Dryer v. Los Angeles Rams

BIRD, C. J., Concurring and Dissenting.

I agree with the majority’s conclusion that Graham v. Scissor-Tail, Inc. (1981) 28 Cal.3d 807 [ 171 *419 Cal.Rptr. 604 , 623 P.2d 165 ] does not permit this court to invalidate an otherwise acceptable arbitration procedure on the “purely speculative possibility” that the commissioner will intervene. (Maj. opn., ante, at p. 417.) I also join their decision to reserve judgment on whether Graham would control if the commissioner were reasonably likely to intervene, or if it were shown that the possibility of intervention distorted the arbitration process. (Ibid.)

I part company with their conclusion that section 301(a) of the federal Labor Management Relations Act ( 29 U.S.C. § 185 (a)) forbids this court even to undertake a Graham inquiry. (Maj. opn., ante, part II.) Graham itself found otherwise. (28 Cal.3d at pp. 830-831.) Nothing in the majority opinion persuades me that Graham was wrong on this score.

Here, this court is asked to review an arbitration procedure which appears to be fair at least as applied. The procedure is the result of a collective bargaining agreement. Under these circumstances, it is easy to forget that there may be arbitration procedures which, though contained in negotiated union contracts and governed by section 301(a) (see maj. opn., ante, at pp. 410-411), nonetheless “essentially preclude the possibility of a fair hearing.” (Graham, supra, 28 Cal.3d at p. 826, fn. 23 .) I would urge my colleagues not to jump to the conclusion that in all circumstances federal law will require us to enforce such agreements.

Graham reviewed the arbitration provisions of a union contract under which a union official would decide disputes between union members and employers. The decision was normally made without hearing, and no appeal to a neutral arbiter was available. ( Graham, supra, 28 Cal.3d at pp. 814-815.) In Graham , this court held that such procedures fell below “minimum levels of integrity” (id., at p. 828) and denied the nonunion party “the common law right of fair procedure” (id., at p. 826). The court went on to consider whether federal law nonetheless required enforcement of the arbitration agreement, since the action was arguably governed by section 301(a).

Graham found that federal law did not require this result. “[W]e decline to find . . . that the substantive federal law of collective bargaining agreements requires any result different from that which we have reached. Until that law, in its application to circumstances such as that before us, is further elaborated by the federal courts, we assume that it does not differ significantly from our own. [Citation.] We have held today, as a matter of state law and policy, that arbitration provisions which designate as sole arbitrator either an affected contractual party or one with identical interests in the outcome of the dispute fail to achieve the level of basic integrity which we *420 require of a contractually structured substitute for formal judicial proceedings. The fact that the instant case arises in the context of what may be considered a labor dispute should not, in our view, render this rule any the less applicable.” (Id., at pp. 830-831.)

Today’s majority reverse this holding of Graham . Yet in so doing, they fail to cite any federal case law which compels such a result. Since there appears to be none, I would affirm Graham’s holding.

The majority cite cases which articulate “the basic policy of national labor legislation to promote the arbitral process as a substitute for economic warfare.” (Teamsters Local v. Lucas Flour Co. (1962) 369 U.S. 95, 105 [ 7 L.Ed.2d 593, 600 , 82 S.Ct. 571 ].) (Maj. opn., ante, at pp. 412-413.) But these cases are not persuasive authority for the specific proposition that unconscionable, illusory arbitration procedures must under all circumstances be enforced.

Most of the cases, as the majority acknowledge, concern the scope of coverage, not the fairness, of arbitration agreements. (See, e.g., Steelworkers v. Warrior & Gulf Co. (1960) 363 U.S. 574, 583 [ 4 L.Ed.2d 1409, 1417 , 80 S.Ct. 1347 ] [contracting-out grievances must be submitted to arbitration since they were not “necessarily excepted” from it]; Republic Steel v. Maddox (1965) 379 U.S. 650 [ 13 L.Ed.2d 580 , 85 S.Ct. 614 ] [contract grievance procedures must be exhausted by discharged employee seeking severance pay]; Haig Berberian, Inc. v. Cannery Warehousemen (9th Cir. 1976) 535 F.2d 496 [dispute as to whether employees at new plant are covered by collective bargaining agreement is arbitrable]; Brannon v. Warn Bros., Inc. (9th Cir. 1974) 508 F.2d 115 , 119-120 [questions of finality of grievance procedure, and of what constitutes adequate notice of grievance hearing, are arbitrable]; Jacksonville Newspaper Printing Pressmen and Assistants’ Union No. 57 v. Florida Pub. Co. (5th Cir. 1972) 468 F.2d 824 , cert. den. 411 U.S. 906 [ 36 L.Ed.2d 196 , 93 S.Ct. 1531 ] [arbitration clauses embrace disputes concerning contractual provisions for composition of arbitration pahel, and disputes concerning contractual provisions barring arbitration if panel not selected in 30 days]; International Ass’n. of Machinists v. Howmet Corp. (9th Cir. 1972) 466 F.2d 1249 [issues arising from plant closure within scope of arbitration clause]; Howard Elec. Co. v. International Bro. of E. W. Loc. U. No. 576 (9th Cir. 1970) 423 F.2d 164 [whether union instigated or encouraged walkout is arbitrable]; Clanebach, Inc. v. Las Vegas Loc. Jt. Ex. Bd. of Cul. Wkrs and Bartenders (9th Cir. 1968) 388 F.2d 766 [whether a contract requires company to negotiate wage rates for certain classes of employees is arbitrable], Maj. opn. ante, at pp. 413, 414.)

*421 The cases cited for the rule that “employee-oriented” or “partisan” arbitration agreements are enforceable simply do not bear the weight which the majority place on them. Monongahela Pow. Co. v. Loc. No. 2332 Int. Bro. of El. Wkrs. (4th Cir. 1973) 484 F.2d 1209 , 1214 and Avco Corp. v. (UAW) Local No. 787 (3d Cir. 1972) 459 F.2d 968 , 972 found “employee-oriented” arbitration procedures to be enforceable against management. However, those cases clearly used the term to mean that the grievance procedures were designed to be initiated by employees. Neither case involved, or even considered, arbitration by a less-than-impartial decision maker. (See also Wilkes-Barre, etc. v. Newspaper Guild, etc. (M.D.Pa. 1980) 504 F.Supp. 54, 71-72 .) ATSA of California, Inc. v. Continental Ins. Co. (9th Cir. 1983) 702 F.2d 172 , 175-176, amended (1985) 754 F.2d 1394 , approved “partisan arbitrators” in sanctioning a contractual agreement to utilize a panel of two arbitrators appointed by the respective parties and one umpire. There was no suggestion that the panel as a whole was biased. Lewis v. Quality Coal Corporation (7th Cir. 1959) 270 F.2d 140, 143 , cert, den. 361 U.S. 929 [ 4 L.Ed.2d 353 , 80 S.Ct. 369 ], is inapposite. It simply held that an employer could not avoid contract provisions (there, a closed-shop agreement) by claiming that the contract was signed under threat of a lawful strike.

I cannot find any federal law which requires the enforcement of arbitration procedures which are so unfair as to come under the Graham holding. On the contrary, as six members of this court found in Graham , “ ‘Congress has put its blessing on private dispute settlement arrangements . . ., but it was anticipated, we are sure, that the contractual machinery would operate within some minimum levels of integrity.’ (Hines v. Anchor Motor Freight (1976) 424 U.S. 554, 571 [ 47 L.Ed.2d 231, 245 , 96 S.Ct. 1048 ].)” (Graham, supra, 28 Cal.3d at p. 825 .)

The reason for the congressional blessing of arbitration agreements is the belief that they promote industrial peace. “The processing of even frivolous claims may have therapeutic values of which those who are not a part of the plant environment may be quite unaware. . . . ‘. . . it is common knowledge in industrial relations circles that grievance arbitration often serves as a safety valve for troublesome complaints.’” (Steelworkers v. American Mfg. Co. (1960) 363 U.S. 564 , 568 and fn. 6 [ 4 L.Ed.2d 143 , 1407, 80 S.Ct. 1343 ], quoting Cox, Current Problems in the Law of Grievance Arbitration (1958) 30 Rocky Mt. L.Rev. 247, 261.)

“A collective bargaining agreement is an effort to erect a system of industrial self-government. . . . [T]he grievance machinery under a collective bargaining agreement is at the very heart of the system of industrial self-government. Arbitration is the means of solving the unforeseeable by mold *422 ing a system of private law for all the problems which may arise and to provide for their solution in a way which will generally accord with the variant need and desires of the parties. The processing of disputes through the grievance machinery is actually a vehicle by which meaning and content are given to the collective bargaining agreement. ” (Steelworkers v. Warrior & Gulf Co., supra, 363 U.S. at pp. 580-581 [4 L.Ed.2d at pp. 1416-1417].)

None of these goals can be achieved if the parties perceive the arbitration machinery as fundamentally biased. Federal labor policy cannot demand enforcement of an arbitration agreement which Graham would otherwise invalidate.

No one disputes that as a general proposition arbitration agreements must be enforced according to their terms. (Maj. opn., ante, at pp. 412-413.) Yet, federal courts have recognized that at times the machinery cannot operate fairly and, thus, cannot be enforced. “ ‘[B]ecause these contractual remedies have been devised and are often controlled by the union and the employer, they may well prove unsatisfactory or unworkable for the individual grievant. The problem then is to determine under what circumstances the individual employee may obtain judicial review of his breach-of-contract claim despite his failure to secure relief through the contractual remedial procedures.’ [Citations.]” (Vaca v. Sipes (1967) 386 U.S. 171, 185 [ 17 L.Ed.2d 842, 854-855 , 87 S.Ct. 903 ], quoted in Glover v. St. Louis-S. F. R. Co. (1969) 393 U.S. 324, 330 [ 21 L.Ed.2d 519, 524 , 89 S.Ct. 548 ].)

In Glover , the high court had refused to compel arbitration where the persons who would decide a grievance were inescapably biased about it. Glover allowed a group of black employees to bypass arbitration and sue in federal court on a claim that the union and the company together were discriminating against them in job promotions. The wrongs the workers alleged constituted a violation of the collective bargaining agreement and it was conceded that they were arbitrable under that agreement. (Id., at pp. 326-327 [21 L.Ed.2d at pp. 521-522].) Nonetheless, the high court found that the grievance and arbitration procedures administered jointly by the company and the union—the very entities charged with discrimination in breach of the contract—would be futile. Accordingly, demanding their exhaustion would not promote “the overall purposes of federal labor relations policy.” (Id., at p. 330 [ 21 L.Ed.2d at p. 524 ].)

Other cases have recognized that arbitration procedures may be avoided when they require a party to submit to a decision maker so biased as to be incapable of providing a fair hearing. Steele v. L. & N. R. Co. (1944) 323 U.S. 192 [ 89 L.Ed. 173 , 65 S.Ct. 226 ], like Glover, held that black firemen need not appear for arbitration before a tribunal chosen by the union and *423 company charged with discrimination. “We cannot say that a hearing, if available, before [this] tribunal[] would constitute an adequate administrative remedy. Cf. Tumey v. Ohio [(1927)] 273 U.S. 510 [ 71 L.Ed. 749 , 47 S.Ct. 437 ].” (Steele, supra, 323 U.S. at p. 206 [ 89 L.Ed. at p. 185 ]; see also Watson v. Cudahy Company (D.Colo. 1970) 315 F.Supp. 1286, 1287-1288 [employee need not submit to arbitration a dispute concerning which union and management agree on a position adverse to his; the hearing will be unfair in part because the arbitrator will be chosen by union and management, and “[t]he individual plaintiffs in this action had no choice in this selection, other than through their union representative, who is now their adversary.”].)

It is to be hoped that arbitration machinery established through collective bargaining will seldom if ever run afoul of those “elementary requirements of impartiality taken for granted in every judicial proceeding[.]” (See Commonwealth Corp. v. Casualty Co. (1968) 393 U.S. 145 [ 21 L.Ed.2d 301 , 89 S.Ct. 337 ].) Yet, such situations can be imagined. Graham is one example of a contract covered by section 301(a) which contains fundamentally unfair procedures. Perhaps, the provision for commissioner intervention in the present contract is another. Glover and Steele illustrate arbitration agreements which are fair on their face but unconscionable as applied. I fear the majority opinion sweeps so broadly that this court would henceforth be bound to enforce each of these contracts. I cannot agree that federal law requires us to do that.