US SUPREME COURT ENDORSES ARBITRATION AGREEMENTS GOVERNING EMPLOYMENT DISPUTES

[Guest guest]

Law Watch 01-4: US SUPREME COURT ENDORSES ARBITRATION AGREEMENTS

GOVERNING EMPLOYMENT DISPUTES

> > Attached please find Foley & Lardner's Law Watch Issue 01-4, titled " US

> > SUPREME COURT ENDORSES ARBITRATION AGREEMENTS GOVERNING EMPLOYMENT

> > DISPUTES. "

> >

> > The document is attached below in several versions: a .PDF file, a Word

> > format, and a straight text format. (All are provided at the end of this

> > message.) Please note that due to varying computer hardware and software

> > configurations, the straight text may have variances in fonts and

spacing

> > for different readers.

> >

> > If for any reason you have trouble accessing and reading the documents

> > attached below, please feel free to send a message to this address or to

> > call Foley & Lardner's customer service line at 1-.

> >

> > Law Watch 01-4 (PDF format):

> > <<479781_1.pdf>>

> > Law Watch 01-4 (Word format):

> > <<LAW WATCH 01-4 U.S. Supreme Court Endorses ArbitrationAgreements

> > Governing Employment Disputes.DOC>>

> > Law Watch 01-4 (Text format):

> >

> >

> > 01-4

> > A Legal Newsletter from Foley & Lardner

> > MAR. 26, 2001

> >

> > U.S. SUPREME COURT ENDORSES ARBITRATION AGREEMENTS GOVERNING EMPLOYMENT

> > DISPUTES

> >

> > Executive Summary

> >

> > Action: On March 21, 2001, the U.S. Supreme Court issued its decision in

> > Circuit City Stores vs. , and ruled that a mandatory arbitration

> > clause in an employment contract or application is enforceable.

> >

> > Impact: The decision greatly strengthens the likelihood that a mandatory

> > arbitration agreement governing employment disputes will be enforced by

> > the courts, providing a viable alternative to employment lawsuits.

> >

> > Effective Date: Immediately.

> >

> > On March 21, 2001, the United States Supreme Court decided the case of

> > Circuit City Stores v. - a case that may have far reaching

> > implications for employers. The Court decided that the Federal

> > Arbitration Act ( " FAA " ) is applicable to employment contracts, and a

> > mandatory arbitration clause in an employment application or employment

> > agreement is enforceable, even if the employer required the employee to

> > sign the agreement in order to be hired. An employee who agreed to such

a

> > provision and wishes to sue his or her employer for an

employment-related

> > claim may be forced to pursue the claim through arbitration rather than

in

> > court. The Court held that the only employment contracts exempted from

> > coverage under the FAA are contracts of employment of transportation

> > workers " actually engaged in the movement of goods in interstate [and

> > foreign] commerce, " which are excluded because separate federal statutes

> > govern the arbitration of employment-related disputes between those

> > workers and their employers.

> >

> > Background

> >

> > In the Circuit City case, the plaintiff, , signed an employment

> > application which included the following provision:

> >

> > I agree that I will settle any and all previously unasserted claims,

> > disputes or controversies arising out of or relating to my application

or

> > candidacy for employment, employment and/or cessation of employment with

> > Circuit City, exclusively by final and binding arbitration before a

> > neutral Arbitrator. By way of example only, such claims include claims

> > under federal, state, and local statutory or common law, such as the Age

> > Discrimination in Employment Act, Title VII of the Civil Rights Act of

> > 1964, as amended, including the amendments of the Civil Rights Act of

> > 1991, the Americans with Disabilities Act, the law of contract and the

law

> > of tort.

> > Circuit City hired as a sales counselor, and two years later, he

> > filed an employment discrimination lawsuit against the company. The

lower

> > court concluded that was obligated by the arbitration provision to

> > submit his claims against Circuit City to binding arbitration.

> > appealed the decision, and the Court of Appeals for the Ninth Circuit

> > ruled that all employment contracts are excluded from the FAA, and that

> > the arbitration agreement between and Circuit City was contained

in

> > a " contract of employment, " therefore the agreement was not subject to

the

> > FAA, and not enforceable in federal court.

> >

> > Supreme Court Decision

> >

> > Nearly every other court of appeals in the country had previously

decided

> > that the FAA would apply to mandatory arbitration clauses in employment

> > contracts; however, in Circuit City, the Ninth Circuit decided

otherwise.

> > Circuit City appealed the ruling, and the United States Supreme Court

> > granted certiori to settle the issue. When the case reached the Court,

it

> > took on major significance as a test of the scope of arbitration

> > agreements, which are increasingly used in the workplace. The Court

> > enforced the provision, and stated that it believed that there were real

> > benefits to enforcing arbitration provisions in employment contracts.

> >

> > The Court pointed out that the sheer number of employment-related cases

> > overwhelms the docket of our federal court system, and has increased

> > dramatically in the past two decades. Arbitration is believed to be

less

> > costly and a faster means of resolving workplace disputes than

litigation.

> > Congress, the courts, federal agencies, and private organizations have

> > recognized the advantages of using arbitration to resolve

> > employment-related controversies.

> >

> > Many employers recognize and appreciate the efficiency and generally

lower

> > cost of using arbitration to resolve workplace disputes. The majority

of

> > employment-related lawsuits qualify for trial by jury. By requiring

> > employees to arbitrate their employment-related claims, employers may

> > avoid the uncertainty of a trial by jury - a worthwhile consideration.

> > Many employers are wary of having their cases go before a jury both

> > because of the " sympathy factor " associated with jury trials, and

because

> > of the large jury verdicts sometimes awarded to employees and

> > ex-employees. Based upon these considerations, employers often prefer

to

> > use arbitration to resolve these claims out of court, rather than have

> > their cases heard by a jury. Employers can also use arbitration to

assure

> > confidentiality of the proceedings, and so avoid the publicity that

> > frequently accompanies litigation.

> >

> > Conversely, many employee groups argue that arbitration somehow favors

> > employers. However, the Court, in response to assertions that the

> > arbitration process is somehow unfair to employees and favors employers,

> > stated that although " discovery procedures might not be as extensive, by

> > agreeing to arbitrate, the parties trade the procedures and

opportunities

> > for review in a courtroom for the simplicity, informality, and

expedition

> > of arbitration. " The Circuit City decision also rejected the

supposition

> > that the advantages of using arbitration somehow disappeared when

applied

> > to the employment context.

> >

> > Conclusion

> >

> > There are numerous and important considerations to keep in mind when

> > deciding whether to incorporate a mandatory arbitration provision into

> > your employment application or agreements, and in drafting such

> > provisions. The decision to use arbitration provisions as part of your

> > workplace is a decision that should be reached only after adequate

> > consultation with experienced labor counsel, who can also draft

> > appropriate language customized to suit your particular needs. To

discuss

> > these considerations and your needs, or to obtain sample language for

your

> > arbitration provision, please contact Sheri McWhorter in our Tampa

office,

> > Gerald Neal in our Chicago office, Walt Connolly in our Detroit office,

> > Hyde in our ville office, Rick Albert in our Los Angeles

> > office, Mike Auen in our Madison office, Maisa in our Milwaukee

> > office, Dick DuRose in our Orlando office, Dorothy s in our

> > Sacramento office, Lynn Goodfellow in our San Diego office,

> > in our San Francisco office, Monsees in our Washington D.C. office,

> > or the member of the firm who normally handles your legal matters.

> >

> > ©2001 Foley & Lardner. Reproduction with attribution permitted.

> >

> >

> >

> > 015.479635.1

> > 03/28/01 4:57 PM

> >

>

----------------------------------------------------------------------------

----

> ---------------------------------------------------------------------

> You are subscribed as: washcoems@...

>