Employment & Labor Law
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Caley v. Gulfstream Aerospace Corp.
2005 U.S. App. LEXIS 23518
In Caley, the plaintiffs are employees (and former employees) of Gulfstream. Gulfstream implemented "dispute resolution policy" (DRP) in the summer of 2002. The policy set forth the exclusive method of resolving employment disputes between the defendant and its employees. Caley at 2.
Gulfstream adequately informed all of its employees of the new policy. They mailed it to everybody with a Q and A form; they placed the new policy on the company intranet; they distributed it through the companies newsletter (in email); and placed the policy in the facilities on numerous bulletin boards. Id.
The letter read informed the employees that the DRP was to be the exclusive remedy and listed a detailed procedure for lodging a complaint and how to appeal. The letter also stated that "continuation of employment by an individual shall be deemed to be acceptance of the DRP. NO signature shall be required for the policy to be applicable." Caley at 3.
The DRP covered all claims relating to Title VII, FMLA, ADA, and torts. The DRP at first excluded ERISSA claims, Worker's Compensation and claims under the NLRA, but later was changed to include ERISSA.
The plaintiffs sued Defendant because they believed the defendant's intentionally mischaracterized the plaintiffs "as exempt from overtime pay requirements and therefore failed to pay the plaintiffs for hours worked in excess of forty per week." Caley at 8.
The defendant filed a motion to compel arbitration and to dismiss the action. The trail court entered the motion. The court of appeals affirmed and held that the DRP was valid and enforceable and the order to compel arbitration was valid. Caley at 45.
The court first discussed the validity of arbitration agreements under the Federal Arbitration Act, 9 U.S.C. 1 et seq. It stated "compulsory arbitration agreements are now common in the workplace, and it is not an unlawful employment practice for an employer to require an employee to arbitrate, rather than litigate, rights under various federal statutes, including employment-discrimination statutes." Caley at 11.
The court also said "in determining whether a binding agreement arose between the parties, courts apply the contract law of the particular state that governs the formation of contracts. The federal policy favoring arbitration, however, is taken into consideration even in applying ordinary state law." Caley at 12-13.
One important requirement the Federal Arbitration Act seemed to mandate was that the agreement must be in writing. It did not have to be signed by both parties, but it needs to be a written agreement. Caley at 13-14.
A second requirement for the Federal Arbitration Act (FAA) to apply is that the employment relationship must affect commerce. This is because the FAA was enacted under the Commerce Clause and the contract "must evidence a transaction involving [interstate] commerce." Caley at 19.
The court held that "the Supreme court has interpreted the term involving commerce in the FAA as the functional equivalent of the more familiar term
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