Gough: New Empirical Work on Employment Arbitration

Mark Gough (Penn St. School of Labor & Employment Relations) has posted on the ILR Review website his article A Tale of Two Forums: Employment Discrimination Outcomes in Arbitration and Litigation, Industrial & Labor Relations Rev. (forthcoming 2020). Rather than just posting his abstract, I'll post instead a summary I asked Mark to draft for me, which helps situate this empirical work among other empirical work on similar topics:

Most of the empirical literature comparing outcomes between forums uses relatively crude descriptive statistics to show stark differences in employee win rates and monetary award amounts within the populations cases disposed of in arbitration and litigation. Indeed, scholars have provided robust evidence on the resolution of employment disputes within individual forums such as:

• The American Arbitration Association (AAA) – see, e.g., Alexander J.S. Colvin, An Empirical Study of Employment Arbitration: Case Outcomes and Processes, 8 J. Empirical Legal Studies 1 (2011); Lisa B. Bingham, On Repeat Players, Adhesive Contracts, and the Use of Statistics in Judicial Review of Employment Arbitration Awards, 29 McGeorge L. Rev. 223 (1998).
• The Financial Industry Regulatory Authority (FINRA) – see, e.g., J. Ryan Lamare & David B. Lipsky, Employment Arbitration in the Securities Industry: Lessons Drawn from Recent Empirical Research, 35 Berkeley J. Employ. & Labor L. 113 (2014); J. R. Lamare, & D. B. Lipsky, Resolving Discrimination Complaints in Employment Arbitration: An Analysis of the Experience in the Securities Industry, Industrial & Labor Relations Rev. (2018).
• Federal court – see, e.g., Kevin M. Clermont & Stewart J. Schwab, How Employment Discrimination Plaintiffs Fare in Federal Court, 1 J. Empirical Legal Studies 429 (2004).
• State court – see, e.g., Theodore Eisenberg & Elizabeth Hill, Arbitration and Litigation of Employment Claims: An Empirical Comparison, 58 Dispute Resolution J. 44 (2003).

These studies often are used to support the perceptions of arbitration as an employee-unfriendly forum. See, e.g., Mark Gough, How Do Organizational Environments and Mandatory Arbitration Shape Employment Case Selection? Evidence From an Experimental Vignette, 57 Industrial Relations 541 (2018); Mark Gough, Employment Lawyers and Mandatory Employment Arbitration: Facilitating or Forestalling Access to Justice, 16 Advances in Industrial Relations 133 (2016). And while informative, a limitation of this literature is it provides minimal controls to account for systematic variation between forums. It is clear that the average monetary award and employee success rates at trial are lower in arbitration than litigation, but are employee claimants genuinely at a disadvantage in arbitration? Or does systematic variation exist within the underlying merits of cases, presence or quality of counsel, party resources, or other case characteristics which account for differences in outcomes between arbitration and litigation? In short, one must be careful to compare “apples to apples” when drawing evaluative conclusions about arbitration’s effect(s) on access to justice.

In a 2020 empirical study, Mark Gough attempts such apples-to-apples comparisons by surveying 1,256 employment plaintiff attorneys about their most recent cases adjudicated in arbitration, state court, or federal court. Even while accounting for claim, plaintiff, defendant, and attorney characteristics, Gough finds employment discrimination plaintiffs in arbitration are less likely to receive a judgment in their favor and smaller awards compared to similar cases disposed in state and federal court. Specifically, he reports, “compared to arbitration, employees' odds of winning increase by 70.7 percent in a federal jury trial, 183.7 percent in a state judge-only bench trial, and 146.0 percent in a state jury trial…[and] relative to arbitration, monetary damages awarded to success

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