Yesterday the Supreme Court granted certiorari in what could be an extremely important case addressing the intersection of mandatory arbitration and class actions. AT & T Mobility v. Concepcion, 2010 WL 303962, Docked 09-893 (May 24, 2010) poses the following question: “Whether the Federal Arbitration Act preempts States from conditioning the enforcement of an arbitration agreement on the availability of particular procedures — here, class-wide arbitration – when those procedures are not necessary to ensure that the parties to the arbitration agreement are able to vindicate their claims.”
The lawsuit, brought in the 9th Circuit, is a consumer class action contending that AT&T Mobility acted fraudulently when it offered a “free” phone to all who signed up for service, but then charged substantial sales tax ($30.22 for two phones to the named plaintiff) to each consumer. When plaintiff sought to litigate the claim as a class action the defendant demanded individual arbitration, citing an arbitration clause that prohibited class actions. Relying on California unconscionability law, specifically Discover Bank v. Superior Court, 113 P.3d 1100 (Cal. 2005) the District Court, 2008 WL 5216255, and Ninth Circuit, 584 F.3d 849 (9th Cir. 2009) both courts found the class action prohibition unconscionable.
AT&T Mobility’s cert petition recognizes that provisions in arbitration agreements can sometimes be held unconscionable, but argues that the decisions below are preempted because California courts are purportedly interpreting unconscionability law differently (and more strictly) when they review arbitral class action prohibitions than when they review other kinds of contracts. In particular, the California Supreme Court’s Discover Bank decision states:
“when the [class] waiver is found in a consumer contract of adhesion in a setting in which disputes between the contracting parties predictably involve small amounts of damages. and when it is alleged that the party with the superior bargaining power has carried out a scheme to deliberately cheat large numbers of consumers out of individually small sums of money, then, at least, . . . the waiver becomes in practice the exemption of the party from responsibility for its own fraud, or willful injury to the person or property of another. Under these circumstances, such waivers are unconscionable under California law and should not be enforced.”
The Ninth Circuit states that this specific test is not a new rule applicable only to arbitration agreements but rather merely a “refinement” of the “general sliding-scale approach to unconscionability in the specific context of class action waivers.”
The arbitration clause at issue in Concepcion is highly unusual, because it includes a provision stating that if the arbitrator awards the customer an amount greater than the phone company’s last written settlement offer made before selection of an arbitrator then the consumer is entitled to a premium payment of $7,500. The company argues that this “premium” provision is sufficiently generous that a class action is not necessary to allow individual claimants to enforce their rights, and that it was wrong in this context to hold a class action prohibition unconscionable. The plaintiffs respond (and the Ninth Circuit found) that “the premium payment does not transform a $30.22 case into a predictable $7,500 case.” Instead, finds the Ninth Circuit, “predictably AT&T will simply pay the face value of the claim before the selection of an arbitrator to avoid potentially paying $7,500. Thus, the maximum gain to a customer for the hassle of arbitrating a $30.22 dispute is still just $30.22.” Normally, finds the Ninth Circuit, a person “will not find it worth the time or the hassle to try to recover such a small amount, even if that person spends no money to hire an attorney or to invoke the arbitration process.”
It seems that the Concepcion case will require the Court to walk a difficult line. If the majority of the Court want to find that California’s approach to unconscionability in this context is preempted it will have to find a way to do that without purporting to wade too far into state law. While it may be easy for the Court to say that unconscionability law can’t be applied more strictly to arbitration agreements than to other kinds of contracts, it may be hard for the Supreme Court or lower courts to apply that test in particular situations.
The case will also be interesting because it raises the issue of the purpose of class actions and litigation more generally. Is the accepted purpose of plaintiffs’ class action only to reimburse plaintiff for the cost of the phone or is an accepted purpose also to help other similarly situated consumers or to deter the defendant or other companies from engaging in such fraudulent behavior in the future? Is it appropriate to find a class action prohibition unconscionable because it harms persons other than the named plaintiffs or prevents deterrence, and not merely because it prevents the particular named plaintiffs from recovering their loss? Note that class actions serve a notice function — helping present claims of persons who did not even know they had claims. Is it appropriate (not preempted by the FAA) to find that eliminating that aspect of class actions is unconscionable?
The case will be watched extremely closely by both sides of the class action/arbitration debate. Probably no one believes that all class action prohibitions are per se unconscionable. Equally, while some companies might want to eliminate unconscionability arguments altogether in all likelihood Section 2 of the FAA ensures that some types of arbitration clauses can be unconscionable. Thus, the question the Court will try to answer is are class action waivers contained in arbitration clauses somehow immune from unconscionability challenges and, assuming they are not, how should courts decide whether such waivers are unconscionable. A broad decision in favor of AT&T Mobility could potentially allow companies in a variety of contexts to insulate themselves from class action exposure by including class action waivers in their arbitration clauses. This would be a huge deal in the world of consumer litigation, as many consumer challenges are only brought through class actions. Such a ruling could also affect employment cases, particularly wage and hour claims, which are typically presented in class actions. This type of ruling could spark legislative action on the proposed Arbitration Fairness Act (which would prohibit mandatory arbitration in the consumer and employment settings). Alternatively a narrower decision in favor of AT&T could open a floodgate of future litigation to determine whether a lower court had issued a permissible or impermissble decision holding that a particular class action waiver was unconscionable. A ruling in favor of the plaintiffs would reinforce existing law in many jurisdictions which provides that arbitral class action prohibitions are at risk of being held unconscionable.
Stay tuned for another exciting arbitration decision from the Supreme Court!
*This post originally appeared in Indisputably.org on May 25, 2010. Reprinted with permission from the author.
About the Author: Jean R. Sternlight is the Michael and Sonja Saltman Professor of Law and also Director of the Saltman Center for Conflict Resolution at the University of Nevada-Las Vegas Boyd School of Law. She teaches courses on dispute resolution, including both litigation and alternatives thereto. Frequently cited by courts and the media, Sternlight is co-author of Mediation Theory and Practice 2d ed. (LEXIS 2006), Arbitration Law in America: A Critical Assessment (Cambridge Univ. Press 2006), and Dispute Resolution: Beyond the Adversarial Model (Aspen 2004). She has published articles in numerous well-respected journals including Stanford Law Review, University of Pennsylvania Law Review, Journal of Law & Contemporary Problems, William & Mary Law Review, and The Ohio State Journal of Dispute Resolution. Sternlight received her B.A. (High Honors) from Swarthmore College, and her J.D. (cum laude) from Harvard Law School. After practicing law in Philadelphia for eight years she began her academic career at Florida State University College of Law. She subsequently moved to the University of Missouri-Columbia and has been at the University of Nevada-Las Vegas since the summer of 2003.
To paraphrase comedian Henny Youngman’s famous one-liner, take my KBR, please.
After all the bad press U.S. engineering and construction company KBR has received over the years for its operations in Iraq , both during its time as a Halliburton subsidiary and since, one might think it had learned a thing or two about how to avoid sticking its foot in its mouth.
But you would be wrong, As case in point consider the following legal brief KBR filed, which was posted online by the estimable Ms. Sparky — who is to chronicling KBR misdeeds, including those against it own employees, as white is to rice — in regard to the case of Jamie Leigh Jones,
For those who missed this news Ms. Jones is the then 20-year old former KBR/Halliburton worker, who says she was gang-raped by Halliburton/KBR coworkers in Baghdad in late July 2005.
The main points are by now well known. She says that just four days after arriving in Iraq she was raped by multiple men at a KBR camp in the Green Zone, the company put her under guard in a shipping container with a bed and warned her that if she left Iraq for medical treatment, she’d be out of a job.
In a lawsuit filed in federal court against Halliburton and its then-subsidiary KBR, Jones says she was held in the shipping container for at least 24 hours without food or water by KBR, which posted armed security guards outside her door, who would not let her leave.
According to her lawsuit, Jones was raped by “several attackers who first drugged her, then repeatedly raped and injured her, both physically and emotionally.” Jones said that an examination by Army doctors showed she had been raped “both vaginally and anally,” but that the rape kit disappeared after it was handed over to KBR security officers.
Ms. Jones had to be rescued from her American employer by U.S. State Department agents from the U.S. Embassy in Baghdad, after she was able to contact her father by cell phone, who then contacted his congressman, Rep. Ted Poe (R-TX), who contacted the State Department.
In late 2007, over two years after the reported rape occurred, the Justice Department had brought no criminal charges in the matter. In fact, an investigation by ABC News could not confirm any federal agency was investigating the case.
Early on, in a statement, KBR said it was “instructed to cease” its own investigation by U.S. government authorities “because they were assuming sole responsibility for the criminal investigations.”
Since no criminal charges were filed, the only other option was the civil system, which Jones tried. But KBR didn’t want this case to see the inside of a civil courtroom. Instead, KBR moved for Jones’ claim to be heard in private arbitration, instead of a public courtroom. It says her employment contract requires it.
When Jones went to work for KBR in Texas, and later for its subsidiary, Overseas Administrative Services, she signed contracts containing mandatory binding arbitration clauses, which required her to give up her right to sue the companies and any right to a jury trial. Instead, the contracts forced Jones to press her case through private arbitration, which she did in 2006.
At the time of the alleged attack, KBR was a subsidiary of Halliburton. So Jones was covered by the Halliburton dispute-resolution program, which was implemented when Dick Cheney was Halliburton’s CEO. On his watch, Halliburton, in late 1997, made it more difficult for its employees to sue the company for discrimination, sexual harassment, and other workplace-related issues.
One day, Halliburton sent all its employees a brochure explaining that the company was implementing a new dispute resolution system. The company sold the new program as an employee perk that would create an “open door” policy for bringing grievances to management and as a forum for resolving disputes without expensive and lengthy litigation. In practice, it meant that anyone who had a legitimate civil-rights or personal-injury claim signed away his or her constitutional right to a jury trial. Anyone who showed up for work after getting the brochure was considered to have agreed to give up his or her rights, regardless of whether the employees had actually read it. In 2001, the conservative and pro-business Texas Supreme Court overturned two lower courts to declare that this move was legal.
In arbitration, there is no public record or transcript of the proceedings, meaning that Jones’ claims would not be heard before a judge and jury. Rather, a private arbitrator hired by the corporation would decide Jones’ case.
When Ms. Jones testified before the House subcommittee on crime, terrorism, and homeland security in December 2007 the point was made that as KBR employees working on contract for the U.S. Army, Jones’ attackers were almost certainly covered under the Military Extraterritorial Jurisdiction Act, more simply known as MEJA, which subjects all civilians working abroad with U.S. armed forces to a defined legal code. But in Jones’ case, MEJA seems to have fallen short for a different reason: a lack of investigative muscle in the Green Zone. Both then and now the Department of Justice lacks investigators in Baghdad with responsibility for looking into crimes committed by private contractors against their own.
KBR has not shown much adroitness in its handling of Ms. Jones’s case. In a December 2007 e-mail with the subject line titled “Recent media coverage,” KBR President and Chairman Bill Utt said the company has disputed allegations by Jamie Leigh Jones.
“While the allegations raised by Ms. Jones are serious, after a review of the case KBR noted inaccuracies in the accounts of the incident in question, and disputes portions of Ms. Jones’ version of the facts,” Utt wrote in an e-mail obtained by the Houston Chronicle.
There is reason to think that Ms. Jones was not an isolated case. In her lawsuit, Jones asserted that “KBR and Halliburton created a ‘boys will be boys’ atmosphere at the company barracks which put her and other female employees at risk.” Another former KBR employee, Linda Lindsey, supported Jones’s claims about the “boys will be boys” environment of KBR barracks in Iraq. “I saw rampant sexual harassment and discrimination,” said Lindsey in a sworn affidavit for Jones’s case.
In a December 2007 letter to Secretary of Robert Defense Gates, Senator Bill Nelson (D-FL) mentioned “a second alleged assault, this time of a woman from Florida who reportedly worked for a KBR subsidiary in Ramadi, Iraq in 2005.”
Since the attacks, Jones has started a nonprofit foundation called the Jamie Leigh Foundation, which is dedicated to helping victims who were raped or sexually assaulted overseas while working for government contractors or other corporations. Since Ms. Jones came forward, other women have come forward with similar lawsuits against KBR
It was primarily because of Ms. Jones that the fiscal 2010 Defense appropriations measure includes a provision barring the Defense Department from entering into contracts with companies that restrict alleged sexual assault victims from taking legal action.
The amendment was introduced by Sen. Al Franken, D-MN. Support for the amendment was broad, but far from universal. The provision passed the Senate 68-30 in October, when the chamber was considering an initial version of the spending bill. Some Republican opponents argued that it was not Congress’ place to interfere in private sector contracts.
“Congress should not be involved in writing or rewriting private contracts,” said Sen. Jeff Sessions, R-AL, during floor debate on the provision. “Instead of eliminating arbitration we should look into how to utilize arbitration more in these kinds of disputes.” Sessions called the amendment a “political attack directed at Halliburton,” KBR’s former parent company.
The Obama administration and the Defense Department initially opposed the amendment, although the White House insisted it supported the provision’s intent. The Pentagon’s primary concern, according to a letter Defense officials sent to lawmakers before the Senate’s vote, was enforcement.
“The Department of Defense, the prime contractor, and higher tier subcontractors may not be in a position to know about such things,” the letter stated. “Enforcement would be problematic, especially in cases where privity of contract does not exist between parties within the supply chain that supports a contract.”
The letter stated that if the Senate deemed these types of contract clauses to be unacceptable, it might be more effective to prohibit them in any business transaction within the jurisdiction of the United States.
Negotiations between the department and Capitol Hill eventually resulted in a number of changes, including an agreement that the restriction would apply only to companies with government contracts valued at more than $1 million and that it would contain a waiver for national security concerns.
The provision, now law, does not require companies to change existing employment contracts, but will bar the government from entering into future pacts with those firms if they do not modify employment clauses. When the provision passed the Senate, Franken said it “narrowly targets the most egregious violations.”
With all this one might think that both KBR and Halliburton would have long ago seen given up trying to treat this as some sort of labor dispute, which should be handled by arbitration. Especially in light of recent court decisions.
Last September the United States District Court for the Southern District of Texas issued a decision in regard to an appeal from Halliburton regarding the case. According to the case summary:
PROCEDURAL POSTURE: Appellant employer sought review of a decision from the United States District Court for the Southern District of Texas, which partially refused to compel arbitration of some of appellee employee’s claims against the employer, which stemmed from the alleged gang rape of the employee by coworkers while working in Iraq.
OVERVIEW: The employee alleged that she informed the employer that conditions at the barracks were not safe and that she was gang raped in her bedroom after a social gathering outside the barracks. The claims for assault and battery, emotional distress, negligent hiring, retention, and supervision, and false imprisonment were found not arbitrable. At issue was whether these claims were related to the employee’s employment or constituted personal injury arising in the workplace, so as to render them arbitrable under the arbitration agreement. The employer argued that the claims were covered by the agreement because the alleged incident “related to” the employee’s employment. The court disagreed. Sexual assault was not within the course and scope of employment. This was true even though the employee received workers’ compensation benefits in connection with the incident, as the terms “course and scope of employment” were more narrowly defined under the agreement than in workers’ compensation laws such as the Defense Base Act. That the employee lived in employer-provided barracks was inconsequential because she was off duty at the time, and the barracks were located away from the work place.
OUTCOME: The court affirmed the district court’s decision and remanded the case to the district court for further proceedings.
Yet KBR is preparing to fight Ms. Jones over her right to settle her suit with the company, all the way to the Supreme Court. Its strategy? Destroying Jones’ credibility.
In its most recent 188-page brief KBR petitions for a writ of certiorari, which is a document a losing party files with the Supreme Court asking the Court to review the decision of a lower court.
To quote from the brief:
This interlocutory appeal from a partial refusal to compel arbitration concerns the arbitrability vel non of tort claims by an employee who, while working at an overseas location, was allegedly gang-raped by her co-workers in her bedroom in employer-provided housing. Halliburton Company/Kellogg Brown & Root, and various affiliates (Halliburton/KBR), contest the denial, in part, of their motion to compel arbitration of Jamie Leigh Jones’ claims concerning her alleged rape by Halliburton/KBR employees, while she was stationed at a company facility in Baghdad, Iraq. All of her claims were deemed arbitrable except for: (1) assault and battery; (2) intentional infliction of emotional distress arising out of the alleged assault; (3) negligent hiring, retention, and supervision of employees involved in the alleged assault; and (4) false imprisonment.
At issue is whether those four claims found non-arbitrable are, for purposes of Jones’ employment contract, “related to [her] employment” or constitute personal injury “arising in the workplace”. That contract incorporated Halliburton/KBR’s dispute resolution program (DRP), which required her to arbitrate all claims brought against the company falling within the scope of related-to or workplace language. In the alternative, should the alleged rape be deemed covered by the arbitration clause, at issue is whether the doctrine of unclean hands precludes granting equitable relief of specific enforcement of that clause.
Not being a lawyer myself I can’t comment on the jurisprudence of all this but I do find it amazing that KBR fights so hard to avoid doing the right thing; namely letting Ms. Jones have her day in court.
After all, on other issues, KBR can show signs of rationality. An example is the op-ed that appeared in this past Sunday’s Washington Post. The author, a former Air Force loadmaster, who was discharged for being gay, notes that within three weeks of his discharge, KBR hired him to go back to Iraq as a radio repair technician. (KBR knew that he was gay.)
So, for the time being, I can only suggest that KBR be subjected to the full barrage of ridicule it so richly deserves. After all, to cite a defense often heard in rape cases, it is asking for it.
*This post originally appeared in the Huffington Post on February 8, 2010. Reprinted with permission from the author.
About the Author: David Isenberg is the author of the book Shadow Force: Private Security Contractors in Iraq. He wrote the “Dogs of War” weekly column for UPI from 2008 to 2009. During 2009 he ran the Norwegian Initiative on Small Arms Transfers project at the International Peace Research Institute, Oslo. His affiliations include the Straus Military Reform Project, Cato Institute, and the Independent Institute. He is a US Navy veteran. His e-mail is firstname.lastname@example.org.
As Congress ended its last session, a legislative victory for employee rights advocates came with it.
The bill, signed by President Obama at the end of December, came about because of the horrible story involving Jamie Leigh Jones. Here’s one description of what happened as reported in September by Think Progress:
In 2005, Jamie Leigh Jones was gang-raped by her co-workers while she was working for Halliburton/KBR in Baghdad. In an apparent attempt to cover up the incident, the company then put her in a shipping container for at least 24 hours without food, water, or a bed, and “warned her that if she left Iraq for medical treatment, she’d be out of a job.”
Even more insultingly, the DOJ resisted bringing any criminal charges in the matter. KBR argued that Jones’ employment contract warranted her claims being heard in private arbitration — without jury, judge, public record, or transcript of the proceedings. After 15 months in arbitration, Jones and her lawyers went to court to fight the KBR claims. Yesterday, a court ruled in favor of Jones.
The tragedy spurred the bill which became known as both the “Franken Amendment” and the”Jamie Leigh Jones Amendment” (to the Defense Appropriations Act for 2010) . It’s the first federal legislation that prevents employees from forcing binding arbitration on their employees as a forum for resolving employment disputes.
In recent years, many companies have required employees to sign contracts, handbooks, and other documents which require them to go to arbitration to resolve their employment disputes.
When employees sign — which they are forced to do to either get the job or keep the job — they give up their right to take claims against their employers to court. Cases involving discrimination and sexual harassment, to name a few, are compelled to go to arbitration instead.
An arbitration is generally held before three arbitrators and is commonly viewed as a favorable forum for employers versus employees.
Without binding arbitration, employees have the right to take their discrimination cases to court, and with sufficient evidence, in front of a jury. It is this precious right to a jury trial which is at the heart of this issue.
The Franken Amendment prohibits the award of Department of Defense contracts of over one million dollars to any company that forces its employees or independent contractors to submit to pre-dispute binding arbitration of Title VII and sexual assault-related tort claims
Under the bill, defense contractors:
- with over $1 million (which is most) that are funded by 2010 appropriations will not be able to force arbitration of Title VII and sexual assault-related tort claims
- will not be able to enter into forced arbitration agreements with their employees or independent contractors or enforce any agreements that have such provisions.
The list of covered sexual assault-related tort claims covers:
any tort related to or arising out of sexual assault or harassment, including assault and battery, intentional infliction of emotional distress, false imprisonment, or negligent hiring, supervision, or retention
The Franken Amendment will protect hundreds of thousands of employees around the country from being forced to arbitrate their Title VII claims. It also provides persuasive authority for employee advocates to strike down forced arbitration clauses in other federal contracts.
It’s also a step forward to getting rid of forced arbitration in other employment settings.
All in all, it’s a great victory on a critical issue for employee advocates and we thank Senator Franken for his efforts on behalf of employee rights.
*This post originally appeared in Employee Rights Post on January 14, 2009. Reprinted with permission from the author.
About the Author: Ellen Simon is recognized as one of the first and foremost employment and civil rights lawyers in the United States. With more than $50* million in verdicts and settlements and over 30 years of experience, Ellen has been listed in Best Lawyers in America and in the National Law Journal as one of the nation’s leading litigators. She has been lauded for her work on landmark cases that established employment law in both state and federal court. Ellen also possesses a wealth of knowledge as a legal analyst discussing high-profile civil cases, employment discrimination and women’s issues. Ms. Simon has been quoted often in local and national news media and is a regular guest on television and radio, including appearances on Court TV. She is the author of the Employee Rights Post, a legal blog devoted to employee and civil rights.
*prior results do not guarantee a similar outcome
An amendment that would prevent the government from working with contractors who deny victims of sexual assault the right to bring their case in court has survived attempts to dull its impact and seems poised to become law.
The Senate Committee on Appropriation passed, on Tuesday, a defense appropriations bill that included the “anti-rape” amendment introduced by Sen. Al Franken (D-Minn.). The legislation was intended to address and prevent a recurrence of the assault and rape that Jamie Leigh Jones, a defense contractor for the company KBR, alleged was committed by her fellow employees. But the amendment became a subject of debate after the Department of Defense, Republicans in the Senate, and even the committee chairman, Sen. Dan Inouye (D-Hawaii) raised concerns that it would leave contractors over exposed to lawsuits.
The final product, in the end, proved remarkably strong. According to a Franken aide, the substance of the language “is unchanged.” Under the amendment the government would not be able to do business with companies that deny court hearings for victims of either assault, false imprisonment, intentional infliction of emotional distress or negligent hiring practice. The controversial Title VII provision, which would allow victims of assault to sue the employers of the alleged perpetrator and not just the perpetrator himself or herself, remains in the bill. Meanwhile, the threshold at which companies will be subjected to the legislation is set at those who have contracts totaling $1 million or more.
All told, the legislation would affect all major and many minor contractors, forcing them to choose between allowing litigation for their employees or forfeiting the hundreds of millions in dollars that are doled out annually in contracts by the federal government.
The Franken amendment includes a national security waiver, meaning that the Department of Defense could circumvent the law if it is deemed dangerous to U.S. safety. But, for that to happen, the Secretary of Defense would have to “personally explain why the waiver was used to Congress and at that point make it public,” the Franken aide explained.
“I came to Washington to stand up for folks like Jamie Leigh, and stand up to the powerful interests that too often silence their voices,” Sen. Franken said in a statement. “I was gratified to see so many of my colleagues in Congress and so many national civil rights leaders join in this effort. The Jamie Leigh Jones amendment is on its way to becoming law thanks to their work, the work of Chairman Inouye, and the work of the White House. I’m pleased that together, we were able to find a solution that allows victims of assault and discrimination their rightful day in court.”
The amendment was initially added to the defense appropriations bill on October 21, 2009 by a 68 to 30 vote. Despite wide support for the measure (and ridicule for the 30 Republicans who opposed it) both the Obama administration’s Department of Defense and Chairman Inouye raised concerns while the legislation was being considered in conference committee. Attempts to strip it of the Title VII provision were met with public outcry, which a Senate source familiar with the negotiations says was partially responsible for its ultimate passage.
“The public support surprised a lot of senators and not just the chairman,” said the source. “The White House was working with Franken’s office to find language that would be enforceable… and I think by the time those talks began everyone was on board, including Chairman Inouye.”
*This article was originally published in the Huffington Post on December 16, 2009. Reprinted with permission from the author.
About the Author: Sam Stein is a Political Reporter at the Huffington Post, based in Washington, D.C. Previously he has worked for Newsweek magazine, the New York Daily News and the investigative journalism group Center for Public Integrity. He has a masters from the Columbia University Graduate School of Journalism and is a graduate of Dartmouth College. Sam can be reached at email@example.com.
I think that all homo sapiens can understand how the mere thought of an organization that receives government money through contract mechanisms being tangentially involved in setting up a fake tax shelter for a fake pimp and his fake prostitution ring of fake prostitutes can justifiably lead to lawmakers going absolutely cross-eyed with white-hot, impotent rage. But what happens when a similarly taxpayer-endowed contractor attempts to cover up employee-on-employee gang rape by locking up the victim in a shipping container without food and water and threatening her with reprisals if she report the incident? Somehow, it doesn’t engender the same level of anger!
Credit new Senator Al Franken however, for introducing an amendment to the Defense Appropriations bill that would punish contractors if they “restrict their employees from taking workplace sexual assault, battery and discrimination cases to court.” You’d think that this would be a no-brainer, actually, but that didn’t stop Jeff Sessions from labeling Franken’s effort a “political attack directed at Halliburton.” Franken, of course, pointed out that his amendment would apply broadly, to all contractors, because otherwise, ‘twould be a bill of attainder, right? Right?
Franken’s amendment ended up passing, 68-30. Here’s a list of the Senators who showed broad support for Roman Polanski by voting against it:
ADDENDUM: It’s been pointed out to me that the U.S. Chamber of Commerce lobbied against the Franken amendment as well:
Republicans point out that the amendment was opposed by a host of business interests, including the U.S. Chamber of Commerce, and applies to a wide range of companies, including IBM and Boeing.
I guess we must cover up crimes like rape in order to save capitalism.
About the Author: Jason Linkins is a Political Reporter at the Huffington Post, covering media and politics. He’s based in Washington, DC. Previously, he wrote for HuffPo’s Eat The Press, and has also contributed to DCist and Wonkette.
This article originally appeared in The Huffington Post on September 7, 2009. Reprinted with permission from the author.
Yesterday, the union movement ramped up its attacks on the Chamber of Commerce over its “two-faced” approach to the Employee Free Choice Act’s provision requiring arbitration if a business won’t bargain in good faith after a union’s been chosen by workers. As the AFL-CIO Now blog observed:
The latest Big Business tactic is to attack the provision of the Employee Free Choice Act that guarantees workers who form a union a fair first contract — a vital provision, because more than 50 percent of workers who form a union don’t have a contract after one year and more than a third still don’t have a contract after two years.
Corporations are crying about the possibility they might have to take part in arbitration with employees if they don’t reach a first contract after three months of talks — even though they’re enthusiastic about arbitration in a wide variety of circumstances where they have the advantage.
In a new ad running in key newspapers, American Rights at Work again challenges corporate hypocrisy on arbitration. When it’s a big corporate entity against an individual, as in credit card disputes or personal injury claims, corporate spokesgroups like the Chamber of Commerce say arbitration is a way to settle any sort of dispute “fairly, quickly and inexpensively.” But when it’s time to bargain over better wages and benefits for their workers, these same groups are viciously opposed to even the possibility of requesting arbitration.
To union activists, what’s especially galling is how fervently businesses embrace arbitration when it allows them to avoid being held accountable for negligence towards employees or the defrauding of consumers. As Stewart Acuff, the special assistant to the President of the AFL-CIO, observes, “It’s pretty simple: arbitration is fine for them when it keeps them out court and limits damages to business. They use it to settle credit card disputes, mortgage payment disputes, and whenever it limits businesses liability and negligence. But when they look at arbitration for workers, then all of it sudden they hate it when it’s simply used as an incentive to force good-faith bargaining, a last resort to allow workers to get a collective bargaining agreement.”
In contrast, business interests have so championed and abused little-known arbitration provisions to keep themselves from being sued that they’ve spurred new legislation pushed by the Fair Arbitration Now coalition designed to rein in their excesses. A few days ago, NPR featured the story of Jamie Lee Jones who was repeatedly raped by co-workers of Halliburton in Iraq but has been barred from suing the company because of an employer’s contract she signed preventing a lawsuit. As the NPR story noted:
Jones was escorted by security to the company clinic for a rape examination. When the rape kit examination was done, the evidence was turned over to Halliburton security. The young woman’s breasts were so badly mauled that she is permanently disfigured. It has been four years since the attack, and despite the physical and circumstantial evidence, the Department of Justice has declined to investigate.
Seeking Justice Through a Suit
Justice Department officials refused to explain or comment in any way to NPR about the case. Jones has decided that if she can’t have her day in criminal court, she’ll sue Halliburton and its former subsidiary, KBR, in civil court.
“I want corporate accountability,” she says. “I was so brutalized that I’m going to have to remember this the rest of my life. And Halliburton was so uncompassionate that they even let the men work there, still, after I went home.”
Heather Browne, director of communications at KBR, says that while the company can’t speak to the facts since the case is ongoing, it denies any liability in the attack. And she argues that any dispute with Jones, even one involving charges of rape, must go to arbitration.
So Jones is now going to court seeking the right to sue. She has become one of the nation’s leading arbitration reform advocates.
An Arbitration Culture
If Jones’ case is remarkable, the fact that arbitration is involved is not. In the past 20 years it has become a dominant feature in the legal relationship between American corporations, their employees and their customers.
If you use credit cards, have a cell phone contract, bought a house from a builder or put your mother or father in a nursing home, you have very likely signed away your right to be heard in court if there’s a problem. It’s called pre-dispute mandatory binding arbitration.
Public Citizen’s David Arkush, one of the country’s leading researchers on arbitration, says many consumers have no clue as to the rights they’re signing away.
“In the fine print of those contracts is a provision that says that they can never sue the company if they have a dispute,” Arkush says.” Instead they have to go a private, secret tribunal chosen by the company.”
To top it all off, businesses rig the arbitration process against consumers and employees by barring them from going to court if there’s any fraud or negligence before a dispute occurs, and only the company can choose the arbitrator.
The arbitration provision in the Employee Free Choice Act, on the other hand, only uses arbitration if negotiations between business and labor have broken down for 120 days after negotiations begin, and both businesses and the union must agree on their arbitrator from a vetted list of private arbitrators approved by a federal agency, the Federal Mediation and Conciliation Service.
All that makes the two different types of arbitration strikingly different: one is a business ruse used by businesses to deprive customers and workers of their rights, and the other is a bulwark designed to protect workers’ rights against bad-faith bargaining.
The new pro-labor ad attacking such hypocrisy, running in Capitol Hill political newspapers as negotiations in the Senate are heating up, puts the issue starkly:
Big Business is happy to support arbitration when it’s in their best interest. But when it comes to negotiating contracts with their workers, Big Business would rather use delay tactics to avoid paying better wages and benefits. It’s only fair that corporations agree to arbitration for workers who are trying to negotiate a first contract after forming a union. Arbitration is a key part of the Employee Free Choice Act that will let both sides reach a fair agreement.
One reason the Chamber and other Big Business interests are turning to attacking arbitration is that their previous bogus claims that the legislation takes away the right to a secret ballot have been exposed as a fraud on Capitol Hill. (The bill actually gives workers the choice — now determined by employers — of whether to form a union by majority sign-up or secret-ballot election.)
Of course, you don’t hear Newt Gingrich or the Chamber of Commerce championing the rights of on-the-job rape victims like Jamie Lee Jones to sue and avoid arbitration, indeed when it comes to abused employees or defrauded consumers they hail arbitration as the best way to handle any disputes. In fact, in May 2008, more than a dozen business trade groups wrote a letter to Congress stating, “Arbitration is an efficient, effective, and less expensive means of resolving disputes for consumers, employers, investors, employees and franchisees, in addition to the many businesses that use the same system to resolve business disputes.”
As the SEIU Blog sums up their attitude, “Corporate Lobbyists: We Were for Arbitration Before We Were Against It.” Among the paeans to the glories of arbitration offered by business leaders before they attacked its use in the Employee Free Choice Act:
“For more than 80 years, arbitration has helped Americans settle disputes fairly, quickly and inexpensively, without having to file a lawsuit or navigate the court system.” – Lisa Rickard, president of the US Chamber’s Institute for Legal Reform (4/2/08)
“Arbitration is mutually beneficial, which is what we have always thought.” – Arne Wagner, assistant general counsel for Bank of America [ABA Journal, December 1994]
“[F]ederal policy… favors the use of arbitration as an efficient, effective, and less expensive means of resolving disputes…Arbitration, has served as an essential valve for the nation’s overburdened civil justice system.” – Letter to Senate Judiciary Committee signed by US Chamber of Commerce, Retail Industry Leaders Association, National Retail Federation, National Association of Manufacturers, Jackson Lewis, et al (2/7/08)
Just a little bit of a double standard, no? Arbitration is the best thing ever when it comes to protecting their wallets, but when it comes to adding the safety net of first contract arbitration during collective bargaining, it’s the devil incarnate that must be stopped at all costs.
Despite such hosannas to arbitration, they’re not-so-surprisingly eager to denounce arbitration as a “mortal threat to American freedom” when workers want it after months of stalled labor negotiations.
And the research is now irrefutable that a majority of workers who select a union don’t get a contract in their first year as a result of business stalling tactics; if businesses can’t bust a union through illegal intimidation before an election, then they’ve got a second shot at union-busting by foot-dragging tactics and lowball proposals to slash wages and benefits by the company. As American Rights at Work reports:
One year after a successful union election, 52 percent of employers deny their workers a contract. According to Cornell University researcher Kate Bronfenbrenner, 52 percent of workplaces had no collective bargaining agreement one year after a successful union election. Two years after an election, 37 percent of workers’ unions still had no labor agreement.
It’s easy to determine when businesses will back or oppose arbitration: if it seems likely to screw workers and consumers out of their day in court, then they see it as good, and it if might possibly help workers achieve decent wages and benefits through labor negotiations, then it’s bad. As Paula Brantner, the attorney who heads the pro-worker Workplace Fairness advocacy organization, observed recently:
So if employers truly think that arbitration is a better system than resolving disputes in court, then why are they fighting the Employee Free Choice Act [EFCA] provision? You don’t have to be a cynic to realize that they’re inclined to fight any effort to level the playing field for workers, which the Employee Free Choice Act would do. Just as they’re spreading the myth that EFCA would eliminate the secret ballot, it just comes naturally for them to confuse the public about the other EFCA provisions that would empower workers.
But if corporate America doesn’t want “a bureaucrat from Washington” to tell people how to run their businesses, then we have to wonder why they want arbitrators who are not even required to know the law or follow it passing judgment on their employment practices. Essentially, companies are talking out of both sides of their mouth: they want to impose an unfair arbitration process on their employees, but cannot bear to have even a fair arbitration process applied to them.
But workers don’t have to accept this hypocrisy: we can work to support both the Arbitration Fairness Act and the Employee Free Choice Act. If both were to pass, workers would be able to go to court for their employment and civil rights claims (under the Arbitration Fairness Act), and leave arbitration to the unions and employers who know how to use it best (under EFCA). But that might simply be too much fairness for employers to handle.
And while the Chamber of Commerce and its GOP allies like Newt Gingrich have been painting a nightmarish scenario of jackbooted bureaucrats imposing job-killing arbitration concessions, the real truth of how arbitration works in labor negotiations has been ignored. As a new Roll Call column by two Harvard and MIT labor scholars, including Arnold Zack, the former past president of the National Academy of Arbitrators, points out:
Something is drastically wrong with a labor law when an employer can ignore and thwart the will of the majority of its employees.
The Employee Free Choice Act currently before Congress addresses this problem by assuring time for negotiations and mediation as the first step in the process and arbitration when agreement is blocked.
The bill has led to a misguided debate and mistaken information about the role played by arbitration in a well-designed and professionally administered dispute resolution system. This has made the current bill an easy target for opponents to argue that everyone will end up having a contract imposed by “government arbitrators” who know nothing about business or labor issues…
If passed, the Employee Free Choice Act would assign a mediator by the Federal Mediation and Conciliation Service as soon as a new unit is certified to support the negotiations by offering the full range of mediation, education, and facilitation services helping the parties reach a voluntary agreement. The vast majority of cases are likely to be resolved through negotiations and mediation.
In fact, settlements are reached more than 90 percent of the time in public sector jurisdictions that provide mediation prior to arbitration. So, contrary to those who argue every case will go to arbitration, the presence of arbitration encourages and enhances the ability of the parties to reach voluntary agreements in negotiation and mediation — and incidentally does so without imposing on employees or employers the risks and costs of a strike to get a contract.
After being smeared by hyperbolic distortions about the bill’s arbitration provision and research by the Chamber’s extremist libertarian scholar-for hire, Richard Epstein, the union movement is finally hitting back on this issue. The latest inside-the-Beltway barrage follows up on last week’s first round of attack ads against the Chamber’s “hypocrisy.” As a spokesman for American Rights at Work (ARAW) told The Hill newspaper this week:
“Labor law reform must ensure that workers who want to join a union are able to do so without facing endless delays from corporations seeking to deny them a voice in the workplace,” ARAW spokesman Josh Goldstein said. “Big Business’ position is hypocritical and motivated by their desire to maintain a status quo in which corporations make millions while middle class families struggle to get ahead.”
About the Author: Art Levine is a contributing editor of The Washington Monthly who has also written for The American Prospect, Alternet, In These Times, Salon, The New Republic, The Atlantic and numerous other publications. He’s written investigative articles on unionbusting and other corporate abuses, and recently completed Cornell University’s Strategic Corporate Research summer program. He blogs regularly for Huffington Post, and co-hosts a weekly Blog Talk Radio show, “The D’Antoni and Levine Show,” every Thursday at 5:30 p.m. ET.
This article originally appeared in The Huffington Post on June 17, 2009. Reprinted with permission by the Author.
The misleading attacks by Big Business on the Employee Free Choice Act now are aimed at the provision that would guarantee that workers can get a fair first contract. Their scare tactics are not only misleading, they’re hypocritical.
Right now, workers lack a legal means to ensure they get a fair first contract. Recent research shows that even after workers successfully win a union and the ability to bargain, they’re too often blocked from getting a fair first contract. Fifty-two percent of workers don’t have a contract a full year after the election, and 37 percent don’t have a first contract two years after the election. For too many workers, the promise of the freedom to bargain is out of reach because the law doesn’t offer them any help.
The Employee Free Choice Act provides a process to help first-time bargainers to reach an agreement, through mediation and, for issues the parties are unable to resolve on their own, arbitration. The reason we need first-contract arbitration is to create an incentive for companies to bargain voluntarily with their workers.
According to research from American Rights at Work, the record of first-contract arbitration provisions in the public sector and in Canada show that disputes rarely reach the arbitration stage; in most cases, the process works to help workers and their employers reach a contract on their own.
Yet corporations are increasing their negative attacks on this provision even though they frequently require consumers to commit to arbitration.
Supporters of the freedom to form unions are hitting this corporate disinformation campaign directly, in the field, online and in the press. American Rights at Work is taking on corporate hypocrisy with a new print ad running today in key newspapers. The ad demonstrates how corporations are attacking the idea of arbitration when it involves their employees—while supporting arbitration in a variety of areas where it benefits them.
As the new ad notes, corporations prefer to use arbitration in consumer disputes, personal injury claims, home construction contracts, nursing home injuries and conflicts related to real estate, credit cards and banking.
Business trade groups even wrote to Congress last year saying arbitration is an “efficient, effective” way to resolve disputes, reported The New York Times, and companies put arbitration provisions into 75 percent of consumer contracts.
So, if corporations want to require arbitration in so many other instances, why are they so afraid of the possibility of arbitration—only after months of negotiations—over a first contract for their employees?
About the Author: Seth Michaels is the coordinator of the AFL-CIO’s presidential candidate website, Working Families Vote 2008. Prior to arriving at the AFL-CIO, he worked on online mobilization for Moveon.org, Blue State Digital and the National Jewish Democratic Council. Seth spent two years touring the country as a member of the Late Night Players, a sketch comedy troupe—but the battles of U.S. politics are even more entertaining.
This article originally appeared in the AFL-CIO Blog on June 11, 2009. Reprinted with permission by the author.