Punla v. Terminal Maintenance Co.

Filed 3/5/07 Punla v. Terminal Maintenance Co. CA1/5

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION FIVE

Appellants Terminal Maintenance Company and Tom Verello contend the trial court erred by denying their petition to compel arbitration of claims of employment discrimination brought by respondent Democritus Punla. We affirm the order denying the petition to compel arbitration.

I. FACTS AND PROCEDURAL HISTORY

We need describe the facts only briefly. Terminal Maintenance Company (Terminal) provides services to repair and maintain large containers used in ocean shipping. Democritus Punla (Punla) was hired by Terminal in May 2001 as a lead foreman or leadman in the Chassis and Gen-Set Division. The terms of Punlas employment were governed, at least in part, by a collective bargaining agreement between Terminal and its union, Local 10 of the International Longshoremens and Warehousemens Union (the union). Punlas supervisor was appellant Tom Verello. Punla is a Filipino-American.

After Punla was terminated in December 2002, Punla filed this action against his former employer Terminal and his former supervisor Verello, alleging unlawful employment discrimination and harassment based on Punlas race, unlawful failure to prevent discrimination and harassment, and unlawful retaliation, all in violation of the California Fair Employment and Housing Act (FEHA), Government Code section 12940 et seq. Punlas complaint also included one nonstatutory tort claim for negligent supervision, which is not in issue in this appeal.

Terminal attempted to remove Punlas lawsuit from Alameda Superior Court to federal district court, but the federal court remanded the action to the state court, finding there were no proper grounds for the assertion of federal removal jurisdiction over Punlas state law FEHA discrimination claims.

Terminal filed a petition to compel arbitration of Punlas claims pursuant to the collective bargaining agreement between Terminal and the union. A clause in the collective bargaining agreement, section 13.2 states, in pertinent part: All grievances and complaints alleging incidents of discrimination or harassment (including hostile work environment) in connection with any action subject to the terms of this Agreement based on race, creed, color, sex (including gender, pregnancy, sexual orientation) age (forty or over), national origin, or religious or political beliefs, or alleging retaliation of any kind for filing or supporting a complaint of such discrimination or harassment, shall be processed solely under the Special Grievance/Arbitration Procedures . . . . The collective bargaining agreement also states in section 17.4 that When any longshoreman . . . claims that he has been discriminated against in violation of Section 13 of this Agreement, he may at his option and expense, or either the Union or the [employer] Association may at its option and at their joint expense, have such complaint adjudicated hereunder, which procedure shall be the exclusive remedy for any such discrimination.

A Letter of Understanding (Letter of Understanding) set forth as an addendum to the collective bargaining agreement uses similar language when specifying the special procedures to be followed in handling grievances under section 13.2 of the collective bargaining agreement. As a prologue to the detailed statement of special procedures, this letter of understanding states: I. Section 13.2 Complaints Covered by Special Procedures [] All registered and casual longshore workers and marine clerks, as well as PMA [Pacific Maritime Association], all ILWU [International Longshore and Warehouse Union] locals and employees covered by the PCLCA [Pacific Coast Longshore and Clerks Agreement], have the right to file a complaint concerning incidents of discrimination or harassment . . . . (Bold in original.) Appellants also refer to another addendum to the collective bargaining agreement which states: NO DISCRIMINATION [] Item XXII, June 22, 1962Memorandum of Agreement [] The parties hereby state that during the negotiations resulting in this Memorandum of Agreement they discussed the provisions of Section 13, No Discrimination, of the basic Agreement and agreed that the parties are jointly responsible for the total implementation of the provisions therein and the Union agrees that it will administer its internal affairs so as to fulfill its share of this joint responsibility. (Bold in original.)

Section 13.1 of the collective bargaining agreement, which immediately precedes the reference to arbitration in section 13.2, forbids discrimination, and states in pertinent part: There shall be no discrimination in connection with any action subject to the terms of this Agreement . . . either in favor of or against any person because of membership or nonmembership in the Union, activity for or against the Union or absence thereof, race, creed, color, sex (including gender, pregnancy, sexual orientation), age (forty or over), national origin, religious or political beliefs, disability, protected family care or medical leave status, veteran status, political affiliation or marital status. Also prohibited by this policy is retaliation of any kind for filing or supporting a complaint of discrimination or harassment. . . .

The parties have not identified any language in the collective bargaining agreement that makes reference to FEHA or to the right to file a lawsuit asserting statutory rights under FEHA, or to an explicit waiver of an employees rights to file a lawsuit pursuant to FEHA.

Punla opposed the petition to compel arbitration, on the ground that the collective bargaining agreement did not contain any clear waiver of his statutory right to pursue a lawsuit for discrimination under the terms of FEHA.

The trial court denied the petition to compel arbitration as to Punlas statutory claims of discrimination based on FEHA. The petition to compel was granted in part only as to Punlas nonstatutory tort claim for negligent supervision, which is not in issue here, and which Punla represents he is abandoning. This appeal followed.

II. DISCUSSION

A. Standard of Review

In reviewing the order of the trial court denying the petition to compel arbitration of Punlas statutory claims, we exercise independent or de novo review, because only pure issues of law are involved. (Mercury Ins. Group v. Superior Court (1998) 19 Cal.4th 332, 348-349.)

B. The Petition to Compel Arbitration was Properly Denied.

Appellants contend the trial court should have granted their petition to compel arbitration with respect to the statutory FEHA discrimination claims brought by Punla. We disagree.

We are guided here by applicable precedent from the United State Supreme Court, and decisions by our own California courts. (See Wright v. Universal Maritime ServiceCorp. (1998) 525 U.S. 70, 78-79 (Wright); Vasquez v. Superior Court (2000) 80 Cal.App.4th 430, 433 (Vasquez), Deschene v. Pinole Point Steel Co. (1999) 76 Cal.App.4th 33, 46-49 (Deschene).)

In Wright, supra, 525 U.S. at pages 77-82, the United States Supreme Court held that an employee was not required to use an arbitration remedy under a collective bargaining agreement prior to filing a statutory discrimination lawsuit, where the arbitration clause of the collective bargaining agreement did not contain a clear and unmistakable waiver of the covered employees rights to a judicial forum for discrimination claims. (Id. at p. 82.) In Wright, a longshoreman employed under the terms of a collective bargaining agreement had injured his heel and back. When he was refused work after his recovery, he sued employers in the longshoring industry for discrimination, under the terms of the Americans with Disabilities Act (ADA). (Id. at pp. 72-74.) The employers contended, and the Fourth Circuit held, that the longshoreman was required to pursue his arbitration remedy under the terms of the collective bargaining agreement, and he could not file a discrimination lawsuit. (Id. at p. 75.)

The Supreme Court in Wright noted that the general presumption of arbitrability of claims was not applicable, because the employee was asserting a statutory right to be free from discrimination, which was independent of any contractual right conferred by the collective bargaining agreement. (Wright, supra, 525 U.S. at pp. 77-79.) The court also distinguished its prior decision in Gilmer v. Interstate/Johnson Lane Corp. (1991) 500 U.S. 20, 26, which had held that a claim filed under the federal Age Discrimination in Employment Act of 1967, 29 United States Code section 621 et seq., could be subject to an enforceable arbitration agreement in a securities registration application signed by an individual employee. (Wright, supra, at pp. 76-77.) The Supreme Court wrote that Gilmer involved an individuals waiver of his right, as compared to a unions waiver of employee rights under a collective bargaining agreement, and hence the clear and unmistakable standard was not applicable. (Id. at pp. 80-81.) Further, the fact that the collective bargaining agreement in Wright provided for the final and binding arbitration of disputes, and called for compliance with all applicable laws, did not establish a clear and unmistakable waiver of the covered employees rights to a judicial forum for discrimination claims. (Id. at p. 82.)

In Vasquez, supra, 80 Cal.App.4th at pages 434-436, the Second District followed Wright as to state law discrimination claims brought under FEHA, similar to Punlas claims here. In Vasquez, a foreperson who had been demoted by his employer brought suit for disability discrimination under the provisions of the ADA, 42 United States Code section 12101 et seq., as well as similar FEHA provisions; and under FEHA alone for discrimination based on national origin and for retaliatory harassment. (Id. at pp. 432‑433.) A collective bargaining agreement governing the plaintiffs employment in Vasquez provided that [a]ll grievances or disputes between the Union and the Employer with respect to the interpretation or application of any of the terms of this Agreement, including discharges, shall be processed in accordance with a grievance procedure that terminated in mandatory binding arbitration. (Id. at p. 433.) The collective bargaining agreement also stated, in another part of the document: A.  There shall be no discrimination by the Union or the Employer of any kind against any applicant or employee on account of race, color, religion, sex, age or national origin under applicable federal and state law. [] B. The Employer and the Union shall make a good faith effort for the Employer to be an equal opportunity Employer. (Ibid.)

The court in Vasquez held this language did not suffice to show a clear and unmistakable waiver of the covered employees rights to a judicial forum. (Vasquez, supra, 80 Cal.App.4th at p. 436.) The Vasquez court determined that it was appropriate to follow federal law precedents such as Wright, in view of the similarity of the state and federal discrimination laws in issue. (Vasquez, supra, at p. 434.) As Vasquez also explained: Although ordinarily a presumption of arbitrability applies to contractual disputes arising out of a collective bargaining agreement, the presumption is not applicable to statutory violations. (Id. at p. 434.) As Vasquez observed, the language of the collective bargaining agreement (CBA) did not refer to statutory rights under FEHA, or waive any rights concerning the filing of statutory claims. (Id. at p. 436.) Accordingly, we conclude the CBA in this case does not contain a clear and unmistakable waiver of the covered employees rights to a judicial forum for statutory claims of employment discrimination. (Ibid.)

In Deschene,supra, 76 Cal.App.4th at pages 46-49, Division Four of our Appellate District followed Wright and held that an employee was not barred by a collective bargaining agreement from filing a statutory discrimination lawsuit pursuant to FEHA where the agreement could not pass the explicit, clear, and unmistakable test described in Wright. (Id. at p. 48, fn. 9.) The employee in Deschene was terminated after an argument at work, and he claimed the real reason for the termination was unlawful discrimination based upon his medical condition or physical disability. (Id. at pp. 37-38, 43-46.) The Deschene court described the language in the collective bargaining agreement as incorporat[ing] language prohibiting discrimination . . . on a variety of grounds, but not including physical disability or retaliation for testimony adverse to an employer, which were among the bases for plaintiffs lawsuit. (Id. at p. 48, fn. 9.) Despite the fact that plaintiff had filed a grievance and later withdrew it, the Deschene court found plaintiffs statutory discrimination action was not barred by the collective bargaining agreement, because there was no clear and unmistakable waiver of the covered employees rights to a judicial forum (Wright, supra, 525 U.S. at p. 82) as Wright requires. (Deschene, supra, at p. 48 & fn. 9.)

Appellants seek to distinguish Wright because it was a federal decision arising from claims under a federal statute, the ADA. However, appellants argument fails to account for the fact that California decisions such as Vasquez and Deschene have followed Wright in the context of state law statutory claims for discrimination brought under FEHA, as Punla has brought here, and for good reason. (See Vasquez, supra, 80 Cal.App.4th at pp. 435-436; Deschene, supra, 76 Cal.App.4th at pp. 46-49.) In deciding to apply federal law to this issue, the court in Vasquez took into account that there was no California authority on the issue of the sufficiency of the waiver; that the Wright decision is the law as explicated by the highest court of this land; that FEHA is modeled after title VII of the federal Civil Rights Act of 1964; and that [n]umerous courts have applied the federal law relating to this issue to state antidiscrimination statutes modeled after title VII. (Vasquez, supra, at p. 434.)

The cases thus teach us that a clear and unmistakable waiver of statutory rights does not arise from general language in a collective bargaining agreement banning discrimination, or calling for the arbitrability of disputes. Instead, such a waiver only arises when there is a specific, explicit and unambiguous incorporation of a specific statute banning discrimination, and a clear waiver of the right to pursue those claims outside the arbitration context. (See Wright, supra, 525 U.S. at p. 82; Vasquez, supra, 80 Cal.App.4th at pp. 435-436; Deschene, supra, 76 Cal.App.4th at pp. 46-49.) In the present case, there is no explicit reference in the collective bargaining agreement to FEHA rights, nor any explicit waiver of employee rights to file a lawsuit under the terms of FEHA. Therefore, Punlas statutory FEHA claims were not waived, and the petition to compel arbitration was properly denied. (Wright, supra, at p. 82; Vasquez, supra, at pp. 435-436; Deschene, supra, at pp. 46-49.)

Appellants argue that arbitration is a preferred remedy under the terms of the California Arbitration Act, Code of Civil Procedure section 1280 et seq., which is the basis for their petition to compel arbitration. (Cf. Service Employees International Union, Local 1000 v. Department of Personnel Admin. (2006) 142 Cal.App.4th 866, 870 [applying this presumption in favor of arbitration to a dispute between the union and the State of California over whether distribution of material supporting a ballot proposition constituted prohibited partisan political activity on job sites].) Appellants argument might be persuasive in other contexts, but, as we have previously observed, there is a different rule with respect to a waiver of employees statutory FEHA claims for discrimination, where the language of the collective bargaining agreement purportedly waiving the right to file a lawsuit must be clear and unmistakable. (Vasquez, supra, 80 Cal.App.4th at pp. 435-436; Deschene, supra, 76 Cal.App.4th at pp. 46-49.)

Appellants also point to section 17.4 in the collective bargaining agreement, as set forth above, which states that when an individual employee claims he has been discriminated against in violation of section 13 of the collective bargaining agreement, he may at his option and expense, or either the Union . . . may at its option and at their joint expense, have such complaint adjudicated hereunder, which procedure shall be the exclusive remedy for any such discrimination. (Italics added.) Appellants contend that the provision allowing an individual the option to initiate arbitration differentiates this case from earlier precedents, since it affords the individual more control over how the grievance would be presented. We disagree, because the determinative issue here is whether an employee has waived the right to a judicial forum for his statutory claim, not whether an employee has more or less control over an arbitration remedy he does not seek to invoke.[1]

Moreover, appellants argument regarding section 17.4 of the collective bargaining agreement is a double-edged sword. The language stating that an employee may file a grievance without union assistance is far from a clear and unmistakable waiver of the employees statutory right to file a lawsuit under FEHA lawsuit. (See Vasquez, supra, 80 Cal.App.4th at pp. 435-436; Deschene, supra, 76 Cal.App.4th at pp. 46-49.) Although that language may allow an employee to proceed to arbitration on his own without union involvement, section 17.4 of the collective bargaining agreement does not mention FEHA or other sources of statutory rights, and does not state that the right to bring court proceedings for statutory discrimination is waived. (See Vasquez, supra, at p. 436.)

Appellants further argue that Punla has waived his right to file a lawsuit under FEHA by his litigation conduct, apparently contending that because Punla filed his discrimination claims in state court under a state law (FEHA), opposed removal of his claims to federal court, and sought a remand to state court, he has thereby expressly waived the right to rely on United States Supreme Court precedents such as Wright, supra, which support Punla proceeding on his statutory claims in a judicial forum. No grounds for such a waiver appear. Punla has consistently sought to bring his state law claims in state court, which he is permitted to do under both federal and state law, absent a clear and unmistakable waiver of his rights in the collective bargaining agreement. (Vasquez, supra, 80 Cal.App.4th at p. 434, Deschene, supra, 76 Cal.App.4th at pp. 46-49.)

C. Appellants Claim Regarding Exhaustion of Remedies is without merit.

Appellants also attempt to argue that Punla failed to exhaust his administrative remedies by not pursuing arbitration. Punla argues that this issue is not properly before us on appeal, because appellants petition to compel arbitration in the trial court never mentioned the phrase exhaustion of remedies. Appellants counter that the issue was not waived because they cited two cases to the trial court, Westlake Community Hosp. v. Superior Court (1976) 17 Cal.3d 465, 469 (Westlake) and Charles J. Rounds Co. v. Joint Council of Teamsters No. 42 (1971) 4 Cal.3d 888 (Rounds). Although neither of these cases directly addressed the issue of whether an employee must exhaust administrative remedies by pursuing arbitration under a collective bargaining agreement prior to filing a FEHA claim for discrimination, we nevertheless will address appellants claim.[2] As we discuss below, it is without merit.

It is a general requirement for bringing an action under FEHA that a plaintiff must exhaust statutorily-specified administrative remedies, by filing a charge of discrimination with the California Department of Fair Employment and Housing (DFEH). (Gov. Code,  12965; see Martin v. Lockheed Missiles & Space Co. (1994) 29 Cal.App.4th 1718, 1724.) The purpose of this requirement is to provide notice to the DFEH, the agency that administers FEHA, so that DFEH has an opportunity to investigate and take administrative action to settle or otherwise resolve a discrimination charge. (See Okoli v. Lockheed Technical Operations Co. (1995) 36 Cal.App.4th 1607, 1612-1613.) Appellants do not dispute that Punla filed a chargewith the DFEH, so there is no showing that Punla failed to exhaust his administrative remedies in this regard. (Ibid.)

Appellants argue that Punlas claims should nonetheless be arbitrated under the collective bargaining agreement in order to exhaust his remedies. However, as we have observed, the collective bargaining agreement did not contain a clear and unmistakable waiver of Punlas right to file a lawsuit under FEHA without pursuing arbitration. (Wright, supra, 525 U.S. at p. 82.; Vasquez, supra, 80 Cal.App.4th at pp. 435-436; Deschene, supra, 76 Cal.App.4th at pp. 46-49; Torrez v. Consolidated Freightways Corp. (1997) 58 Cal.App.4th 1247, 1256‑1258.)

Appellants next argue that even if the result of an arbitration might not be binding as to Punlas FEHA claims, we nevertheless should require Punla to exhaust his administrative remedies through a nonbinding arbitration because it might be helpful to appellants and potentially result in their ability to introduce evidence of a favorable arbitration result at a subsequent trial.

We reject appellants contentions. By its terms, the collective bargaining agreement contemplates binding arbitration to provide a final settlement of contractual grievances.[3]Appellants do not point us to any contractual language that even suggests otherwise. Under these circumstances, we will not supply a contractual provision for nonbinding arbitration of a FEHA claim or impose an exhaustion of remedies requirement, particularly where there is no clear and unmistakable waiver of the right to proceed directly to court contained in the terms of the collective bargaining agreement. (See Wright, supra, 525 U.S. at p. 82; Vasquez, supra, 80 Cal.App.4th at pp. 435-436; Deschene, supra, 76 Cal.App.4th at pp. 46-49.)[4]

Appellants appear to rely on the United States Supreme Court decision in Gardner-Denver, supra, 415 U.S. 36, for the proposition that Punla must be required to arbitrate his claims in any event so that the arbitration decision may be submitted to the trier of fact in a subsequent trial. In Gardner-Denver, the Supreme Court held that an employees statutory right to a trial de novo pursuant to title VII of the Civil Rights Act of 1964 based on a claim of race discrimination could not be foreclosed by the fact that the employee had earlier submitted his claim to final arbitration under a nondiscrimination clause of a collective bargaining agreement. (Id. at pp. 38, 60.) The court also stated that The federal court should consider the employees claim de novo. The arbitral decision may be admitted as evidence and accorded such weight as the court deems appropriate. (Id. at p. 60, italics omitted.) In the present case, Punlas claim has not been arbitrated, and we need not decide whether the result of such an arbitration would be admissible. In any event, Gardner-Denver does not support appellants argument that Punlas case must be arbitrated before he can proceed with his statutory FEHA claims.

D. Other Issues

Because we do not find a clear and unmistakable waiver, we need not address other contentions raised by appellants including whether an arbitration under the collective bargaining agreement, if held, would be binding or to what extent, if any, the results of any arbitration would have collateral estoppel effect or be admissible in connection with any subsequent trial.

III. DISPOSITION

The order of the trial court denying the petition to compel arbitration is affirmed.

MILLER, J.*

We concur.

JONES, P. J.

SIMONS, J.

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[1] Thus, although the Supreme Court noted in a footnote in Alexander v. Gardner-Denver Co. (1974) 415 U.S. 36, 58, footnote 19 (Gardner-Denver) that the unions control over the arbitration process was [a] further concern in deciding whether an arbitration proceeding should have preclusive effect in a subsequent lawsuit brought by an employee, the issue before us here is a different one, namely, whether the collective bargaining agreement contains a clear and unmistakable waiver of FEHA claims. (See Vasquez, supra, 80 Cal.App.4th at p. 436.)

[2] The issue in Westlake was whether, in light of recently decided California Supreme Court decisions about the denial or withdrawal of hospital privileges, a doctor was required to pursue an available internal remedy under her hospitals bylaws before filing a lawsuit for damages (Westlake, supra, 17 Cal.3d at pp. 468-469.) Westlake did not involve a collective bargaining agreement or a claim of violation of statutory rights under FEHA. Similarly, the issue in Rounds was whether an employer was required to pursue arbitration before suing a union for violation of a no strike clause in a labor contract. (Rounds, supra, 4 Cal.3d at pp. 891, 894.)

[3]For example, the collective bargaining agreement has a brief summary of the basic steps for processing a grievance under section 13.2 of the collective bargaining agreement relating to discrimination or harassment. These steps include filing the grievance, requesting the area arbitrator to direct witnesses to appear, a hearing before an area arbitrator, a written decision, and an appeal on the written record of the hearing to the coast appeals officer. (Letter of Understanding,  1-12.) The Detailed Special Grievance Procedures make clear that the decision of the area arbitrator is final and binding on all parties unless a timely appeal is filed, and that other than the appeal to the coast appeals officer, [n]o other appeal shall be available. (Letter of Understanding,  9, 12.)

[4] Our conclusion in this respect is consistent with authority from our Supreme Court, in Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1092 (Schifando).) There, the court held that an employee of the City of Los Angeles was not required to pursue administrative remedies under the city charter, prior to filing a FEHA action, because the Legislature in enacting FEHA had specified only that an employee must file an administrative charge with the DFEH. (Id. at pp. 1080-1081, 1091-1092.) Schifando dealt with the rights of a public employee rather than a private employee such as Punla, but the underlying rationale of Schifando is that the Legislature has specified that the only applicable administrative remedy to be exhausted is the filing of a charge with the DFEH. (Ibid.)

* Judge of the Superior Court of San Francisco County, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.