San Antonio Employment Law Blog : San Antonio Employment Lawyer & Attorney : Thomas Crane Law Firm : South Texas, Bexar County TX Wage & Discrimination Issues

A survey of likely voters in 2010 shows that the American public is generally opposed to mandatory arbitration clauses found in employment and consumer situations.  59% oppose forced arbitration clauses found in the fine print of employment and consumer agreements.  59% of likely voters support the Arbitration Fairness Act, a proposal which would prevent these arbitration clauses.  Opposition to such clauses is found regardless of party affiliation or gender.  Voters who identify themselves as Republicans opposed these clauses 59%, while Independents opposed such clauses 59%.  60% os surveyed Democrats opposed arbitration clauses. 

The survey also indicated that some three-fourths of Americans believe they can sue an employer if necessary  the presence of these forced arbitration clauses.  

The survey was taken by Lake Research Partners and was commissioned by the Employee Rights Advocacy Institute, an affiliate of National Employment Lawyers Association.  

• Email This
• Print
• Comments
• Trackbacks
• Share Link

 Jamie Leigh Jones, who claimed she was raped in Iraq when she served as a private contractor lost her case.  See news report.  She had sued her former employer, KBR.  A Houston jury rejected her claims of fraud and rape.  Ms. Jones acquired some fame when she testified in Congress opposing mandatory arbitration in so-called employment agreements.  She appealed her arbitration issue and eventually won the right to a jury trial.  I previously wrote about her case here.  

• Email This
• Print
• Comments (2)
• Trackbacks
• Share Link

Arbitration is not popular with many people.  Part of the problem with arbitration is a lack of accountability.  There is no appeal from an award by an arbitrator.  There is often a lack of information about the arbitrator.  In a recent case, we see what goes on behind some arbitrations.  The Fifth Court of Appeals in Dallas vacated a $22 million dollar award by one JAMS arbitrator.  See decision on Karlseng v. Cooke, No. 05-09-01002-CV.  The decision focused on the social ties between the arbitrator and the lawyer for the winning party.  Robert Faulkner, the JAMS arbitrator and a former US Magistrate, had close ties to the lawyer, Brett Johnson.  The arbitration hearing lasted several days in 2007.  The arbitrator awarded $22 million in damages and another $6 million in attorney's fees to the winning party.  The arbitral hearing concerned a partnership dispute. 

Karlseng, the losing party appealed the award to the trial judge, but was denied.  The Dallas Court of Appeals then overturned the lower court decision - finding that the ties were close between the former Magistrate and Mr. Johnson and those ties were not disclosed.   Of course, in an arbitration, all ties should be disclosed. 

In 2006, Johnson and Faulkner attended a Dallas Mavericks game, with Mr. Johnson paying some $1,200 for the tickets.  They ate dinner at an expensive restaurant to the tune of $428, again paid by Mr. Johnson.  In December, 2006, Mr. Johnson sent a $75 basket of wine to the Faulkners.  

Yet, at the start of the arbitration in 2007, Mr. Faulkner and Mr. Johnson acted as if they were meeting for the first time.  

Later, Mr. Faulkner said his wife opens the presents and he was not aware of the wine basket.  Mr. Faulkner said he forgot about the Mavericks game until reminded by his wife.  So says a report by Texas Lawyer.  

Arbitration is intended to represent an agreement between the parties to have their matter heard by an impartial third party.  It only works if the arbitrator discloses any potential biases.  It is a system based on contract.  If the arbitrator does not disclose all possible ties, the parties have no way of knowing.  The parties cannot make an intelligent choice in the absence of information. 

Arbitrations only work if the arbitrator discloses every possible bias.  Anyone who has purchased a new car, electronic device or who has worked for some 30% of the employers out there have knowingly or unknowingly agreed to mandatory arbitration.  A system based on arbitral disclosure will not work well for the average consumer, much less the average businessman involved in a partnership dispute. 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

 A majority of Americans oppose forced arbitration accoding to a recent survey.  See HR Lawyer post.  In a nationwide survey of 800 citizens, 59% opposed forced arbitration clauses in employment and consumer contracts.  59% support the Arbitration Fairness Act, a proposed statute in Congress. Support crosses political and gender boundaries. Even after voters hear arguments pro and con, only one-third support mandatory arbitration. 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

 Mandatory arbitration holds few benefits for the employee.  In the labor union context, it is helpful.  The union and employer can pick the arbitrator they want.  Both union and employer have knowledge of the different arbitrators and their particular biases.  So, both sides can make an informed selection when they choose arbitrators.  But, that does not work in the non-union context.   Because in the normal at-will situation, the employee may go to arbitration only once in his/her life.  She will have no knowledge of the different arbitrators.  Instead, the employer will go to arbitration far more often and will have more knwowledge of the different arbitrators.  

And, the cost is huge.  One typical case: the employee was required to pay half the arbitrator's fee (usually about $250/hr with a minimum of $2000/day), filing fee of $500, case filing fee of $1000, additional filing fee of $2750, $150 daily hearing fee.  These are huge fees for someone who may have ben terminated.  

Then, if you lose, you may have to pay the other side's legal fees - $207,000 in one case.  In another case, the arbitrator derived half of his annual income from the employer.  

One study found that employees won 21% of the time in mandatory arbitration while winning 56% in California state courts.  I know there are occasional significant wins for employees, but generally, employees do worse in arbitration than they do in traditional courts.  The cost alone makes it virtually impossible for any employee to pursue.  

And, since the employers do more arbitrations, the arbitratraors will favor them.  The arbitrator gets work only if they get picked by one side or the other.  Over time, the arbitrator will favor the side that hires him/her more often.  

The reliance on arbitration needs to change.  It is harming a great many employees.  Support the Arbitration Fairness Act now pending in the Senate. 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

 NPR has a good story on the evils of  mandatory arbitration in the workplace.  Unfortunately, it is all too accurate.  Mandatory arbitration simply does not work well in the non-union workplace.  It favors employers over employees.  Note the experience of one arbitrator who ruled against the company one time, after finding in favor of the credit card companies 19 previous times.  She was removed from the list of potential arbitrators.  

The problem with arbitration in the workplace is that arbitrators are employed or hired for a case only when both sides agree.  Both sides are presented with a list of potential arbitrators.  Both sides can strike whoever they wish.  Employers go to arbitrations multiple times.  Employers will have an institutional memory of who rules which way.  An employee will generally go to arbitration only once. The arbitrators understand this.  If they want future employment, they must find in favor of the employer.  

Support the Arbitration Fairness Act now before Congress. 

• Email This
• Print
• Comments
• Trackbacks
• Share Link