Monday, May 21, 2018

Murphy Oil and an Even Slipperier Slope of Forced Arbitration: Game Over?

The Supreme Court’s ruling today in Murphy Oil/Epic Systems/Ernst & Young may be read narrowly as an opinion holding that the National Labor Relations Act does not trump the Federal Arbitration Act (FAA): Congress’s desire to facilitate arbitration, it appears, outweighs employees’ rights to engage in concerted activities for mutual aid or protection. One of the hats I wear is “labor law professor,” and my co-authors and I will be updating our labor law casebook to reflect the change.

But Murphy Oil means much more than which of two federal statutes prevails when there is a conflict between them. The right question to be asking is whether any employment statute, federal or state, may overcome the FAA. In the workplace context, what the FAA represents is a privileging of a fictitious agreement between employer and employee to waive a judicial forum for resolution of all workplace disputes. By fictitious, I do not mean that the employee failed to sign the arbitral agreement. The document is real. The employee’s signature on the document is real. What is fictitious is the notion that the employee realizes what she is signing or has any real choice in an era of expanding arbitration to refuse to sign it. Why bother? The next employer will insist on the same thing. But this is no more an agreement than the other contracts of adhesion I argued about many years ago in my first-year of law school contracts class. The employee unwittingly waives the right to judicial review of an adjudicator/arbitrator’s award. An arbitrator need not cite a case or analyze law. Indeed, a patently erroneous decision cannot be reversed simply because it is wrong. The employee has simply waived the substantive law.

And this is just the beginning. As I have written previously, arbitration has been expanding. I have harbored a suspicion that the only reason it was not expanding faster was that employers were concerned Murphy Oil/Epic Systems would come out the other way. I do not for a minute dispute a contention made by Justice Ginsburg, blithely dismissed by opinion-author Neil Gorsuch, that the decision will lead to the “underenforcement of federal and state statutes designed to advance the well-being of vulnerable workers.”  And, as I have said previously, there is absolutely nothing to prevent the spread of forced arbitration to workers’ compensation cases. (I would love to hear arguments to the contrary—I’ve heard nothing convincing). Arbitration has already made its way into state tort law. It will continue to encroach on the rule of law until the U.S. Congress stops it.

A great irony for workers’ compensation lawyers is that the dilemma over “contracting out” was at the center of uncontroversial enactment of the UK’s workers’ compensation statute in 1897. During debate, in 1893, on amendment of the 1880 English Employer’s Liability Act, the contending factions could not come to agreement on the question of whether employers and employees should be permitted opt-out of statutory coverage in exchange for voluntary employer contribution to worker friendly societies. The strengthening organized labor movement and Asquith’s liberals were adamantly opposed to contracting out. Chamberlain’s Unionists and the Conservatives disagreed. When the factions could not agree, workers’ compensation was the resulting grand bargain, for years later. It is a long story and my reason for mentioning it here is to point out that roughly 120 years later we have returned to the same old question and find ourselves in an era of warmed-over Lochner and yellow dog contracts.

Michael C. Duff

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