Arbitration is becoming a way of life for consumers, employees and many others. Arbitration formerly was only used in the labor union context. Now, arbitration clauses are everywhere, even at one Whataburger front door. See my prior post.
Arbitration makes more sense for the labor union context, because arbitrators have incentive to remain nuetral. In arbitration, the two sides to a dispute choose an arbitrator. Both sides are allowed a certain number of picks. Eventually, the two sides end up with the arbitrator seen as least biased. That process does not work as well in the employment context. In employment cases, there is no union. You have one employee who is filing his/her first and only challenge to some employment action. That one employee will never again pick an arbitrator. That one employee will have little or no idea regarding prior history of potential arbitrators or possible bias. The one employee is shooting in the dark.
In Alim v. KBR, 2011 WL 61868 (Tex.App. Dallas 1/10/2011), we see one instance where a prior relationship leads to dismissal of an arbitration award. The arbitrator, Scott Rosuck did not disclose that he had presided over a prior arbitration three years prior with KBR, with the same KBR attorney and with the same KBR representative. Mr. Rosuck was required to disclose prior relationships, but did not mention the prior arbitration. He did say at the beginning of the arbitration that he had "come across" the lawyer and representative before. But, the Dallas court of appeals found that to be insufficient disclosure to put the employee on notice.
Mr. Rosuck said he relied on memory to check prior conflicts. It appears he had overlooked the prior arbitration with the same employer, the same employer’s representative and the same employer’s attorney. Obviously, he needs a better system for checking potential issues. The court found this oversight to be "inexcusable." Mr. Rosuck could not even disclose how many arbitrations he had done with KBR in the past.
But, the more important issue is prior arbitral awards. This employee somehow learned of the prior arbitration with KBR, the same rep and the same attorney. But, arbitration awards are not public records. The real issue is that there is no systemic way for employees to check prior arbitration awards. Unlike a lawsuit, where you can look in the district court records, we cannot learn that Scott Rosuck presided previously with the same persons. Unless the employee’s attorney gets lucky and calls the right employment lawyer who maybe, sort of remembers Scott Rosuck from three years before. This is a system sure to lead to abuse.
Arbitrations have been sold to employers as quicker, cheaper alternative to lawsuits. We are finding out that they often are not cheaper or faster. But, the real problem is the secrecy. Judges have biases. But, we lawyers and observers have some awareness of those biases. Lawyers usually know. But, arbitrators are different. Arbitration awards are private and not available for review. Biases reveal themselves only haphazardly or not at all.