Monday, January 11, 2010

California Supreme Court To Decide Employment Arbitration Case

Approximately 18 years ago, in Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, the California Supreme Court held that the decisions of arbitrators are generally immune to challenge in the courts, even if the arbitrator makes a legal error. Unlike cases decided in the court's, an arbitrator's decision generally cannot be appealed. This general rule has long been considered one of the trade offs of resolving employment claims by arbitration instead of in the courts.

On January 7, 2010, the California Supreme Court heard oral arguments in Pearson Dental Supplies, Inc. v. Superior Court to decide whether an arbitrator wrongfully dismissed the age discrimination case of a 67-year-old janitor. The case is important to California employers because the California Supreme Court apparently will revisit the issue of the extent to which arbitrator's decision are subject to review by the courts.

Pearson Dental Supplies terminated Luis Turcios' employment in January 2006. Mr. Turcois promptly filed suit.

In February 2007, his former employer pointed out Mr. Turcois' employment contract called for him to arbitrate disputes arising out of his employment. An arbitrator later dismissed Mr. Turcois' claim on the ground that Mr. Turcois' employment contract called for him to seek arbitration within one year of the date his employment was terminated, which Mr. Turcois did not do.

The trial court reinstated Mr. Turcois' claim, but the Court of Appeal overturned that ruling on the ground the trial court did not have the power to review the arbitrator's decision even when an arbitrator makes a legal error. The California Supreme Court granted Mr. Turcois' petition for review of the Court of Appeal's decision that the trial court lacked the power to reinstate Mr. Turcois' claim.

It is expected that the California Supreme Court will issue its decision within approximately 90 days. We will report that decision here after it has been published.