In Knutsson v. KTLA, ___ Cal.App.4th ___  (August 12, 2014), the California Court of Appeal (Second Appellate District, Division Five) affirmed the order of the Los Angeles County Superior Court (Judge Kleifield) denying defendant’s motion to compel arbitration of plaintiffs’ employment-related claims.

Plaintiff Knutsson, along with his company, entered into a personal service agreement (the “agreement”) with defendant, a television broadcaster, to act as a technology reporter.  After the agreement was terminated, plaintiffs filed suit alleging claims for breach of contract, age discrimination, unfair business practices, and misappropriation of Knutsson’s likeness.  Defendant moved to compel arbitration on the ground that the agreement was subject to a three-step grievance and arbitration provision in a collective bargaining agreement that existed between plaintiff’s union and defendant. Step 1 of the grievance and arbitration procedure required an attempt be made to resolve the dispute by discussion with a supervisor. Either the union or the employee could attempt to resolve the dispute informally. Step 2 permitted the union only to resolve the matter by presenting a formal grievance to a department manager.  Step 3 permitted only the union to proceed with the grievance, if necessary, to arbitration. The trial court denied defendant’s motion to compel arbitration, finding that the grievance procedure was a condition precedent for arbitration and it had not occurred.

The appellate court agreed, finding the motion to compel arbitration was properly denied because defendant forfeited the right to compel compliance with the collective bargaining agreement’s non-arbitration provisions in the three-step grievance process: “[a]t no time in the trial court did defendant argue that plaintiffs must engage in the employee/supervisor discussion required by step 1. Further, defendant never sought to compel compliance with step 2 . . . .   Further, [plaintiff] had no obligation under step 2 to do anything. Unlike step 1, steps 2 and 3 require the union to act on behalf of the employee.     *     *     *     Thus, defendant failed to compel compliance pursuant to section 301(a) with steps 1 and 2 in the trial court. Under federal common law, they have forfeited the right to do so now.”  In addition, the court found that defendant could not compel plaintiffs to arbitrate their claims because “plaintiffs and defendant never agreed to arbitrate any dispute between them. The collective bargaining agreement expressly states only the union and defendant may require arbitration of the other party. The collective bargaining agreement does not grant a union member the power to compel defendant to arbitrate a dispute. Conversely, defendant may only compel the union to arbitrate, not a member of the rank and file.”  Finally, the court ruled that the trial court, not an arbitrator, was the correct legal body to resolve the substantive arbitrability issue, notwithstanding the United States Supreme Court’s decision in John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543 (1986).