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News :: Miscellaneous |
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Private Justice: Millions are Losing Their Legal Rights, Part II |
Current rating: 0 |
by Reynolds Holding
(No verified email address) |
07 Oct 2001
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Supreme Court Forces Disputes From Court to Arbitration - A System With No Laws |
THE LAST BARRIERS
On Wednesday, attorneys for the Equal Employment Opportunity Commission will appear before the U.S. Supreme Court on behalf of 27-year-old Scotty Baker.
In November 1992, Baker's white Corolla flipped off a rain-slickened highway near his home in South Carolina. He walked away with a bump on his head, but a week later started to have periodic seizures.
In 1994, he filled out an application for a job cooking at the Waffle House in Columbia. He got the job, but turned it down. A few weeks later, he applied for a similar job at the Waffle House in West Columbia.
The manager hired him on the spot, without asking Baker to complete an application. When Baker mentioned his seizures, the manager just said, "Show up for work at 7 a.m.," Baker says.
About two weeks into the job, Baker suffered a seizure, and the manager fired him. The manager said, "It's bad for business to have you spazzing out in front of the customers," says Baker.
Eight months later, he consulted a lawyer about suing Waffle House for discriminating against a disabled employee. That was when he learned about the arbitration clause at the bottom of the application he had filled out for the Waffle House in Columbia.
In barely readable type, a four-line paragraph said any dispute involving the company would go to binding arbitration.
Baker says he never saw the arbitration clause. Besides, the clause was on the application he had completed at the first Waffle House, not at the Waffle House in West Columbia where he worked.
But arbitration was his only recourse. And he would have to pay half the costs, including the arbitrator's fees. Out of work and seeking reinstatement to a job that paid $5.50 an hour, Baker couldn't afford it.
In 1996, the Equal Employment Opportunities Commission sued Waffle House in the U.S. District Court in Columbia, S.C., claiming the company had violated the Americans with Disabilities Act by firing Baker for his seizure. Waffle House, as expected, moved to force the case into arbitration.
Waffle House and its attorneys declined to comment on the case.
When a federal judge ruled that Baker wasn't bound by any arbitration agreement, Waffle House appealed. In October 1999, the appeals court reversed the ruling, deciding not only that Baker must go to arbitration, but that the "strong policy favoring arbitration" barred the EEOC from suing Waffle House for damages and, in effect, doing an end run around the agreement.
The court, though, also acknowledged the EEOC's congressionally mandated duty to protect the public's interests. The agency could, therefore, seek an order stopping Waffle House from illegally firing any disabled workers.
That is the issue now before the U.S. Supreme Court. Can a federal watchdog like the EEOC use every means provided by Congress, including suing for damages, to enforce the laws against employment discrimination and other civil rights violations?
"I can't imagine the court will stop the EEOC from enforcing the law," says Carrington, "but who knows? And if workers have to protect themselves from discrimination without the EEOC, to bargain for their own rights, then that means they don't have any rights."
SUPREME COURT RULINGS EXPANDING THE ROLE OF ARBITRATION
In a series of controversial rulings since 1983, the U.S. Supreme Court has encouraged companies to impose mandatory arbitration on the public. But critics say the rulings seriously misinterpret the Federal Arbitration Act. .
-- Federal Arbitration Act
For years courts allowed people to back out of arbitration agreements. In 1925, Congress passed a bill making arbitration agreements as enforceable as any other contract. During congressional debates, the bill's supporters assured critics that the new law would apply only to "merchants" who entered agreements voluntarily.
. .
1983 -- New policy favoring arbitration
In the mid-1970s, fears of a litigation explosion prompted judges and companies to push arbitration as an alternative to lawsuits. In 1983, without explanation, the high court concluded that the Federal Arbitration Act had created a "liberal federal policy favoring arbitration.".
1984 -- Trumping state laws
Citing that "federal policy," Chief Justice Warren Burger wrote for the court that arbitration clauses preempt state laws protecting the public's right to go to court. In dissent, Justice Sandra Day O'Connor said the decision Ð"utterly fails to recognize the clear congressional intent underlying the (Federal Arbitration Act)." .
1985 -- Fair and competent
In a case enforcing an arbitration agreement in an antitrust action, the high court called arbitration just as fair and competent as the legal system. Justice John Paul Stevens disagreed, calling arbitration "despotic decision making." .
1989 -- Ignoring consumer protections
Reversing an earlier ruling, Justice Anthony Kennedy wrote for the court that a securities firm could force a disgruntled customer into arbitration, even though arbitrators might not enforce the consumer protections of securities laws. Justice Stevens compared the decision to "an indefensible brand of judicial activism." .
1991 -- Lost civil rights
The high court ruled that an employee must take an age discrimination case to arbitration, breaking with its longstanding position that civil rights cases were too important and legally complex to handle in arbitration. .
1995 -- Undermining state protections
The Supreme Court held that states could not limit mandatory arbitration with, for example, laws ensuring that consumers, employees and others understand the rights they are giving up by agreeing to arbitration. .
2001 -- Covering employees
Earlier this year, the high court ruled for the first time that the Federal Arbitration Act applied to all employees, except transportation workers.
STARK DIFFERENCE BETWEEN COURT AND ARBITRATION
Advocates of arbitration say the process is swift, efficient and inexpensive. But critics say arbitration can mean high filing fees, unqualified arbitrators, lost legal rights, limited awards and no appeals. .
FEES
Court: Filing a case in state Superior Court costs from $90 to $185, depending on the amount claimed.
Arbitration: Filing fees for arbitration can cost thousands of dollars, depending on the case and the arbitration firm. Fees for hearing rooms and the arbitrator's time can run tens of thousands of dollars more and discourage individuals from pursuing a case. .
JUDGES
Court: Judges or other judicial officers hear cases.
Arbitration: Many arbitrators are former judges, but some are not even lawyers. Arbitrators are rarely required to follow the law and are regulated in only two states. .
PICKING JUDGES
Court: Judges are usually assigned according to a rotation or by a presiding judge.
Arbitration: Parties select arbitrators, usually from a list compiled by an arbitration firm. Firms offer parties various methods of striking names from the list and reducing them to one. If the parties cannot agree, the firm may designate an arbitrator. .
INDIVIDUAL RIGHTS
Court: The right to a fair process is protected by legal safeguards such as discovery, testimony and evidence rules.
Arbitration: Court rules do not apply, meaning the arbitrator - sometimes guided by an arbitration agreement or the rules of an arbitration firm - controls the process. .
AWARDS
Court: Judges and juries decide how much an injured party should receive.
Arbitration: Awards are generally lower than in court, and arbitration agreements sometimes limit the type of damages an individual can recover. .
APPEALS
Court: Judges' decisions are public record and subject to appeal.
Arbitration: Most decisions by arbitrators are confidential. They cannot be appealed and are subject to judicial review only in narrow circumstances.
CIVIL RIGHTS TAKE A BEATING
The stories of three people who discovered how hard it is to fight mandatory arbitration. .
-- No arbitration, no job
For three years, Donald Lagatree worked as a legal secretary at a Long Beach firm, receiving regular bonuses and pay raises. Then in June 1997, the firm asked him to agree "that any claims arising out of or relating to my employment . . . shall be resolved by final and binding arbitration."
When Lagatree refused, the firm fired him.
Several months later, he took another secretarial position, this one at a Los Angeles law office. On his first day, he was handed a letter to "confirm" the deal, including his agreement to take all disputes to arbitration.
Again Lagatree refused to agree to arbitration, and, once again, he was fired.
He sued both firms for wrongful termination and lost in the state courts. The federal Equal Employment Opportunity Commission is pursuing the case before the U.S. Court of Appeals in San Francisco.
The right to go to court "just seemed too important to give away," said Lagatree. .
-- Even egregious decision stands
Rosalind Smith says her co-worker ogled her breasts, licked his lips and gyrated against her from behind. He complimented her "onion-shaped butt," bragged of his sexual prowess and repeatedly asked for "a one-night stand."
When Smith, a secretary at a Pennsylvania social services agency, finally complained to her supervisor, she was fired. In 1999, she filed a claim against the agency and her co-worker, charging them with sexual harassment and retaliation.
At the formal hearing, her co-worker admitted asking her for a one-night stand and making vulgar comments about her body. But the arbitrator ruled against Smith.
So she went to federal court, seeking to overturn the arbitrator's decision.
The judge acknowledged that her case met all the requirements for proving sexual harassment. And when she argued that the arbitrator was simply wrong about the law, the judge agreed.
But courts are prohibited from overturning even the most egregious decision by an arbitrator, unless it makes virtually no sense at all.
In declining to reverse the ruling in Smith's case, the judge wrote that he could not "conscientiously conclude that the arbitrator's . . . decision exceeded all bounds of rationality." .
-- "Plaintiffs have themselves to blame'
Three years ago, when Gabriel Martinez lost his job with Scott Specialty Gases Inc. in Fremont, he and his wife sued the company in Alameda County Superior Court, claiming the firm had fired him illegally and ruined their lives. The company responded that Martinez was bound by the arbitration agreement he had signed when he started work.
Although Martinez insisted that he had repudiated the agreement when it was presented to him, the court ordered him to arbitration.
Martinez appealed, and late last year the state Court of Appeal in San Francisco ruled against him and his wife.
Then the court informed Martinez that by pursuing his case in court, he had waived his right to take the case to arbitration. Martinez was left with no recourse against his former employer, either in court or in arbitration.
"While perhaps genuinely regretting this now, . . . " the court wrote, "plaintiffs have themselves to blame for their predicament."
THE FINE PRINT
Waffle House's policy requiring parties to settle disputes through arbitration - and give up their right to a jury trial - appears in small, barely readable type at the bottom of its employment application form. An excerpt: .
"The parties agree that any dispute or claim concerning Applicant's employment with Waffle House, Inc. . . . or the terms, conditions or benefits of such employment, including whether such dispute or claim is arbitrable, will be settled by binding arbitration."
©2001 San Francisco Chronicle
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See also:
http://www.sfgate.com/
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