Arbitration Decision Precludes Subsequent Non-Statutory Wrongful Termination Claim

A court of appeal recently addressed whether an arbitration decision on a claim of wrongful termination in violation of a collective bargaining agreement, as a result of racially discriminatory practices, bars a subsequent action in superior court alleging wrongful termination in violation of public policy.  The court held that the subsequent claim was barred under the doctrine of res judicata and is also precluded because there is no comprehensive statutory scheme applicable to Fair Employment and Housing Act (“FEHA”) related common law claims comparable to the statutory requirements of the FEHA.  (Wade v. Ports America Management Corp., et al. (--- Cal.Rptr.3d ----, Cal.App. 2 Dist., August 2, 2013).

Facts

Calvin Wade (“Wade”) was employed as a steady vessel planner by Marine Terminals Corporation (“MTC”).  Wade was a member of Local 63 of the International Longshore and Warehouse Union (“Union”).  As a member of Local 63, Wade was subject to the Pacific Coast Longshore and Clerks’ Agreement Contract Document for Clerks and Related Classifications (“PCCCD”), a collective bargaining agreement.  Section 13.1 of the PCCCD prohibited discrimination against Union members.  The PCCCD also required Union members to submit any grievances related to their employment to binding arbitration.

On September 5, 2008, Wade was laid off.  At the time of his release, he had more seniority than three of the six steady vessel planners that MTC retained.  Following his release, Wade filed a grievance alleging that he had been laid off in violation of the PCCCD and alleging discrimination on the basis of his Union membership and race.  The grievance was arbitrated in 2009 and the arbitrator found no violation of the PCCCD.  Wade then filed an action in superior court, alleging retaliation and wrongful termination in violation of public policy, specifically racial discrimination and retaliation under the FEHA.  The court held that Wade’s claims were barred by res judicata because he had previously litigated his claims in arbitration.

Decision

The court of appeal upheld the lower court’s holding that Wade was barred from bringing a single cause of action for retaliation and wrongful termination in violation of public policy in superior court because an arbitrator previously resolved the same cause of action adversely against him.

The court rejected Wade’s claim that the arbitration proceedings would have no preclusive effect on his claim in superior court.  The court distinguished the cases that Wade used to support his argument by explaining that the cases addressed only the preclusive effect of an arbitration award on statutory employment discrimination claims.  Wade was pursuing a nonstatutory employment discrimination claim under public policy.  The court declined to extend the holdings in existing case law because it would allow a person to benefit from the statutory scheme of the FEHA without complying with any of its prerequisites, including jurisdictional requirements.

The court next concluded that because the same primary right was at issue in both the arbitration proceeding and the judicial proceeding, the legal doctrine of res judicata applied and Wade was barred from bringing an action for wrongful termination in violation of public policy.  Res judicata prevents relitigation of the same cause of action in a second suit between the same parties.  The doctrine applies to judicial proceedings as well as arbitration proceedings.  The court found that the sole injury for which Wade sought relief in the arbitration proceedings was his termination.  The allegedly wrongful termination was also the basis for his claim in superior court.  Therefore, he was precluded from relitigating the wrongful termination claim in superior court.

Additionally, the court determined that the arbitration encompassed Wade’s common law racial discrimination claim.  His grievance alleged that his termination was a result of unfair discrimination against minority employees.  Wade presented no evidence to support the claim and the arbitrator found no violation of the PCCCD.  The court held that the arbitrator’s finding was binding on Wade and precluded his subsequent claim.  Moreover, the issue of wrongful termination in violation of public policy against racial discrimination was barred under res judicata because it was relevant to the subject matter of the arbitration (wrongful termination) and should have been raised in the arbitration proceeding.

Questions

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A court of appeal recently addressed whether an arbitration decision on a claim of wrongful termination in violation of a collective bargaining agreement, as a result of racially discriminatory practices, bars a subsequent action in superior court alleging wrongful termination in violation of public policy.  The court held that the subsequent claim was barred under the doctrine of res judicata and is also precluded because there is no comprehensive statutory scheme applicable to Fair Employment and Housing Act (“FEHA”) related common law claims comparable to the statutory requirements of the FEHA.  (Wade v. Ports America Management Corp., et al. (--- Cal.Rptr.3d ----, Cal.App. 2 Dist., August 2, 2013).

Facts

Calvin Wade (“Wade”) was employed as a steady vessel planner by Marine Terminals Corporation (“MTC”).  Wade was a member of Local 63 of the International Longshore and Warehouse Union (“Union”).  As a member of Local 63, Wade was subject to the Pacific Coast Longshore and Clerks’ Agreement Contract Document for Clerks and Related Classifications (“PCCCD”), a collective bargaining agreement.  Section 13.1 of the PCCCD prohibited discrimination against Union members.  The PCCCD also required Union members to submit any grievances related to their employment to binding arbitration.

On September 5, 2008, Wade was laid off.  At the time of his release, he had more seniority than three of the six steady vessel planners that MTC retained.  Following his release, Wade filed a grievance alleging that he had been laid off in violation of the PCCCD and alleging discrimination on the basis of his Union membership and race.  The grievance was arbitrated in 2009 and the arbitrator found no violation of the PCCCD.  Wade then filed an action in superior court, alleging retaliation and wrongful termination in violation of public policy, specifically racial discrimination and retaliation under the FEHA.  The court held that Wade’s claims were barred by res judicata because he had previously litigated his claims in arbitration.

Decision

The court of appeal upheld the lower court’s holding that Wade was barred from bringing a single cause of action for retaliation and wrongful termination in violation of public policy in superior court because an arbitrator previously resolved the same cause of action adversely against him.

The court rejected Wade’s claim that the arbitration proceedings would have no preclusive effect on his claim in superior court.  The court distinguished the cases that Wade used to support his argument by explaining that the cases addressed only the preclusive effect of an arbitration award on statutory employment discrimination claims.  Wade was pursuing a nonstatutory employment discrimination claim under public policy.  The court declined to extend the holdings in existing case law because it would allow a person to benefit from the statutory scheme of the FEHA without complying with any of its prerequisites, including jurisdictional requirements.

The court next concluded that because the same primary right was at issue in both the arbitration proceeding and the judicial proceeding, the legal doctrine of res judicata applied and Wade was barred from bringing an action for wrongful termination in violation of public policy.  Res judicata prevents relitigation of the same cause of action in a second suit between the same parties.  The doctrine applies to judicial proceedings as well as arbitration proceedings.  The court found that the sole injury for which Wade sought relief in the arbitration proceedings was his termination.  The allegedly wrongful termination was also the basis for his claim in superior court.  Therefore, he was precluded from relitigating the wrongful termination claim in superior court.

Additionally, the court determined that the arbitration encompassed Wade’s common law racial discrimination claim.  His grievance alleged that his termination was a result of unfair discrimination against minority employees.  Wade presented no evidence to support the claim and the arbitrator found no violation of the PCCCD.  The court held that the arbitrator’s finding was binding on Wade and precluded his subsequent claim.  Moreover, the issue of wrongful termination in violation of public policy against racial discrimination was barred under res judicata because it was relevant to the subject matter of the arbitration (wrongful termination) and should have been raised in the arbitration proceeding.

Topics:  Arbitration, FEHA, Public Policy, Res Judicata, Termination

Published In: Alternative Dispute Resolution (ADR) Updates, Civil Procedure Updates, Civil Rights Updates, Labor & Employment Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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