Here we go again. In advance of the Washington Supreme Court’s visit to the UW School of Law on February 20, I’m previewing the three cases the Court will hear that day. If you missed my first preview—a discussion of how Miranda applies at the border, which the Court will tackle in State v. Escalante—you can find that here.
In this post, I’m taking a look at Lee v. Evergreen. Once again, you can read all the briefs yourself, here at the Washington Supreme Court website. That’s over 350 pages of briefs—just briefs, not including the evidentiary record. Yikes. [But this post is over 3000 words. How much time are they really saving? –ed. Point taken.]
Lee v. Evergreen has something for everyone: contract interpretation, arbitration, labor law, class actions, civil procedure, waiver, evidentiary issues, and more. It’s a lot. I’ll do my best to boil it all down.
Summary of the Facts, Prior Proceedings, and Issues on Review
The short version: Plaintiff Jeoung Lee was a registered nurse at Evergreen Hospital. She filed a putative class action against Evergreen, alleging that Evergreen violated a state law that required nurses to receive certain rest breaks and meal breaks at certain times during their shifts. Later, Sherri McFarland was added as a named plaintiff, apparently because she was a current employee at Evergreen, which allowed for an extension of the class period. (The effect of and reasons for her addition are hotly debated! More on that later…)
Evergreen argues that the class’s claims are not governed by state law, but are instead governed by the terms of the collective bargaining agreement between the nurses’ union (the Washington State Nurses Association) and the hospital. Under Washington law, the bargained-for terms of a CBA between public employers and employees can supersede statutory rest break and meal break requirements. See RCW 49.12.187. In this case, Evergreen argues that the CBA does in fact supersede the laws that form the basis of the plaintiffs’ claims. Evergreen then argues that, because the claims are based on the CBA instead of state law, the claims should be subject to the CBA’s arbitration provisions.
The trial court disagreed, ruling that the class’s claims were not subject to arbitration. Evergreen appealed.
The Court of Appeals affirmed on two independent grounds. First, the court agreed with the trial judge that the plaintiffs’ claims were not subject to mandatory arbitration. According to the Court of Appeals, the claims were based on a violation of state law—a portion of state law that had not been displaced by the terms of the CBA. The claims were therefore not subject to the CBA’s arbitration provision. According to the Court of Appeals, plaintiffs’ claims were just state law claims that could be brought in state court.
Second, the Court of Appeals ruled that Evergreen had waived its ability to seek arbitration. (The trial court had not ruled on waiver, but the Court of Appeals dove in anyway.) Evergreen raised arbitrability as a defense in its initial Answer, but it then litigated the case for nearly nine months before filing its motion to compel arbitration. During that time, the plaintiffs had spent $140,000 in litigation costs, engaged in lots of discovery, and sent out notices to class members. The Court of Appeals held that Evergreen simply waited too long and acceded to the litigation too much to then seek arbitration at such a late date.
The Supreme Court granted review on both issues: (1) Is Evergreen entitled to the compelled arbitration of plaintiffs’ claims? (2) And even if the law and the terms of the CBA would normally entitle Evergreen to arbitration, did Evergreen waive that entitlement by delaying its motion to compel?
In my view, the answers to those questions are somewhat intertwined in a complicated way. But in a misguided attempt to simplify things, I’m going to take them one at a time. And I’ll start with the arbitration question.
Are Plaintiffs’ Claims Subject to Mandatory Arbitration?
The relevant provision of the CBA seems to blend state law requirements and separate contractual terms regarding meal and rest breaks:
Meal/Rest Periods. Meal periods and rest periods shall be administered in accordance with state law (WAC 296-126-092). Nurses shall be allowed an unpaid meal period of one-half (1/2) hour. Nurses required by the Employer to remain on duty during their meal period shall be compensated for such time at the appropriate rate of pay. All nurses shall be allowed a rest period of fifteen (15) minutes on the Employer’s time, for each four (4) hours of working time.
A later section of the CBA provides for 12.5-hour shifts that include one 30-minute lunch break and three 15-minute rest breaks.
I’ve read more straightforward provisions. The CBA states, first, that meal and rest breaks shall be administered in accordance with a specific WAC provision. That sounds like the CBA is stepping out of the way to let state law control. But the CBA then includes some terms that diverge from the WAC. For example, the referenced WAC provision provides that employees must receive a thirty-minute meal period that begins “no less than two hours nor more than five hours from the beginning of the shift.” WAC 296-126-092(1). And “[n]o employee shall be required to work more than five consecutive hours without a meal period.” WAC 296-126-092(2).
Perhaps you can see the problem. The CBA says breaks are “administered in accordance with” WAC 296-126-092. Then the CBA says nurses get a 30-minute meal break only once during a 12.5-hour shift. But the relevant WAC provision says that an employee can’t go more than five hours without a meal break. That requirement is impossible to satisfy with one break during a 12.5-hour shift. Evergreen provides this helpful chart to show how the CBA doesn’t permit compliance with the WAC:
Those red portions of the schedule illustrate violations of the WAC. So according to Evergreen, despite the language in the CBA affirming that breaks are governed by state law, the specific differences mean that the terms of the CBA must control disputes about the timing of meal and rest breaks. If compliance with the CBA makes compliance with the WACs impossible, then the CBA must control. (There’s a similar argument re the 10-minute and 15-minute rest breaks, but you get the gist.)
But the plaintiffs have a clever response: Their complaint doesn’t mention the CBA! Instead, all of the plaintiffs’ claims reference state law and the applicable WAC provisions. The plaintiffs freely admit that the CBA changes some of the WAC requirements. But where the CBA does not alter a specific WAC provision, the plaintiffs argue that the WAC provision still governs. And as long as the plaintiffs’ claims focus only on violations of those WAC provisions that are still left standing, then state law controls, not the CBA. I see this as a variation of the “well-pleaded complaint” rule in federal question jurisdiction. As long as the plaintiffs didn’t mention a violation of the CBA in the complaint, then the existence of related CBA provisions doesn’t mean the CBA governs the claims.
Here’s how the plaintiffs have artfully pleaded their state law claims to avoid the CBA: They concede that the CBA supersedes subsection (2) of the relevant WAC provision. Nurses will necessarily work more than five consecutive hours without a meal period, since nurses only get one meal break during a 12.5-hour shift. And yet, the plaintiffs argue, the CBA does not alter subsection (1), which provides that the meal period must come within the first five hours of the shift. Since nothing in the CBA specifically contradicts that part of the WAC provision, and since the provision is set out in a wholly separate subsection of the regulation, the CBA leaves that requirement untouched. In the words of the CBA, the commencement of the meal period “shall be administered in accordance with state law (WAC 296-126-092).” Looking back at Evergreen’s chart, the plaintiffs think the second example would be just fine: The five-hour period before the break complies with the applicable WAC provision. And the seven-hour period after the break complies with the applicable CBA provision, which only partially superseded the WAC requirements.
The plaintiffs also have a backup argument. Thus far, I’ve been discussing whether the plaintiffs’ claims are governed by the CBA or by state law. But answering that question does not, by itself, answer the arbitration question. Just because a plaintiff asserts a claim under a contract doesn’t mean the claim is subject to mandatory arbitration! That separate question depends on the terms of the contract’s arbitration clause. In other words, a court could agree with Evergreen that, despite the attempt at artful pleading, the plaintiffs’ claims are actually claims for violations of the CBA. But a court could still decide that the CBA’s arbitration clause does not subject the claims to mandatory arbitration. (In an alternate universe, the CBA could include an arbitration provision that requires even statutory claims to be arbitrated, just to demonstrate how these two questions are uncoupled.)
Here’s how the plaintiffs’ describe the CBA’s arbitration provision: The provision applies to employee “grievances,” which are defined as “an alleged breach of the express terms and conditions of the [CBA].” The CBA then states: “If the grievance is not settled on the basis of the foregoing procedures, the Association may submit the issue in writing to final and binding arbitration….”
The plaintiffs stress two aspects of these arbitration provisions. First, the provisions only apply to “grievances,” which must involve the express terms of the CBA—not the parties’ understanding of the terms, not penumbras of preemption emanating from the terms, not terms implied from apparent conflict, not the common law of the parties’ historical understandings. The express terms. Second, the provisions give the Association the option of arbitrating. That means the nurses’ union could force Evergreen to arbitrate, but not the other way around. On the plaintiffs’ reading, Evergreen is attempting to force the nurses to arbitrate a claim based on some implied terms of the CBA. The arbitration provision doesn’t allow that.
Evergreen has a really strong response to all this, which basically boils down to: “Oh, come on.” They don’t say it in so many words, but that seems to be the heart of the objection. The CBA clearly includes specific instructions about when nurses get breaks, how many breaks they get, and how long those breaks should be. The plaintiffs’ claims are about the timing of those breaks. Perhaps the plaintiffs have managed to draft a complaint without mentioning the CBA, and perhaps they’ve crafted a too-clever-by-half reading of the WAC provisions and the CBA provisions to find some logically possible residual WAC requirements. But that doesn’t mean the plaintiffs have avoided the CBA’s arbitration provision.
For example, here’s the start of a paragraph from Evergreen’s Reply Brief in the Court of Appeals:
The question before this Court is whether the CBA covers plaintiffs’ claims. It does. It sets forth “the understanding reached between the parties with respect to wages, hours of work and conditions of employment.” The CBA covers rest and meal breaks. Plaintiffs’ claims of missed and unpaid rest and meal periods are indeed issues of “wages, hours of work and conditions of employment” and pertain to the CBA’s rest and meal break provisions.
It’s hard to read that paragraph without hearing Evergreen imploring the court: “Are you kidding me?! This is a claim about rest and meal breaks under the CBA!” It’s not a bad argument, given some of the legal presumptions in favor of arbitration. But that’s now a question for the Supreme Court to decide.
Before I get to the waiver issue, I want to make a three closing points about this arbitration issue:
First, the Court is faced with a threshold question of arbitrability. Before the arguments about whether the CBA applies or the WAC applies, or whether the break system actual violated either set of rules, there’s the question of who decides: a court or an arbitrator? Some contracts (many contracts? many CBAs?) include a term that requires the question of arbitrability itself to be determined by an arbitrator in the first instance. But based on the parties’ briefing in this case, this CBA doesn’t seem to have that term. So the question of arbitrability is one for the courts.
Second, there’s a lot of U.S. Supreme Court jurisprudence applying the Federal Arbitration Act and even more Washington jurisprudence written in the FAA’s shadow. Much of those cases involve presumptions in favor of arbitration. For example, the Washington Supreme Court has said: “There is a strong presumption in favor of arbitrability; all questions upon which the parties disagree are presumed to be within the arbitration provisions unless negated expressly or by clear implication.” Peninsula Sch. Dist. No. 401 v. Pub. Sch. Employees of Peninsula, 130 Wn.2d 401, 414, 924 P.2d 13 (1996). I’m sure the parties will be arguing about those precedents.
But to me, the more interesting question is how those precedents apply in a case like this, where the CBA (i) limits arbitration to disputes based on express contract terms, (ii) seems to give the option to arbitrate to only one party, and (iii) includes provisions that affirm statutory rights while also tinkering with some of the details? In general, a court should certainly effect the parties’ contractually expressed decision to arbitrate claims. In this case, however, it’s hard to figure out whether the actual parties actually decided to arbitrate these actual claims. I suspect this case would be entirely different if, for example, the CBA clearly stated that all statutory claims were subject to arbitration, or that all questions of arbitrability were subject to arbitration. But that’s not this case.
Third, nobody here seems to dispute that a CBA between a public employer and its employees can supersede the WAC requirements for meal and rest breaks. The amicus brief from the Association of Washington Public Hospital Districts (AWPHD) really stresses this point. The question for the Court, however, isn’t whether a public-employer CBA can override state worker protections, but whether this particular CBA effected such an override, and whether that override compels arbitration. The AWPHD’s brief argues that Evergreen’s CBA does supersede all the pertinent WAC provisions. Perhaps. I’m not sure. But one thing I am sure of: If future hospitals want their CBAs to supersede state law protections, and they want those disputes to be arbitrated, they could probably write their CBA provisions a bit more clearly than the CBA in this case.
What About Waiver?
Here’s where things get even more interesting. (I know, I know. You didn’t think that was possible!) Even if Evergreen did, at some point, have a right to compel arbitration, did Evergreen waive that right by not asserting it until after litigating the case in court for nine months? The trial court didn’t address that question. The Court of Appeals, however, discussed Evergreen’s waiver at length as a second, independent reason to affirm the trial court’s decision. Prior to the Court of Appeals’ decision, waiver didn’t get a lot of ink in the parties’ briefing. Evergreen devoted only 2.5 pages to the waiver argument, near the end of its 33-page initial brief in the Court of Appeals. The plaintiffs followed suit, devoting only 4.5 pages near the end of their 50-page response.
But the Supreme Court granted review on both issues. And the plaintiffs seem to have changed their emphasis. The plaintiffs’ brief in the Supreme Court starts with waiver. And nearly half of the brief’s argument is devoted to waiver. Quite a change in focus and strategy. I suspect they’ll press waiver at oral argument.
The plaintiffs’ argument on waiver is relatively simple: The parties litigated in the trial court for nine months before Evergreen moved to compel arbitration. Evergreen knew the plaintiffs’ claims that entire time. Evergreen knew enough to assert an “arbitrability” defense in its initial answer. But then Evergreen sat on the defense until after numerous rulings, depositions, other discovery, and costly litigation. Meanwhile, the plaintiffs spent $140,000 litigating the case as a class action, they sent out notices, and Evergreen even represented it was ready to try the case at one point! In the plaintiffs’ view, nine months of that is sufficient for waiver.
Evergreen has, in my view, a more complicated counterargument: Yes, the plaintiffs asserted claims about meal and rest breaks at the very start of the litigation. But according to Evergreen, those claims were not subject to mandatory arbitration until the plaintiffs filed their Second Amended Complaint and added Ms. McFarland as a named plaintiff. Evergreen explains: “Unlike the original Complaint or the First Amended Complaint, the Second Amended Complaint included as plaintiff a current employee with standing to seek prospective relief. Such forward-looking declaratory and injunctive relief . . . directly challenged the CBA and its historical implementation of the single 30-minute meal break on a 12-hour shift.” Evergreen Supp. Br. at 10. After the plaintiffs filed their Second Amended Complaint, Evergreen didn’t delay. It moved to compel 15 days later.
So who is right? I’m not sure. The briefs somewhat talk past each other on this point. Evergreen asserts various differences between the relief requested in the Second Amended Complaint and the initial Complaint. And obviously, there was some reason for the plaintiffs to add Ms. McFarland as a named plaintiff. Something changed. But what are those specific differences and, more importantly, why are those differences sufficient to create such a stark distinction between claims that require arbitration and claims that do not? Evergreen says the forward-looking relief was the big change. But is that true? And why is that legally relevant? Of course, the plaintiffs assert that they’ve asked for the exact same relief in every single complaint. The factual dispute here is quite stark. I anticipate some probing questions on this point during oral argument.
The Interplay Between Waiver and Arbitrability
Reading through the briefing, I was really struck by the tension between Evergreen’s two arguments on the two issues. Taken alone, I think both of Evergreen’s arguments are quite strong. But I don’t think they fit together easily. And I’m interested in seeing how the Justices push on some of the inconsistencies during oral argument.
Here’s what I mean: Evergreen’s argument on arbitrability seems to favor a very broad reading of the CBA and its arbitration provision. Anything having to do with rest breaks or meal breaks is covered by the CBA and therefore requires arbitration. That’s the gist of the arbitrability argument. It’s almost like a sort of field preemption. (I know, I’m being imprecise here. But I’m talking about the tenor of the briefing.)
But when Evergreen’s briefing gets to waiver, Evergreen needs to parse the CBA and the WACs very carefully. Evergreen didn’t move to arbitrate Ms. Lee’s claims because, Evergreen explains, those were statutory claims. Before the plaintiffs added Ms. McFarland’s claims, Evergreen was “ready to try [Ms. Lee’s] statutory claims for missed rest and meal breaks because its electronic timekeeping system made it easy for nurses to report and be paid for missed rest and meal breaks.” Evergreen Supp. Br. at 9.
But that assertion seems to cut against Evergreen’s argument on the arbitrability issue, because when it comes to waiver, Evergreen seems to concede that its possible to assert purely statutory claims for meal and rest breaks. In other words, if Evergreen is right that claims based on meal breaks and rest breaks are subject to arbitration under the CBA, then it should have moved for arbitration right away. If Evergreen is finely parsing its waiver argument, then why can’t the plaintiffs finely parse their claims to avoid the CBA? I’m sure that tension is resolvable, but I’m just not sure how to resolve it. So that’s something I’ll be listening for.
Some Random Thoughts
This post is already long enough. If I keep at it, you’ll be reading 350 pages of “preview” when you could just read all the briefing. So a few parting thoughts:
1. Deposition Testimony. — Both parties spend a lot of time relying on deposition testimony to support their arguments. How does the relevant CBA provision apply? The plaintiffs’ briefs are filled with citations to Evergreen’s 30(b)(6) testimony that the CBA was never intended to supersede statutory claims. Are the plaintiffs’ claims based on the CBA or state law? Evergreen’s briefs are filled with citations to Ms. McFarland’s deposition in which she testified about violations of the CBA. In the end, I would be surprised if the Court put much weight on either deposition. But that could be something to watch for during questioning.
2. Waiver vs. Forfeiture. — If you’ve read this far, you’re probably asking yourself: “Wait a minute? Is the waiver issue really waiver? Or is it more of a forfeiture issue?” That’s a great question. Here’s the U.S. Supreme Court on the difference: “Although jurists often use the words interchangeably, forfeiture is the failure to make the timely assertion of a right; waiver is the intentional relinquishment or abandonment of a known right.” Kontrick v. Ryan, 540 U.S. 443, 458 (2004) (cleaned up). So maybe it should be forfeiture here.
3. Helpful Amicus Briefs. — I’ve already mentioned the amicus brief from the Association of Public Hospital Districts. This case has drawn two other amicus briefs, both of which also helpfully articulate important issues. First, the brief of the Washington Employment Lawyers Association stresses the distinction between (i) employees waiving statutory rights in a CBA, and (ii) employees waiving the right to access the courts by requiring arbitration in a CBA. Those are separate issues that the Court should not conflate. Second, the brief of the Washington State Nurses Association (the plaintiffs’ union) strongly backs the plaintiffs. The union agrees that the CBA does not waive the employees’ statutory rights and that only the union, not Evergreen, gets to opt for arbitration.
4. Some Unhelpful Rambling About a Problem I Can’t Articulate Clearly. — There’s a “litigation process” aspect of this case that I think is doing a lot of work in the background, but that I can’t quite wrap my head around. The briefs only hint at it. But I think some of the messiness of these issues results from the fact that the substance and merits of the plaintiffs’ claims are all tied up with the arbitrability questions and the class certification questions. For example, when the trial court permitted the addition of Ms. McFarland as a named plaintiff and certified the class, the court made some implicit decisions about how Ms. McFarland’s “new” claims related to the old claims. Maybe the court got that decision wrong? Maybe the plaintiffs were trying to expand their relief in a way that would have bumped into the CBA, but the trial court didn’t allow that? I’m not sure.
But when asking whether “the claims” are arbitrable, the relevant “claims” might not be so easy to define. Sure, the claims are written in the complaint. But there are also the claims as limited, modified, and interpreted by the court’s rulings on various motions for class certification and other procedural matters. The nature of a plaintiff’s claim can subtly change over time as the parties better understand the substantive issues and as the court makes rulings. Evergreen’s motion to compel might therefore have been prompted not so much by an in-writing change in the Second Amended Complaint, but by a change in how Evergreen understood the trial court’s conception of the plaintiffs’ claims that were certified for the class. In my experience, the parties’ understandings of the claims can change during the litigation even without formal changes to boilerplate requests for relief in amended complaints. So maybe Evergreen appealed the “wrong” order. But it’s hard to know what the “right” order would have been. Especially on the issue of waiver, it’s hard to know what to make of the shifting understandings of the litigation without first getting a decision on the merits from the trial court.
Sorry. I warned you that I couldn’t really articulate it. Anyway, that’s as good a point as any to end on. Maybe the oral argument will help me sort this all out! I’ll be watching with you on February 20.