Thursday, June 20, 2013
Today, we have a guest post from Lise Gelernter (Buffalo) on the United States Supreme Court's latest decision on arbitration in American Express v. Italian Colors Restaurant. The decision can be found on the Supreme Court website here under the name of the case.
Here's Lise's overview of the decision:
The Court, four in the majority (Justice Scalia writing the decision), one in concurrence (Justice Thomas) and three in the dissent (Justice Kagan writing the opinion with Breyer and Ginsburg joining her – Justice Sotomayor took no part, presumably because she was on the 2d Cir. when it decided the case that the Supreme Court reviewed), said that the Federal Arbitration Act prohibited a court from invalidating an arbitration agreement that barred class actions, even if the practical effect was that the plaintiffs would find it impossible to vindicate their antitrust claim.
An economic analysis had shown that the cost of an expert witness to show that American Express had used improper monopolistic power to impose fees on the plaintiffs would far exceed the economic recovery that any one individual plaintiff could hope to have. As the dissent pointed out, the pluarlity and concurrence basically responded by answering that that was just “too darn bad.”
The impact in the labor and employment context is that unrepresented employees can not only be required to waive access to a court to vindicate statutory rights, but can also be required to waive their right to class actions. Thus, minimum wage, employment discrimination and other types of employment actions will have to be pursued on an individual basis if that waiver exists in a pre-hire agreement.
On the collective bargaining side of things, it will be interesting to see if an employer tries to compel individual arbitration of a contract grievance that was brought on behalf of a whole bargaining unit (e.g., a violation of a contractual provision on overtime scheduling). I don’t know that it would make much of a difference in the long run in terms of the practical effect of an arbitration award, which probably means it is not worth it for an employer to pursue that kind of argument.
Great commentary, Lise, and looking forward to others' comments on this important new arbitration law case.