Another Bad Supreme Court Decision

A Supreme Courts decision from last May once again affects each and everyone of us. The ruling is about binding arbitration, you know the fine print on your credit cards or the car rental agreements or your cable bill or even on employee manual where you give up you rights to legal action even if the company breaks the law.

Justice by the Hour The Supreme Court tangles with mandatory arbitration clauses.
Slate.com
By Dahlia Lithwick
Posted Monday, April 26, 2010

In 2004, when Jackson signed his employment contract, he agreed that disputes arising from his employment would go to arbitration. Specifically, his contract said, "The Arbitrator, and not any federal, state or local court or agency, shall have exclusive authority to resolve any dispute relating to the interpretation, applicability, enforceability or formation of this Agreement." And so, in 2007, when Jackson sued Rent-A-Center for racial discrimination and retaliation in federal district court, his former employer tried to dismiss the case, arguing that the arbitration agreement meant that only an arbitrator could determine whether the agreement was enforceable. (More legalese in the contract: The arbitration authority extended to "any claim that all or any part of this Agreement is void or voidable.")

Note the part that says, “The Arbitrator, and not any federal, state or local court or agency, shall have exclusive authority to resolve any dispute relating to the interpretation, applicability, enforceability or formation of this Agreement.” The court ruled just that, that Jackson gave away all his rights under the law. That means that a company can have you work an 80 hour work week and pay you for only 40 hours or even pay you not at all. It means that companies can discriminate against black or pregnant women, they can do anything that they want to do. Impossible you say. The article goes on to say…

The rap on mandatory arbitration clauses is that, in the interest of speed and efficiency, they replace the truth-seeking function of courts with the truthiness-seeking function of paid arbitrators. In addition to structural incentives for arbitrators to favor the employer and wonky fee-sharing and secrecy rules, arbitration provides for limited review and unequal bargaining power between employers and employees (who are generally told to take it or leave it). But the courts have mostly tended to enforce arbitration agreements, except in extraordinary cases, and the lower courts agreed to dismiss Jackson's case. The 9th Circuit reversed, finding that whether an arbitration provision is unconscionable is a matter for the courts, not an arbitrator. Rent-A-Center appealed to the Supreme Court, and the tilt-a-whirl of oral argument begins.

So the company can stack the deck anyway they want, they determine who is the arbitrator or who pays for the arbitrator, in other words the Supreme Court just gave companies the right to impose any rules that they want and the employee cannot do anything about it.

When the justices asked if binding arbitration applied in all types of contracts, the lawyer answered,

But Ruth Bader Ginsburg cuts him short. "Underlying your whole case, I think, is the notion that this is a take-it-or-leave-it contract, very common in consumer, credit card agreements, in employment contracts, that one party has no say except to sign or not to sign," she says. "Are all those contracts subject to the unconscionability argument that you are making?" Uh, oh. When Silverberg [Jackson’s lawyer] says that, yes, all these contracts are subject to this argument, Scalia says, "Well, kiss goodbye to arbitration." Or, more likely, kiss it hello.

In the Wall Street Journal article by Clifford M. Marks, he writes…

Dissenting Justice Stevens wrote that the result made no sense. If the arbitration agreement is “so one-sided and the process of its making so unfair” then it was unreasonable to assume Jackson truly assented to put that very question to the arbitrator, Stevens wrote.

The decision is already drawing flak from liberal groups and lawmakers, who contend it will stack the scales in favor of corporations. In a statement, Senate Judiciary Committee Chairman Patrick Leahy said, “five members of the Supreme Court struck a blow to our nation’s civil rights laws and the protections that American workers have long enjoyed under those laws.”

Still not convinced…


The other bad Supreme Court decision this year was about allowing companies unlimited political spending in campaigns, you can read what I wrote here and here.