ARBITRATION FOLLIES
by Peter S. Saucier

Purveyors of alternative dispute resolution as a vehicle to solve "whatever ails ya’" often oversell their case like a sleezy snake oil salesman. As a result, too many employers who have no first hand experience with binding arbitration believe that implementation of an arbitration system to address workplace disputes will produce fair, reasonable, and efficient results. Leaving aside the legal challenges often raised to such agreements, for most employers there are complications undreamed of until you dig beneath the surface. Perhaps the most disturbing of these complications is the inscrutable mind of the arbitrator himself.

One characteristic that makes arbitration so “efficient” is the near impossibility of pursuing any appeal, including one from a decision that is contrary to reason or law. Once an arbitrator rules, the opinion is conclusive. Appellate judges who well might reverse a black-robed colleague who goes astray on the bench, have no such jurisdiction over wayward arbitrators. Far too frequently that leaves the frustrated employer at a complete loss.

Examples of anomalous arbitration decisions abound. My favorite from 2000 was a case in which an arbitrator ordered the reinstatement of an employee who had been convicted in court of embezzlement from his employer. The arbitrator did not care that the employer produced proof of the criminal conviction in reaching the determination to return the thief to his old job. The Connecticut Supreme Court ruled that it could not overturn the arbitrator’s decision, so the reinstatement order stood. That’s a good one!

This year’s leading candidate, and there are many nominees, comes from California. The Southern California Gas Company hired a medical group to administer its drug testing procedure. The medical group employed a person who represented himself to be a medical doctor to be responsible for checking the results of tests. Regulations require review of those results by a doctor. It turned out that the ostensible doctor was a fraud, unknown to the medical group, and, of course, to the Gas Company. Once the ersatz physician was discovered, he was arrested, and all the test results were reviewed again by a real medical doctor.

Two utility worker employees of the Gas Company had tested positive for drugs and the results were certified by the imposter doctor. Once the impersonator was arrested, the results were rechecked and reaffirmed by a real doctor several months later. Again, the urine samples proved positive for drugs. The utility workers and their loyal union took the case to arbitration anyway, arguing that certification by a phony doctor nullified the results, even if they were accurate. Remarkably, the arbitrator accepted that argument, and the federal court of appeals allowed the award to stand on appeal.

So, the Southern California Gas Company was required to reinstate to employment, in safety sensitive positions, two known drug users because the medical company it hired briefly employed an imposter. That the results were accurate, that they were rechecked later by a physician, that the Gas Company could not possibly have known about the phony physician, and that there was no harm or prejudice were all irrelevant to the arbitrator, and not subject to review on appeal, according to the federal court. I wonder how California found itself in that energy mess this year?

There will be more cases like these, as there are many that have gone before. They illustrate why I do not encourage clients to enter into arbitration agreements cavalierly. One more point. I have conducted many arbitrations over time, and I have the good fortune to represent some clients whose employees belong to labor unions. That means that they are required to arbitrate disputes with unionized employees. Among all of those clients, who have real contact with arbitrators and arbitrations, not one has even considered implementing a similar system for its non-represented employees.

October 2001

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