A run-of-the-mill employment dispute could become a major embarrassment for railroad giant BNSF over an allegation that a senior executive threatened to blackball an arbitrator from the industry if she ruled against the company. In a federal court case that was set to go to trial last month in Tacoma, Wash., a fired railroad employee accuses the company of legal corruption. The suit claims that the railroad executive pressured the arbitrator to reverse a proposed ruling that initially was in the worker’s favor.
The central allegation is that two months after a February 2009 phone call with a railroad senior executive, the arbitrator changed her previous decision, which was to reinstate the fired worker. Instead, she decided to dismiss the case. A new arbitrator was brought in and later upheld Kite’s firing. This case shines a light on what readers of this report have heard for years concerning the growing use of arbitration in consumer and workplace disputes in recent years. The abuse and pressure brought against arbitrators who rely on corporate business for their livelihoods can be quite prevalent. Unlike judges, arbitrators are private business people who may well be dependent on their next case.
The underlying action involved a conductor who was accused of failing a blood-alcohol test. After all of the evidence, the arbitrator thought the employee should be reinstated to his job. Reportedly, she circulated a draft memo to the parties to this effect. During a February 2009 telephone conference, the railroad executive strongly objected to the employee’s proposed reinstatement. According to the executive’s written statement filed in court, he said the arbitrator stuck to her guns when criticized and was inclined to finalize her draft. The railroad executive then added:
I then reminded her of what I said at the oral argument: allowing a second-violation employee back to work would create an emotional response from the carrier, and that I didn’t know how I could have made that point any clearer unless I’d said, “you won’t be able to work in the industry if you make decisions like that.”
Growing concern about the fairness of arbitration awards has some courts more willing to scrutinize them. However, some courts still look at arbitration as an agreement between the parties in which each waived access to the judicial process. Except in very limited circumstances, those courts refuse to look behind “how” an arbitrator actually arrived at her decision. Obviously, there are a lot of good arbitrators out there. But having your constitutional and legal rights adjudicated should not be akin to playing roulette.
American citizens deserve a fair system every time – one that is emblematic of the sacrifices that have been made by all citizens over the course of our nation’s history. Fortunately for the employee in this case, he found a court willing to listen to his grievance. In fact, the 9th U.S. Circuit Court of Appeals stated:
[i]f Boldra as a high ranking railway official … made such a statement and intended it as an economic threat against Zimmerman (the arbitrator) if she did not change the outcome … then Boldra committed an act of attempted extortion and impaired the integrity of the arbitral process.. (emphasis added).
The case was sent back to the district court to allow the employee the chance to prove corruption. I wish I could tell you that this result is allowed each time a corrupt arbitration proceeding occurs. But that wouldn’t be the truth. Hopefully, this case will remind more courts to protect victims from arbitration abuse until such time as some legislative action is taken to get rid of forced arbitration for consumers once and for all.
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