Total Articles: 17
U.S. Supreme Court Again Confirms Viability of Arbitration Agreements
Continuing its growing line of cases in favor of enforcing arbitration agreements, the U.S. Supreme Court has upheld an arbitration agreement containing a class action waiver and requiring the arbitration of consumer claims brought under the Credit Repair Organizations Act (“CROA”). The Court ruled that because the CROA was silent on whether statutory claims had to be litigated in court (despite the CROA’s requirement that consumers be informed of their “right to sue”), the Federal Arbitration Act required that the parties’ arbitration agreement be enforced, “according to [the agreement’s] terms,” including its class action waiver. CompuCredit Corp. v. Greenwood, No. 10-948 (Jan. 10, 2012).
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.
U.S. Supreme Court Strengthens Employer Arbitration Rights Meanwhile, Congress Seeks To Prohibit Such Agreements.
Some employers enter into arbitration agreements with employees as an alternative to dispute resolution in a court of law. In the event of a legal dispute, the matter is submitted to an arbitrator (often a retired judge) rather than to a judge or jury in state or federal court. However, over the years courts have scrutinized the terms of arbitration agreements, sometimes finding certain terms to be too unfair to the employee. Formulating enforceable terms of an employer-employee arbitration agreementthat is, an agreement that the courts will agree to upholdhas been very challenging.
ENFORCEABILITY OF ARBITRATION AGREEMENTS IN FLUX.
Although it has been around since at least the 1600s, arbitration has grabbed headlines recently. Debate over arbitration is nothing new. In 1925, Congress enacted the Federal Arbitration Act (FAA) [t]o overcome judicial resistance to arbitration, and to declare a national policy favoring arbitration of claims that parties contract to settle in that manner. Under the FAA, all arbitration agreements in contracts involving commerce are valid, irrevocable, and enforceable.
Sixth Circuit Overturns Employer's Litigation Waiver for Lack of Detail.
On April 26, 2010, the United States Court of Appeals for the Sixth Circuit, which encompasses Kentucky, Michigan, Ohio and Tennessee, ruled that companies that require their employees to grieve or arbitrate their employment claims must provide them with sufficient information at the time of their acceptance to constitute a "knowing and intelligent" waiver.
Federal Defense Contractors Cannot Require Arbitration of Discrimination Claims.
The Department of Defense Appropriations Act of 2010 (the "Act"), enacted on December 19, 2009, does more than dole out funds to the Department of Defense (DOD). Of particular note to federal contractors, the Act restricts DOD contractors with qualifying contracts from requiring their employees, as a condition of employment, to arbitrate claims brought under Title VII of the Civil Rights Act of 1964 and torts "related to or arising out of sexual assault or harassment."
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.
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.
Supreme Court Reaffirms Limited Judicial Review of Arbitration Decisions Under FAA.
The U.S. Supreme Court recently issued a decision reaffirming the limited grounds for judicial review of an arbitrators decision under the Federal Arbitration Act (FAA). See Hall Street Associates, L.L.C. v. Mattel, Inc. (March 25, 2008). Although Hall Street is not an employment case, the Courts decision is relevant to employers because its reaffirmation of the limited grounds for judicial review of an arbitration award applies to awards issued by arbitrators in employment-related matters.
Ninth Circuit Rules That Law Firms Dispute Resolution Program Is Unconscionable.
In yet another decision explaining what is, and is not, acceptable in employment-related mandatory arbitration procedures, the Ninth Circuit held that the program utilized by law firm OMelveny & Myers (OMM) was both procedurally and substantively unconscionable.
Legal Alert: Fifth Circuit Finds USERRA Claims Subject to Arbitration.
The Fifth U.S. Circuit Court of Appeals has held that claims under the Uniformed Services Employment and Reemployment Rights Act (USERRA) are subject to arbitration in accordance with employment-related individual arbitration agreements.
Arbitration Agreement Is Not Enforceable.
An arbitration agreement was found unenforceable by the Ninth Circuit because its fee and discovery provisions and its limitations on what issues could be arbitrated rendered the agreement procedurally and substantively unconscionable.
Circuit City's Arbitration Agreement Is Unenforceable.
Discusses Circuit City Stores, Inc. v. Adams, No. 98-15992 (9th Cir. February 4, 2002), in which the Ninth Circuit (on remand from the Supreme Court) held that the arbitration agreement in question was procedurally unconscionable because it was a contract of adhesion.
arbitration of employment claims: here to stay.
Discusses arbitration of employment disputes in light of Circuit City Stores, Inc. v. Adams, No. 991379, __ U.S. __ (March 21, 2001), in which the court held the Federal Arbitration Act ("FAA"), 9 U.S.C. 1, permits employers to require employees to arbitrate work-related disputes.
