Minnesota’s RUAA has much to commend it as a tool for effective arbitration of increasingly complex civil disputes, but its very complexity and alignment with litigation principles threatens to undercut what has historically made labor arbitration effective.
Arbitration as an alternative to litigation has a long and illustrious history in Minnesota. In 1955 Minnesota became the first state to adopt the Uniform Arbitration Act1 (UAA), and by most accounts its succinct provisions have served parties in arbitration well for over 50 years.2 This has been especially true within the labor relations community, which has looked to labor arbitration as an essential process for resolving labor-management disputes.
However, time marches on and things change and sometimes change is not for the best for everyone affected. In 2010 the Minnesota legislature adopted a new and expanded version of the UAA, the Revised Uniform Arbitration Act3 (RUAA). Its terms became effective August 1, 2011. Only now have members of Minnesota’s labor relations community begun to understand the unintended consequences that the RUAA is already having upon an established labor arbitration system that until now has served Minnesota so well.
Labor Arbitration Unique
To understand the labor relations community’s growing concern with the RUAA it is helpful to understand the unique nature of labor arbitration. Labor arbitration took root as a means of resolving labor conflict in the late 1800s, and it became entrenched as a method of avoiding work stoppages during World War II. In 1960 the United States Supreme Court rebuffed decades of judicial resistance to labor arbitration and affirmed its special role in collective bargaining. In the Steelworkers Trilogy the court recognized that “[t]he labor arbitrator performs functions which are not normal to the courts,”4 and that the parties expect the arbitrator’s judgment regarding
… not only what the contract says but, insofar as the collective bargaining agreement permits, such factors as the effect upon the productivity of a particular result, its consequences to the morale of the shop, his judgment whether tensions will be heightened or diminished. For the parties’ objective in using the arbitration process is primarily to further their common goal of uninterrupted production under the agreement, to make the agreement serve their specialized needs.5
In short, the court recognized that a labor arbitrator often does more than simply adjudicate a dispute. A labor arbitrator applies the common law of labor relations, with its unique principles such as just cause and past practice and industrial due process, to serve the parties’ shared goal of maintaining industrial peace. Labor arbitrators are expected to resolve disputes quickly and practically in a way that full-bodied litigation cannot. Now, however, persons from every corner of Minnesota labor relations are voicing concern that several of the RUAA’s new provisions, as appropriate as they may be for other forms of civil disputes, are not appropriate for labor arbitration. Mediators, arbitrators, and representatives from both labor and management are expressing dismay that the RUAA, taken literally, appears to blur lines to such a degree as to now make labor arbitration simply an ancillary proceeding to litigation. This is bad for a process that many have viewed as much as a problem-solving as a dispute-resolution model.
This is not to suggest that the RUAA is inappropriate for other types of civil disputes. On the contrary, committee members who drafted the model upon which Minnesota’s RUAA is based had good reason to conclude that with the dramatic and accelerating use of arbitration in an ever-expanding range of cases the UAA was no longer able to address many of the new and “extremely complicated matters” being submitted to that process.6 For this reason the drafters added entirely new sections and revised others to address the complex cases that were presumed to have outgrown the UAA’s minimal provisions.
These “minimal provisions,” however, were the very thing that enabled the UAA to work so well within the labor relations arena. Many now interpret the expanded RUAA as injecting a heightened formality and a litigation orientation that undercuts the very reasons labor arbitration has been so accepted and so successful.
A few provisions now found in the RUAA appear to hinder rather than advance labor arbitration’s unique traditions and needs. To restore the former functionality of labor arbitration under the uniform act, representatives from the labor, management and neutral communities should come together to consider how best to address these concerns.
Flexibility in the RUAA
Several of the RUAA’s provisions suggest that its drafters did not intentionally seek to erode the benefits of labor arbitration. For example, the act notes that parties retain a great deal of flexibility in that they may waive several of its provisions.7 Moreover, the RUAA specifically recognizes the unique character of labor arbitration by stating “an employer and a labor organization may waive the right to representation by a lawyer in a labor arbitration.”8
Thus, experienced parties familiar with traditional labor arbitration can agree to continue to arbitrate their disputes much as they always have. They can mutually agree to circumvent the litigation aspects of the RUAA model where appropriate, remaining mindful that seeking to win at all costs can come at the expense of labor arbitration’s historic, heralded advantages of problem solving, informality, cost savings, finality, and preservation of relationships.
But this apparent promise of flexibility is belied by the act’s premise that it is the default process, and that any waivers of the RUAA’s terms (not all of which can be waived) are dependent upon the parties’ mutual agreement. Experienced advocates and neutrals will probably agree to remain flexible and will continue to arbitrate within practices and understandings that have traditionally worked well. Newer arrivals to the field, however, who rely upon the literal terms of the RUAA, will quite reasonably assume that labor arbitration is largely a trial conducted in a conference room. Indeed, parties apparently new to the process are already seeking massive amounts of discovery and filing motions that historically have not been a part of labor arbitration.
While experienced arbitrators may elect to keep labor arbitration true to its roots and set limits on discovery and other extraordinary requests, the same cannot be expected of newer arbitrators. Arbitrators not grounded in labor arbitration’s past practice will read the RUAA and conclude that its broad discovery and remedy provisions reflect a default position from which one deviates at one’s risk. In short, newer labor arbitrators may not recognize that by exercising the expanded authority granted them by the RUAA they may defeat the very reasons the parties agreed to arbitrate in the first place.
Most alarmingly, the RUAA’s litigation model, especially its provisions regarding discovery and remedies and court proceedings, will now probably preclude nonlawyers’ participation in this arena. Human resources directors, business agents, and nonattorney arbitrators have always been major players in labor arbitration. Despite the RUAA’s express proviso that parties may waive the right to legal representation in a labor arbitration,9 it is hard to imagine a nonattorney feeling anything other than disadvantaged in a proceeding in which others who are attorneys know the legal rules of the game and play them aggressively. Reading the RUAA as a full-employment act for labor relations lawyers may appeal to some, but many who have worked hard to promote stable labor relations in Minnesota fear that the RUAA imposes too great a cost.
Prior to Hearing
The RUAA gives the arbitrator complete control over discovery. This includes new authority to issue subpoenas for prehearing discovery proceedings such as depositions,10 and the power to grant interim remedies.11 While the act specifically affirms the “desirability of making the proceeding fair, expeditious, and cost-effective,”12 some are troubled that the act’s discovery section overall seems to encourage a litigation orientation even prior to the hearing. Again, the problem lies in the likelihood that now that an arbitration statute more expressly expands an arbitrator’s authority, parties will insist that an arbitrator exercise it and arbitrators, especially new arbitrators, will feel obligated to do so.
For example, until now parties have swallowed their disappointment when a witness in New York cannot realistically be commanded to appear to testify at a hearing in Minnesota. Now that the act enhances the parties’ ability to compel out-of-state witnesses to attend arbitral discovery proceedings and hearings,13 an arbitrator asked to issue a subpoena to force a witness to appear will be pressed to justify her unwillingness to do so and may not view denying the request as worth the effort. The path of least resistance can prove very expensive. Will parties with deeper pockets now seek more subpoenas and more discovery as a way to discourage the other side from proceeding?
Other questions arise. Can either party require the other side to produce its bargaining notes? That has never been the practice, but now the RUAA seems to make those notes fair game. Should nonattorneys now refrain from taking bargaining notes? An arbitrator who declines requests for a subpoena, for discovery, or for a protective order can be second-guessed by a court. Will parties now routinely run to court on all such matters? Will their clients expect them to do so? Who will take those issues to court? Again, is there no longer room for the nonlawyer in labor arbitration? What nonattorney will feel comfortable writing or responding to interrogatories, or participating in prehearing conferences that “determine the admissibility, relevance, materiality, and weight of any evidence,”14 or responding to a motion for summary judgment?15
The RUAA now expressly grants an arbitrator broad authority to address and resolve myriad complex prehearing matters. Does this mean that an arbitrator will now typically be expected to explain why he declines to approve a party’s request? Will doing so also increase the likelihood that a disgruntled party may question that arbitrator’s neutrality before the matter even gets to hearing? Who would hear such challenges?
Arbitrator Appointment & Disclosure
Everyone understands that the integrity of labor arbitration is grounded upon trust that the arbitrator is impartial. For that reason, common sense and the arbitrators’ Code of Ethics16 have always obliged an arbitrator to disclose any information that would cause a reasonable person to question her neutrality in a given case.
The RUAA now extends this well-understood obligation and provides for what some see as draconian relief in the absence of such disclosure. The problem is best understood by recognizing that the Minnesota labor relations community is a small one. Arbitrators encounter repeat players all the time. Sometimes arbitrators are academicians who preside over hearings presented by former students they may or may not remember. Arbitrators and advocates routinely serve on committees and speak on panels together. Sometimes they chat at cocktail parties. Are these “known facts that a reasonable person would consider likely to affect the impartiality of the arbitrator in the arbitration proceeding?”17 Most within the field have historically thought not. Indeed, the arbitrators’ Code of Ethics recognizes that close relationships within labor relations are the norm and expressly provides:
There should be no attempt to be secretive about such friendships or acquaintances but disclosure is not necessary unless some feature of a particular relationship might reasonably appear to impair impartiality.18
If this common sense understanding is no longer true, under the RUAA an arbitrator who fails to disclose a relationship is presumed to act with evident partiality.19 Arbitrator disclosure has not before been an issue in Minnesota labor arbitration. Under the RUAA it may now become one.
Until now, labor arbitrators who have ordered remedies have historically stayed within well-understood parameters of a make-whole remedy, largely comprising lost wages and other benefits and reinstatement. They have awarded punitive damages, attorneys’ fees, interest, and other extraordinary relief in only the most extraordinary circumstances. Indeed, such relief is so exceptional that parties rarely even consider requesting it.
Now, however, the RUAA specifically authorizes these and other extraordinary remedies “if such an award is authorized by law in a civil action involving the same claim and the evidence produced at the hearing justifies the award under the legal standards otherwise applicable to the claim.”20 An arbitrator now has express authority to “award punitive damages or other exemplary relief”21 and can even go beyond what a court could order if the arbitrator believes doing so is “just and appropriate.”22 This would include assessing the costs of the arbitration to one party, regardless of what the parties had negotiated in their collective bargaining agreement.23
The overall breadth of this provision is alarming for all involved in labor arbitration. Already one award has directed an employer to discipline a supervisor, an action many view as an extraordinary encroachment on a basic management right. Another award has ordered an apology. While these awards may seem imaginative and possibly even appropriate, they can trigger a host of subsequent problems. If an arbitrator accedes to a grievant’s request to discharge a supervisor, what becomes of the supervisor’s trampled rights to due process? What prevents the supervisor from suing the employer for claims such as defamation or tortious interference with contract?
Labor arbitration is grounded in decades of past practice and shared understandings. That long and rich history can be undone in short order if the RUAA is accepted as authority that sets a new norm. With the stakes now potentially unlimited, who can now trust their cases to a nonattorney? How can the parties protect themselves from an unseasoned arbitrator who interprets the RUAA’s express invitation to award nontraditional remedies as the norm?24 Why would anyone take a chance on an untested arbitrator who can easily be confused or led astray? How will the field bring along new arbitrators to replace those who retire?
Change sometimes produces unintended consequences. In this case persons throughout Minnesota’s labor relations community have begun to express concern that the RUAA, at least in some respects, undercuts the very reasons that labor arbitration has been so successful in responding to the unique needs of parties in a collective bargaining relationship. These concerns are premised on observations that the statute conflicts with many collective bargaining contracts, well-established practices as affirmed by the courts, and labor arbitrator codes of ethics.
Minnesota’s labor relations community has always relied upon an arbitration act to guide the process generally and to enforce arbitration decisions. Moreover, many welcome the new provisions of the RUAA that explicitly provide for arbitrator immunity.25 However, there are now good reasons to encourage members of that community to come together to consider what provisions are or potentially can be the most disruptive to Minnesota labor arbitration and how best to proceed to address these unintended consequences.
Christine Ver Ploeg is a professor of law at William Mitchell College of Law, a member of the National Academy of Arbitrators, and a neutral member of the Advisory Board of the Minnesota Bureau of Mediation.
1 Minn. Stat. §572.
2 Disputes that involve interstate commerce are governed by the Federal Arbitration Act, 9 U.S.C. §1 et seq.
3 Minn. Stat. §572B.
4 Steelworkers v. Warrier & Gulf Navigation Co., 80 S. Ct. 1347, 1352 (1960).
6 Heinsz, “The Revised Uniform Arbitration Act: Modernizing, Revising, and Clarifying Arbitration Law,” 1 Journal of Dispute Resolution 1, at 2 (2001).
7 Minn. Stat. §572B.04(a).
8 Minn. Stat. §572B.04(b)(4).
9 Minn. Stat. §572B.04(b)(4).
10 Minn. Stat. §572B.17(b).
11 Minn. Stat. §572B.08.
12 Minn. Stat. §572B.17(c).
13 Minn. Stat. §572B.17(g).
14 Minn. Stat. §572B.15(a).
15 Minn. Stat. §572B.15(b).
16 National Academy of Arbitrators, 18 Code of Professional Responsibility for Arbitrators of Labor-Management Disputes, Section B3. American Arbitration Association, Federal Mediation and Conciliation Service (September 2007). (hereinafter “Code”).
17 Minn .Stat. §572.12(a).
18 Code at 18, Section B3a.
19 Minn. Stat. §572B12(e).
20 Minn. Stat. §572B.21(a),(b).
21 Minn. Stat. §572B.21(a).
22 Minn. Stat. §572B.21(c).
23 Minn. Stat. §572B.21(d).
24 Minn. Stat. §572B.21(e).
25 Minn. Stat. §572B.14.