California Correctional Peace Officers Assn. v. State of California (2006)

In California Correctional Peace Officers Assn. v. State of California (2006) 142 Cal.App.4th 198, the parties disputed whether supervisory employees could observe negotiations with rank-and-file employees and vice versa. The union argued that they could, and had in fact been doing so for several years pursuant to negotiated "ground rules." (Peace Officers, supra, 142 Cal.App.4th at pp. 201, 202.) The state countered that Government Code section 3529, providing that supervisory employees " 'shall not participate in meet and confer sessions on behalf of' " rank-and-file employees and vice versa, as a matter of law superseded anything to the contrary in the ground rules. (Peace Officers, at p. 201.) The union petitioned to compel arbitration of the dispute pursuant to a grievance resolution procedure that called for binding arbitration of " 'grievances which involve the interpretation, application or enforcement of the provisions of this memorandum of understanding.' " (Peace Officers, at p. 203.) The state opposed the petition, arguing that it was not required to arbitrate the dispute because only courts, not arbitrators, can interpret statutes. (Peace Officers, at p. 202.) The trial court denied the petition. (Ibid.) The Court of Appeal reversed, holding that "there is no statutory exception for arbitrations presenting issues of statutory construction." (Peace Officers, supra, 142 Cal.App.4th at p. 211.) Six reasons supported the court's rejection of the state's argument that arbitrators cannot interpret statutes. First, the state's position ran counter to the assumptions underlying a long list of California decisions "anticipating that arbitrators will engage in statutory interpretation." (Peace Officers, supra, 142 Cal. App.4th at p. 208.) The court explained: "In Broughton v. Cigna Healthplans (1999) 21 Cal.4th 1066 90 Cal. Rptr. 2d 334, 988 P.2d 67, for example, the Supreme Court considered whether a party could be required to arbitrate a cause of action asserted under the Consumer Legal Remedies Act citation. ... The court noted that the United States Supreme Court 'has repeatedly made clear that arbitration may resolve statutory claims as well as those purely contractual if the parties so intend, and that in doing so, the parties do not forego substantive rights, but merely agree to resolve them in a different forum.' Citation. The court concluded that 'statutory damages claims are fully arbitrable.' Citation. Subsequently, in Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83 99 Cal. Rptr. 2d 745, 6 P.3d 669, the court defined the minimum procedural requirements that would permit arbitration of certain statutory claims. Citation. These cases appear to assume, if not expressly hold, that arbitrators are permitted to interpret statutes, since it is inevitable that an arbitrator asked to resolve a statutory claim will be required to engage in interpretation of the statute." (Ibid.) Second, the court found the state's contentions "inconsistent with the California Supreme Court's still-evolving jurisprudence regarding substantive appellate review of arbitration awards." (Peace Officers, supra, 142 Cal.App.4th at p. 209, citing Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1 10 Cal. Rptr. 2d 183, 832 P.2d 899, which "left open the possibility that an arbitrator's award could be reviewed 'when according finality to the arbitrator's decision would be incompatible with the protection of a statutory right' ".) "This provision for appellate review of possible statutory violations appears to constitute an implicit recognition that, as an initial matter, arbitrators are empowered to consider statutory defenses and therefore to interpret statutes." (Ibid.) Third, "while the state's contention appears to be new to California courts, it is not new to the federal judiciary." (Peace Officers, supra, 142 Cal.App.4th at pp. 209-210 citing federal decisions "rejecting claims by parties to an agreement to arbitrate that they should be allowed to bypass arbitration because the claims made by the petitioner are inconsistent with statutory law or public policy".) Fourth, "there is simply no authority to support the state's position that courts alone can interpret statutes, to the exclusion of arbitrators. It is certainly true that courts will, in some instances, be the final interpreters of statutory law as a result of their appellate authority, but nothing in the statutes or the case law suggests that arbitrators cannot also interpret statutes." (Peace Officers, supra, 142 Cal.App.4th at p. 210.) Fifth, the existence of a potentially dispositive statutory issue does not preclude arbitration under Code of Civil Procedure section 1281.2. (Peace Officers, supra, 142 Cal.App.4th at pp. 210-211.) And finally, there is a strong public policy favoring arbitration. (Id. at p. 211.) We find the court's analysis in Peace Officers persuasive. There, as here, the party attempting to avoid arbitration claimed that because a statute compelled the ultimate result it was seeking, the opposing party's position was wrong as a matter of law. But as the Peace Officers court explained, "Even assuming the state is correct ... , the statute in no way prevents the presentation of this argument to an arbitrator." (Peace Officers, supra, 142 Cal.App.4th at p. 211.) "The presence of a potentially dispositive statutory issue is not recognized as a defense to arbitration under Code of Civil Procedure section 1281.2." (Peace Officers, at pp. 210-211, italics added.) In short, the union asserted that rank-and-file members could participate in meet and confer sessions involving supervisors and vice versa. When management refused to permit negotiations to occur in the presence of others, the union filed a petition to compel arbitration. (Id. at pp. 202-203.) Management resisted the petition arguing that Government Code section 3529, subdivision (c) excluded supervisors from participating in meet and confer meetings with rank-and-file employees and vice versa. (142 Cal.App.4th at p. 204.) Government Code section 3529, subdivision (c) provides: "Excluded employees shall not participate in meet and confer sessions on behalf of nonexcluded employees. Nonexcluded employees shall not participate in meet and confer sessions on behalf of supervisory employees." The trial court denied the petition to compel arbitration because the dispute was governed in its view by Government Code section 3529, subdivision (c). (142 Cal. App.4th at p. 204.)