Review of Court Decisions
Trigger of Statute of Limitations
The 4th Circuit ruled that the statutory period for filing a motion to compel arbitration does not begin to run until a party unequivocally informs the adversary that it is refusing to arbitrate.
In September 1999, the union and employer entered into a collective bargaining agreement (CBA) and a separate agreement covering pension and insurance benefits. The CBA contained a broadly applicable grievance procedure culminating in binding arbitration. That procedure was incorporated by reference into the pension and insurance agreement.
When the CBA expired in 2006, the parties unsuccessfully attempted to negotiate a new agreement. When the employer announced a layoff, the union alleged that the employer failed to pay extended health benefits to the laid-off employees and demanded arbitration.
On Aug. 9, 2006, the employer's human resource manager orally informed the union that the dispute was not arbitrable but he would submit the union's request for arbitration to his department's vice president, who would issue a written response to the request.
Just over six months later, on Feb. 14, 2007, the union had still not received a written response from the employer's HR vice president, so it filed a lawsuit in district court under the Labor Management Relations Act (LMRA) seeking to compel the employer to arbitrate. The district court granted the motion to compel. The employer appealed, arguing that arbitration was barred by the six-month statute of limitations in Section 10 of the National Labor Relations Act (NLRA), which applies to motions made under the LMRA.
The 4th Circuit affirmed, ruling that the statute of limitations had not run under the NLRA because the employer had not provided an unequivocal statement that it would not arbitrate.
The court found that the HR manager's oral statement that he would transmit the demand for arbitration to his superior indicated he was not in a position to take a formal position for the company. Similarly, his statement that a written response would be forthcoming suggested to the court that an oral response was not a formal company refusal to arbitrate. The refusal to arbitrate must be unequivocal, the court said. so that it puts the other party on notice that the statute of limitations period has begun. The HR manager' statement did not do that. Accordingly, the court ruled that the union's motion to compel arbitration on Feb. 14, 2007, was timely.
Next the court held that the grievance procedure survived termination of the CBA in 2006 because the CBA and the pension and insurance agreement both stated that the procedure would survive their termination. The court said these provisions showed that the parties intended to arbitrate disputes over pension and health insurance benefits after the date these agreements were set to expire.
United Steel, Paper & Forestry, Rubber, Manufacturing, Energy, Allied-Industrial & Service Workers International Union AFL-CIO/CLC v. Continental Tire North America, Inc., 568 F.3d 158 (4th Cir. June 9, 2009).
Enforceability of Agreement
The Florida Court of Appeals ruled that an arbitration agreement is not rendered unenforceable when the arbitration provider named in the parties' agreement refuses to administer the arbitration because the courts are authorized by the state arbitration code to appoint an arbitrator.
Dorothy Stern entered into a New Port Richey nursing home in 2006 and upon admission signed a contract that included an arbitration agreement. Two years later she sued New Port Richey for violating her rights while a resident. New Port Richey moved to compel arbitration. At the hearing on the motion, Stern showed that the American Arbitration Association (AAA), the provider named in the agreement, no longer administered cases arising out of predispute arbitration agreements in the health care arena. …