employment

Senate Sends Bill Restricting Arbitration for Workplace Sexual Assault Victims for Biden’s Signature

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By Tamia Sutherland & Russ Bleemer

The U.S. Senate passed H.R. 4445, Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021, this morning on a voice vote.

The bill had bipartisan support in both legislative chambers and quickly cleared the 60-vote procedural step to advance in the Senate. The House had passed the bill on Monday by a vote of 335-97.

President Biden has signaled he will sign the bill, which will take effect immediately. The Office of Management and Budget expressed the administration’s support in a Statement of Administration Policy letter, published Feb. 1, noting, “This bipartisan, bicameral legislation empowers survivors of sexual assault and sexual harassment by giving them a choice to go to court instead of being forced into arbitration.”

The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act invalidates pre-dispute arbitration agreements and waivers of joint proceedings for individuals alleging conduct constituting a sexual harassment dispute or sexual assault. It effectively overrides employment contracts that require arbitration and allows all cases which include sexual assault or harassment claims to be resolved in court, despite the signed agreement containing an arbitration clause.

The language targets predispute arbitration agreements and predispute joint-action waivers, but not ad hoc or post-dispute processes. In fact, the law apparently allows employees an option to stay in existing arbitration agreements, noting at the outset that an arbitration clause will not be valid “at the election of the person alleging conduct constituting a sexual harassment dispute or sexual assault dispute, or the named representative of a class or in a collective action alleging such conduct. . . .” The law focuses on the filing of cases; a determination of the arbitrability of matters is sent by the law to courts, not arbitrators. . . .”

In introducing the bill this morning, Senate Majority Leader Charles Schumer, D., N.Y., noted the bipartisan agreement on the bill, and emphasized that it will apply retroactively.  The law states that it “shall apply with respect to any dispute or claim that arises or accrues on or after the date of enactment of this Act.” Said Schumer, “That’s an important point that hasn’t gotten enough attention.”

The text of the bill is available here.

Arbitration clauses in employment contracts have been characterized by legislators as “forced” and were discussed in depth at the Nov. 16 House Judiciary hearing, “Silenced: How Forced Arbitration Keeps Victims of Sexual Violence and Sexual Harassment in the Shadows.” A blog post about the Nov. 16 hearing can be accessed here, and the hearing can be viewed in its entirety at https://bit.ly/3wTDLkf.

Some legislators and attorneys were worried that the proposed reforms could unwittingly fail in practice. There is concern because litigation can be more expensive; the bill does not prevent companies from forcing people to sign nondisclosure agreements that also could hide sexual misconduct allegations, and plaintiffs’ attorneys could be incentivized to include sexual harassment allegations in cases that have nothing to do with sexual harassment to evade arbitration.

“Unfortunately, some of the language in the statute is potentially ambiguous,” says Christopher C. Murray, a shareholder in the Indianapolis office of Ogletree, Deakins, Nash, Smoak & Stewart, and co-chair of the firm’s Arbitration and Alternative Dispute Resolution Practice Group. He explains:

Specifically, the statute bars enforcement of certain arbitration agreements with respect to “cases” relating to sexual harassment and sexual assault disputes.  The statute probably should state it bars enforcement of agreements with respect to ‘claims’ relating to sexual harassment and sexual assault disputes. Some plaintiffs’ counsel may try to make hay out of this ambiguous use of ‘cases’ and seek to expand the scope of the statute to bar the arbitration of other types of claims that happen to be in the same case. I expect that effort by plaintiffs’ counsel will ultimately be unsuccessful under cases like CompuCredit Corp. v. Greenwood, but the ambiguity may still result in some extra litigation in the short term. . There’s no indication the new law is intended to change the “Congressional command” analysis for claims under other federal statutes that have nothing to do with a sexual harassment or sexual assault dispute.

In CompuCredit Corp. v. Greenwood, 565 U.S. 95 (2012), the Supreme Court held that because the Credit Repair Organizations Act is silent on whether claims can be arbitrated, the Federal Arbitration Act required the plaintiff’s arbitration agreement to be enforced according to its terms. Moreover, the case stands for the proposition that an arbitration agreement should be enforced if the claims at issue are federal statutory claims, unless the mandate of the Federal Arbitration Act, 9 U.S.C. § 1, et seq., has been overridden by a contrary Congressional command. Parties likely will dispute whether the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act, which specifically amends the FAA, changes that analysis in any way for claims under federal statutes that do not relate to sexual harassment or assault.

* * *

The Senate also was concerned about the misuse of sexual assault and harassment claims to piggyback arbitrable claims into court, and this morning addressed the issue. 

Sen. Joni Ernst, R., Iowa, emphasized that the act should not be used for other workplace disputes. “Those claims are meaningfully different,” she said, emphasizing that if an employment agreement has a predispute arbitration provision and a sexual assault or harassment claim is brought with another claim, and the assault or harassment claim is later dismissed, “the court should remand the other claim back to the arbitration” system.

Ernst told the Senate that the presence of sexual assault or harassment claims “should not effectively destroy arbitration in employment litigation.”

Ernst pledged to work with Schumer and other senators, she said, “if there are indications that there is gaming of the system” by claimants or lawyers.

Sponsor Kirsten Gillibrand, D., N.Y., expressed appreciation for work on the bill by Ernst and Sen. Lindsey Graham, R., S.C., and agreed with Ernst’s cautions. “I do not believe that survivors of sexual assault and harassment will use the claims” to avoid arbitration, she said, adding, “If those claims on assault or harassment are dismissed, [victim claimants] will go back to arbitration.”

“But,” continued Gillibrand, “it is important that all claims related to assault or harassment are dealt with at the same time” to avoid sending victims to multiple forums. “If victims and attorneys break those rules, they can be sanctioned in court,” she said.

Ahead of the voice vote, Lindsey Graham said, “It does not hurt business to make sure that people harassed in the workplace [get justice]. It helps business.  . . . Arbitration has its place in business.  . . . [But] you’re not going to sign away your life.”

He concluded, “This is not bad for business. This is good for America.”

* * *

The passing of the Ending Forced Arbitration Act marks a significant national reform in the fight against sexual misconduct in the workplace that emerged from the bravery of the #MeToo movement.  It also may be a harbinger of more to come in terms of arbitration restrictions. The White House statement supporting the legislation, which now goes to the president’s desk to be signed into law, ended by noting,

The Administration also looks forward to working with the Congress on broader legislation that addresses these issues as well as other forced arbitration matters, including arbitration of claims regarding discrimination on the basis of race, wage theft, and unfair labor practices.

* * *

Sutherland, a second-year law student at the Howard University School of Law, in Washington, D.C., is a CPR 2021-22 intern.  Bleemer edits Alternatives to the High Cost of Litigation for CPR.

[END]

Highlights from the House Judiciary Hearings Targeting Arbitration’s Role in Prosecuting Sexual Harassment

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By Tamia Sutherland

The House Committee on the Judiciary held a Nov. 16 hearing on arbitration’s effects on victims of sexual violence and harassment. Chairman Jerrold Nadler,  D., N.Y., presided over the hearing, “Silenced: How Forced Arbitration Keeps Victims of Sexual Violence and Sexual Harassment in the Shadows.”

A second hearing followed the next day, marking up a bill introduced to restrict the use of arbitration in sexual harassment employment cases, and sending it to the full House, where it awaits action.

In his opening statement at the first hearing, Nadler said that “arbitration was originally developed as an alternative to the court system, for parties of relatively equal bargaining power to enter into voluntarily.”

But, he continued, “forced arbitration” clauses, seen in “take it or leave it contracts,” have grown in popularity between large corporations and individuals. Nadler asserted that forced arbitration is most problematic in the workplace. He provided data projecting that by 2024, 80% of private-sector employees will be required to sign an arbitration clause when accepting employment. Moreover, he stated that employers prevailed over employees in 98.1% of arbitrations.

Notwithstanding the statistical information, Nadler explained that the purpose of the hearing was to examine the “true human toll of forced arbitration, [based on] stories that cannot be distilled down to a number or a statistic.” He set out the theme of the hearing by declaring arbitration a system that is “fundamentally unjust,” but noting that the decisions in the matters involving the witnesses would not be reversed. He added that the witnesses’ appearances were to provide a voice for other victims of sexual harassment.

Ranking minority committee member Jim Jordan, R., Ohio, also provided an opening statement in which he explained that the committee must ensure that “pathways that Americans have to resolve their disputes function properly and are fair to everyone.” He added, “Arbitration should be as fair as court.”

He noted the declining number of civil cases that concluded in a trial. Jordan said that if the arbitration system is not being used properly, there is an obligation to fix it to benefit the parties to the dispute.

Many of the witnesses who provided hearing testimony are survivors of sexual harassment and/or sexual assault who reported that they were forced into arbitration agreements based on their employment. Chairman Nadler explained that the witnesses faced off in arbitration with their employers, who had the opportunity to select “the judge and the jury, truncate the discovery process, choose the law applied, and prevent all appeals.” The individuals who provided testimony, Nadler reported, were only allowed to do so because a congressional subpoena has compelled their testimony. Here is the witness list:

  • Eliza Dushku, actor/producer and philanthropist;
  • Tatiana Spottiswoode, first-year Columbia University Law School student and former business analytics associate at Afiniti Ltd., a Hamilton, Bermuda-based software developer;
  • Anna St. John, president and general counsel at Washington, D.C., public interest law firm Hamilton Lincoln Law Institute;
  • Andowah A. Newton, vice president for legal affairs and head of litigation for LVMH Moët Hennessy Louis Vuitton Inc.;
  • Sarah Parshall Perry, Legal Fellow, Edwin Meese III Center for Legal and Judicial Studies at the Heritage Foundation, a Washington, D.C. membership think tank focusing on conservative issues;
  • Lora Henry, a sales associate for Wacom Mitsibushi in Canton, Ohio, and
  • Myriam Gilles, the Paul R. Verkuil Chair in Public Law at the Yeshiva University’s Benjamin N. Cardozo School of Law in New York.

Eliza Dushku began the witness testimony, noting that she has worked in the entertainment industry on high-profile films and television for nearly 30 years.  She also identifies as a victim and survivor of sexual harassment in the workplace—she was fired and says she was silenced when she attempted to speak out.

She told the story of being aggressively pursued by CBS to co-lead in a 2017 show, “Bull,” in which she said her character was written with her in mind, and which required a six-year commitment to playing a strong, confident lawyer. But within the first week of her new job, she reported that she became the brunt of crude sexualized, lewd verbal assaults and suffered near-constant sexual harassment from her co-star, Michael Weatherly, who also was the show’s co-producer.

Dushku says she wasn’t physically harmed, but the effects of verbal abuse have been long lasting. Examples of some of the comments endured included being called “legs” and being told she would be taken to a “rape van” where  “long phallic things” would be used, or she would be “take[n] over his knee and spank[ed] like a little girl.” Additionally, she reported Weatherly told her that his sperm were “powerful swimmers,” and he shouted out loud on set that he and his buddy wanted to have a “threesome” with her.

The comments were not scripted lines. They were made in front of the cast and crew members, and sometimes while the cameras were still rolling. She stated that her co-star’s comments emboldened other male crew members.  One said to her, “I’m with Bull, I want to have a threesome with you, too, Eliza,” between scenes.

Dushku reported that she was horrified and became physically nauseous but, she said, her drive to succeed was strong, and she loved the role, so she tried to maintain her professionalism. And as a result, she said, she received positive reviews from the showrunner and other CBS employees and officials.

After speaking with her manager about the work conditions, Dushku said that she asked her co-star to be her ally and “tone down some of the sexualized comments.” His response was that “no one is more respectful of women than me.”

But then he texted the head of CBS Studios that Dushku was “humor deficit,” who she reported replied that Dushku made the show better. Nevertheless, Dushku was fired the next day and told she was only in three more episodes despite the six-year deal.

Despite her longevity in the entertainment industry, Dushku said she never understood the mandatory arbitration clauses in her contracts. In this case, the harassment of Dushku was caught on camera, in tapes CBS provided in a poorly constructed attempt to defend itself. Still, Dushku told the House Judiciary Committee that no one will see the tapes due to her signing a binding arbitration clause.

Dushku concluded her testimony by asserting that there will never be real justice for her and for countless other victims of sexual harassment who unknowingly signed binding arbitration clauses.

* * *

Tatiana Spottiswoode explained that she first met Zia Chishti, the founder of Invisalign and CEO of Afiniti, when she was around 12-13 years old, as a business associate and friend of her father’s. When Spottiswoode was a college senior in 2014, Chishti, then 43, deceived Spottiswoode by insisting that she attend a ski trip to meet a nephew that she later discovered didn’t exist. Spottiswoode believes the trip was an attempt to groom her and introduce her to “an extravagant lifestyle.”

When Chishti explained that he had feelings for her, she rejected him but agreed to date him nine months later. After 10 weeks of dating, Spottiswoode ended the relationship. ‘

Months later, Spottiswoode was offered a job with an annual $60,000 salary, and she was assured Chishti did not expect a sexual relationship. In April 2016, Spottiswoode signed an employment contract that included an arbitration agreement. And over the next 18 months, Spottiswoode was pressured for sex and punished or humiliated when she did not comply.  Chishti, she said, also retaliated by ignoring her for months after her rejection.

Chishti fixated on another young female employee on a Dubai business trip, according to Spottiswoode. After the employee was violated by Chishti after a night of drinking, the other young employee was flown home and paid a secret settlement, according to Spottiswoode’s testimony. Afiniti did not take any steps to prevent other women from this behavior, she reported, noting that in all interactions with Chishti she made clear that she did not want to have a sexual relationship with Chishti. In a January 2017 email, Spottiswoode wrote to Chisti: “three times you have behaved inappropriately and with my explicit non-consent.”

Chishti only became more hostile. He called Spottiswoode petulant and told her to fix her behavior in writing. After expressing concern to Chishti, Spottiswoode received pornographic emails describing Chishti’s rape fantasies. On a business trip to Brazil, where Spottiswoode had business accounts, Chishti forced sex with her, and beat her. Spottiswoode’s was covered with scratches, cuts, and contusions;  gruesome images, including choke marks, were submitted in the hearing (and are available at the committee hearing link below).

According to Spottiswoode’s testimony, Chishti then initiated arbitration against Spottiswoode. He filed suit against her father, who had quit his employment with the company when she returned from Brazil the day before her deposition was scheduled.

In May 2019, an arbitrator ruled that Spottiswoode was sexually harassed. Chishti’s Big Law representation, she told the House Judiciary Committee hearing, have tried to get Spottiswoode to vacate the arbitration award by offering her money and to drop the suit against her father, and pay him $1 million. Spottiswoode’s father’s arbitration was continuing as of the House Judiciary Committee hearing, she said. Spottiswoode  she said she is terrified about the ramifications of her testimony because forced arbitration gave Chishti the power for continuing a “campaign of retaliation.”

Zia Christie Chishti stepped down from his role as Afiniti CEO three days after the hearing, but denied all of the allegations. Rimal Farrukh, “She Wanted to Accuse a Celebrated Techie of Sexual Assault But Couldn’t. Until Now.” Vice.com (Nov. 29, 2021) (available at https://bit.ly/3sBblvu).

* * *

Committee witness Anna St. John of the Hamilton Lincoln Law Institute argued that removing arbitration is not in the best interests of those subjected to sexual harassment and assault. St. John explained that studies show that arbitration provides a faster and less expensive way to resolve claims against employers and to obtain greater relief because (1) arbitration is more flexible, (2) involves less burdensome discovery and traditional rules, and (3) organizations support arbitration proceedings to increase accessibility and fairness for individual claimants, and which can lower the costs of claims.

St. John argued that secondary benefits include corporations having more funds for employee benefits or lowering costs to consumers. Furthermore, St. John stated that the U.S. Supreme Court and Congress have expressly recognized the benefits of arbitration.

St. John said that she believes that taking away arbitration for victims is a “top-down, heavy-handed approach that denies them the advantages of arbitration as a means of adjudicating their claims.” Moreover, she believes that overburdened courts are slow-moving, which in turn benefits attorneys, not victims. And class actions do not benefit sexual assault victims because their experiences are often individualized, according to St. John.

* * *

Other testimony included the Heritage Foundation’s Sarah Parshall Perry, who testified strongly in support of arbitration as support for helping congested court dockets.  She said that “the basic premise of all limiting legislation that arbitration is somehow unfair to or bad for employees and consumers is false. The evidence shows precisely the opposite.” She concluded noting that the elimination of the use of arbitration ultimately could hurt victims of sexual harassment and violence.

During the questioning that followed testimony, Perry repeatedly said that more scrutiny should be made of confidentiality provisions and nondisclosure agreements, the use of which she said could be “a particularly pernicious setup” when teamed with an arbitration agreement. But she warned later during questioning that reforms on confidentiality and NDAs can’t become “a piecemeal slice-and-dice of the [Federal Arbitration Act].”

Prof. Myriam Gilles discussed H.R. 4445, the “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021,” which was introduced and debated the day after the hearing. The bill would bar predispute arbitration agreements or predispute joint-action waiver in sexual assault or harassment disputes. Gilles focused on the secrecy aspect of arbitration in her support of the bill. But during questioning late in the hearing, Gilles made clear that the target is arbitration and court-waiver provisions as a condition of employment, noting, “Post-dispute arbitration is fine.”

* * *

The House Judiciary Committee marked up the bill the next day, Nov. 17. The bill prohibits the validity or enforcement of any pre-dispute arbitration agreement or a pre-dispute joint-action waiver with respect to a case “which is filed under Federal, Tribal, or State law and relates to the sexual assault dispute or the sexual harassment dispute.” 

The terms “sexual assault dispute, “sexual harassment dispute,” “sexual assault dispute,” “pre-dispute arbitration agreement” and “pre-dispute joint-action waiver” are defined in detail in the bill. The proposed legislation, however, says nothing about NDAs, but it excepts application to collective bargaining agreements, which often depend on arbitration.

The bill was reported out to the full House at the markup hearing, 27–14, with four Republicans joining the majority Democrats in passing the proposal.

* * *

The Nov. 16 House Judiciary hearing, “Silenced: How Forced Arbitration Keeps Victims of Sexual Violence and Sexual Harassment in the Shadows,” can be viewed in its entirety at https://bit.ly/3wTDLkf. The link includes the biographies, written testimony, and evidence submissions of each of the hearing witnesses. The Nov. 17 House Judiciary markup, with role-call votes on the bill and proposed amendments, as well as more supporting submissions, is available at https://bit.ly/3FFNw9p.

* * *

The author, a second-year law student at the Howard University School of Law, in Washington, D.C., is a CPR 2021-22 intern.

[END]

The Latest #SCOTUS #Arbitration: Process ‘Preference’; Int’l #Discovery; Federal Courts’ Arb #Jurisdiction

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CPR presents on YouTube linked and embedded above a new discussion on the current U.S. Supreme Court hot arbitration topics.  

The discussion is moderated by Russ Bleemer, editor of Alternatives to the High Cost of Litigation (http://altnewsletter.com, and for CPR members at www.cpradr.org/news-publications/alternatives) (@altnewsletter)), who is joined by Angela Downes, Assistant Director of Experiential Education and Professor of Practice Law at the University of North Texas-Dallas College of Law; independent Dallas attorney-arbitrator Richard Faulkner, and arbitration advocate Philip J. Loree Jr., who heads the Loree Law Firm in New York (@PhilLoreeJr). 

Here are the matters discussed, and links on this CPR Speaks blog to details on the cases and potential cases along with resources including links to lower court opinions and briefs.

  1. Morgan v. Sundance Inc., No. 21-328, an employment case on the extent to which a federal court may defer to an arbitration agreement, which the nation’s top Court agreed to hear last week. For details, see Mark Kantor, “U.S. Supreme Court Adds an Arbitration Issue: Is Proof of Prejudice Needed to Defeat a Motion to Compel?” CPR Speaks (Nov. 15) (available here).
  2. The Court has scheduled two cases involving the reach of 28 U.S.C § 1782 for a Dec. 3 conference that will determine whether it should hear the matters or let lower court opinions stand.  The cases examine whether the statute, which authorizes “any interested person” in a proceeding before a “foreign or international tribunal” to ask for and receive discovery from a person in the United States, covers international arbitration tribunals. The cases, AlixPartners LLP v. The Fund for Protection of Investors’ Rights in Foreign States, No. 21-518, and ZF Automotive US Inc. v. Luxshare Ltd., No. 21-401, are discussed at Bryanna Rainwater, “The Law on Evidence for Foreign Arbitrations Returns to the Supreme Court,” CPR Speaks (Oct. 22, 202) (available here).  CPR has filed an amicus brief asking the Supreme Court to accept and decide the AlixPartners case; the NYC-based nonprofit which publishes this blog did not take a position in the case.  The details on the filing can be found at “CPR Asks Supreme Court to Consider Another Foreign Tribunal Evidence Case,” CPR Speaks (Nov. 12) (available here) (containing information and links to CPR’s previous amicus brief in Servotronics v. Rolls Royce PLC, No. 20-794, another Section 1782 case that the Supreme Court dismissed in September and removed from the Court’s October argument calendar).
  3. Badgerow v. Walters, No. 20-1143, an employment discrimination case that dives into the jurisdiction of federal courts under Federal Arbitration Act sections on enforcing and overturning arbitration awards.  The case was most recently discussed on CPR Speaks at Russ Bleemer, “Supreme Court Hears Badgerow, and Leans to Allowing Federal Courts to Broadly Decide on Arbitration Awards and Challenges,” CPR Speaks (Nov 2) (available here).

The video embedded above can be found on YouTube at https://www.youtube.com/watch?v=Sw8ps4vtTfs.

[END]

House Subcommittee Introduces Bill that Would Restrict Arbitration

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By Tamia Sutherland

The House Committee on Education and Labor’s Subcommittee on Health, Employment, Labor, and Pensions held a Nov. 4 hearing on employment arbitration to introduce the “Restoring Justice for Workers Act.” The meeting and bill was presented by House Education and Labor Committee Chairman Bobby Scott, D., Va., and House Judiciary Committee Chairman Jerrold Nadler, D., N.Y.

The text of the Restoring Justice for Workers Act is available here. The act would

  • prohibit pre-dispute arbitration agreements that require arbitration of work disputes;
  • prohibit retaliation against workers for refusing to arbitrate work disputes;
  • provide protections to ensure that post-dispute arbitration agreements are truly voluntary and with the informed consent of workers;
  • amend the National Labor Relations Act to prohibit agreements and practices that interfere with employees’ right to engage in concerted activity regarding work disputes, and
  • reverse the U.S. Supreme Court’s 5-4 decision in Epic Systems Corp. v Lewis, available here. (Earlier this week, the Court agreed to hear a case that could clarify the extent of the seminal case’s application. For more, see Mark Kantor, “U.S. Supreme Court Adds an Arbitration Issue: Is Proof of Prejudice Needed to Defeat a Motion to Compel?” CPR Speaks (Nov. 15) (available at https://bit.ly/3FnfyGd).

The subcommittee meeting, “Closing the Courthouse Doors: The Injustice of Forced Arbitration Agreements,” began with an opening statement from committee Chairman Mark DeSaulnier, D., Calif. Senior Georgia Republican committee  Rick W. Allan gave an opening statement, and then four witnesses provided testimony:

  1. Alexander Colvin, Dean of the School of Industrial and Labor Relations at Cornell University;
  2. Glenda Perez, Former Implementation Set-Up Representative at Cigna;
  3. G. Roger King, Senior Labor and Employment Counsel at the Arlington, Va.-based HR Policy Association, a nonprofit membership group of “over 390 large” corporations’ chief human resource officers; and
  4. Kalpana Kotagal, a Partner in Cohen Milstein Sellers & Toll’s Washington, D.C., office.

First, Chairman DeSaulnier began by introducing the topic of “forced arbitration” agreements and collective action waivers, explaining that for many employees, employment documents “include an arbitration clause, hidden in the fine print,” which requires workers to sign the document or forgo employment.

Next, he provided data to support the assertion that the use of these agreements is widespread. He explained that “in 1990, 2.1% of non-union employees had an arbitration clause in their employment contracts . . . [and in] 2018, nearly 60% of all nonunionized private-sector employees were covered by forced arbitration agreements.”

Chairman DeSaulnier provided other examples of what he described as unfair practices and, finally, introduced the Restoring Justice for Workers Act as a solution.

Rep. Allan countered in his opening statement that the act is another instance of heavy-handed government reach that will be burdensome to employers and unfairly target job creators. Moreover, he asserted that the act would delay justice and continue to clog an already overrun court system.

Prof. Colvin, a longtime critic of mandatory arbitration processes, was the first witness to provide testimony. He provided statistics from his studies, cited at his link above, to show the increase use of arbitration, and how employees do worse in arbitration as opposed to the court. He also discussed how employees who use the arbitration process for the first time are at a structural disadvantage to companies who repeatedly use the process.

Next, Glenda Perez provided a personal account of her struggles with the arbitration process without a lawyer. Perez reported that she and her husband worked for Bloomfield, Conn.-based insurer Cigna from October 2013 to  July 2017. In April 2017, Cigna put her on a performance correction plan for work “errors” after meeting with her team on pharmacy benefits.

Her husband, a Cigna analyst, found evidence of errors by white women but none by his wife, according to Perez’s witness statement. She filed a discrimination complaint with Cigna’ human resources department. Typically, a full investigation takes 60 days, she reported, but in her statement, Perez said her investigation took one day, with human resources backing her manager’s claim. Two months later, she was fired.

Perez wanted to file a claim for discrimination and retaliation, but could not find an attorney to represent her in mandatory arbitration. She said she was forced to drive to a law library to do research while also taking care of her three children and looking for a new job. She claimed it took several months to choose an arbitrator.

Moreover, Perez reported, the arbitrator selected may have had a conflict of interest that was not disclosed. Perez’s testimony focused on arbitrator’s lack of impartiality. She reported that there are photos online of the arbitrator, and Cigna’s attorney, at the arbitrator’s 50th birthday party, which she filed with her committee testimony. Additionally, she testified, the arbitrator formerly worked for the firm representing Cigna and had Cigna’s counsel as a reference on his CV.

The arbitrator denied Perez’s request for materials to prove her case as Cigna claimed it would cost more than $1 million to retrieve “even though,” she said, “I was only requesting my employee personal profile.” Cigna moved for summary judgment, and then the arbitrator ruled in favor of Cigna, and canceled a hearing that had been scheduled. When Perez filed a motion to vacate the decision in court, she said Cigna fired her husband.

HR Policy Association attorney Roger King said that two of the legislation’s primary objectives are big mistakes and are a substantial overreach of congressional action. He explained that completely eliminating pre-dispute arbitration was a mistake, and a total prohibition on class-action waivers would be burdensome. Also, in response to Glenda Perez’s testimony, he asserted that generally, arbitrators are ethical.

Finally, Kalpana Kotagal testified that the justification for forced arbitration is predicated on myths because (1) there is no equal bargaining power in most forced arbitrations, (2) it burdens those who are already marginalized, (3) it is not speedy, and (4) it deters workers from bringing claims.

The meeting concluded with a Q&A from other committee members.

* * *

A video of the hearing, and witness statements, is available here. The Congressional repository page for the event can be found here.

* * *

The author, a second-year law student at the Howard University School of Law in Washington, D.C., is a CPR 2021 Fall Intern.

[END]

CPR Releases Update to Employment-Related Mass Claims Protocol

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The International Institute for Conflict Prevention and Resolution (CPR), working with a diverse task force of leaders in employment law and alternative dispute resolution (ADR), has launched an updated version of its Employment-Related Mass Claims Protocol (the “Protocol”). The Task Force included leading counsel from the plaintiff’s bar, in-house employment counsel, corporate defense attorneys and neutrals (arbitrators and mediators).

The original Protocol was launched in November 2019.  It was reviewed by U.S. District Court Judge Edward M. Chen, of the U.S. District Court for the Northern District of California, in November 2020, in McGrath v. DoorDash, Inc., No. 19-cv-05279 (N.D. Cal. Nov. 5, 2020), who found that “the terms of the Mass-Claims Protocol appear fair.”  Working together over the past 10 months, the Task Force sought to make improvements and further enhance the Protocol. 

An initial set of revisions by the Task Force was released in April 2021, and incorporated CPR’s then newly-launched Administered Employment Arbitration Rules as well as other clarifying changes. See CPR Speaks, April 14, 2021.  Since then, the Task Force has continued to work together to develop the current version of the Protocol, which includes a novel approach to selecting neutrals that will enhance both efficiency and diversity.  The updated version also provides greater detail in describing the mediation process and other procedures.

The procedure outlined in the Protocol applies where it has been incorporated into an agreement between the parties, either before or after a dispute arises, and where there are 30 or more similar cases filed with CPR against one company.

The procedure requires fast track arbitration of randomly selected test cases while proceedings in the other cases are paused. The awards from those cases are anonymized and provided to a mediator to work with the parties and their counsel in trying to identify a global framework for resolving the remaining cases.  If the mediation is successful, each person who brought an arbitration will be presented with an opportunity to settle their case according to the global framework or to proceed with their arbitration. If the mediation fails to identify a global framework, then any of the parties may opt out of the arbitration process and go to court.

Distinguishing features of the Protocol include:

  • Requiring within the Protocol itself that certain due process protections be afforded to employees or others who file cases.
  • A novel fee structure that does not require the company to pay all filing fees up front but instead collects an upfront initiation fee followed by fees paid as each case is addressed.
  • Consistent with CPR’s Diversity Commitment, nominating a diverse pool of arbitrators from which the parties will choose the arbitrators who ultimately will resolve their cases.
  • Innovative mechanisms to encourage all parties to reach a faster resolution of their cases, providing parties with the opportunity and incentives to reach a global framework for resolving all of their cases before proceeding with more arbitrations.

In keeping with its commitment to the parties, CPR sets forth the procedures in detail so that the parties may understand what is expected of them and are provided a practical pathway toward resolution. CPR is also willing to work with the parties on agreed-upon variations to these procedures.

“It has been a privilege to work with and be guided by the experiences and perspectives of this Task Force,” noted Allen Waxman, President & CEO of CPR, adding, “With the benefit of the members’ input, the Protocol offers an innovative procedure for employers and their employees or contractors to resolve their disputes when many arise at once – providing the parties with more options toward finding a resolution.”

Jahan Sagafi, partner of Outten & Golden, Task Force Co-Chair, and a lawyer who frequently represents workers in employment disputes, stated that “while I am very concerned about Supreme Court precedent allowing employers to force workers to submit to individual arbitration, given those realities, CPR’s Protocol provides a fair process to resolve those claims efficiently.  CPR should be commended for considering a variety of perspectives from the Task Force in completing the Protocol.”

“CPR’s Protocol represents a valuable contribution toward the resolution of many similar employment claims,” commented Task Force Co-Chair Aaron Warshaw, a partner in Ogletree, Deakins, Nash, Smoak & Stewart, a law firm that represents management and companies in labor disputes, “The Protocol is an important option for companies putting in place arbitration programs and one that should be seriously considered.”

“CPR has consistently been a leader in offering innovative ways to resolve disputes,” observed the Honorable Timothy K. Lewis, Task Force member, arbitrator and a retired judge on the U.S. District Court and Third U.S. Circuit Court of Appeals, adding, “The Protocol is another such offering for the complex challenges posed by the filing of a mass of cases. Its procedures reflect careful considerations to foster resolution in a fair and efficient fashion. In addition, the Protocol’s commitment to greater diversity in the pool of candidates who will be selected to arbitrate cases is also a meaningful step in addressing the lack of diversity and inclusion in the field of ADR.”

For more information, see the File a Case or Employment Disputes sections of CPR’s website, or contact Helena Tavares Erickson at herickson@cpradr.org.  Also review Frequently Asked Questions for the Protocol.

ABOUT CPR

Established in 1977, CPR is an independent nonprofit organization that promotes the prevention and resolution of conflict to better enable purpose.

The CPR Institute drives a global prevention and dispute resolution culture through the thought leadership of its diverse member companies, leading mediators and arbitrators, law firms, individual practitioners, and academics. It convenes committees to share best practices and develop innovative tools. It connects thought leaders through global, regional, and smaller events. It publishes a monthly journal on related topics and advocates for expanding the capacity for dispute prevention and resolution globally through a variety of initiatives.

CPR Dispute Resolution provides leading edge dispute management services – mediation, arbitration, early neutral evaluation, dispute review boards and others – as well as training and education. It is uniquely positioned to resolve disputes by leveraging the resources generated by the leaders who participate in the CPR Institute.  It has deep experience in dispute management, a deep bench on its global Panel of Distinguished Neutrals, and deep expertise across a variety of subject areas.

Visit cpradr.org to learn more.

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CPR Launches New Administered Employment Arbitration Rules and Updates Its Employment-Related Mass Claims Protocol

/ CPR Staff / 2 Comments

The International Institute for Conflict Prevention & Resolution (CPR) has launched its first set of Administered Employment Arbitration Rules and updated its Employment-Related Mass Claims Protocol. 

The just-released 2021 Administered Employment Arbitration Rules (Employment Rules) incorporate many innovations from CPR’s 2019 Administered Arbitration Rules, and reflect the collaboration of counsel from the plaintiff’s bar, in-house employment counsel, corporate defense attorneys, and neutrals who contributed to their creation. 

CPR recognizes that employment disputes and employment arbitration programs differ from commercial arbitration in important ways. Among other things, employment arbitration agreements, programs, and procedures must ensure that the interests of individual workers, who as a practical matter often do not negotiate their terms, are adequately protected.

The new CPR Employment Rules give significant attention to due process concerns (described in more detail below), which are vital for individuals subject to mandatory arbitration programs.  These rules are an especially welcome contribution to the field, given the increasing frequency with which employment-related disputes are being arbitrated. (Alexander J.S. Colvin, “The growing use of mandatory arbitration,” Economic Policy Institute (April 6, 2018) (noting that 53.9 percent of nonunion private-sector employers now have mandatory employment arbitration procedures, and that percentage climbs to 65.1 percent among companies with 1,000 or more employees).

The following are some of the distinguishing features of the newly launched CPR Employment Rules:

  • Rule 1.4 (Due Process Protections):  Demonstrating the fundamental importance that CPR places on fairness to all parties, including in particular employees and individuals who may be subject to mandatory arbitration programs, CPR incorporates its Due Process Protections directly in the Rules at their outset. The provision is detailed, providing employers better guidance on when and how CPR will apply the due process requirements.
  • Rules 3.12-3.13 (joinder and consolidation, respectively): CPR has created an innovative procedure that uses an Administrative Arbitrator to address issues of joinder and consolidation when they arise prior to selection of an arbitrator, identifies factors to be considered, and makes clear that neither joinder nor consolidation is permitted if prohibited by the applicable arbitration agreement.
  • Rules 5-6 (selection of arbitrator): CPR’s Employment Rules provide for arbitration by a single arbitrator selected by the parties from a list using striking and ranking as the default procedure (like other employment arbitration providers); however, CPR’s Employment Rules also offer parties a variety of other options for arbitrator selection should they wish to innovate in this area, including allowing parties to propose arbitrators to be included on the slates for nomination or to use CPR’s unique screened selection process for three-arbitrator tribunals.
  • Rule 12.2(c) (hearings): Given the experiences gained during the Covid-19 pandemic, CPR’s Employment Rules make clear that an arbitrator may order remote hearings and provide factors to be considered in making this determination.
  • Rule 14 (emergency measures by emergency arbitrator): Clarifying a matter than can be ambiguous under other providers’ rules, CPR’s Employment Rules provide that their emergency procedures will apply automatically unless parties expressly agree they do not; at the same time, the emergency procedures are not exclusive, and parties still have the choice of going to court for emergency relief.
  • Rules 17 and 18 (administrative and arbitrator fees): CPR’s Employment Rules, consistent with most state law and with the Due Process Protections, provide that employers are generally required to pay arbitration fees but that the arbitrator has authority in appropriate cases to shift fees to the same extent a court would be able to do so. In addition, to address a matter that has become more commonly litigated, CPR’s Employment Rules set out detailed guidance to address cases where a party has refused to pay required fees to provide clarity on preserving the rights of the non-defaulting party.
  • Rule 20 (confidentiality): CPR’s Employment Rules provide that CPR and the arbitrator must maintain confidentiality. But, consistent with developing case law, these rules do not impose confidentiality by rule upon the parties. The arbitrator has the same authority as a court to issue confidentiality orders to protect evidence/discovery.
  • CPR’s Employment Rules are specifically designed to avoid ambiguity and disputes over the interpretation of the rules.

The fee structure for the administration under the Employment Rules can be found HERE.

CPR also is updating the Employment-Related Mass Claims Protocol (ERMCP), which it first launched in November of 2019.  The Protocol provides an innovative mechanism for the more efficient and effective resolution of a mass of employment-related cases.  The ERMCP now incorporates CPR’s newly launched Employment Rules as the default rules that will govern arbitrations under the Protocol.

In addition, and in an effort to provide better clarity around the procedures under the Protocol, and with the guidance from a task force of leading counsel from the plaintiff’s bar, in-house employment counsel, corporate defense attorneys, and neutrals, the updated ERMCP also:

  • clarifies the documents that need to be filed to commence the arbitrations;
  • clarifies certain timelines for triggering events, including payment deadlines;
  • specifies the kinds of grounds for challenging an arbitrator’s independence or impartiality (such as provided in the Employment Rules);
  • defines basic terms to avoid ambiguity, such as “Commencement Date,” the “Employment Mass Claims Panel,” the “CPR Panel of Distinguished Neutrals,” and a “Final Written Reasoned Award;”
  • provides greater details for how the Mediation Process will work;
  • expands the role of the Administrative Arbitrator to assist the parties in expediting the proceedings and reaching a resolution;
  • reinforces the option of the parties to resolve their cases at any point in time even apart from the Mediation Process; and
  • clarifies the authority of the arbitrator to order a remote proceeding so long as taking measures to ensure the remote proceedings remain fair.

Please also see the FAQs accompanying this revised version.

To make administration of the Protocol more cost-effective, the fee structure for the Protocol has also been modified based on efficiencies that can be achieved.  CPR still requests that any party contemplating inclusion of the Protocol in its dispute resolution program discuss the Initiation Fee with CPR both to scope out the size of any matter and to ensure there is compliance with CPR’s Due Process Protections and other guidance.

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