Pike & Pike, PC

Attorneys at Law

1921 Bellmore Ave.
Bellmore, New York 11710

RECENT COURT DECISIONS UPHOLD

DIAL CAR'S GRIEVANCE PROCEEDINGS

 

As citizens of the United States, our right to speak our minds is protected by the First Amendment to the Bill of Rights.  Unlike the citizens of many other countries, we are free to openly criticize our government, our politicians, taxes, and numerous other aspects of our public lives.  However, there are limits to what we can say. Specifically, contrary to what many people think, the First Amendment generally provides no protection with respect to statements made between private persons, as two shareholders of Dial Car recently learned the hard way when they attempted to invoke it in order to excuse offensive and obnoxious statements they made about Dial management.

 

As we know, most black car companies have rules and regulations with which drivers must comply.  The rules are intended to protect the collective interests of the company - both the customers’ and the drivers’ as a whole. Like traffic laws, they are an evil necessary to maintain peace and order. Generally speaking, these rules are enforced through the use of internal disciplinary proceedings, more commonly known as security hearings, which are held before a group of other drivers. After hearing all of the facts, the committee determines if the accused driver is guilty or not, and if guilty, imposes a penalty.

 

Most drivers are hard-working individuals who recognize the importance of company rules to the success of their business.  There will, however, always be one or two bad apples in the bunch who think they are above compliance with the rules.  For whatever reason, such individuals believe that they are not subject to the rules their fellow drivers abide by, and that they are not obligated to participate in the company=s disciplinary proceedings after being accused of having broken such rules. 

 

Such was the case in two recent lawsuits brought against one of the best-regarded and most prominent black car companies in New York.  In each of these cases, shareholder/drivers of Dial Car unsuccessfully sought to challenge the discipline imposed upon them by Dial=s Grievance Committee.

 

In the first case, two shareholders brought suit after they were expelled from Dial for committing multiple serious violations of Dial=s rules.  As mentioned above, one of the drivers, amongst other wrongdoing, had been accused of repeatedly making outrageously nasty, degrading and untrue statements regarding members of management and the other had been charged with, amongst other violations, serious customer complaints.  Each shareholder was notified that he was to appear before Dial=s Grievance Committee for a hearing.  Following each hearing, the shareholder was found guilty of most of the charges. Each was notified of his right to appeal the adverse determinations to Dial=s Board of Directors, but neither elected to do so.  Instead, the two shareholders commenced a lawsuit, attacking various aspects of the hearing process. 

 


The Court upheld the discipline Dial imposed upon the shareholders on multiple grounds.  First, the Court found that the contracts the shareholders signed with Dial required that all disciplinary matters go before the Grievance Committee.  When parties contractually agree to let a third party (in this case, the Grievance Committee) resolve disputes, a Court will not interfere by substituting its own judgment in place of that of the arbitrator.  The reason is that the parties have contracted to let someone other than a Court handle the matter. Thus, only where, for example, the Security Committee fails to follow the agreed-upon procedures or renders a decision which is Aarbitrary and capricious@ (i.e., not based upon any reason or logic) will a Court step in and interfere.

 

In addition to finding that the drivers were contractually obligated to follow Dial’s rules and regulations, the Court also found that the shareholders had failed to exhaust their administrative remedies - they did not appeal the decision to the Board of Directors, even though they had been informed of their right to do so. When a party is required to participate in disciplinary proceedings, they must participate in each and every step of the process.  They cannot pick and choose what they will, or will not, participate in. Here, although the shareholders attended their security hearings, they failed to appeal the decisions to Dial=s Board of Directors.  By failing to participate in that second stage of the process, they lost any entitlement they might have had to bring a lawsuit challenging those decisions in Court.

 

Lastly, the Court upheld the Grievance Committee=s determinations based upon its determination that there was more than ample evidence which supported the charges against the shareholders.  With respect to the outrageous statements the shareholders had made against management (which they claimed were protected by the First Amendment), the Court noted that the First Amendment does not apply to relationships between private parties.  In other words, the shareholders possessed no right to bad-mouth management, and they were not protected against Dial’s response to such behavior.  The shareholders also claimed that the charges were in retaliation for their participation in another lawsuit. The Court rejected this argument, noting that the charges had been filed, not by Dial management, but by customers and other shareholders of the company.  The Court also took note of the shareholders= lengthy history of disciplinary infractions in finding that the penalty of expulsion was proper.

 

Less than a month later, Dial scored yet another victory, when a different judge dismissed a second lawsuit challenging discipline imposed by its Grievance Committee.  In this second case, the judge also found that Dial=s Grievance Committee conducted a valid grievance hearing resulting in the shareholder=s expulsion. Unlike the shareholders in the previous case, this shareholder did appeal his expulsion to Dial=s Board, but without success.  Nevertheless, the Court found that, based upon the evidence (multiple vouchers containing unauthorized markings made by the driver where the customer was to initial), and upon the Court=s determination that procedures had been properly followed, the Grievance Committee and the Board were within their rights to terminate the shareholder=s driving privileges.

 


Dial=s success in defeating these challenges to its disciplinary authority is largely due to the fact that it, in essence, planned for possible challenges by (a) making sure its contract contained the necessary terms and (b) making sure that it followed all of its own rules to ensure the drivers were given a fair hearing.  For example, when the shareholders violated Dial=s rules, its Grievance Committee gave the shareholders notice of the charges against them, and advised them when their hearings would be held.  On the date of the hearings, each shareholder was given a full and fair opportunity to participate, to present evidence, and to present and cross-examine witnesses.  The hearings were tape recorded, and the decisions were rendered based upon specific factual findings citing specific rules.  After the decisions were issued, each shareholder was advised of his right to appeal to Dial=s Board. 

 

In conclusion, the decisions in these two cases confirm that when a driver enters into a contractual agreement with a black car base providing that disputes are to be handled by the company=s internal disciplinary committee, he will usually be held to his bargain unless he can demonstrate that his hearing was not handled in a fair and impartial manner.  The key to defeating claims of unfairness is to follow procedures.  The disciplinary committee must give written notice of the hearing.  It must inform the driver which rule(s) he has been charged with violating.  It must hold a hearing and give the driver an opportunity to plead his case.  It must render a decision grounded in reason and logic.  And it must provide an opportunity for review of the decision by the Board and/or by the membership. 

While there is no fail-safe way to guarantee that lawsuits will not be brought challenging disciplinary committee determinations, as the Dial cases show, conducting those hearings properly greatly reduces the likelihood that such lawsuits will succeed.

        

Roberta C. Pike, Esq. is a partner with Pike & Pike, P.C., with offices located at 1921 Bellmore Avenue, Bellmore, New York 11710.  The firm specializes in commercial litigation, including workers compensation and unemployment insurance matters, employment practices, franchising and business practice matters. The foregoing is provided solely as general information, is not intended as legal advice, and may not be applicable within your jurisdiction or to your specific situation.   You are advised to consult with your attorneys for guidance before relying upon any of the information presented herein.