Not all arbitration agreements are created equal. Despite a series of U.S. Supreme Court decisions bolstering the strength of contractual mandates to force workplace disputes into arbitration, judges keep them in court when the agreements have holes.
Attending Homecare Services will appear before a federal appeals court in Manhattan today to challenge a district judge’s ruling that refused to enforce an arbitration agreement on a worker’s wage claims. The judge said the arbitration provision in the home care firm’s collective bargaining agreement with the worker’s union is “confusing” and thus nonbinding.
The case could provide guidance to employers, workers, and unions on what it takes to make arbitration agreements in unionized workplaces enforceable or render them invalid. The Supreme Court has said courts must rigorously enforce arbitration agreements according to their terms, including provisions that waive workers’ right to bring class claims.
State contract law can come into play when there are questions about whether a valid agreement was formed. Last summer, for example, the U.S. Court of Appeals for the Fifth Circuit refused to enforce an arbitration agreement the employer didn’t sign. The Fourth Circuit similarly ruled on an agreement that listed the wrong company name.
Rather than state contract law, the decision being challenged during oral argument at the Second Circuit focuses on the heightened bar that an arbitration agreement must clear when it appears in a union contract.
“The case turns on whether ‘clear and unmistakable’ language in the CBA requires employees to arbitrate,” University of Kansas law professor Stephen Ware, an arbitration specialist, told Bloomberg Law.
Normally courts are required to rule in favor of arbitration when there are doubts. But the Second Circuit says judges must take that pro-arbitration thumb off the scales when analyzing a CBA that calls for union members to arbitrate statutory claims. Instead, the mandate to arbitrate must be unambiguous to be valid.
Judge Finds Ambiguity
Attending Homecare moved to compel individual arbitration of Tatyana Abdullayeva’s class and collective claims that the company didn’t pay her what she and other home health aides were owed under federal and state wage law.
In his 2018 ruling, U.S. District Judge
The agreement’s section that sets forth individual employees’ obligations only applies if they ask the union to process a grievance, and Abdullayeva didn’t, Weinstein said. And she wasn’t required to do so, he said.
“Absent this mandatory prerequisite, arbitration is permissive, not mandatory,” Weinstein said. “The introductory clause tells the employee she must follow the grievance procedures, but the grievance procedures do not direct that she must follow a path to arbitration.”
The agreement says employees “may” take their claims to arbitration, which could be read to mean they have a choice, the judge said.
Courts have split on what such a use of “may” can signify in arbitration agreements, said Imre Szalai, a Loyola University New Orleans law professor who has written extensively about arbitration. Some decisions say plaintiffs give up their claims if they don’t opt for arbitration, while others have allowed them to go to court, Szalai told Bloomberg Law.
What Must Be ‘Clear and Unmistakable’?
Attending Homecare argued in a brief that Weinstein incorrectly applied the “clear and unmistakable” standard altogether, making his conclusions about permissive language in the agreement off-base.
The agreement’s introductory clause unambiguously states that all claims brought under specific statutes must be arbitrated, the company said. The introductory clause names the Fair Labor Standards Act, New York Home Care Worker Wage Parity Law, and New York Labor Law—the three laws that Abdullayeva sued under.
“The courts do not read into the ‘clear and unmistakable’ standard any additional requirements beyond the identification of the particular statutory provisions that will be subject to arbitration,” Attending Homecare said.
Abdullayeva disagreed, saying in her brief that Second Circuit precedent also requires that the agreement clearly makes arbitration mandatory. The arbitration agreement met the first prong of the clear and unmistakable test by naming the statutes, but it failed the second by failing to unambiguously require arbitration, she said.
Attorneys for Attending Homecare and Abdullayeva didn’t respond to requests for comment.
The case is Attending Homecare v. Abdullayeva, 2d Cir. App., 18-0651, Oral argument 2/19/19.