By Nick C. Geannacopulos, Timothy M. Hoppe, and Mark Casciari
Seyfarth Synopsis: The trend-lines describe employment-related litigation in the past 25 years: (1) the emergence of arbitration as a flexible and increasingly legally viable to resolve employment claims; and (2) the dangerous politicization of the judicial selection process in federal and state government. These trends should make arbitration in any state, whether red or blue, an even more attractive dispute-resolution device for employers and employees alike.
No decades-old federal legislation has experienced a legal resurrection like that of the Federal Arbitration Act. Passed in 1925, it now is the legal cornerstone of a quarter century of Supreme Court jurisprudence that permits most employers to require employees to arbitrate employment disputes. In Gilmer v. Interstate/Johnson Lane Corporation, the Supreme Court said that statutory age discrimination claims can be subject to mandatory arbitration agreements. Since then, courts have consistently held that employment claims of various varieties can be forced into arbitration. They have also held that the contracting parties can delegate questions of arbitrability to the arbitrator—in other words, the arbitrator decides whether claims fall under the arbitration agreement. If the arbitration agreement is properly written, this leaves courts with a simple, threshold analysis of determining whether the parties entered into a valid contract to arbitrate their dispute.
At the same time that arbitration has solidified its dispute-resolution status, the judiciary at the state, federal, and administrative level have seen continued politicization. More and more, it seems leaders from both major parties—at the state and federal level—have political litmus tests for judges, emphasizing party affiliation and ideology above other qualities. In California, for example, we recently saw attempts to unseat superior court judges, seemingly for little reason other than the political affiliation of the governor who appointed them. The four incumbents all survived the challenge, but the impact of politics on the California judiciary is a trend that won’t just go away. Other states—both liberal and conservative—have experienced similar efforts to reshape the judiciary to advance political agendas. And in Washington, the politicization of the judicial-selection process seems to be intensifying (including at the administrative level).
All of this is to say that arbitration may not be such a bad alternative for employers and individual employees alike. Unlike the court systems, arbitration agreements allow the parties to agree on the selection of the arbitrator, to arbitrate before a panel of adjudicators (as opposed to a single fact finder), and to provide for an appellate level of arbitration. Arbitration also allows the parties to agree on other efficiencies, such as streamlining the discovery process, allowing for dispositive motions, and ensuring a timely decision. As between the Federal Rules of Civil Procedure and arbitral procedural rules, the latter are leaner and more efficient. And states have put employee-focused safeguards in place. For instance, California requires employers to cover most of the cost of arbitration, and to allow adequate discovery.
To be sure, the plaintiff bar and some legislative bodies will try to curb the scope of mandatory arbitration. If the judicial selection process continues on its politicization path, however, it may be best for both employers and employees simply to “opt out” of our mainstream dispute-resolution system in favor of arbitration.
For more information on this topic, please contact the authors, your Seyfarth Attorney, or any member of Seyfarth Shaw’s Arbitration Strategy & Litigation or Alternative Dispute Resolution Teams.