Minimorty - 20 October 2009 02:35 PM

EvaL -

Please correct me if I am wrong, but does arbitration favor the employer over the employee because most of the lawsuits brought about are frivolous and BS?

It’s good to see you have an open mind when you want to learn something.  But let’s pretend for a minute that you are actually interested in the answer.  No, some of the reasons that arbitration tends to favor the employer over the employee are as follows:

1.  Repeat player effect.  XYZ corporation has an arbitration clause in its employee handbook that says that all arbitrations are to be held before the American Arbitration Association in its OC office.  Obviously AAA likes having a regular source of business.  While AAA arbitrators are professionals and would not consciously find in favor of the company that is responsible for their hire or discount an award to a employee that has brought a claim in order to curry favor, there is the very real potential for unconscious bias in favor of the “repeat player” over the “one time” player.  See, Lisa B. Bingham, Employment Arbitration: The Repeat Player Effect, 1 Employee Rts & Emp. Pol’y J. 189 (1997) (finding that employees recover a lower percentage of their claims in “repeat player” cases than in non repeat player cases).

2.  Less opportunity to conduct discovery.  You might not have the opportunity to take depositions or ask for documents in an arbitration.  While a sexual harassment case might be “he said / she said,” it becomes a completely different ball of wax when you find out that a manager’s last four subordinates resigned complaining of harassment.  You might not find out this important fact unless you depose the HR people.

3.  The time for “trial” and the number of witnesses each side can call may be limited.  In the example above, if the plaintiff wanted to bolster his credibility with the arbitrator by calling the four prior employees, he may not be able to, or will have to choose between calling some or all of them, and calling other witnesses to testify as to other damages (e.g., the plaintiff’s shrink).

4.  The arbitrator, unlike a jury, need not follow the substantive law or even apply the rules of evidence.  This is determined by the scope of the arbitration provision. 

There are others, but those are the some of the biggies.  Don’t forget, these provisions are very rarely, if ever, negotiable.  They are often presented on a “take it or leave it” basis.

Also, I would imagine a panel of three judges/lawyers with experience relating to the specific issues and laws at hand would make better decisions, on average, then John Six Pack and Suzy Q in a jury box.

Well, first of all that assumes that the arbitration agreement calls for a panel of three, much less anyone with experience in the substantive area of the law.  I’ve seen arb agreements that call for one person and others that call for three.  I have seen arb provisions that don’t require the arbitrator to be a lawyer or judge or have any experience in the subject matter to be decided.  I have seen arb agreements that do not tell the arbitrator to apply any law and that the decision is good whether it conforms to the law or not. 

Also, it appears that you are not familiar with the litigation process (you should sit for jury duty some time!), as you are unaware that a jury isn’t the sole determiner of the outcome.  While a jury verdict is given much deference, it is not the only consideration.  If a case even reaches trial (and a good chunk don’t due to being dismissed under pre-trial procedures), the judge can dismiss the case at the close of plaintiff’s case (known as a directed verdict), the judge can “overrule” a jury’s verdict (known as a judgment notwithstanding the verdict), or determine that certain things happened at trial such that a new trial should be had.  There is also an opportunity to appeal to a higher court. 

Arbitration may not be perfect for employment disputes, but again, nobody is forcing anybody to work for a company that uses arbitration.

  That is absolutely correct, and why California says that predispute arbitration clauses are perfectly allowable in the employment relationship if the agreement to arbitrate meets certain conditions.

green_cactus - 21 October 2009 01:02 AM

The courts did rule that the employer could not arbitrate her claims in this case. It is tragic that she had to go to court to fight for the right to sue them in Civil Court in the first place.

She didn’t, she filed a civil suit right after she returned to the US. Your own link has links to all these details, as does the link I posted. Will you people just go read the damn links rather than just posting whatever you think happened?

MojoJD - 20 October 2009 09:08 PM

Yes, you did call me out on my defense counsel leanings. 

Well, you will probably choke on your Wheaties when I tell you that I know them because I recognize them in myself.  At the same time, people still run red lights (and say they didn’t!), there are still Peter Campbells in the workplace, and there are still sob stories that are true and every bit as sad as they sound (those cases are usually settled, BTW).

As Minimorty pointed out, however, the “leanings” in arbitration generally do not stem from the fact-finders being biased for the employers.  Juries are often persuaded by sob stories that really arent anyone’s fault.  A sympathetic plaintiff can overcome bad facts, and often take way more $ in the award than is reasonable.

I’ll refer you to my response to MiniM regarding bias in arbitration (systemic and by the arbitrator him/her self) as well as safeguards for jury verdicts.  Also, just because someone has bad facts doesn’t mean that their suit is meritless.  When a case goes to trial, it is usually for one of two reasons: (1) the parties have wildly diverging valuations of the case, or (2) one side really wants to have their story heard (doctors sued for malpractice are well known for this).

Do you really need $120,000 because the boss didn’t buy your “stress” leave claim and fired you from you $34K/year job?  I don’t think so.

Workplace stress claims and retaliation based on them falls into the Worker’s Comp system.  I don’t know the practice and procedures there, so I won’t comment on that except to say that I have seen malingerers and I have seen people worked into the ground by their boss.

So the perception of bias comes from plaintiffs believing they will not cash out the same way.

In some cases that is true.  I have seen dispute resolution clause specifically bar claims of punitive damages.  That is another factor I didn’t mention in my response to MiniM.  Thanks for reminding me. 

It comes from an expectation that they will be able to exploit the system and make their case a payday, rather than a means of serving justice.  I mean think about it, who wouldn’t want to get way more money than they deserve for being wronged?  Its human nature - but it doesn’t make it the correct outcome.

Yes, I have seen plaintiffs who expect their case to be Litigation Lotto.  Who said that that was a correct outcome?  Strawman, please pick up the white courtesy phone.  I have seen others that simply want to be compensated for their loss and move on.  There are checks and balances in the system.  There are some “lotto” winners that make it through, and there are also people with valid claims who get shut out.  It’s not a perfect system, but neither is arbitration.

Nude - 21 October 2009 04:47 AM

green_cactus - 21 October 2009 01:02 AM

The courts did rule that the employer could not arbitrate her claims in this case. It is tragic that she had to go to court to fight for the right to sue them in Civil Court in the first place.

She didn’t, she filed a civil suit right after she returned to the US. Your own link has links to all these details, as does the link I posted. Will you people just go read the damn links rather than just posting whatever you think happened?

“On May 16, 2007, Jones filed a civil lawsuit against KBR and former parent corporation Halliburton.[2] KBR requested a private arbitration, and claims this is required by her employment contract. On September 15, 2009 the 5th Circuit Court of Appeals in New Orleans ruled Jamie Leigh Jones’ federal lawsuit against KBR and several affiliates can be tried in open court.[17]” [Wikipedia]

“Heather Browne, director of communications at KBR, says that while the company can’t speak to the facts since the case is ongoing, it denies any liability in the attack. And she argues that any dispute with Jones, even one involving charges of rape, must go to arbitration. So Jones is now going to court seeking the right to sue. She has become one of the nation’s leading arbitration reform advocates.” [NPR]

“When my lawyers filed suit, they were met with Halliburton’s response that ALL of my claims were to be decided in arbitration – because I had signed away my right to a jury trial at the age of 20, and without the advice of counsel, or any choice other than to be terminated.” [Jamie Leigh Jones]

EvaL -

Thank you for taking the time to respond to my post. I was genuinely curious, and you provided a ton of great information.

My only experience in a court room setting was a three-week trial when my dad was involved in a bad car accident. The accident happened in 2005 and we are just now getting into the appeal process. The court system is very slow it seems.

Minimorty - 21 October 2009 03:24 PM

EvaL -

Thank you for taking the time to respond to my post. I was genuinely curious, and you provided a ton of great information.

My only experience in a court room setting was a three-week trial when my dad was involved in a bad car accident. The accident happened in 2005 and we are just now getting into the appeal process. The court system is very slow it seems.

You’re very welcome, and I’m glad it was helpful.

I’m very sorry to hear about your Dad.  Although I don’t know the details, one of the likely reasons it is slow going is that in big injury cases, you have to wait to know how bad the injuries are and what the person’s condition will be going forward.  Also, budget cuts have really taken a toll.  The local state court is closed one day a month and will now be closing early on Fridays to save money, which winds up being a double whammy because historically the number of filings (criminal, civil, and family) have gone up when the economy gets bad.

EvaLSeraphim - 21 October 2009 05:01 AM

Yes, I have seen plaintiffs who expect their case to be Litigation Lotto.  Who said that that was a correct outcome?  Strawman, please pick up the white courtesy phone.  I have seen others that simply want to be compensated for their loss and move on.  There are checks and balances in the system.  There are some “lotto” winners that make it through, and there are also people with valid claims who get shut out.  It’s not a perfect system, but neither is arbitration.

(side note: the preclusion of punitive damages for arb seems ripe for motions to nullify that provision, or the arb clause altogether.  I would be interested to know if that holds up.)

I wouldn’t go calling straw man on my explanation so quickly.  I was giving an example of the shortfalls in the flip-side to arbitration; common problems with the civil court system.  I was not reframing someone’s argument.