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Total Articles: 66

Could Congress Ban Arbitration Of Sex Discrimination And Harassment Claims?

A bipartisan group of federal legislators has turned their attention to the sweeping revelations of sexual harassment in the American workplace by introducing a bill that would prevent employers from forcing claims of sex discrimination or harassment into arbitration. If passed and signed into law, this legislation could have a profound impact on employment policies and practices, not to mention litigation that results from workplace conflicts. What do employers need to know about the Ending Forced Arbitration of Sexual Harassment Act?

Supreme Court Hears Argument on Validity of Class Action Waivers in Employment Arbitration Agreements

The United States Supreme Court heard a one-hour consolidated oral argument in three arbitration cases involving the intersection of the National Labor Relations Act and the Federal Arbitration Act on October 2, 2017.

Future of Class Action Waivers: The Supreme Court Hears Oral Argument

On October 2, 2017, the Supreme Court of the United States heard oral argument in three consolidated cases that will decide the future of class action waivers in the employment context. These cases—National Labor Relations Board v. Murphy Oil USA, Inc., Epic Systems Corp. v. Lewis, and Ernst & Young LLP v. Morris—kicked off the Court’s new term and likely will be the most important employment cases to be decided in the coming year. We were present this morning for the Court’s oral argument, and while you never know how the Court will rule, a few telling moments stood out, as explained below.

Appellate Court Nixes Employee Arbitration Agreements

Overview: By Decision dated July 19, 2017 (the “Decision”), the Appellate Division, First Department (the “First Department”) (which has jurisdiction over Manhattan and Bronx) held that arbitration agreements obligating employees to waive their rights to bring collective disputes, such as class actions regarding wage disputes, were unlawful and unenforceable because they “run afoul of the National Labor Relations Act” (the “NLRA”). Though freely acknowledging that the United States Supreme Court will resolve a similar issue in its October 2017 Term, the Decision currently binds the trial courts in Manhattan and Bronx and has precedential effect for other trial courts throughout New York. The Decision can be appealed to New York’s highest court, the New York Court of Appeals.

First Circuit Applies FAA Transportation Worker Exception to Independent Contractors

The First Circuit Court of Appeals, in a case of first impression, recently issued an important ruling that will have a major impact on transportation companies using arbitration agreements in the states and territories located within the First Circuit (Massachusetts, New Hampshire, Maine, Rhode Island, and Puerto Rico). Specifically, on May 12, 2017, the court ruled in Oliveira v. New Prime, Inc., No. 15-2364 that (1) when a federal district court is ruling on a motion to compel arbitration under the Federal Arbitration Act (FAA), the court—and not the arbitrator—must first determine if the FAA applies, and (2) the FAA Section 1 transportation worker exception applies to independent contractor arrangements. The First Circuit’s ruling in Oliveira has deepened the circuit split on the issue of whether the determination of FAA coverage is an arbitrable issue and has made it that much harder for transportation companies to utilize arbitration agreements with independent contractors in the First Circuit.

Sixth Circuit Adopts NLRB’s D.R. Horton Rule and Deepens Circuit Split on Class Action Waivers

The Sixth Circuit Court of Appeals—apparently unable to wait a few months for the Supreme Court of the United States to rule on the issue—has now cast its lot with the National Labor Relations Board (NLRB) and the Seventh and Ninth Circuits in finding class action waivers in employment arbitration agreements unlawful under the National Labor Relations Act (NLRA).

Supreme Court Emphatically Defends Arbitration Agreements from State Interference

On May 15, 2017, the U.S. Supreme Court reiterated the principle that the Federal Arbitration Act (FAA) requires states to treat arbitration agreements just as they treat other types of contracts. In Kindred Nursing Centers L.P. v. Clark, the Court reversed in part a decision of the Kentucky Supreme Court, which had instituted a new rule chipping away at the enforceability of arbitration agreements under certain circumstances.1 Justice Kagan wrote the majority 7-1 opinion and, moreover, was joined by other liberal-leaning members of the Court.2 While newly-confirmed Justice Gorsuch did not participate, the Kindred Nursing Centers decision reaffirms the Supreme Court’s continued commitment to uphold arbitration agreements under the FAA to the greatest extent possible.

Long-Term Care Facilities: Recent Developments on Use of Arbitration Agreements

Three cases making their way through the courts demonstrate that the question of arbitration clauses in long-term care (LTC) facility admission agreements is an active and developing area of the law.

Beauty School (Arbitration) Dropout: Ninth Circuit Bars Belated Attempt to Arbitrate

Defendants who try their hands at litigation on the merits and seek arbitration only after things don’t go their way, risk losing the right to arbitrate—as the Ninth Circuit Court of Appeals made clear in the recent case of Martin v. Yasuda . In the case, the court barred a beauty school and its president from arbitration after they took a series of actions the court held were inconsistent with the right to arbitrate. These included filing a mostly unsuccessful motion to dismiss, submitting a detailed discovery plan to the court, negotiating with the plaintiff regarding discovery responses, telling the judge “we are probably just better off being here in the court,” and waiting for 17 months after the start of the case to move to compel arbitration.

Ninth Circuit Rules that Arbitration of USERRA Claims is Permissible

In Ziober v. BLB Resources, Inc., 2016 U.S. App. LEXIS 18516 (9th Cir., Oct. 14, 2016), the United States Court of Appeals for the Ninth Circuit joined three other circuit courts in holding that the Uniformed Services Employment and Reemployment Rights Act (USERRA) does not prohibit the compelled arbitration of claims under the Act. The Ninth Circuit’s ruling helps solidify the right of employers to compel arbitration of USERRA claims under a valid arbitration agreement, particularly in light of this Circuit’s perceived hostility towards arbitration of employment-related claims. Ziober provides further support for the view that a properly drafted arbitration agreement provides employers with the ability to arbitrate USERRA claims and avoid litigation.

9th Circuit Rules Reservist Must Arbitrate Employment Claim

The 9th Circuit Court of Appeals has ruled that the Uniformed Services Employment and Reemployment Rights Act (USERRA) does not prohibit a mandatory arbitration clause covering all employment discrimination claims. The finding in Ziober v. BLB Resources, Inc., is significant because the San Francisco-based federal appellate court has occasionally struck down mandatory arbitration provisions in other cases.

DEA Classifies U-47700, or “Pink”, As A Schedule I Drug

The Drug Enforcement Administration (“DEA”) announced September 7, 2016 that it intends to temporarily schedule the synthetic opioid known as U-47700 on Schedule I of the federal Controlled Substances Act because it poses an imminent hazard to the public safety. A final scheduling order will be made on or after October 7, 2016. Schedule I drugs are drugs that have a high potential for abuse, no currently accepted medical use in treatment in the U.S., and a lack of accepted safety for use under medical supervision.

Will Your Arbitration Program Survive the Contractor Blacklisting Regulations?

The arbitration restrictions contained in Executive Order 13673, Fair Pay and Safe Workplaces (EO 13673), have been largely overshadowed by other parts of the so-called “contractor blacklisting” rules. Nonetheless, for those federal contractors that have adopted or are considering adopting an employee arbitration program, the arbitration restrictions in EO 13673 are just as significant—and more imminent.

The Big Uber Arbitration Win, As Explained By 3 Fisher Phillips Lawyers

A few days ago, Uber won a significant battle when the 9th Circuit Court of Appeals overturned a lower court’s decision and upheld the company’s arbitration agreements. No doubt about it, this is a big win. You might remember a few weeks ago when I wrote a post entitled, “Will Uber Actually Be Happy It’s $100M Settlement Fell Apart?” If I had a chance to edit that post now, I’d replace the six paragraphs of analysis with a one-word answer:

Remember That Good News On Class Waivers? Forget What We Said

There’s a great scene in the Naked Gun movie where Lieutenant Frank Drebin (Leslie Nielsen) is trying to clear a crowd forming around a crime scene, except that the crime scene happens to be a fireworks factory on fire. While a massive pyrotechnic fireworks show is going on behind him, Drebin vainly yells to the gathering crowd, “Move along! Nothing to see here! Please disburse! Nothing to see here!”

Ninth Circuit Finds Uber’s Arbitration Agreements Enforceable After All

On September 7, 2016, the Ninth Circuit Court of Appeals in Mohamed v. Uber Technologies, Inc. largely overturned the District Court’s ruling which had held Uber’s arbitration agreements to be unenforceable. Last year, the District Court had held that the arbitration agreements were unconscionable due to the inclusion of a waiver of claims brought under California’s Private Attorneys General Act (“PAGA”). The decision invalidated nearly 250,000 arbitration agreements between Uber and independent drivers, allowing the case against Uber to proceed as a class action in civil court.

Federal Appeals Court Hands Uber Major Victory In Arbitration Agreement Fight

The 9th Circuit Court of Appeals delivered a significant victory to Uber and other gig economy businesses by reversing a trial court’s denials of Uber’s motions to compel arbitration in companion class action lawsuits brought by former drivers in Massachusetts and California. The decision not only provides tremendous leverage to Uber as it continues to fight class action litigation over classification issues, but it also boosts gig employers in their efforts to require mandatory arbitration instead of costly courtroom battles.

Working Around the Courtroom: Is Arbitration for You?

Within hours of Gretchen Carlson suing then-Fox News CEO Roger Ailes for sexual harassment, Ailes’ attorney responded that Carlson was “desperately attempting to litigate [her termination] in the press.” It didn’t take much longer for Ailes to follow this comment with a formal motion to thwart Carlson’s supposed dreams of a public trial; two days after Carlson instituted her lawsuit, Ailes filed a motion to compel arbitration of the claims pursuant to an arbitration provision contained in Carlson’s employment agreement with Fox News.

Has the Seventh Circuit Court of Appeals Expanded the Grounds for Reviewing Arbitration Awards?

A fundamental tenet of arbitration is that arbitration awards are subject to very limited review and are rarely vacated due to an error in contract interpretation. The Illinois Uniform Arbitration Act sets forth just five limited grounds under which a court can vacate an arbitration award, including fraud; evident partiality; where the arbitrators exceeded their powers; where the arbitrators refused to permit material evidence; or where no arbitration agreement existed. 710 ILCS 5/12. Illinois courts will usually not vacate an arbitration award for mere “errors in judgment or mistakes of law” unless “gross errors of judgment in law or [ ] gross mistake[s] of fact” are “apparent on the face of the award.” Rauh v. Rockford Products Corp., 574 N.E.2d 636, 644 (Ill. 1991).

Class and Collective Action Waivers Lawful under NLRA, Eighth Circuit Finds, Contrary to Seventh Circuit

The National Labor Relations Board erred in determining that a company violated the National Labor Relations Act by maintaining and enforcing a mandatory arbitration agreement which prohibited employees from bringing or participating in class or collective actions to redress employment-related disputes in any forum, the U.S. Court of Appeals for the Eighth Circuit, in St. Louis, has held.

Supreme Court Review Likely After Seventh Circuit Creates Split on Class and Collective Action Waivers under NLRA

Setting the stage for U.S. Supreme Court review, the U.S. Court of Appeals for the Seventh Circuit, in Chicago, has held that arbitration agreements that prohibit employees from bringing or participating in class or collective actions violate the National Labor Relations Act. Lewis v. Epic Systems Corp., No. 15-cv-82-bbc (7th Cir. May 26, 2016). This holding is contrary to that of the Second, Fifth, Eighth, and Ninth Circuit Courts of Appeals.

Eighth Circuit Finds Class and Collective Action Waivers Lawful Under NLRA, Contrary To Seventh Circuit

On the heels of the 7th Circuit’s May 27 Lewis v. Epic Systems decision, reported here, yesterday the Eighth Circuit Court of Appeals held that the NLRB erred in determining that Cellular Sales of Missouri, LLC violated the NLRA by maintaining and enforcing a mandatory arbitration agreement under which employees waived their rights to pursue class or collective action to redress employment-related disputes in any forum.

Deflategate for Labor Lawyers Revisited: 2nd Circuit Reinstates Brady Suspension and Reaffirms Judicial Deference to Arbitration

The United States Court of Appeals for the Second Circuit has reinstated the four game suspension imposed by the NFL on New England Patriots quarterback Tom Brady for his role in the infamous “Deflategate” scandal. This decision overturned a district court decision which vacated an arbitration award issued by NFL Commissioner Roger Goodell enforcing the suspension.

Arbitration Plan Contained in Employee Handbook Enforceable? Not Without Savings Clause, Fifth Circuit Says

In Nelson v. Watch House International, L.L.C., (No. 15-10531), the Fifth Circuit Court of Appeals reversed a district court decision dismissing an employee’s lawsuit against his employer and compelling arbitration. The Fifth Circuit held that the employer’s arbitration agreement, contained within its employee handbook, failed to include a Halliburton-type savings clause that required advance notice before termination of an arbitration agreement became effective—and thus the agreement was illusory and unenforceable.

Mandatory Arbitration and the Supreme Court - The First of Potentially Many New Days

As Justice Scalia''s body lies in state in the Great Hall of the Supreme Court this morning, my eye was caught by the first headline in today's Employment Law 360.

Pitfalls of Arbitration Clauses in Employee Handbooks

An employee handbook is a necessary and familiar workplace fixture. A recent trend among employers is the inclusion of a mandatory arbitration clause, to avoid a jury trial in the event of employment-related litigation. Both state and federal courts have recently grappled with the validity of arbitration clauses in the employment litigation realm, and have both concluded that such clauses are not enforceable. These cases serve as a reminder that an employer must be vigilant should it wish to make such a clause part of its employment policies.

Is binding arbitration an effective alternative to litigation for employment disputes? One PA federal court thinks it’s not.

In a case that could act as a jumping off point for discussion regarding the pros and cons of mandatory arbitration in employment cases, the U.S. District Court for the Eastern District of Pennsylvania ultimately upheld an arbitrator’s decision that a soccer coach’s firing did not violate his employment agreement. Nowak v. Penna. Professional Soccer, et al., EDPA, No. 12-416 (January 11, 2016). In its published opinion, the court provided its own view of binding arbitration as a problem resolution mechanism – and the language is not supportive of that form of ADR.

DIRECTV v. Imburgia

Last week, in DIRECTV v. Imburgia, the United States Supreme Court issued a decision once again re-affirming the strong federal policy in favor of arbitration.

U.S. Supreme Court Rejects California Limitation on Arbitration Agreements with Class Action Waivers

Despite recent U.S. Supreme Court decisions strongly upholding the enforceability of class action waivers in arbitration agreements, opposition to class action waivers on both the political and legal fronts persists, especially in California.

Supreme Court Rebukes Another California Anti-Arbitration Ruling

Today the U.S. Supreme Court issued its opinion in DirectTV v. Imburgia, reversing a California Court of Appeal’s refusal to enforce a consumer arbitration agreement containing a class action waiver. The case involves a service agreement between DirectTV and its consumers, stating that any dispute between DirectTV and the consumer will be resolved by binding, individual arbitration and that the consumer waives the right to pursue any claim on a class basis. However, the agreement further provided that if the class waiver is unenforceable under “the law of your state” (the state where the consumer resides), then the entire arbitration provision will be deemed unenforceable.

SCOTUS Channels The FAA To Uphold DirecTV's Arbitration Clause

In a 6-3 decision, the U.S. Supreme Court ruled today in favor of the enforceability of arbitration clauses, once again communicating the court’s enduring preference for the enforcement of arbitration provisions. Although today’s decision did not specifically involve employment law, it should give a boost to those companies that choose to utilize arbitration agreements with their workforces. DirecTV, Inc. v. Imburgia.

State Limitations on Arbitration Agreements with Class Action Waivers Again before U.S. Supreme Court

The latest of a line of recent cases in which the U.S. Supreme Court has weighed the enforceability of class action waivers in arbitration agreements was before the Court on October 6, 2015, when the Supreme Court heard oral argument in DirecTV, Inc. v. Imburgia, et al., No. 14-462. These decisions almost uniformly have favored arbitration, and many employers have adopted and successfully utilized arbitration agreements containing class action waivers.

PAGA Representative Claims Remain Alive After SCOTUS Denies Iskanian Review

This morning, the Supreme Court of the United States declined review of a state supreme court case that has sparked widespread flux in the landscape of class action arbitration waivers in California. In Iskanian v. CLS Transportation Los Angeles, LLC, S204032 (June 23, 2014), the Supreme Court of California had ruled on the issue of whether the Federal Arbitration Act (FAA) preempts California’s policy against enforcement of class action waivers on the grounds that such waivers were contrary to public policy or unconscionable. Last summer, the state’s highest court held that the California policy was preempted by the FAA. But the California Supreme Court refused to find that the FAA preempted rephresentative action waivers as applicable to the Labor Code Private Attorneys General Act of 2004 (PAGA). As a result, under the California Supreme Court’s decision, while arbitration agreements can prohibit employees from bringing class actions, employees can still bring representative actions pursuant to PAGA and an arbitration agreement containing a waiver of PAGA representative actions is not enforceable. The United States Supreme Court’s decision means that the California Supreme Court’s decision is still good law.

Supreme Court: Arbitrators, Not Courts, Decide Whether A Suit May Proceed To Arbitration

On March 5, 2014, the U.S. Supreme Court upheld an arbitration panel’s award and broadened arbitrators’ authority to determine preliminary issues in arbitration agreements. Although the case concerned a treaty dispute between a corporation and a sovereign nation, the Court’s decision reframed the issue as an arbitration dispute and continued to follow well-established precedent that favors arbitration while limiting judicial intervention of such agreements. This ruling is good news for employers. BG Group v. Republic of Argentina

IADC ADR Committee Chair Val Stieglitz of Nexsen Pruet reports on recent trends regarding state statutes restricting out of state arbitrations

Congress passed the Federal Arbitration Act (FAA) in 1925 to place arbitration agreements on the same footing as other contracts.1 Under the FAA, an arbitration provision “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C.A. § 2. This simple idea has, of course, spawned considerable controversy and litigation, and the tension between the FAA and State laws continues to appear on many fronts.

Fifth Circuit Overrules NLRB on D.R. Horton Mandatory Arbitration Case

As we previously reported, in D.R. Horton, the NLRB held that a mandatory arbitration agreement that waives employees’ rights to participate in class or collective actions is unlawful under the National Labor Relations Act (NLRA). As recently as last month, the NLRB and its ALJs have continued to rely on D.R. Horton to find unlawful both mandatory and non-mandatory arbitration agreements, and even expanded the case’s holding to further restrict the rights of employers to invoke arbitration agreements, even if such agreements contain opt-out clauses.

Legal Alert: Fifth Circuit Further Strengthens Class Action Waivers with Latest DR Horton Decision

Executive Summary: In a long awaited decision, D.R. Horton v. National Labor Relations Board, (Case. No. 12-60031, Dec. 3, 2013), the Fifth Circuit Court of Appeals vacated the January 2012 ruling of the National Labor Relations Board ("NLRB") that invalidated an employee's arbitration agreement containing a class action waiver.

Fifth Circuit Rejects NLRB's D.R. Horton Decision

In a major win for employers, the Fifth Circuit Court of Appeals, on December 3, 2013, rejected the highly controversial D.R. Horton, Inc. decision from the National Labor Relations Board (NLRB).

Employers Should Reassess Strategy in Light of New Rulings from the Supreme Court

The Supreme Court of the United States recently issued two landmark rulings affecting the viability of arbitration as an alternative to costly litigation. As a result, every employer of every size needs to reassess whether the protections an arbitration agreement can afford are worth the potential negative ramifications.

Will Your Arbitration Agreement Be Enforceable After September 30, 2013?

Some employers have decided that it is beneficial to try to avoid public lawsuits and arbitrate disputes they may have with their employees. Such employers typically require employees to agree to arbitration at the time of employment by including such language in their employment applications or other documents that are signed by employees.

U.S. Supreme Court Enforces Arbitration Clause in Non-Compete Agreement

In the latest of a long line of decisions favoring arbitration, the United States Supreme Court has overturned a decision of the Oklahoma Supreme Court invalidating a non-compete agreement that contained a binding arbitration clause. The United States Supreme Court reasoned that by declaring the non-competition agreements null and void, rather than leaving that decision to a private arbitrator in the first instance, the Oklahoma Court ignored the basic tenets of the Federal Arbitration Act (FAA) that expresses a national policy favoring arbitration.

D.R. Horton Decision on Class Action Waivers in Mandatory Arbitration Agreements Draws Decidedly Negative Reaction from Federal Courts

In January, we reported on the National Labor Relations Board’s (NLRB) controversial decision in D.R. Horton, Inc. and the broad implications that it had for both union and non-unionized workforces. The NLRB’s decision in D.R. Horton is pending before the U.S. Court of Appeals for the Fifth Circuit. Meanwhile, a majority of federal district courts who have addressed the issue have disagreed with the NLRB and have refused to follow its holding, creating a “perfect storm” which could lead to a Circuit Court split (and perhaps a Supreme Court decision) or a reversal of the NLRB’s holding.

5th Circuit Dashes Class Action in Arbitration Setting

The interaction between arbitration and class/collective actions which seems to be continually evolving, took another positive step for employers in the 5th Circuit with today's decision in Reed v. Florida Metro University, Inc. (5th Cir 5.18.12).

An Arbitration Sign of the Times

If you think arbitration is not a significant player in employment law dispute resolution, you would have to think twice when you see that the National Institute for Triall Advocacy (NITA), one of the best known training programs for trial lawyers is holding their first Arbitration Advocacy May 18-20, 2012.

Arbitration (Is Not the Same as) Courts of Conciliation

In my first year of law school at the University of Texas, we had a class called "Introduction to the Study of Law." My section was taught by Professor Leon Lebowitz, one of the nicest profs at the law school, and a really good Business Associations, Securities Regs professor. Intro, at least I remember it, was known best for its endless discussions about the "forms of actions" which of course were purely historical relics even at the time. (For some reason trespass de bona asportatis sticks in my mind, how scary is that?)

Two And A Half Lawsuits: Lessons Learned From The Charlie Sheen Litigation

The recent termination of Charlie Sheen from "Two and a Half Men," and the swirl of negative publicity around the incident, has shed light on the use of arbitration agreements. After he was fired, Sheen filed a $100 million lawsuit against Warner Bros. He wants the proceedings held in front of a jury rather than being privately adjudicated by an arbitrator as outlined in his Warner Bros. contract.

Legislative Override of Supreme Court

What a difference three years makes. Unlike the opening weeks of the prior Congress when it could not act fast enough to get the reversal of the Supreme Court's decision in the Lilly Ledbetter case to President Obama's desk, the offering of the Arbitration Fairness Act by Senator Franken, faces much more difficult sledding. Franken bill would block mandatory arbitration clauses in cell phone contracts.

Arbitration Can Save Time and Money

s American businesses slowly emerge from the worst downturn since the Great Depression, employers should steer clear of roadblocks that can undermine their progress.

Divided Supreme Court Endorses Use of Class Arbitration Waivers

On April 27, 2011, a divided U.S. Supreme Court held that the Federal Arbitration Act (FAA) protects an employer’s right to include a class action waiver in its arbitration agreement even though a state law bars such provisions as unconscionable. In a 5-4 decision, the Court found that “[s]tates cannot require a procedure that is inconsistent with the FAA, even if it is desirable for unrelated reasons.”

SUPREME COURT CONTINUES TO GREENLIGHT EMPLOYMENT ARBITRATION (pdf).

The U.S. Supreme Court continues to issue rulings favorable to arbitration agreements in the employment setting. Employers who have arbitration agreements with their employees, or those considering putting such agreements in place, should make sure their agreements are drafted and updated to take full advantage of developing Supreme Court precedent. The two most recent Supreme Court decisions and their implications for employers are addressed below.

U.S. Supreme Court Tackles Arbitration Case.

On June 21, with Justice Antonin Scalia writing for a 5-4 majority, the U.S. Supreme Court issued an important decision for employers that are utilizing or are considering adopting arbitration agreements. The Court addressed the enforceability of an arbitration agreement (included as part of an employment contract), which stated that the arbitrator determines the enforceability of the contract. According to the majority, because the employee in this case challenged his employment contract as a whole, rather than specifically chal-lenging the provision in the agreement granting the arbitrator the authority to determine enforceability (the "delegation provision"), the agreement to arbitrate must be evaluated by the arbitrator, not a court.

The Potential Impact of Today's Supreme Court's 5-4 Decision on Arbitrability.

It is never too much a surprise when the Supreme Court reverses the 9th Circuit, nor in recent years is it a surprise when the Court hands down a decision favoring arbitration of disputes, even in employment law matters. In a narrow sense, that is the substance of today's 5-4 decision in Rent-A-Center, West, Inc. v. Jackson, (S.Ct. 6/21/10) [pdf].

Employers Handed Narrow Arbitration Decision Victory.

In a narrow 5-4 decision, the Supreme Court handed employers yet another victory in the area of employment arbitration agreements today by holding that, in many circumstances, the issue of whether the agreement is enforceable should be made by an arbitrator and not a court of law.

High Court Says Arbitrators Cannot Decide Class Claims Unless Arbitration Agreement Specifically Says So – Does this Apply to Employment Claims?

In Stolt-Nielsen S.A. v. AnimalFeeds International Corp., the Supreme Court ruled that arbitrators cannot decide class action styled arbitration claims unless an arbitration agreement specifically provides for it. But the Court’s ruling may not become the boon that it seems for employers. An argument can be made that the decision does not apply in the context of employment claims because the National Labor Relations Act (NLRA) gives employees the right to engage in concerted activities for the purpose of mutual aid or protection. Employers that interfere with those rights commit unfair labor practices. So, theory being, employers that impose arbitration on employees—but at the same time prohibit them from banding together to arbitrate their claims—unlawfully interfere with employees’ rights protected the NLRA.

Supreme Court Rules Against Inference of Class Arbitration in “Silent” Contracts.

On April 27, with Justice Samuel Alito writing for the 5-3 majority (Justice Sonia Sotomayor abstained), the U.S. Supreme Court addressed class-action arbitration when the parties’ agreement was silent regarding the aggregation of multiple parties’ claims. According to the Court, the arbitration panel’s imposition of class arbitration – despite the parties’ stipulation that they had not reached an agreement on this issue – is “fundamentally at war” with the Federal Arbitration Act (FAA) principle that arbitration is a matter of consent. “[A]n implicit agreement to authorize class action arbitration,” the Court ruled, “is not a term that the arbitrator may infer solely from the fact of an agreement to arbitrate.”

Supreme Court Rules Class Arbitration Not Allowed When Agreement is Silent.

On April 27, 2010 the U.S. Supreme Court decided that class arbitration is permissible only when the parties to a contract specifically agree. That is, silence does not amount to an implicit agreement to class arbitration. This question had confounded courts and arbitrators for years.

No Class Arbitration Under the FAA Unless Specifically Agreed, At Least for Now.

Today the Supreme Court decided a case important in the employment law field although the underlying case was a commercial dispute. The question in Stolt-Nielsen v. AnimalFeeds International (S.Ct. 4.27.10) [pdf] was whether under the Federal Arbitration Act, arbitrators could decide that class action was appropriate if the arbitration agreement was silent on that issue. Holding that the answer was no, Justice Alito wrote:

Arbitration Restricted For Defense Contractors And Subcontractors.

On December 19, 2009, President Obama signed into law a new Defense Appropriations Act. The Act contains a provision, originally introduced by Senators Al Franken of Minnesota and Mary Landrieu of Louisiana, with important implications for federal defense contractors and subcontractors that have implemented arbitration agreements for their employees. Specifically, the Act prohibits the federal government from awarding funds appropriated by the Act for any federal contract in excess of $1,000,000 if a contractor requires its employees or the employees of an independent contractor to arbitrate certain claims.

The Next Lilly Ledbetter Fair Pay Act?

The first bill signed into law within days following President Barack Obama's inauguration was the Lilly Ledbetter Fair Pay Act. This law extended the statute of limitations for filing charges of discrimination in compensation beyond the statutory 180/300 days from the alleged discriminatory act by making each new pay check a separate violation triggering a new period of charge filing (even if it was decades after the act in question). The law reversed the U.S. Su-preme Court's 5-4 decision in Lilly Ledbetter v. Goodyear Tire & Rubber Co. It was passed without congressional hearings or even a mark-up in a congressional committee.

Supreme Court Bypasses Constitutional Question In Arbitration Ruling.

On December 8, 2009, the U.S. Supreme Court issued a unanimous decision holding that a panel of the National Railroad Adjustment Board (NRAB) violated the Railway Labor Act (RLA) when it refused to hear five grievance cases on the ground that the railroad and the union had not presented sufficient evidence to show that they had completed the required "conferencing" before arbitration.

Is It Time For You To Adopt An Arbitration Policy?

When you fire an employee, there is always the concern that your termination decision will end up under the microscope of litigation – the human resources equivalent of Monday-morning quarterbacking. But instead of having that employment dispute resolved in a courtroom, you may want to consider adopting an arbitration policy that substitutes an arbitration hearing for a courtroom trial.

U.S. Supreme Court Set To Begin New Term Justices To Review Arbitration And Disparate Impact Bias Cases.

In early October, the U.S. Supreme Court began hearing oral arguments in the 2009-2010 term. There are currently seven cases on the docket that involve employment and labor related issues or are likely to impact these areas. One of the most notable of these will decide how much time plaintiffs have to file a lawsuit when they believe they have been unfairly penalized by hiring tests. Other cases will resolve issues involv-ing an alleged whistleblower, pension benefits, race discrimination, and labor arbitration.

Hotel's "Refusal" to Arbitrate Does Not Breach Arbitration Agreement.

Employers with currently valid arbitration agreements should keep in mind that nothing lasts forever. Just as the world is constantly changing, so too are court decisions relating to implementation and enforcement of arbitration agreements always evolving. The case at issue involves the U.S. Court of Appeals for the Ninth Circuit, which covers ten states in the western United States. But circuits read each others' cases and the principles established by one are frequently applied elsewhere. This case points up the need to always be aware of any binding arbitration agreements and their details when dealing with employee issues.

Mandatory Arbitration of Employment Disputes: Is It Right For Your Company? (pdf).

On March 25, 2008, the U.S. Supreme Court ruled in Hall Street Assocs. LLC v. Mattel, Inc. that courts “must” confirm an arbitration award unless that award is vacated, modified, or corrected on the basis of some very narrow and exclusive categories. The Court further held that the parties to an arbitration agreement could not contractually agree to modify a reviewing court’s authority to vacate or modify the arbitration award. While this case emphasized the limited grounds for reversal and review under the Federal Arbitration Act (FAA), it also underscored the potential advantages of arbitration of disputes – in contrast to civil litigation – for employers.

Careful What You Ask For... (4th Cir.)

A recent Fourth Circuit case highlights potential pitfalls with class and collective action arbitrations. In Long John Silver’s Restaurants, Inc. v. Cole, et al., 514 F.3d 345 (4th Cir. 2008), the court affirmed an arbitrator’s award determining (i) the Fair Labor Standards Act’s (FLSA) “opt-in” collective action certification process was inapplicable to the arbitration proceedings, and (ii) employees could pursue an “opt out” class action. The award magnified the scope of the case by including all employees who fell within the definition of the putative class, not just those who filed consents to join the action.

Arbitration Agreements: Make Sure Your Employees Actually Sign Them.

Many employers utilize binding arbitration to resolve employment-related disputes with their employees. The advantages of binding arbitration include savings of time and cost, limited discovery, a more expedited process than court procedures, and, hopefully, smaller attorney's fees.