Monthly Archives: June 2011

June 7, 2011

Court Ruling Strengthens Noncompetes in Colorado

My colleague Alyssa Yatsko has sound advice for Colorado employers that worry about the enforceability of noncompetition covenants.  Thankfully, the Colorado Supreme Court has determined that continued employment does constitute sufficient consideration to support a noncompete agreement.  For a more detailed analysis of the importance of the Colorado Supreme Court’s decision in Lucht’s Concrete Plumbing, Inc. v. Horner follow this link to Alyssa’s article:  Lucht analysis

For more information, please feel free to reach out to Alyssa Yatsko.

June 6, 2011

Newspaper Loses Arbitration Argument, but Can Hold Employee to His Word

By Jude Biggs

Introduction

Unionized employees file grievances when they believe their employer has not followed the collective bargaining agreement (CBA”); usually such an employee argues the employer did not have “just cause” to discipline, demote, or fire him.  If the grievance is not decided in favor of the employee, the employee can take the grievance to arbitration.  In most cases, however, union employees need not grieve or arbitrate their statutory discrimination claims; they still have a right outside of the CBA to claim discrimination, just as a non-union employee does, so they can still litigate the claim in court.  In 2009, the Supreme Court muddied the waters and said some CBAs may be worded clearly enough that a union employee may only arbitrate a discrimination or retaliation claim through the CBA process.  Since then, courts have attempted to sort out just what “clearly enough” means.  Courts have also struggled with what to do when an employee says he is disabled when he applies for social security benefits, but then claims he was qualified for a job and should be allowed to sue for discrimination.  The following case is the latest word from the Tenth Circuit on both of these issues.

Background

John Mathews, a unionized employee of the Denver Newspaper Agency (the “Agency”), worked for the Agency from 1983 through 2005.  At the time his claims arose, he was a Unit Supervisor (but still a union employee).  In June 2005, a female employee complained that Mathews had made inappropriate comments; Mathews was placed on paid leave while the complaint was investigated.  Once the investigation was completed, the union filed a grievance against Mathews on behalf of the complaining employee, and the Agency demoted him from his Unit Supervisor position on July 1, 2005.  That same day, Mathews obtained a doctor’s note saying he could not return to work for medical reasons.

            Mathews was originally from southern India.  He filed a grievance against the Agency, claiming his demotion was due to his national origin and it violated the union contract’s anti-discrimination provision.  He also claimed he was demoted in retaliation for complaints of race, color, and national origin discrimination that he had made in May and June of 2005.  He later amended the grievance to remove any reference to a violation of anti-discrimination statutes, but he still claimed he was “discriminated” against when he was demoted.  Under the CBA, Mathews could choose to arbitrate his grievance or litigate it in court; in this case, he chose to pursue arbitration.  The arbitrator held a 4-day evidentiary hearing on the claims and ruled against Mathews.  Mathews then filed a claim for disability benefits with the Social Security Administration (“SSA”), alleging complete and total disability beginning on June 11, 2005 (the date of the alleged comments that led to his demotion). 

Mathews filed a lawsuit in district court, claiming he had been discriminated and retaliated against, in violation of Title VII of the Civil Rights Act and §1981 (another civil rights statute that prohibits race discrimination).  The district judge ruled Mathews’s decision to arbitrate his claims prevented him from doing so again in court; in other words, he could not have two bites at the apple.  In addition, the judge ruled that Mathews’s statement to the SSA that he was totally disabled and unable to work prevented him from claiming he could still do the job he held before.  Hence, he was “judicially estopped” or prevented from maintaining a claim for discrimination, as he could not prove he was qualified for the job.  Mathews then appealed to the Tenth Circuit.

The Tenth Circuit Says Mathews Gets Two Bites at the Apple

            The Tenth Circuit looked first at when a union employee is limited to bringing a statutory discrimination claim under the arbitration procedure in a CBA, and when a union employee may file the discrimination claim under the CBA (if he wishes) and also in court.  The Tenth Circuit explained that, based on a 2009 Supreme Court decision (Penn Plaza v. Pyett, 129 S. Ct. 1456 (2009)), a CBA may be worded in such a way as to be the exclusive remedy for claims based on anti-discrimination and anti-retaliation statutes.  However, normally, a union employee has both contractual rights under the CBA and statutory rights not to be discriminated or retaliated against.  The CBA preempts statutory rights only when the CBA expressly says that statutory claims are to be arbitrated under the CBA.  In Mathews’s case, the CBA did say the company and union would not discriminate “in accordance with and as required by applicable state and federal laws.”  That language, to the Tenth Circuit, meant only that the company and union agreed discriminatory conduct could violate both the CBA and anti-discrimination statutes; it did not mean submitting a claim of discrimination to arbitration waived the right to sue in court.  In addition, Mathews had amended his initial grievance to delete any reference to statutory claims.  As a result, the Tenth Circuit held the CBA arbitration process was not Mathews’s exclusive remedy and Mathews could also sue in court. 

But the Tenth Circuit Says Mathews Can’t Have It Both Ways

            The Tenth Circuit then turned to Mathews’s claim that he could be totally disabled for purposes of getting social security disability benefits but not disabled for purposes of claiming he could still do his job.  The Tenth Circuit pointed out that Mathews had to prove he could do the job before he could prove he was discriminated against.  Mathews admitted he could not do the job anymore, but blamed the company for his disability.  Since the company caused his disability, he argued, it should not escape liability.  The Tenth Circuit did not buy his arguments. 

In reaching that conclusion, the Tenth Circuit confirmed that, just because an employee claims to be disabled for purposes of gaining social security disability benefits, he is not necessarily estopped (or prevented) from saying he was qualified for a job in a subsequent lawsuit.  However, such an employee must explain why he has taken inconsistent positions. 

Looking at the medical evidence, the Tenth Circuit saw that Mathews had persuaded the social security judge that he was disabled due to a bulging disc of the cervical spine and an affective disorder as of June 11, 2005.  In the discrimination case, he claimed “to the best of his recollection,” his disabling depression occurred after the Agency placed him on administrative leave on June 17, 2005.  The two positions were entirely inconsistent, and he made no effort to explain the discrepancy.  Mathews’s inconsistent statement to the SSA gave him the benefit of significant disability payments, and allowing him to recover for a lawsuit based on inconsistent statements would give him an unfair advantage.  As a result, the Tenth Circuit concluded that the district judge had not abused his discretion by concluding Mathews could not establish a claim of discriminatory demotion. 

Retaliatory Demotion Claim Still Survives

The court then reviewed whether Mathews could still sue for retaliatory demotion.  Since that claim was not waived in the arbitration process, the court looked at the evidence supporting such a claim, and concluded a jury might rule in Mathews’s favor.  The record showed Mathews was placed on leave on June 17, 2005, but he had made complaints to his supervisors on May 31 and sometime after June 17 but before his July 1 demotion.  Given that timing, it was possible a jury might conclude the demotion was due to his complaints.  As a result, the court remanded the case for further proceedings on the retaliatory demotion claim.

Lessons Learned

            The Mathews case teaches union employers in Colorado (and other states within the Tenth Circuit’s reach) that, if they want employees’ statutory discrimination claims to be resolved only through the arbitration process under the CBA, the CBA must say clearly that the arbitrator has the exclusive authority to hear statutory claims.  It also helps if the employee says in the grievance that he believes the conduct he is complaining about violates the CBA and anti-discrimination statutes.  To avoid the Mathews result, union employers may consider negotiating provisions in their CBAs stating not only that the arbitrator has exclusive authority to hear statutory claims, but also that any general claim of “discrimination” will be deemed both a contract and statutory violation.  That may often be impractical, given the dynamics of negotiations, but it may work with some unions.

For more information on this case or arbitration law in general, please contact Jude Biggs at jbiggs@hollandhart.com.

 

This article is posted with permission from Colorado Employment Law Letter, which is published by M. Lee Smith Publishers LLC. For more information, go to www.hrhero.com.