One of the biggest reasons arbitration is the chosen method of dispute resolution for labor unions and employers across the country is the ability to quickly resolve disputes without overburdensome discovery, depositions, or pre-hearing motions.  The changes made recently to Minnesota’s Uniform Arbitration Act (UAA) added some additional procedural options for parties, but for the most part, the process for arbitration has remained relatively stable for decades.

A recent Minnesota Court of Appeals decision discussed efforts by a union member to remove her grievance from the grievance process and have it resolved in court.  In Schaber v. Ramsey County, the court discussed what appeared to be a purely contractual dispute from the parties’ grievance procedure and the efforts to allow a class action against the employer to proceed in district court.

The nature of the dispute revolves around the County’s agreement to match monthly payments into employee deferred compensation accounts, up to $25.  According to the case, instead of placing the money directly in the accounts, the employer put the match directly on the employee’s paychecks.  One employee (and president of the Ramsey County Deputy Federation), Schaber, grieved the County’s failure to deposit the money into her deferred compensation account.  After the first three steps of the grievance process, the union…did nothing.  Instead, Schaber filed a class action against the county alleging a breach of fiduciary duty and breach of a unilateral contract created by its employment policies.

The county moved to dismiss Schaber’s claims, arguing the court lacked subject matter jurisdiction because Schaber’s claims were subject to the grievance procedure.  The district court denied its motion, stating the plaintiff’s “causes of action [were] independent of – and liability can be determined without reference to – the CBA.”  The county appealed.

First, the court of appeals noted that courts “will dismiss a case for lack of subject-matter jurisdiction when a plaintiff-employee fails to exhaust a grievance-procedure remedy provided under a collective bargaining agreement.”  It also noted that under the UAA, “The court shall decide whether an agreement to arbitrate exists or a controversy is subject to an agreement to arbitrate, except in the case of a grievance arising under a collective bargaining agreement when an arbitrator shall decide.”

The court found that because the union did not submit the grievance to an arbitrator, and the grievant considered her grievance to be waived, that the decision on whether the matter was covered by a CBA was left to the court, under the statute.  Furthermore, this was not a situation where a party was seeking to compel arbitration where a grievance had been filed and a party was refusing to follow the grievance procedure.

However, that marked the end of the victories for the plaintiff in this matter.

In determining whether the court had subject matter jurisdiction over the deferred compensation controversy, the court first found that the arbitration agreement was valid and Schaber was a union member.  Next, the court found that the matter was clearly covered by the collective bargaining agreement, as the specific amount which was supposed to be paid into the employee deferred compensation accounts was delineated in the CBA.  With that, the district court’s decision was reversed and the case was remanded to be dismissed.

It’s difficult to tell if the employee’s failure to pursue the grievance was accidental or deliberate, but it is good to see that the court was able to see through the tactic and ship it back to an arbitrator to resolve (or not, based on the employee’s failure to adhere to procedural timelines).  We will keep our eyes peeled for any developments following this decision.  If you, or your organization, need assistance in the processing of grievances, or defending your decisions to an arbitrator or in court, contact Wiley Reber Law, for experience that works.