Posts Tagged ‘arbitration’

Supreme Court upholds workplace arbitration, and it’s Epic

My latest at Cato on this week’s decision upholding agreements to individually arbitrate wage and hour claims, in Epic Systems Corp. v. Lewis:

Yesterday’s 5-4 Supreme Court decision upholding agreements to individually arbitrate wage-and-hour claims was neither surprising nor novel as a legal matter. Nor – notwithstanding the variously breathless, furious, and apocalyptic reactions it has drawn from stage Left – is it objectionable as a matter of policy, or “anti-worker.” It is pro-liberty, pro-contract, and pro-respect for private ordering….

NPR, which really should know better, misreported on Twitter that “The Supreme Court in a 5-4 vote has delivered a major blow to workers, ruling for the first time that workers may not band together to challenge violations of federal labor laws,” of which the first eight words count as accurate reporting, the next half-dozen as erroneous opinion, and the remainder as merely false in fact….

…an oft-heard argument is that a contract presented as a take-it-or-leave-it matter, as is typical of employer handbook policies, credit card terms and the like, doesn’t count as a “real” contract and is entitled to no respect as a matter or law or, presumably, from libertarians. … Properly evaluating that claim is a task for another occasion, but my colleague Andrew Grossman is surely right when he points out that every hour of the day workers choose to accept overall employment packages including some terms they welcome (health insurance coverage, paid vacations) along with others they may not (some weekend hours required, don’t take staplers home) and that the lack of dickering over individual terms does not mean that they are not voluntary or have somehow been imposed by force.

Whole thing here. As I wrote after Italian Colors, millions of people “sign away their class action rights not because they are all hoodwinked or coerced, but because at some level they have rational grounds to recognize that” those rights are mostly of value to the class action industry.

Speaking of Italian Colors, the outcome in Epic Systems would surely have been no different had Scalia lived, since he led the way on the Court toward respecting contractual arbitration clauses and upholding the broad scope of the Federal Arbitration Act. More from Archis Parasharami and Dan Jones at SCOTUSBlog: “The best available empirical evidence shows that employees who arbitrate their claims are more likely to prevail than those who go to court, and to obtain awards that are the same as or larger than court awards in a shorter amount of time.” More: James Copland.

Labor and employment roundup

  • “For years, a Texas electric utility company and its union feuded over the installation of automated smart meters; the company wanted them; the union didn’t, fearing they would put meter-readers out of work. A repairman for the company testifies to state legislators that the smart meters are combustion prone and damaging homes. Company: Which isn’t true. You’re fired. NLRB: Can’t fire him. His testimony was protected union activity. D.C Circuit: Maybe not. We’re very deferential to the Board, but even so, the NLRB’s reasoning here is ‘too opaque.'” [John Kenneth Ross, Short Circuit, on Oncor v. NLRB]
  • May Day replay: What happened at the Haymarket Affair? [John J. Miller] A Wikipedia footnote [Timothy Messer-Kruse, Chronicle of Higher Education]
  • Decline in number of U.S. manufacturing jobs is not owing to decline in unionization [Colin Grabow, Cato]
  • More for the “I thought contractual non-union arbitration was just a racket to benefit employers” files [Eric B. Meyer, Employer Handbook (prospective “tsunami” of arbitration claims against chain restaurant); Daniel Schwartz (exotic dancers win big in private arbitration)]
  • “Regulating the Modern Workforce,” Federalist Society Regulatory Transparency Project symposium video with James C. Cooper, Clark Neily, Ryan Nunn, Gabriel Scheffler, John Yun;
  • “Consumers do not have the option of abandoning unionized public services if they become too expensive and inefficient, as they can do with unionized services in the private sector.” [Chris Edwards, Cato on Janus v. AFSCME]

Liability roundup

Banking and finance roundup

  • D.C. Circuit’s en banc decision upholding constitutionality of CFPB disappointing but not surprising. On to SCOTUS [Ilya Shapiro, Aaron Nielson, Jonathan Adler]
  • Big thinking under way at the SEC could replace securities class action sector with free contract: “The SEC should authorize mandatory arbitration of shareholder class action lawsuits” [Bainbridge, Benjamin Bain/Bloomberg News (noting that broker dealers have long been free to use arbitration clauses)]
  • Milberg Weiss founder Melvyn Weiss dies at 82 [ABA Journal, our coverage over the years of Weiss and his firm, @PaulHorwitz (“Give generously, and to the right people, so that your NYT obit can be a glowing apologia despite a few inconvenient facts.”)]
  • Here come the shareholder derivative suits over sleazy-boss #MeToo scandals [Kevin LaCroix] “NERA: 2017 Securities Suits Filed at ‘Record Pace'” [same]
  • Rogoff rebuttals: “More Evidence of the High Collateral Damage of a War on Cash” [Lawrence White, Cato, earlier] “Money as coined liberty” [David R. Henderson]
  • Quotas/targets for percentages of women, disabled and indigenous persons on Canadian corporate boards? [Terence Corcoran/Financial Post, more]

Ted Folkman, “Some Thoughts On Consumer Arbitration”

The campaign against consumer arbitration has sought over the years to establish a number of propositions: that the process favors business over consumers, that the arbitrator is in the pocket of the corporate repeat player, that you can’t get discovery in arbitration, that arbitration is unfairly secretive, and so forth. Ted Folkman, who in addition to being a practicing commercial lawyer and longtime blogger is also an arbitrator who serves on the American Arbitration Association’s commercial and consumer panels, has some perspective to offer. [Letters Blogatory]

“So What If You Can’t Join A Class Action?”

Megan McArdle writes at Bloomberg on the downfall of the CFPB’s anti-arbitration rule, and why the results of most class actions, though expensive to provide, are not greatly valued by consumers. She also quotes me on one reason why surveys find (paradoxically or otherwise) higher consumer satisfaction with the experience of arbitration that you’d think from the campaign against it:

The alternative to lawsuits, arbitration, is supposed to follow the same laws as courts, and to do so more quickly and without a lot of the costly procedure. As a result, says Walter Olson of the Cato Institute, consumers are in general surprisingly satisfied with the arbitration experience, because it provides the kind of justice we imagine courts will: You sit down and tell your story in your own words. In court, by contrast, everything has to proceed according to complicated rules of evidence, with opposing counsel interrupting to tell the court that you can’t say certain things.:

More on the recent Congressional rejection of the CFPB’s regulation: Thaya Brook Knight. And in a new paper, David Noll (Rutgers) finds the new administration’s rollback of anti-arbitration rules to be piecemeal in nature and of only middling success so far. Earlier here.

Banking and finance roundup

Waivers of class actions against employers

The Supreme Court will resolve a circuit court split on whether employment agreements under which workers agree to “arbitrate disputes with their employers individually, rather than bringing class-action lawsuits collectively with their co-workers, are valid….In an unusual twist, the administration will face off against an independent agency of the federal government, the National Labor Relations Board (NLRB).” [Lawrence Hurley and Robert Iafolla, Reuters, earlier here, here, here, and arbitration generally] Monday was oral argument on the trio of Murphy Oil, Ernst & Young, and Epic Systems [Amy Howe, transcript]

Banking and finance roundup

  • “The Rise of Financial Regulation by Settlement” [Matthew C. Turk, Columbia Law School Blue Sky Blog]
  • Before buying into the idea that fractional reserve banking has some sort of fraudulent roots, consider the common law concepts of detinue, bailment, and debt [George Selgin, Cato]
  • Cato files brief urging Supreme Court to clarify constitutional status of SEC’s use of in-house administrative law judges [Thaya Brook Knight on Lucia v. SEC]
  • Between FATCA and the Patriot Act, American extraterritorial banking rules keep wreaking havoc on other countries [Ernesto Londoño, New York Times on Uruguay legal marijuana businesses]
  • “Congress Can Rescind the CFPB’s Gift to Trial Lawyers” [Ted Frank, WSJ]
  • “Absent Reform, Little Relief in Sight from Chronic “Merger Tax” Class-Action Litigation” [Anthony Rickey, WLF]

CFPB anti-arbitration rule

Why it should go [Rafael Mangual and Jarrett Dieterle, Investors Business Daily] And Thaya Brook Knight, Cato:

If customers were really upset about arbitration, it seems they would have presented a terrific market for a company that would offer them contracts free of arbitration clauses. The trade-off would likely have been slightly higher fees for their products to off-set the costs. That is, effectively the trade-off the new rule presents: no arbitration clause, but higher costs. To my knowledge, no one offered this trade-off. Given the competitiveness of the market, it seems that if there were customers willing to pay for a product, banks and credit card companies would have offered it. The fact that no one did suggests to me that arbitration clauses are not that important to consumers. Not important enough, at least, to justify higher costs. This makes the rule a bit strange. It forces on consumers an option they never chose, all in the name of protecting their best interests.