Torrez v. Consolidated Freightways Corp.

Page 792

68 Cal.Rptr.2d 792

58 Cal.App.4th 1247, 157 L.R.R.M. (BNA) 2376, 11 NDLR P 81,

97 Cal. Daily Op. Serv. 8435,

97 Daily Journal D.A.R. 13,569

Lawrence TORREZ, Plaintiff and Respondent, v. CONSOLIDATED FREIGHTWAYS CORPORATION OF DELAWARE, Defendant and Appellant.

No. H015966.

Court of Appeal, Sixth District, California.

Oct. 31, 1997.

Certified for Partial Publication. ^*

[58 Cal.App.4th 1249] Peter MacClaren, for Plaintiff and Respondent.

Ned A. Fine, John P. Boggs, Fisher & Phillips, Redwood City, for Defendant and Appellant.

COTTLE, Presiding Justice.

I

In the published portion of this opinion, we are asked to determine whether an employee may be compelled to arbitrate a statutory discrimination claim under the California Fair Employment and Housing Act (Gov.Code, § 12900 et seq.) where the employee's union has entered into a collective bargaining agreement with the employer to arbitrate all employment-related claims. In Austin v. Owens-Brockway Glass Container Inc. (4th Cir.1996) 78 F.3d 875 (Austin), a divided court held that an arbitration provision in a collective bargaining agreement was enforceable with respect to an employee's statutory discrimination claims. Since Austin, virtually every court ¹ that has considered the issue has disagreed. In lengthy analyses, these courts have explained that the Austin majority misinterpreted the United States Supreme Court precedents, Gilmer v. Interstate- /Johnson Lane Corp. (1991) 500 U.S. 20, 111 S.Ct. 1647, 114 L.Ed.2d 26 (Gilmer) and Alexander v. Gardner-Denver Company (1974) 415 U.S. 36, 94 S.Ct. 1011, 39 L.Ed.2d 147 (Gardner-Denver), upon which it based its holding. As we shall explain, we join the growing chorus of cases rejecting Austin's reasoning. ² Accordingly, we affirm the trial court's order denying the employer's petition to compel arbitration of the employee's statutory discrimination claims. In the unpublished portion of this opinion, we reverse the trial court's order to the extent it denied arbitration of the employee's nonstatutory claims, and we remand to the trial court to determine whether arbitration of the nonstatutory claims should be stayed pending litigation.

II FACTUAL AND PROCEDURAL BACKGROUND

In his complaint, Lawrence Torrez alleged he was suspended on October 21, 1992, for working more than 70 hours in an 8-day period. Non-Hispanic workers who violated this rule were allegedly given only warnings. He was then terminated on June 2, 1993, for falsifying his driving log. Non-Hispanic drivers were never terminated for falsifying driving logs, which was a common practice. He grieved his termination and was reinstated based on a "determin[ation] that Plaintiff had been disciplined much more severely than non-Hispanic and non-Mexican transport operators...." Following his reinstatement, he was terminated again on September 16, 1993, "for not accurately reflecting the time he actually worked on his log." He grieved this second termination on the grounds of discrimination, and was reinstated once again. Subsequently he "was forced to take a medical leave of absence from work due to the emotional distress he experienced from the discrimination he received...."

Torrez's employment was governed by the terms of a collective bargaining agreement between his employer, CF Motorfreight (CF), and the International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America (Teamsters). The collective bargaining agreement included provisions governing the discharge of employees, prohibiting discrimination on the basis of sex, age, race, creed, color or national origin, and establishing a mandatory grievance and binding arbitration procedure.

On November 13, 1995, Torrez filed suit against CF, alleging violations of the FEHA and California Constitutions, intentional infliction of emotional distress, and tortious wrongful termination. In lieu of an answer, CF filed a petition to compel arbitration and stay the proceedings. The court denied CF's petition, and CF appeals from that denial.

III DISCUSSION

A. Torrez's Statutory Discrimination Claim

In Austin, in this case, and in the numerous cases cited in footnote 1 of this opinion, the issue presented was the same: can an employee be compelled to arbitrate statutory discrimination claims where an agreement to arbitrate all employment-related claims ³ is contained in a collective bargaining agreement?

Because the United States Supreme Court has never dealt with precisely this issue, lower courts have had to extrapolate from Supreme Court precedents that are distinguishable on their facts. The court in Austin concluded from these precedents that an arbitration agreement specifically listing statutory discrimination as a claim subject to arbitration was enforceable and precluded the employee from suing her employer. Other courts, analyzing the same precedents, have concluded otherwise. We begin our discussion with a review of these Supreme Court precedents.

1. Gardner-Denver and Its Progeny

In Gardner-Denver, supra, 415 U.S. 36, 94 S.Ct. 1011, 39 L.Ed.2d 147, the court held that a plaintiff was not precluded from filing a Title VII lawsuit against his employer by having earlier submitted his claim to final arbitration under a collective bargaining agreement. In so holding, the court noted the "distinctly separate nature" of "contractual and statutory rights." (Id. at p. 50, 94 S.Ct. at p. 1020.) The grievance/arbitration procedures in the collective bargaining agreement were intended to address the employee's contractual rights, while Title VII created an independent right to be free from racial discrimination. (Id. at pp. 49-50, 94 S.Ct. at pp. 1020-21.) Therefore, an agreement limiting contractual remedies to a particular forum (such as the arbitral forum) would not affect the employee's statutory rights. (Id. at p. 50, 94 S.Ct. at p. 1020.)

The court noted that a union may waive certain types of statutory rights that are related to "collective activity," such as the right to strike. (Gardner-Denver, supra, 415 U.S. at p. 51, 94 S.Ct. at p. 1021.) This is because these rights "are conferred on employees collectively to foster the processes of bargaining and properly may be exercised or relinquished by the union as collective-bargaining agent to obtain economic benefits for union members." (Ibid.)

On the other hand, the court observed, Title VII "stands on plainly different ground; it concerns not majoritarian processes, but an individual's right to equal employment opportunities. Title VII's strictures are absolute and represent a congressional command that each employee be free from discriminatory practices. Of necessity, the rights conferred can form no part of the collective-bargaining process since waiver of these rights would defeat the paramount congressional purpose behind Title VII. In these circumstances, an employee's rights under Title VII are not susceptible of prospective waiver." (Gardner-Denver, supra, 415 U.S. at p. 51, 94 S.Ct. p. 1011.)

The Gardner-Denver court also expressed concern about the different procedures followed in labor arbitration as compared with a judicial forum, the relative inexperience of labor arbitrators in civil rights litigation, and the limited remedies that an arbitrator might be permitted to award pursuant to a collective bargaining agreement. (415 U.S. at pp. 55-58, 94 S.Ct. at pp. 1023-25.)

"A further concern," the court explained, "is the union's exclusive control over the manner and extent to which an individual grievance is presented. [Citations.] In arbitration, as in the collective-bargaining process, the interests of the individual employee may be subordinated to the collective interests of all employees in the bargaining unit. [Citations.] Moreover, harmony of interest between the union and the individual employee cannot always be presumed, especially where a claim of racial discrimination is made." (Gardner-Denver, supra, 415 U.S. at p. 58, fn. 19, 94 S.Ct. at p. 1024, fn. 19.)

The Supreme Court reaffirmed and extended the themes set forth in Gardner-Denver in two later opinions. In Barrentine v. Arkansas-Best Freight System, Inc. (1981) 450 U.S. 728, 101 S.Ct. 1437, 67 L.Ed.2d 641 (Barrentine), the court held that a truck driver could pursue his claims under the Fair Labor Standards Act, notwithstanding his unsuccessful participation in grievance procedures mandated by a collective bargaining agreement. And in McDonald v. West Branch (1984) 466 U.S. 284, 104 S.Ct. 1799, 80 L.Ed.2d 302 (McDonald ), the court applied the same rule with respect to a plaintiff bringing a civil rights action under 42 United States Code section 1983 following an adverse arbitration decision.

2. Gilmer and Its Progeny

Seventeen years later, the Supreme Court decided Gilmer, supra, 500 U.S. 20, 111 S.Ct. 1647, 114 L.Ed.2d 26. In what appeared initially to be a departure from Gardner-Denver, the court held that an agreement to arbitrate a statutory claim is generally enforceable. In Gilmer, the plaintiff had been required by his employer to register as a securities representative with the New York Stock Exchange (NYSE). The registration application contained an agreement to arbitrate "any dispute, claim or controversy" arising between him and his employer "that is required to be arbitrated under the rules" of the NYSE. The NYSE rules required arbitration of " '[a]ny controversy between a registered representative and any member or member organization arising out of the employment or termination of employment of such registered representative.' " (Id. at p. 23, 111 S.Ct. at pp. 1650-51.)

The employer terminated Gilmer's employment when Gilmer was 62 years old. In response, Gilmer filed a charge with the Equal Employment Opportunity Commission (EEOC) and brought an action in the federal district court, alleging he had been discharged in violation of the Age Discrimination in Employment Act of 1967 (ADEA). The employer moved to...