Should Parties Limit an Arbitrator's Authority

On February 9, the Michigan Court of Appeals issued City of Center Line v. Police Officers Association of Michigan and Angela Post in which it affirmed a trial court's decision to affirm an arbitration award. In that award, an arbitrator determined the employer had "unreasonably" relied on medical evidence when finding that an employee was unable to return to work and, as such, had violated the CBA. The arbitrator then ordered the employer to seek another medical opinion to determine, for damage reasons, when the employee was fit to return to work. Based on this evidence, the arbitrator ordered backpay.

The employer challenged this order on the grounds that granting this relief was not within the arbitrator's authority. After noting that the "arbitrator's chose of remedy is . . . generally broad," the Court of Appeals explicitly noted that the CBA in question "does not limit the arbitrator's authority to order a particular remedy."

This raises an important question for employers. When negotiating CBAs, should you insist on a provision that limits an arbitrator's remedial powers? CBAs traditionally contain provisions prohibiting arbitrators from adding to or subtracting from CBAs, but a remedial limitation is different and, in a more targeted fashion, addresses the authority of the arbitrator to grant certain remedies.

Click here for a copy of the Michigan Court of Appeals decision.

Conscionability of Arbitration Provisions -- Certiorari Granted

On January 15, the United States Supreme Court granted certiorari in Rent-A-Center, West, Inc. v. Jackson, 09-497. The issues involved in Rent-A-Center is whether a federal district court is required to determine whether an arbitration provision is conscionable, even if the parties' agreement contains a provision assigning this issue to an arbitrator. The Ninth Circuit held that a district court must decide the threshold question of arbitrability regardless of the language in the parties' agreement. In doing so, the Ninth Circuit reversed the district court's decision to dismiss the case and compel arbitration based on the parties' agreement to assign conscionability to an arbitrator.



Entities who rely on arbitration provisions, including employers, should carefully follow Rent-A-Center. Michigan employers, in particular, rely heavily on arbitration provisions to assure that disputes between them and their employees are promptly and efficiently resolved. If the Court concludes that conscionability is for a court to decide, and not an arbitrator, that desirable promptness and efficiency will be affected.

Click here for a copy of the Ninth Circuit's decision.