Thursday, February 4, 2016
Lise Gelernter (SUNY-Buffalo) sends word of a recent Fourth Circuit consumer arbitration decision with important implications for employment arbitration and the waiver of substantive rights through arbitration generally. Apart from the second paragraph below, which I added, what follows in entirely Lise's analysis:
A recent Fourth Circuit consumer arbitration decision has an interesting discussion on arbitration agreement enforceability that has implications for the employment and labor arbitration arenas. Hayes v. Delbert Services, Docket No. 15-1170 (4th Cir. 2/2/16).
Western Sky was an online lender owned by Martin Webb. Webb was a member of the Cheyenne River Sioux Tribe, and Western Sky's offices were located on the Cheyenne River Indian Reservation in South Dakota. From its base on the Reservation, Western Sky issued payday loans to consumers across the country. Named Plaintiff James Hayes took a loan from Western Sky for about $2500 and an annual interest rate of 140% . Over the four-year life of Hayes's loan he would have paid more than $14,000. Western Sky all but conceded in the litigation that its loan practices violated a wide variety of federal and state laws.
The loan agreements contained an arbitration clause that stated:
This Loan Agreement is subject solely to the exclusive laws and jurisdiction of the Cheyenne River Sioux Tribe, Cheyenne River Indian Reservation. By executing this Loan Agreement, you, the borrower, hereby acknowledge and consent to be bound to the terms of this Loan Agreement, consent to the sole subject matter and personal jurisdiction of the Cheyenne River Sioux Tribal Court, and that no other state or federal law or regulation shall apply to this Loan Agreement, its enforcement or interpretation.
(emphasis added). The loan agreement also stated: “Neither this Agreement nor Lender is subject to the laws of any state of the United States of America.”
The loan agreement’s arbitration agreement required the arbitration of any disputes related to the loan or its servicing and stated that the arbitration proceedings shall be “conducted by the Cheyenne River Sioux Tribal Nation by an authorized representative in accordance with its consumer dispute rules and the terms of this Agreement.” The version of the agreement at issue in the case also provided that a party “shall have the right to select” the AAA or JAMS, or another group to “administer the arbitration.” The arbitration clauses also provided that the agreement
IS MADE PURSUANT TO A TRANSACTION INVOLVING THE INDIAN COMMERCE CLAUSE OF THE CONSTITUTION OF THE UNITED STATES OF AMERICA, AND SHALL BE GOVERNED BY THE LAW OF THE CHEYENNE RIVER SIOUX TRIBE. The arbitrator will apply the laws of the Cheyenne River Sioux Tribal Nation and the terms of this Agreement.
The agreement also prohibited the arbitrator from applying “any law other than the law of the Cheyenne River Sioux Tribe of Indians to this Agreement.”
After finding that Delbert was not a tribal entity, the Fourth Circuit ruled that the arbitration agreement was unenforceable because it “fails for the fundamental reason that it purports to renounce wholesale the application of any federal law to the plaintiffs’ federal claims.” The court recognized that the Supreme Court has found choice of law provisions and waivers of certain rights, such as class actions, to be enforceable, but distinguished the Delbert case because it violated the Supreme Court’s ruling that arbitration waivers that blocked “a party’s right to pursue statutory remedies” were not enforceable. The court stated: “a party may not underhandedly convert a choice of law clause into a choice of no law clause -- it may not flatly and categorically renounce the authority of the federal statutes to which it is and must remain subject.”
This appears to be a pretty extreme case of a waiver. In the employment and labor arena, the Fourth Circuit’s reasoning might have some play if there is an arbitration clause that appears to effectively waive all the rights of a party under an otherwise applicable law, such as Title VII or the FLSA. But the Fourth Circuit made it clear that it considers the Supreme Court’s decisions in ATT v. Concepcion and Italian Colors to limit that inquiry by embracing the enforceability of waivers of certain procedural or attendant rights, such as class actions, that merely make it more difficult or costly to pursue a federal remedy.
Wednesday, December 16, 2015
Lise Gelernter of Buffalo sent out the following to the National Academy of Arbitrators listserv. Although DirectTV is a consumer case, she thought it might be of interest to us employment types.
The Supreme Court just decided another consumer-related arbitration case (copy attached) -- DirecTV v. Imburgia. In this case, the Court considered a class-action waiver in a 2007 contract that customers had with DirecTV in California. The contract waived access to class action arbitration, EXCEPT " 'if the law of your state' does not permit agreements barring class arbitration, then the entire agreement to arbitrate becomes unenforceable." (Quoting from Justice Ginsburg's dissent).
The California Court of Appeal held that the "law of your state" language meant state law regardless of whether it was later preempted by the FAA (as it was in the Concepcion case). Since California law ruled out the banning of class arbitrations, the California court had held that the clause was unenforceable in California.
The majority didn't buy it, in a 6-3 decision written by Justice Breyer. Justice Thomas dissented on the basis that he does not believe that the FAA is applicable in state court. Justice Ginsburg wrote another dissent, joined by Justice Sotomayor, in which she said the California court had correctly interpreted the clause and the meaning of the term "law of your state."
It's an interesting lineup -- in the Concepcion case, Scalia wrote the 5-4 decision, joined by Roberts, Alito, Kennedy and Thomas. Breyer wrote the dissent in Concepcion, joined by Sotomayor, Ginsburg and Kagan. In contrast, in the DirecTV case, Breyer wrote the majority 6-3 decision, joined by the same judges as in the Concepcion majority, except for Thomas, with the addition of Kagan. It looks like Breyer and Kagan, although they dissented in Concepcion case, decided that parties had to adhere to Concepcion as the law of the land.
In an interesting twist, DirecTV is now owned by AT&T, the company in the Concepcion case.
Keep in mind that class action arbitration is still a possibility in restricted circumstances, even under the recent Supreme Court apparent expansion of FAA preemption. In Oxford Health Plans v. Sutter, 133 S. Ct 2064 (2013), the Supreme Court refused to vacate an arbitrator's decision that had construed ambiguous language in a contract to permit class action arbitrations. However, many corporations rewrote their arbitration clauses after Concepcion to be very unambiguous about prohibiting class arbitrations.
And I could add, from the employment side, that the NLRB's Horton rule is still being heavily litigated in the courts, although we have yet to see a circuit court decision upholding the principle that an agreement waiving all right to class relief violates the NLRA and Norris LaGuardia.
Saturday, October 31, 2015
This is old news for most readers of this blog, but it's nice to see a paper like the New York Times highlight the issue of arbitration waivers. In particular, an article today talks about the Supreme Court's approval of arbitration class action waivers, including some backstory of the Italian Colors restaurant.
Friday, October 2, 2015
I'm cross-posting here Imre Szalai's email out to the ADR Listserv:
Today, the Supreme Court granted cert in yet another FAA case. In this
new case, MHN Government Services v. Zaborowski, the Supreme Court will have to deal with the broad scope of FAA preemption as set forth in
Concepción is much more than a class action case. The preemption doctrine
from Concepción is changing how lower courts treat unconscionability
arguments in connection with individual, non-class disputes. Judicial
review of arbitration agreements for fundamental fairness is shrinking and
more circumscribed as a result of Concepción (and as a result of other
cases like American Express and Rent-A-Center), which I find troubling,
especially in the consumer and employee contexts.
I plan to file an amicus brief supporting the employees in this case. I
plan to criticize Concepción’s overly broad preemption doctrine, and I
also plan to critique the application of the FAA to the employment
setting. I have uncovered historical evidence that was unknown at the
time Circuit City was decided in 2001, when the Supreme Court held that
the FAA applies to employment disputes. This evidence confirms that the
FAA was never intended to apply in the employment setting, and I want to
bring this new historical research to the Court’s attention in the
If you are interested in the amicus brief, please contact [Imre].
The new historical evidence Imre refers to is hot -- a complete game-changer, if SCOTUS is willing to admit it got Gilmer and Southland wrong. Stay tuned!
Thursday, October 1, 2015
Gary Spitko (Santa Clara) has just posted on SSRN his article (just published -- 20 Harv. Nego. L. Rev. 1 (2015)) Federal Arbitration Act Preemption of State Public-Policy-Based Employment Arbitration Doctrine: An Autopsy and an Argument for Federal Agency Oversight. Here's the abstract:
This article examines the negative impact that the U.S. Supreme Court’s recent jurisprudence interpreting the Federal Arbitration Act (“FAA”) will have on the ability of states to promote the public interests that ground state employment regulation and argues for a reordering of the relationship between federal arbitration law and state public-policy-based employment arbitration doctrine. The article proceeds in three steps. First, the article demonstrates that the U.S. Supreme Court’s 2011 decision in AT&T Mobility LLC v. Concepcion and 2013 decision in American Express Co. v. Italian Colors Restaurant together extinguish the state effective-vindication and public policy exceptions to FAA application. In doing so, this case law preempts a significant amount of state employment arbitration regulation and, thus, enables employers to use employment arbitration agreements imposed on employees as a condition of employment as a means to evade the strictures of state employment regulation. Second, the article argues that, as a normative matter, the FAA should allow for consideration of the public interest in determining whether an employment arbitration agreement will be enforceable. Thus, in practice, the FAA should allow for consideration of the need for a worker to effectively vindicate her state statutory employment rights and for consideration of her ability to do so in arbitration. Finally, the article suggests a way forward. Specifically, the article proposes that Congress limit the FAA’s preemptive scope by carving out an exception to section 2 of the FAA that would allow states to regulate predispute employment arbitration agreements subject to the approval of the U.S. Department of Labor or a similar body. Pursuant to this reform, a state would be authorized to propose employment arbitration regulations tailored to the specifics of that state’s employment statutes. A federal overseer with expertise in employment law would be charged, however, with evaluating any such proposed employment arbitration regulation by balancing the federal interest in promoting arbitration agreements as written with the state interest in vindicating state statutory employment rights.
Monday, January 26, 2015
Loyal readers are familiar with my (if not necessarily appreciative of) obsession with the Horton principle (which, by the way, is getting another rub at the courts in the Second Circuit). Those similarly afflicted (or maybe just interested in Chevron deference to the National Labor Relations Board decisions) will find interesting a recent student Note, Deference and the Federal Arbitration Act, 128 Harv. L. Rev. 907 (2015)
Written by Brett Kalikow, it argues that the Board's decision as to whether concerted action is a substantive right under the NLRA is entitled to deference. While recognizing that deference is not due where an agency interprets a statute outside its domain (like the FAA), the cases make clear that the FAA cannot require any waiver of substantive rights. And the Note contends that, therefore, Board interpretations that rights under the NLRA are substantive may nevertheless dictate the outcome:
This Note argues that deference is also warranted for the Board’s finding that the NLRA provides employees with a substantive statutory right to pursue legal claims collectively, which would render the arbitration agreements waiving that right unenforceable under the FAA. Although most of the Board’s discussion of the FAA is not entitled to deference, the Board’s finding that concerted legal activity is a substantive right under the NLRA is different. That determination is based on the NLRB’s interpretation of the nature of the rights guaranteed by the NLRA, the statute it administers, and therefore Chevron deference applies.
Needless to say, I'm persuaded -- although I'm a pretty easy sell when it comes to Horton!
Wednesday, October 29, 2014
Although the Fifth Circuit tried to put a stake in the heart of the NLRB's Horton decision, the Board confirmed its vitality today in its opinion in Murphy Oil U.S.A. The bottom line: the NLRB "reaffirmed the D.R. Horton rationale and applied it to find that the employer violated section 8(a)(1) of the NLRA "by requiring its employees to agree to resolve all employment-related claims through individual arbitration" and by trying "to enforce the unlawful agreements in Federal district court" when employees filed a collective action against the company under the FLSA.
Tim Glynn and I have written about the issue before, and I've blogged about it on Workplace Prof , so I won't belabor the point. Suffice it to say that, although Horton has to date not been well-received outside of the Board and the law reviews, the jury is still out on whether the NLRA bars employers from foreclosing any kind of concerted action in a court or arbitral forum. Indeed, there's an appeal before the Second Circuit which will provide another opportunity for the viability of the theory to be tested.
Wednesday, August 27, 2014
Barry Winograd sends word that:
the Board of Governors of the National Academy of Arbitrators has approved a set of Guidelines for professional standards for arbitrators in mandatory employment arbitration proceedings. The Guidelines were developed over a two year period by a special Academy committee of a dozen members. The committee was chaired by Professor Theodore J. St. Antoine.
From a review, you will see that the Guidelines improve upon current arbitration rules and ethical standards for mandatory employment arbitration cases. Topics that are covered include limits on the source of an arbitrator's appointment, initial and continuing disclosure obligations, arbitrator disqualification, prehearing discovery, prohibited ex parte communications, monetary deposits, addressing issues of public law, and post-award clarification of a decision. It is anticipated that the Guidelines will be helpful in promoting heightened standards of professional responsibility in a manner that will be fair and of benefit for both claimants and respondents in the field.
Friday, August 8, 2014
A new piece by Jonathan R. Harkavy, Class Action Waivers in Title VII Cases after Italian Colors: Sidestepping the Individual Arbitration Mandate, recently posted on SSRN:
The Supreme Court ruled in American Express Co. v. Italian Colors Restaurant, 570 U.S. -- 186 L. Ed. 2d 417, 133 S. Ct. 2403 (2013), that class action waivers ordinarily must be enforced under the Federal Arbitration Act even when the cost of an arbitration exceeds a claimant's potential recovery. This essay suggests, however, that employee waivers of class treatment in arbitrations are not appropriate for claims under Title VII of the Civil Rights Act of 1964 because of enforcement provisions unique to that statute. Because Congress has effectively set its legislative face against limits on employee access to class treatment, employee class treatment waivers are unenforceable as to Title VII status discrimination and retaliation claims.
The article focuses on a number of provision in Title VII that the author argues show a commitment to judicial enforcement that the Court found absent in the Sherman Act in Italian Colors. These provisions are also largely absent from the ADEA, which draws its enforcement scheme from the FLSA, so the Gilmer decision doesn't, in theory at least, foreclose the argument.
As someone who has railed unsuccssfully against the arbitration tide in the past, I wish the argument luck without being super optimistic about its success!
Friday, August 1, 2014
False Claims Act suits come in two flavors – those brought by “relators” on behalf of the United States to recover for harm caused by false or fraudulent submission of claims to the government and retaliation suits seeking damages as the result of adverse employment actions resulting from plaintiff’s whistleblowing activity. 31 U.S.C. § 3730(h)(1). Of course, relators are typically, although not always, employees of the defendant since such persons are usually best positioned to know about fraudulent claims. And, of course, both kinds of claims can be, and often are, brought in the same action.
Where, if at all, does arbitration fit into this structure? A recent case raised, but did not exactly resolve, the question. United States ex rel. Paige v. BAE Sys. Tech., 2014 U.S. App. LEXIS 9676, 9-12 (6th Cir. May 22, 2014), involved an effort by defendant to shunt an FCA retaliation claim into arbitration. The Sixth Circuit refused to do so because the employment contract in question provided only for arbitral resolution of claims arising under that agreement. The FCA “is purely statutory and exists independent of the Agreement.” While the FCA bars retaliation with respect to “"terms and conditions of employment," it is not limited to breach of any given employment contract. Thus, the arbitration clause simply did not reach the FCA claim at bar.
If employment law teaches us anything, however, it is that employers are adept at responding to limiting judicial constuctions of the language of their agreements with workers, and we can be confident that, unlike the agreement in BAE, future arbitration agreements will explicitly require the arbitration of FCA claims. In fact, BAE’s form was odd because it did not refer to statutory claims at all, and the Sixth Circuit provided examples of language that apparently would reach such claims.
What happens when such clauses are written to embrace FCA claims? Although a district court opinion in 2000 found such a clause invalid, Nguyen v. City of Cleveland, 121 F. Supp. 2d 643, 647 (N.D. Ohio 2000), more recent authority – in line with the Supreme Court’s enshrinement of the Federal Arbitration Act as a “superstatute”-- goes the other way. For example, United States ex rel. Wilson v. Kellogg Brown & Root, Inc., 525 F.3d 370, 381 (4th Cir. 2008), rejected the argument that the FCA barred waiver of rights to bring suit in federal court.
Both BAE and Kellogg Brown & Root involved FCA retaliation claims. In such cases the plaintiff is not merely a relator but, instead or in addition, is suing on his own behalf. Even assuming that the FAA permits employees to agree to arbitrate their own claims, would an agreement to arbitrate (if broadly enough framed) bar court suit by the employee acting as a relator?
This is a much more problematic scenario, both pragmatically and legally. Practically speaking, the FCA’s procedures cut against arbitration but probably don’t preclude it: a relator must file her complaint under seal, and the period of nondisclosure (in theory 60 days but almost always extended far longer, sometimes years) allows the Department of Justice to decide whether to intervene to pursue the litigation itself. Thus, the normal motion to stay a suit pending arbitration is not a good fit with this somewhat unusual procedure and filing for arbitration before bringing a qui tam suit might trigger the FCA’s public disclosure bar. See United States ex rel. Cassaday v. KBR, Inc., 590 F. Supp. 2d 850 (S.D. Tex. 2008). Further, should the DoJ in fact intervene, the suit becomes not only in name but also in reality one prosecuted by the government. It would seem that the original relator’s agreement to arbitrate, if not simply irrelevant at this point, could not limit the federal government’s right to proceed. EEOC v. Waffle House, Inc., 534 U.S. 279 (2002) (individual employee’s arbitration agreement could not limit EEOC’s right to seek victim-specific relief for such an individual).
But what if Justice chooses not to intervene? In that case, the original relator (who, by hypothesis agreed to arbitrate all claims against the defendant) could be faced with a motion to stay pending arbitration, and the court would have to confront the conceptual objection. Put simply, that is that the government (represented by the relator) can’t be bound by an agreement entered into by the relator in her private capacity. And an FCA suit is not merely in the name of the government: even when the DoJ does not intervene, the bulk of any judgment will go to the United States Treasury and any settlement with the defendant requires Justice approval.
Some analogies cut in this direction. For example, an employee cannot waive his or her right to report legal violations to the government. Any agreement to do so is null and void. E.g., EEOC v. Frank's Nursery & Crafts, Inc., 177 F.3d 448 (6th Cir. 1999).
But perhaps the closest parallel to the FCA situation came recently out of the California Supreme Court. Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal. 4th 348 (Cal. 2014), held that, while employees could agree to arbitrate their individual claims, they could not waive their right to bring a “representative action” under the state’s Private Attorneys General Act of 2004. Like the FCA, PAGA “authorizes an employee to bring an action for civil penalties on behalf of the state against his or her employer.” In this case for Labor Code violations. Again like the FCA, most of the proceeds of that litigation going to the state. The court held that an “arbitration agreement requiring an employee as a condition of employment to give up the right to bring representative PAGA actions in any forum is contrary to public policy.”
While Iskanian involved a federalism question absent where the FCA is concerned – whether the FAA deprived California of the power to deputize employees to prosecute Labor Code violations on the state's behalf – the result seems correct and applicable to the FCA. Despite those problems, a recent district court decision in the FCA context held in favor of arbitration. Deck v. Miami Jacobs Bus. College Co., 2013 U.S. Dist. LEXIS 14845 (S.D. Ohio Jan. 31, 2013). Contra Mikes v. Strauss, 889 F. Supp. 746 (S.D.N.Y. 1995) (dicta suggesting that the plaintiff, as relator, stands as a private representative of the government and, since the government was not a party to any arbitration agreement, a plaintiff, suing on the government's behalf is not bound).
Assuming that FCA claims per se are not arbitrable but retaliation claims are, courts will have to struggle with questions of preclusion. The two claims in the two fora are almost certain to overlap, and, should the relator proceed with the arbitration (or the defendant move to compel arbitration), the arbitral award will almost always be issued before a court decision. Is it issue preclusive? A fascinating question for civil procedure buffs, but well beyond the scope of this post. FWIW, my instinct is that preclusion shouldn’t work. But, especially when it comes to arbitration’s reach, I’ve been wrong before!
Thanks to Angela Raleigh, Seton Hall class of 2016, for her help on this.
Thursday, June 12, 2014
Just a friendly reminder from conference organizers, Melissa Hart and Scott Moss at the University of Colorado Law School, that the deadline to register to attend, and/or present a paper at, the 9th Annual Labor and Employment Scholars Colloquium is Friday, August 1, 2014. The Colloquium is scheduled in Boulder between September 11-13, 2014.
You can register and submit a paper proposal at this link:
June 12, 2014 in About This Blog, Arbitration, Conferences & Colloquia, Disability, Employment Common Law, Employment Discrimination, Faculty Presentations, International & Comparative L.E.L., Labor Law, Pension and Benefits, Public Employment Law, Religion, Scholarship, Teaching, Wage & Hour, Worklife Issues, Workplace Safety, Workplace Trends | Permalink | Comments (0) | TrackBack (0)
Wednesday, April 16, 2014
I'm sorry to report that John E. (Jack) Dunsford passed away earlier this week. Jack was emeritus at SLU, and the entire community here will miss him greatly. Jack was a beloved colleague, a wonderful teacher, and a preeminent scholar and arbitrator. This is from his faculty page here:
John Dunsford is one of the nation's foremost arbitrators and labor law scholars. For more than four decades, labor unions and companies have entrusted him to settle their differences.
"I view the selection to arbitrate as a privilege," says Professor Dunsford. "One of the highest compliments you can receive is to be asked by parties with adverse interests to consider their differences and offer solutions. It's very rewarding."
Dunsford was a young college professor when the legendary scholar and arbitrator Leo Brown, SJ, tapped him in the early 1960s to be an apprentice.
""Among the many things Fr. Brown taught me was to try to understand the underlying problem of whatever case is given to you,"" Dunsford remembers. "Sometimes it's not apparent and other times you have to dig for it, but if you can help the parties resolve their dispute and do something to help their relationship along the way then you've done a lot."
As Professor Dunsford's reputation as a thoughtful and unbiased arbitrator grew, so did his client list. Over the span of his career, Dunsford has arbitrated nearly 1,000 disputes for groups such as U.S. Steel and the United Steelworkers of America and the National Football League and the Bert Bell Retirement and Pension Plan\; Southwestern Bell and the Communications Workers of America\; the International Revenue Service and the National Treasury Employees Union. He has arbitrated for virtually all of the U.S. airlines and their unions. Most recently, he participated in an interest arbitration between Alaska Airlines and the Transport Workers Union to set rates during the difficult economic times following 9/11. He is a permanent arbitrator for John Deere & Company and the United Auto Workers.
Professor Dunsford has held several leadership positions with the prestigious National Academy of Arbitrators, including serving as president in 1984-1985. In 2000, he was named a fellow in the College of Labor and Employment Lawyers. From 1987-1994, he directed the School's Wefel Center for Employment Law and remains a senior consultant. He was the McDonnell Professor of Justice in American Society from 1982-1987.
Except for a two-year break in the late 1970s when he practiced arbitration full time, Professor Dunsford has been teaching labor law at the School of Law since the early 1960s. In addition to a book, individuals and Unions, he has written numerous articles and chapters on labor law, arbitration, and the U.S. Constitution and personal freedom. Currently, his research interest is in the area of church-state relations, specifically tuition vouchers that allow parents the option of using state money to send their children to the schools of their choice.
Monday, March 17, 2014
As you may recall, the Board found the company's arbitration agreement to violate its employees' rights to engage in concerted action. The more sweeping ground was that the mandatory arbitration agreement foreclosed any right to concerted dispute resolution because, in addition to cutting off any judicial forum, it barred class or collective arbitration. While the decision did not foreclose a ban on class arbitration per se, it did find impermissible provision that would bar any pursuit of concerted legal remedies.
A panel of the Fifth Circuit rejected this argument while upholding the Board's second, less dramatic ground -- that the arbitration agreement could be reasonably read by employees to bar resort to the Board itself for unfair labor practices. The panel decision was 2-1, Judge Graves dissenting as to the class dispute resolution issue.
The thrust of the Board's petition is relatively simple: the panel majority's reliance on Supreme Court cases rejecting attacks on arbitration (Gilmer, Concepcion, Italian Colors) is mistaken because these cases did not involve any infringement on a substantive right, and the Horton arbitration agreement infringes on the core susbtantive right underlying the National Labor Relations Act -- the right of employees to act concertedly.
Makes sense to me, but, then, I'm a pretty easy sell on this question!
Sunday, March 9, 2014
Stephanie Greene and Christine Neylon O'Brien (both Boston College - Business) have just posted on SSRN their timely article (forthcoming Am. Bus. L.J.) The NLRB v. The Courts: Showdown Over the Right to Collective Action in Workplace Disputes. Here's the abstract:
When employees sign employment agreements, they are most likely not concerned about a mandatory arbitration provision forbidding them from engaging in class or collective actions. The United States Supreme Court has shown a strong preference for enforcing arbitration agreements, even when they foreclose rights to collective action. The National Labor Relations Board, however, has found that individual employment agreements may not prevent employees from engaging in protected concerted activity in both union and nonunion environments. The Board ruled in D.R. Horton that individual, as opposed to collectively bargained, arbitration agreements that are a condition of employment, may not bar collective action through both arbitral and judicial forums. The Board reasons that Section 7 of the National Labor Relations Act mandates the preservation of rights to collective activity, and that the Supreme Court’s strong preference for individual arbitration must accommodate the text and legislative history of the Act. Despite the Board’s decision, most federal courts have declined to strike down mandatory arbitration agreements that foreclose collective action, even when it means undermining rights under federal wage and hour statutes as well as employees’ NLRA rights. The authors support the NLRB’s interpretation as the correct and preferred framework for analysis of NLRA challenges to forced individual arbitration. The authors maintain that the courts should recognize that the Board’s decision is consistent with Supreme Court precedent and adopt the reasoning of the NLRB to preserve substantive federal statutory rights of private sector employees.
I agree, but am not optomistic.
Tuesday, February 25, 2014
Congratulations to Laura Cooper (Minnesota), Dennis Nolan (South Carolina, Emeritus), Stephen Befort (Minnesota), and our own Rick Bales on publication of the third edition of their casebook (from the Labor Law Group), ADR in the Workplace. From West's announcement:
West Academic has just published the Third Edition of ADR in the Workplace, a casebook that covers substantive and procedural issues of arbitration and mediation in both the union and non-union workplace. On behalf of The Labor Law Group, authors Laura J. Cooper, Dennis R. Nolan, Richard A. Bales and Stephen F. Befort, have updated the 2005 Second Edition in many respects including recent court and arbitration decisions, new scholarly analysis, and current notes and questions. Changes include new empirical and statistical information, a significant number of new labor and employment arbitration cases illustrating contemporary developments, a look at the effects of the recent upheavals in state regulation of public sector collective bargaining, and an expanded section on federal sector arbitration. Among the book’s appendices is an extensive research guide on labor arbitration and alternative dispute resolution in employment. West Academic plans to publish in Summer 2014, for professors adopting ADR in the Workplace, a book of materials and teacher’s guidance for classroom simulations of arbitration and mediation in both union and non-union settings.
Wednesday, February 5, 2014
My colleague Andrea Schneider (Marquette) and her co-author, Gina Brown, have posted on SSRN their new report: Gender Differences in Dispute Resolution Practice: Report on the ABA Section of Dispute Resolution Practice Snapshot Survey (Andrea also posted on this report at Indisputably.org here).
Here is the abstract:
This report to the ABA Section on Dispute Resolution outlines the results of a survey to the membership concerning the use of neutrals in both mediation and arbitration on behalf of the Women in Dispute Resolution Committee (WIDR) of the Section of Dispute Resolution. The goals of the WIDR Committee was to change how neutral selection occurs in disputes, to increase the number of women who serve as neutrals, and to ensure that women and minorities were proportionally represented as neutrals. The first step, before suggesting changes, was to understand the current situation in the world of dispute resolution. In fall 2012, the Section of Dispute Resolution surveyed the lawyers belonging to the section to determine how mediators and arbitrators are selected in legal cases and the types of cases being resolved through the many available dispute resolution processes. Specifically, the survey was designed to examine who is being selected as a neutral, by whom, using what process, and for what types of cases. This report explains the methodology of the survey, the demographics of the respondents and neutrals involved in particular cases, and, most importantly, the information about neutral selection.
This survey provides clear data on women serving in neutral capacities and demonstrates several different potential avenues of change. Three preliminary conclusions drawn from this data are — first, the type and subject matter of the dispute clearly impacts neutral selection. As detailed above, certain practice areas are far more male and certain others are quite female. Second, it appears to matter how the neutral is selected in mediation. Networking resulted in only 29% women while provider lists resulted in an increased percentage of 47%. Finally, arbitration and mediation are not the same for gender integration. Arbitration seems to hold steady at 20% regardless of selection process and even decreases further in panel arbitrations.
Our recommendations included that clients and lawyers could be encouraged to think more broadly about who they use as neutrals. Particularly in three arbitrator panels, when considering equally qualified candidates, there should be a presumption that a woman be selected as part of a panel. Furthermore, neutrals need to be aware that personal networks still appear to be the primary source of referrals and that these networks need to be strengthened and broadened to include women. Provider organizations should be commended for improved gender balance in mediation. Courts, provider organizations, agencies, and other organizations that administer and oversee ADR programs should be encouraged to use lists and the lists themselves should be broadened to include more women. In arbitration, provider organizations (a) should also adopt the assumption that multi-arbitrator panels should include one woman when they are appointing the panel and (b) should have a higher percentage of women on their list so that these lists can do more than reflect the current situation. Additional efforts in certain practice areas (commercial, construction, etc.) are likely warranted with a targeted program to identify and encourage women and minorities to serve as neutrals.
This report's connection to labor and employment law is fairly straightforward: more and more workplace disputes are being decided through arbitration and mediation. Consequently, the importance of arbitrators and mediators themselves being reflective of the populations they serve cannot be understated. This report and its recommendations takes an important first step in ensuring more gender diversity among arbitrators and mediators deciding workplace and other types of disputes.
Monday, January 20, 2014
Thanks to Lise Gelernter (Teaching Faculty and Director, Externship Programs at SUNY Buffalo Law School) for bringing to my attention this interesting arbitration case decided by the Ninth Circuit on December 17th of last year and providing some commentary.
The case is In Re Wal-Mart Wage and Hour Litigation or Carolyn Burton v. Class Counsel. The Ninth Circuit’s summarizes the case thusly:
[T]he panel held that a non-appealability clause in an arbitration agreement that eliminates all federal court review of arbitration awards, including review under § 10 of the Federal Arbitration Act, is not enforceable.
Here is Lise's commentary:
The court reasoned that if the grounds for vacatur of an award cannot be expanded by contract beyond what is permitted by the FAA §§10-11 (per Hall Street), a contract cannot eliminate the federal judicial review of arbitration awards that is available under the FAA. The Ninth Circuit cited to a Second Circuit case that had a similar holding:
Since federal courts are not rubber stamps, parties may not, by private agreement, relieve them of their obligation to review arbitration awards for compliance with § 10(a)” of the FAA. Hoeft v. MVL Grp., Inc., 343 F.3d 57, 63–64 (2d Cir.2003), overruled on other grounds by Hall St. Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576, 128 S.Ct. 1396, 170 L.Ed.2d 254 (2008).
This creates some tension with the United States Supreme Court’s strong push for honoring almost any term of an arbitration agreement, but since these holdings are grounded in the specific terms of the FAA, perhaps they are a bit more safe from reversal or even disagreement among other circuits.
Lise points out that you can obtain this Ninth Circuit case by using the following link and selecting the Carolyn Burton case.
Tuesday, December 17, 2013
Here is information about a timely symposium at Berkeley Law on mandatory predispute arbitration in the workplace, a trend that has taken off with all the recent pro-arbitration Supreme Court opinions:
Please join The Employee Rights Advocacy Institute For Law & Policy (The Institute) and the Berkeley Journal of Employment and Labor Law (BJELL) on February 27, 2014 for Forced Arbitration In The Workplace: A Symposium at the University of California, Berkeley School of Law (Boalt Hall).
Convened by The Institute in collaboration with the Berkeley Journal of Employment and Labor Law, the Symposium is designed to bring together academics, practitioners, and others in the legal community to engage in a thoughtful dialogue and help raise awareness about forced arbitration of workplace disputes. Articles from the Symposium will be published in BJELL’s Spring 2014 issue.
Program highlights include a keynote address by former Secretary of Labor Robert B. Reich, the Chancellor’s Professor of Public Policy at the University of California, Berkeley.
Monday, December 9, 2013
Warning: it's not your usual legal scholarship alth
ough it does try to make some serious points about the Supreme Court's arbitration jurisprudence and its dominant methodology of statutory interpretation. Click here.
Wednesday, December 4, 2013
The Fifth Circuit just handed down its opinion in D.R. Horton v. NLRB, and, while the Board may have won the battle, it seems to have lost the war – absent en banc review or cert.
As anybody who has suffered through presentations or conversations with Tim Glynn or me knows, Horton had enormous potential for changing the landscape of arbitration law, reflected in our recent article in Alabama. In its decision, the NLRB ruled that the company’s “Mutual Arbitration Agreement” violated Section 7 and 8(a) for two reasons: first, by being drafted broadly enough to convey to a reasonable employee that she was giving up her right to file unfair labor practice charges with the Board; and, second, by cutting off the right of employees to pursue both class (or joint) actions and class (or joint) arbitration, it infringed employee rights to act concertedly for mutual aid and protection.
The second ground was obviously more sweeping than the first, since it had the potential – at least in the employment arena – to undermine the Supreme Court’s validation in Concepcion of agreements barring class arbitration.
Before the Fifth Circuit, the Board won on the first ground and lost on the second. Upholding the Board on the first ground is not insignificant -– management-side attorneys will be scurrying around for months reviewing and revising arbitration agreements to make more explicit that workers retain the right to resort to the NLRB. But far more important is the court’s rejection of the concerted action argument.
To get to either of these issues, the Fifth Circuit had to wade through a variety of arguments about the composition of the Board that rendered Horton, including validity of recess appointments of Board members (the issue before the Supreme Court in Noel Canning), whether Member Becker’s appointment (even if valid) expired before Horton was handed down, and whether there was improper delegation of authority to the three member panel that decided Horton. I’ll spare the reader the technical discussion, but the Fifth Circuit either ruled in the Board’s favor or dodged the questions thus allowing it to reach the merits.
As to whether the arbitration agreement violated 8(1)(1) and (4) for “including language that would lead employees to a reasonable belief that they were prohibited from filing unfair labor charges,” the court upheld the Board. Even though the agreement did not explicitly address charges to the agency, it was written in language that could be reasonably construed to do so. Again, the court’s upholding the Board’s conclusion on this ground is significant, although clearly of less import than if the court had also affirmed on the other ground.
As for the second ground, the opinion acknowledged “some support” for the “Board’s analysis that collective or class claims, whether in lawsuits or in arbitration” are protected concerted activity under the NLRA. But that conclusion did not take into account the Federal Arbitration Act, and whatever deference the Board may be owed in construing the NLRA in isolation was not appropriate where the FAA was concerned. Essentially treating the FAA as a “super-statute,” the court stressed the “barrier any statute faces before it displaces the FAA.”
For reasons not clear, the opinion then detours into an excursion as to whether the class actions are a substantive or procedural right, not surprisingly finding them procedural. Why that would matter when Section 7 appears to largely protect rights that could be described as “procedural” (organizing) is not so clear.
At any rate, the court proceeded to consider two “exceptions” to the FAA command that arbitration agreements be enforced according to their terms – although I, at least, don't understand why they are two separate exceptions rather than simply a way of meshing two statutes which are at least in some tension with each other.
The first exception, according to the court, was the FAA’s “savings clause,” which allows courts to refuse to enforce an arbitration agreement “upon such grounds as exist in law and equity for the revocation of any contract.” Although the NLRA’s prohibition (much less the Norris-LaGuardia Act’s explicit declaration that agreements to such effect are not enforceable) would seem to satisfy that clause, the Fifth Circuit’s “detailed analysis” of Concepcion led it to the opposite conclusion -- essentially because, while facially neutral between arbitration and litigation, the result would be to disfavor arbitration. The presumption seemed to be that employers would forego even individual arbitration if faced with class actions/class arbitration.
This is all somewhat head-scratching since it essentially bootstraps the conclusion it reaches. The FAA’s preference for arbitration is undeniable, but, by the FAA’s own terms, limited. The limit would seem to have been reached by the boundary staked out by Norris LaGuardia and the NLRA. The preference, nevertheless, somehow o’er leaps the textual boundary that the statute itself established.
At any rate, the court moved on to the second exception – application of the FAA may be precluded by another statutory command (the NLRA). The Fifth Circuit begins, again, by treating FAA as a super-statute, and finding no explicit language trumping the FAA. It doesn’t explain why the Norris LaGuardia language “shall not be enforceable” doesn’t suffice as explicit language to the contrary, but presumably that’s because it only addresses “any undertaking or promise” (emphasis added) without mentioning arbitration. (The court dismisses the Norris LaGuardia argument in a footnote without explaining why).
In any event, lacking explicit trumping language, a contrary “general thrust” of the NLRA is not sufficient, although an “inherent conflict” would be. Such a conflict, however, is lacking because arbitration is generally favored in the union context (of course, the cases cited involve arbitration under collective bargaining agreements where the union can be expected to keep employers in check) and because of “conceptual problems” whose significance is not so clear.
Judge Graves concurred with the affirmance of the Board’s decision but would have found that the arbitration agreement “interferes with the exercise of employees’ substantive rights” under Section 7.
One question that remains puzzling in the wake of the Horton opinion is the effect,, if any, of arbitration agreements that constitute unfair labor practices (as in Horton itself) on the validity of the arbitration agreement. An employer in the situation of Horton could, of course, modify its arbitration agreements to make sufficiently clear to employees executing them that they retain the right to file charges with the Board. But suppose employers don't, or suppose that the question of arbitration arises under an extant agreement that violates the statute as intepreted by both the Board and the Fifth Circuit? Should a court being asked to stay a suit pending arbitration do so, thus "enforcing" an illegal agreement? Or should it find the whole agreement unenforceable because tainted by illegality? Or what?