• November 18, 2015
    Guest Post

    by Doron M. Kalir, Clinical Professor of Law, Cleveland-Marshall College of Law

    The fact that the Roberts Court is business-friendly is, by now, well documented. It is also no secret that the Court is generally hostile to the once-venerable institution of class actions. And most recently, as The New York Times ably demonstrated, the Court has moved to elevate arbitration as the preferred mode of dispute resolution. The accumulated effect of these three trends has been devastating: Millions of Americans – customers, employees, patients, and investors, among others – are routinely denied their fundamental right to have a day in court. Some call that the privatization of the justice system.

    DIRECTV, Inc. v. Imburgia, a case emerging out of an intermediate state court in California, is another case reflecting these trends. At first sight, it may not seem a likely candidate to become one of the Term’s blockbusters. Allegedly a typical state contract-interpretation case, it looks benign, almost boring to read. Yet it is anything but. It represents nothing short of a last-ditch effort by state courts to shield consumers from these emerging trends. Will it be successful or – as some predict – destined to fail? Only days will tell.

    The facts of the case are somewhat complicated. In 2007, Amy Imburgia contracted with DIRECTV to receive programming services. Predictably, her Customer Agreement contained an arbitration-only, no-class action clause. Unpredictably, it also contained language abolishing that clause should “the law of your state . . . find this agreement to dispense with class action procedures unenforceable.” And that is precisely what happened – the California Supreme Court held such provisions to be “unconscionable” and therefore unenforceable.

    Four years later, in AT&T Mobility v. Concepcion, the U.S. Supreme Court reversed the California rule. Class-action waivers in arbitration agreements, the 5-to-4 decision held, are enforceable, reasoning that the Federal Arbitration Act (FAA) preempts state law. Despite Concepcion, however, the California Court of Appeals ruled in this matter that the individual-only arbitration clause is still unenforceable. Why? The court reasoned that the term “the law of your state,” as included in this particular consumer contract, should not be interpreted to include federal interpretation of that law (the “Supremacy Clause” version), but rather only state law as interpreted by state courts.

  • November 11, 2015
    Guest Post

    by Adam Klein and Nantiya Ruan. Klein is a partner of Outten & Golden and Ruan is Of Counsel at Outten & Golden.

    Most veterans, like most Americans, believe that our Constitution’s Seventh Amendment protects their right to a jury trial in federal court when employers break the law.  Veterans returning to their jobs after service are in particular need of protection, as recognized by the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA), which protects veterans’ reemployment rights and right to be free from discrimination because of their military service.  Yet, because so many employers mandate arbitration, having a court or jury hear employees’ claims is increasingly unavailable. 

    Forced arbitration agreements in employment relationships have garnered needed attention in recent years, most recently by the in-depth reporting of The New York Times this month. Despite extensive lobbying and media attention, forced arbitration is growing.  In 2014, 66 percent of U.S. companies had some form of arbitration clause for employees, customers, or both.[1]   Forced arbitration occurs when an employer conditions initial employment, continued employment, or receipt of employment benefits, including severance benefits, on the employee’s “agreement” to privately arbitrate all future claims against the employer.  Under employment arbitration, parties go before a privately hired arbitrator, usually a retired judge or attorney, who listens to evidence and issues a decision without a viable avenue for appeal. 

    Arbitration as a private system for handling disputes is too often an uneven playing field for employees: arbitration can be prohibitively expensive; agreements typically bar employees from bringing their claims as a group in a class action, which is the only way for many employees to challenge well-funded employers; employers effectively control the arbitration process, including the selection of arbitrators and the rules of that govern the proceeding; and there is no appeal from a bad arbitration decision. Adding to this imbalance is the U.S. Supreme Court’s recent decisions that make it extremely difficult to get out of forced arbitration agreements or class action bans.[2]

    Servicemembers hoping to escape forced arbitration agreements to pursue their USERRA rights in court are unlikely to be successful.  Recent case law in the Fifth and Sixth Circuits (as well as several district courts) have held that USERRA claims are subject to forced arbitration, in part because courts hold the statutory language of USERRA does not demonstrate a congressional intent to preclude arbitration.[3]

  • November 4, 2015
    Guest Post

    by Alex J. Luchenitser, Associate Legal Director for Americans United for Separation of Church and State

    In recent years, religious groups have attempted to use the legal system to impose their beliefs on others in a variety of areas, from health-insurance coverage and healthcare services, to discrimination in public accommodations and employment. Religious groups have typically done so by claiming that they have a statutory or constitutional “religious freedom” right to discriminate, deny services, or be exempted from laws or regulations.

    The New York Times exposes another way in which religious groups are attempting to foist their faith on those who might not share it. More and more frequently, religiously affiliated institutions are requiring people with whom they interact to sign contracts that require any disputes to be resolved through religious arbitration instead of the secular court system.

    Such religious arbitration is typically based on religious law, such as the Bible. Arbitration sessions are often opened with prayers. And the arbitrators are typically adherents of the religion of the entity that is being sued.

    Religious arbitration may make sense in some circumstances. Courts are prohibited from resolving disputes relating to certain internal affairs of a house of worship, including controversies that require interpretation of religious doctrine or involve the selection of ministers. In such situations, religious arbitration may provide the best chance for a disagreement to be resolved fairly.

    But religious arbitration clauses have spread far beyond contracts between houses of worship and their employees or members. The Times reveals that such clauses are being used by a variety of entities and businesses that serve the public, including substance-abuse programs, providers of vacation houses, flooring vendors, and even a sponsor of a fishing tournament.

    In these kinds of circumstances, religious arbitration functions as yet another means for religious groups to force the doctrines of their faiths upon people who do not share those beliefs, and to avoid legal rules that apply to others. Religious arbitration, in that context, is also suspect from a legal and constitutional standpoint.

    Although courts have generally upheld contractual clauses that mandate arbitration to resolve disputes, some of the reasoning underlying such decisions does not apply to religious arbitration clauses: Secular arbitrators usually must rely on the same legal principles that courts do; religious arbitrations follow religious law. Secular arbitrations are subject to limited review by the courts; courts cannot review religious arbitrations at all, however, because courts are barred from interpreting religious law. And secular arbitrators must be impartial; religious arbitrations, on the other hand, may be conducted by the very same religious groups that are being sued.

  • November 2, 2015
    Guest Post

    by Ross Eisenbrey, Vice President, Economic Policy Institute

    *This piece originally appeared on EPI’s “Working Economics Blog.”

    The New York Times has published two parts of a three-part series about the epidemic of arbitration clauses that have cropped up in millions of transactions between corporations and their customers and employees. The clauses are routinely included in employment contracts, cell-phone contracts, consumer product purchase agreements, cable subscriptions, rental agreements, and a multitude of financial transactions, as a way to prevent injured parties from having their day in court. Giving up the constitutionally protected right to sue in state or federal court is a big deal and is often the result of ignorance and deceit: millions of people have no idea the clauses are there in the fine print of contract provisions written in legalese that few individuals ever read or comprehend. They don’t find out they’ve lost their rights until they need them.

    Individuals give up not just their right to go to court but all protections regarding the venue of any hearing their claim will receive (for example, the agreement might require arbitration in a city a thousand miles away). They might give up certain remedies and the right to appeal even if the arbitrator gets the law completely wrong, and give up the essential right to join with other victims to file a class action, especially important when each claim is small and no single individual could rationally pay to hire a lawyer and bring a lawsuit for such a small sum.

    The myth is that arbitration is preferable because it allows individuals to resolve their grievances easily, quickly, and cheaply. In fact, arbitration can be more expensive for a plaintiff than a civil suit because instead of a small filing fee in court, the plaintiff will have to pay half of the arbitrator’s fee, or sometimes all of it if the arbitration clause includes a “loser pays” provision. Legal fees can be ruinous, and the Times story relates the case of a woman who owes $200,000 in attorney fees after losing a case in which her former employer allegedly destroyed evidence.

    Perhaps the worst aspect of the forced arbitration epidemic is the loss of a neutral trier of fact. Unlike judges who have lifetime appointments to the bench and are protected from financial pressure, arbitrators rely on the companies to use them again and again, creating a financial pressure to please the corporation that will have many arbitration cases in the future rather than the individual plaintiff, who will probably never use an arbitrator again.

  • July 30, 2015

    by Nanya Springer

    Many people assume that an inevitable consequence of suing someone – or being sued – is a day in court.  After all, a trial by jury in most civil cases is a constitutional right under the Seventh Amendment.  However, fewer and fewer civil suits are resulting in jury trials—less than one percent of federal civil cases since 2005, down from 5.5 percent in 1962.  The trend continues at the state level, where courts have seen a 50 percent drop in jury and bench trials between 1992 and 2005.

    In order to study why the civil jury trial is disappearing, plaintiff’s attorney Stephen Susman, a member of the ACS Board of Advisors and former member of the ACS Board of Directors, has partnered with the New York University School of Law to found the Civil Jury Project.  Susman, who provided the initial funding for the project and will serve as its executive director, says, “The Project will examine why jury trials in civil cases are rapidly vanishing, whether trial by jury still serves a useful purpose in our complex society, and if so what – if anything – can be done to reverse the trend.”

    The first of its kind in the nation, the project was conceived because of Susman’s longstanding commitment to the jury trial right.  In light of the proliferation of binding arbitration clauses and other barriers to the courthouse, Susman has repeatedly expressed concerns about the “privatization of the justice system.”  While serving as executive director of the Civil Jury Project, Susman will continue practicing law full time and teaching law students how to try cases inexpensively—a vital skill for trial lawyers, considering todays’ skyrocketing litigation costs.

    The Project’s inaugural conference will take place on Friday, September 11 in New York. For more information, visit here.