Employment Arbitration Growing to Defeat Class Actions

The Wall Street Journal reports "The percentage of companies using arbitration clauses to preclude class-action claims soared to 43% last year from 16% in 2012, according to a survey of nearly 350 companies conducted by management-side law firm Carlton Fields Jorden Burt LLP." "Lawyers agree that a 2011 Supreme Court case, AT&T Mobility v. Concepcion, gave employers confidence that courts would uphold class-action waivers." The Wall St. Journal suggests the arbitral class waivers are lowering employers' litigation costs: "Class-action suits from workers cost employers $462.8 million in 2014, down from $598.9 million in 2011." The Journal article also suggests one issue in many of these cases is whether the employees are in fact employees are actually independent contractors. One lawyer for employees/contractors, Shannon Liss-Riordan, "is trying to wear down Arise by bringing claim after claim from different contractors. An arbitrator in Texas ruled in favor of one Arise worker in February, awarding her full damages and requiring Arise to pay her legal fees. Ms. Liss-Riordan hopes the company will decide facing dozens of individual cases is no longer
in its interests."

The Nation Magazine Criticizes SCOTUS Arbitration Decisions

The title of the article is How Consumers Are Getting Screwed by Court-Enforced Arbitration

Criticism of SCOTUS Arbitration Cases: Concepcion and Amex

U.S. Supreme Court rulings AT&T Mobility v. Concepcion and American Express v. Italian Colors criticized by Lina Khan who writes that these "decisions culminate a thirty-year trend during which the judiciary, including initially some prominent liberal jurists, has moved to eliminate courts as a means for ordinary Americans to uphold their rights against companies. The result is a world where corporations can evade accountability and effectively skirt swaths of law, pushing their growing power over their consumers and employees past a tipping point."

Class Waiver Voided in Securities Arbitration

Since the Supreme Court's Concepcion and Italian Colors cases, courts have generally enforced arbitration agreement provisions requiring individual, rather than classwide, adjudication.  In contrast, the Financial Industry Regulatory Authority (FINRA) ruled otherwise for securities arbitration.

Good lawyering by Pace Law Professor Jill Gross and Cincinnati Law Professor Barbara Black, who argued for this result in their article,  Investor Protection Meets the Federal Arbitration Act, 1 Stan. J. Complex Litig. 1 ­­(2012).

As Professor Gross explains at ADR Prof Blog, FINRA held that the Securities Exchange Act constituted a sufficient Congressional command to overcome the FAA’s mandate to courts to enforce arbitration agreements as written.  Since the Exchange Act delegated to the SEC, which in turn delegated to FINRA, the authority to regulate broker-dealers’ arbitration agreements for the protection of investors, FINRA’s rules barring class action waivers and mandating that investors be able to bring class claims in court were enforceable [notwithstanding the FAA].

AT&T v. Concepcion: The Problem of a False Majority

Article by John Marshall Law Professor Lisa Tripp and Evan Hanson concludes "Concepcion should viewed as having created no rule of law outside its specific facts and should, ... be treated as not having a majority opinion for precedential purposes."

California Court Strikes Down Class Waiver Arbitration Clause

California Court of Appeal finds a way around Concepcion and declines to enforce class waiver clause in   Imburgia v. DIRECTV, Inc., B239361 (2nd Dist. Div. 1 April 7, 2014).  As the valuable blog, California Mediation and Arbitration summarizes, "Concepcion does not necessarily invalidate all class action waivers.  The objective of the FAA is to carry out the intent of the parties, and contract interpretation may lead to the conclusion that the parties intended to proceed under state law rules that allow for the invalidation of class action waivers."

Collective Actions and Joinder of Parties in Arbitration

"Collective Actions and Joinder of Parties in Arbitration: Implications of DR Horton and Concepcion"

by UC Irvine Law Professor Catherine Fisk

Berkeley Journal of Employment and Labor Law, Vol. 35, No. 1, 2014, Forthcoming

Professor Fisk argues that employment agreements "to arbitrate individually are unenforceable under the National Labor Relations Act and the Norris LaGuardia Act."  She argues that such agreements are not covered by the Supreme Court’s reasoning in Concepcion and Italian Colors to the extent they prohibit joinder of fewer parties than would be required to bring a large class action and, therefore, remain protected by labor law.

Professor Fisk's article criticizes the Fifth Circuit’s Horton case and questions the practical wisdom of agreements requiring employees to pursue claims only as individuals. "State and federal courts universally allow liberal joinder of plaintiffs and defendants because it is more efficient and avoids some truly thorny issues about the preclusive effect of judgments."

Mass Arbitration and Democratic Legitimacy

Mass Arbitration and Democratic Legitimacy 

This very well written article by UC Davis Law Professor David Horton reviews Margaret Jane Radin’s "dazzling new book, Boilerplate."

Horton's Essay argues that Radin’s democratic degradation thesis is particularly compelling in the context of consumer and employment arbitration.