The Future of Class-Action Lawsuits in Question
By Lawrence P. Schaefer |
The United States Supreme Court, in a bitterly divided 5-4 decision on three cases under appeal, ruled on Monday, May 21, 2018, that employers can enforce arbitration agreements which preclude class action lawsuits. Business commentators celebrated this decision, and quickly predicted that many employers will now impose such agreements on their employees, as this can eliminate a very significant potential risk – class-wide liability to a large group of affected employees – with a “stroke of the pen.”
I spoke the day this decision issued at the Upper Midwest Employment Law Institute on a panel which addressed strategies in arbitration, so this topic is very timely in terms of the strategies I presented. I want to emphasize that this recent decision, while concerning to class action advocates, will likely have very little impact on the vast majority of employment-related disputes, which are generally prosecuted on an individual basis.
Further Considerations on Arbitration Agreements
Furthermore, agreements to arbitrate still must pass basic fairness tests in order to be enforced. In addition to precluding class action or collective action claims, arbitration denies employees access to the court system (except for a very prescribed appeal right), and, perhaps most importantly, to the right to have the claim(s) at issue decided by a jury. These agreements won’t generally be enforced however, if they limit the remedies available to employees in terms of scope of damages to be awarded, limit the right to recover attorneys’ fees and costs on claims where courts allow this relief, or try to shorten the time to file (called the statute of limitations). Any agreement can be effectively challenged if it attempts to impose prohibitive costs on the employee, requires the proceeding occur in an inconvenient or remote location, restricts any right to discovery, or requires the employee to pay all fees or costs if not successful.
Accepting the Arbitration Process: There Are Some Advantages
Employee advocates and affected employees, however, must be prepared to accept the arbitration process when it is a required by the employer and standards of fairness are met. There are real advantages to the arbitration process, as it is generally private, moves much more swiftly than litigation, and most costs are borne by the employer, especially when arbitration occurs under the very commonly applied AAA Employment Rules. There is considerable discretion in selecting the arbitrator (or panel, depending on the agreement), and the arbitrator selected is usually very familiar with the substantive law which will apply. Finally, claims submitted to arbitration will generally be permitted to proceed to a hearing when contested, whereas the risk of being denied a trial on these same claims in litigation – usually through what is known as “summary judgement”- is far higher. The arbitration process can be an effective vehicle to vindicate employee rights.
The lawyers at Schaefer Halleen have decades of experience in effectively advocating for employees in arbitration, giving a powerful voice to our clients in this legal system. Don’t be deterred from contacting us if your employer has imposed a requirement to arbitrate – we will be prepared to advocate for you in this process.