Arbitration

Question 1

Key Themes:

Answer 1

• Employers seek to control forum through mandatory arbitration clauses. little controversy here in the unionized setting, its actually where nearly all disputes are resolved.
• MUCH more controversial in individual employment setting, especially with statutory claims.
• Critique – confidential outcomes, non-deterrent

Question 2

Federal Arbitration Act:

Answer 2

• §2 (Savings clause) - a written arbitration clause in any “contract evidencing a transaction involving commerce . . . Shall be valid, irrevocable and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract”
  o What this means? Unless saved by contract doctrine (fraud, duress, unconscionability etc)….arbitration clause is enforceable.
• FAA has been applied sweepingly by the court.
• Employee statutory rights must be arbitrated if they have agreed through arbitration clause
  o Employees cannot be subject to k that waives statutory rights, but employees can waive access to court to enforce those rights. (Rights themselves unwaivable, forum is waivable)

Individualized arbitration clauses (class treatment waivers) have typically been upheld.

Question 3

Cases

Answer 3

Concepcion – CA law says ALL class action waivers in adhesion k in small damage amounts are unconscionable.
SCOTUS says:
o Savings clause does not protect state law that stands as obstacle to FAA’s intent
o Majority said class arbitration is different than individual arbitration
o IF allowed CA law to undue arbitration clauses, that would defeat purpose of FAA.
o Dissent: disagrees and would have found the CA law saved.

Epic Systems – Do collective/class action waivers run afoul of NRLA’s and NLA;s protection for concerted activity for the purpose of “mutual aid or protection”?
o NRLA protects employee when engaged in concerted activity for mutual aid or protection.
 Does this include protection for concerted dispute resolution?
 NO (5-4).
 Court said NRLA does not conflict with FAA (including savings clause), therefore FAA still requires that the arbitration clause is enforced. Arbitration clause is what he’s raising and that is not a K defense.

**Practical effects of Concepcion and Epic Systems:

o Arbitration clauses containing collective and class action waivers are ALMOST ALWAYS enforceable in consumer and employment contexts.
 Challenges focus on the margins (consideration for the underlying k, etc)
 D.R. Horton – invalid if reasonable employee might construe clause as barring resort to NLRB for labor violations (if clause is unclear and suggests to reasonable employee that they cant bring a charge, that might be an exception)
o No joinder – even two employees cannot join to bring claims in arbitration or court together
o Core criticism: Many employees will be deterred from bringing claims or unable to find counsel willing to take case when damages are simply too low
o Criticism in Congress and bills have come forward, but stalled, to limit arbitration clauses