Will the Supreme Court now turn against employment arbitration?

In a case involving Murphy Oil, the National Labor Relations Board contends that “a mandatory arbitration provision violates the National Labor Relations Act. That has been the position of the NLRB for some time now, notwithstanding almost universal rejection by the courts.” The Fifth Circuit, unsurprisingly, joined other precedent and upheld the employer. Until just a short time ago, given a Supreme Court on which Justice Antonin Scalia had penned strong opinions in favor of freedom to contract in favor of arbitration as a choice, “employers would not have been terribly concerned if the NLRB had appealed.” But now? [Michael Fox, Jottings By an Employer’s Lawyer]


  • This is what happens when you facilitate the creation of a system that benefits massive corporations at the expense of consumers and small businesses. A backlash is inevitable. But don’t think I am exonerating anyone. This backlash only came about as a result of a backlash against unwarranted and outrageously expensive litigation, especially of the class-action sort. It is a pendulum swinging back and forth and never stopping in the middle.

    Until we come up with a system that adequately protects the consumer and does not force corporations to pay unseemly litigation fees, the pendulum will continue to swing back and forth with the only winners in the long term being corporate counsel (litigation attorneys, like corporations and consumers, only benefit when the pendulum swings in their direction). (I use the term “corporations” loosely, it includes a lot more than the IBMs and Apples of the world).

    I truly do not see how the powers in this country can be so short-sighted. Don’t they see that empowering the masses by giving them the opportunity to fight fairly and be in a strong and vibrant middle class benefits them? Arguably, one of the main reasons the US became an economic powerhouse in the US was the presence of a huge middle class.

  • Allan,

    You negotiate the terms of your employment and I’ll negotiate mine. Jackpot justice has never been on my list, so it’s always been easy for me. You too?

    Et al,

    What if punitive damages were simply taxed at a, well, punitive rate of 100%, thereby eliminating/reducing this incentive for jackpot justice. Most proposed legal reform seems – to me, as a layman – to consist of technical, rules-based legerdemain that leaves in place multi-million dollar incentives to the very class of people who best understand how to manipulate the rules; i.e. a mug’s game. Why not just eliminate the incentive, instead? Let such damages, where they occur, go to a charity of the defendant’s choice, approved by the court. Gosh, who could argue with that?

    /Too easy, what am I missing?

    • But it’s not as simple ras as saying everyone can negotiate the terms of their employment. Have you ever tried to remove an arbitration clause from an employment contract? I have. While I had no plans of suing everyone (nor have I ever sued anyone), I found it absolutely wrong that my employer wanted to ensure I had no access to the legal system of our country no under any circumstances. While I was able to negotiate other terms of employment, this was absolutely a deal-breaker for them and I wound up accepting the position, having no leverage at the time, resenting that such a provision is possibly enforceable.

      And I’m someone in a position to negotiate something who understands what an arbitration clause means. Do you really think restaurant workers, retail workers, warehouse workers uniformly understand what rights they are signing away and have the ability to negotiate their contracts? Certainly workers don’t seem to view it as “freedom” when they’re told they can’t sue their employers for breaking the law.

      • Restaurant and retail workers, where not covered by union contracts are generally at will employees. No contract, no arbitration clause.

        Even many salaried professionals, myself included are at-will employees.

        • You can be an at-will employee and still have an employment contract (which can double as the offer letter) that lays out the general terms and conditions of employment and includes an arbitration clause. Indeed, such contracts usually emphasize at length the at-will nature of the employment to protect the employer in the future. I wouldn’t want to work somewhere without at least having my rate of pay agreed to in writing. I don’t doubt that some restaurant workers are hired on a handshake, but plenty of at-will employees have contracts.

    • Employment contracts with large companies are adhesion contracts.

      I am not for jackpot justice, for companies or for consumers/employees. How about we just get justice?

  • Allan, mx.

    So you would be ok with punitive damages going completely to charity. then? Y/N?

    • I’d be open to the idea with some consideration. Allowing the plaintiff to keep at least some share would be useful, especially as punitive damages can serve to make up for hard-to-prove compensatory damages when the defendant has acted egregiously. I’d also have concerns about the defendant (and even the plaintiff in some cases) picking the charity, as that seems very much open to abuse. For a contrived example, a plaintiff who has won a sex abuse case against an archdiocese might have some objection to the damages being donated to a retirement home for priests.

      That said, I’m not sure that punitive damages are particularly relevant here. Access to the courts for aggrieved employees is a different issue than punitive damages, and I think there are other ways to address the issues you raise. Punitive damages are intended to be for egregious conduct and should be reserved for such. The defendant’s financial resources and ability to pay are important considerations in crafting a monetary punishment and should be considered. And a far bigger issue is legal fees, which can turn a routine employment dispute into a phenomenally expensive proceeding.

  • punitive damages can serve to make up for hard-to-prove compensatory damages

    Good idea. We can’t prove anything but the defendant should be punished anyway.

    • Nope. I would not presume to choose a good charity for punitive damages. Instead, I would be for punitive damages should go to the general fund for the specific purpose of reducing the federal debt. Attorney fees for the prevailing party should be the lesser of a lodestar amount or 10% of the damages.

  • punitive damages should go to the general fund for the specific purpose of reducing the federal debt

    The govt will decide if the money should go to itself? No perverse incentive there.

    • No. A jury decides that the money will be awarded. The government should have no role in litigating the case, other than providing the forum for the trial.

      • The govt controls the process and it should not be controlling a process from which it will benefit; that’s Conflict of Interest 101. Even all but the most ideological of lovers of govt will realize/accept that the same rules apply and for the same reasons.