Dryer v. Los Angeles Rams

• Decision Date: 05 December 1985
• Citation: 220 Cal.Rptr. 807,709 P.2d 826,40 Cal.3d 406
• Parties: , 709 P.2d 826, 103 Lab.Cas. P 55,537 Fred DRYER, Plaintiff and Respondent, v. LOS ANGELES RAMS et al., Defendants and Appellants. L.A. 31889.
• Court: California Supreme Court

Page 807

220 Cal.Rptr. 807

40 Cal.3d 406, 709 P.2d 826, 103 Lab.Cas. P 55,537

Fred DRYER, Plaintiff and Respondent, v. LOS ANGELES RAMS et al., Defendants and Appellants.

L.A. 31889.

Supreme Court of California,

In Bank.

Dec. 5, 1985.

Wyman, Bautzer, Rothman, Kuchel & Silbert, Terry Christensen and J. Jay Rakow, Los Angeles, for defendants and appellants.

Farella, Braun & Martel, San Francisco, Willkie, Farr & Gallagher, Washington, D.C., and Stephen E. Cone, San Francisco, as amici curiae on behalf of defendants and appellants.

Gage & Mazursky, Sanford M. Gage, Beverly Hills and John M. Thomas, Los Angeles, for plaintiff and respondent.

KAUS, Justice. ^*

Defendant Los Angeles Rams (Rams) and individual codefendants appeal from an order of the Los Angeles Superior Court denying their petition to compel arbitration. Basing its ruling on Graham v. Scissor-Tail, Inc. (1981) 28 Cal.3d 807, 171 Cal.Rptr. 604, 623 P.2d 165, the trial court held that the arbitration procedure established by the National Football League (NFL) collective bargaining agreement fails to satisfy the requisite "minimum levels of integrity" and is therefore unenforceable. We conclude that the petition to compel arbitration should have been granted. Not only is the Graham analysis incompatible with federal law governing in this case, but--in the context of this dispute--the NFL arbitration procedure does not violate the Graham standards.

I Background

On April 1, 1980, plaintiff Fred Dryer and the Rams entered into an employment contract--a slightly modified version of the standard NFL player contract drafted pursuant to a collective bargaining agreement between the players' union and the NFL management. Alleging that the Rams removed him from the active roster in violation of his contract, ¹ Dryer sued in superior court. The Rams responded with a petition to compel arbitration.

Dryer's contract contains a standard provision calling for binding arbitration under the terms of the applicable collective bargaining agreement in the event of a dispute involving interpretation or application of any provision of the contract. Article VII of the applicable collective bargaining agreement sets forth a grievance and arbitration procedure for general contract disputes. Replete with the full panoply of due process safeguards--notice, representation, hearing, appeal to outside arbitrators, etc.--this basic arbitration machinery appears to be unobjectionable.

What the trial court did find offensive was a clause in article VII which provides that matters which are filed as grievances and which involve "the integrity of, or public confidence in, the game of professional football" may be ordered withdrawn from the article VII procedure by the commissioner--after consultation with the player-club relations committee--and processed under article VIII ("Commissioner Discipline"). ² Once removed from the article VII grievance procedure, such matters are handled exclusively by the NFL commissioner, who hears both the dispute and any appeal arising from his own decision. The NFL commissioner is appointed and paid by the management of the member clubs.

The Superior Court's Opinion

The trial court denied defendants' petition to compel arbitration. Finding that the arbitration clause of the contract (i.e., arts. VII and VIII of the collective bargaining agreement) is a contract of adhesion, the court further held that the contract is "unconscionable" in that it fails to meet the "minimum levels of integrity" standard required by Graham v. Scissor-Tail, Inc., supra, 28 Cal.3d 807, 171 Cal.Rptr. 604, 623 P.2d 165. This holding rests on the court's conclusion that under the collective bargaining agreement "all arbitration decisions can ultimately be vested in the League Commissioner at his discretion."

With regard to a possible federal preemption problem, the trial court did find that the collective bargaining agreement affects interstate commerce and is therefore subject to section 301(a) of the Labor Management Relations Act (29 U.S.C. § 185(a)). The court determined, however, that applicable federal and state principles are compatible.

Finally, the court denied the petition to compel arbitration as to all defendants other than the Rams on the rationale that the individual defendants were not signatories to the contract.

II

Dryer's dispute with the Rams--centering on a provision of the NFL collective bargaining agreement--clearly falls within the ambit of section 301(a) of the Labor Management Relations Act (LMRA) (29 U.S.C. § 185(a)), which pertains to "[s]uits for violation of contracts between an employer and a labor organization representing employees in an industry affecting commerce...." ³ This answers the threshold question of what law applies in this case, for it is firmly established that federal substantive law governs the validity and enforcement of contracts under the LMRA. (Republic Steel Corp. v. Maddox (1965) 379 U.S. 650, 657, 85 S.Ct. 614, 618, 13 L.Ed.2d 580; Textile Workers Union of America v. Lincoln Mills of Ala. (1957) 353 U.S. 448, 456, 77 S.Ct. 912, 917, 1 L.Ed.2d 972.) Specifically, federal law governs the enforcement of arbitration provisions in contracts involving interstate commerce (Southland Corp. v. Keating (1984) 465 U.S. 1, 104 S.Ct. 852, 79 L.Ed.2d 1), and section 301(a) authorizes enforcement of a promise to arbitrate in a collective bargaining agreement. (Intern. Ass'n of Machinists and Aerospace Workers, AFL-CIO v. Gen. Elec. Co. (2d Cir.1969) 406 F.2d 1046, 1050.)

Thus, while our jurisdiction over this suit is concurrent with that of the federal judiciary, ⁴ federal law remains applicable, and "incompatible doctrines of local law must give way." (Teamsters Local v. Lucas Flour Co. (1962) 369 U.S. 95, 102, 82 S.Ct. 571, 576, 7 L.Ed.2d 593; Textile Workers of America, supra, 353 U.S. at p. 457, 77 S.Ct. at p. 918; Rehmar v. Smith (9th Cir.1976) 555 F.2d 1362, 1368; Charles Rounds Co. v. Joint Council of Teamsters (1971) 4 Cal.3d 888, 95 Cal.Rptr. 53, 484 P.2d 1397.) We may look to state law for guidance, but only if it effectuates the policies underlying federal labor legislation. (Seymour v. Hull & Moreland Engineering (9th Cir.1979) 605 F.2d 1105, 1109.)

After determining correctly that the NFL collective bargaining agreement is indeed subject to section 301(a) of the LMRA, the trial court expressed the view that "there is no incompatibility between federal and state principles as applied to this case." It then went on to apply principles of unconscionability and of adhesive contracts as embodied in Graham v. Scissor-Tail, Inc. (1981) 28 Cal.3d 807, 171 Cal.Rptr. 604, 623 P.2d 165.

Our review of federal policy and case law strongly suggests that the principles of Graham--applied in the context of a motion to compel arbitration under a provision of a collective bargaining agreement subject to section 301(a)--are incompatible with federal law and national labor policy. To effectuate that policy, federal law appears to limit a court's inquiry to a few basic questions concerning arbitrability of the dispute and defenses, if any, based on allegations of a lack of fair representation. We find no federal precedent for a Graham-type inquiry into the fairness of the arbitration machinery itself as part of the court's role in considering a motion to compel arbitration under a bona fide collective bargaining agreement.

National labor policy favors arbitration. Indeed, Congress has specifically encouraged labor and management to negotiate private means of dispute resolution: "Final adjustment by a method agreed upon by the parties is declared to be the desirable method of settlement of grievance disputes arising over the application or interpretation of an existing collective bargaining agreement." (LMRA, § 203(d) (29 U.S.C. § 173(d) [1978] ).) Courts can best serve this policy by giving full effect to the means chosen by the parties for settlement of their differences under a collective bargaining agreement. (United Steelworkers of Amer. v. American Mfg. Co. (1960) 363 U.S. 564, 566, 80 S.Ct. 1343, 1345-46, 4 L.Ed.2d 1403; Brannon v. Warn Bros., Inc. (9th Cir.1974) 508 F.2d 115, 119; Grunwald-Marx, Inc. v. L.A. Joint Bd. (1959) 52 Cal.2d 568, 581, 343 P.2d 23.)

The United States Supreme Court has observed that state decisions contrary to this policy of full enforcement could have a "crippling effect" on grievance arbitration. (United Steelworkers of Amer. v. American Mfg. Co., supra, id.; see, also, Republic Steel v. Maddox, supra, 379 U.S. at p. 653, 85 S.Ct. at p. 616-17.) Normally, a claim that the contract grievance procedures are unfair or inadequate cannot be asserted until the aggrieved party has attempted to implement the procedures and found them to be unfair. (Republic Steel, supra.) "A contrary rule which would permit an individual employee to completely sidestep available grievance procedures in favor of a lawsuit has little to commend it. [In addition to weakening the union's status in collective bargaining], it would deprive employer and union of the ability to establish a uniform and exclusive method for orderly settlement of employee grievance. If a grievance procedure cannot be made exclusive, it loses much of its desirability as a method of settlement. A rule creating such a situation 'would inevitably exert a disruptive influence upon both the negotiation and administration of collective agreements.' " (Republic Steel, supra, 379 U.S. at p. 653, 85 S.Ct. at p. 616-17 quoting Teamsters Local v. Lucas Flour Co., supra, 369 U.S. at p. 103, 82 S.Ct. at p. 576-77.)

The judicial role in considering a motion to compel arbitration is thus quite limited. Indeed, the Ninth Circuit has noted that a district court's function is essentially ended "once it has found the collective bargaining agreement susceptible of an interpretation which would cover the dispute...." (Intern. Ass'n of Machinists v....