An unholy alliance between trial lawyers and #MeToo activists is pressuring lawmakers to eliminate an important alternative to costly and time-consuming lawsuits: arbitration.
These opponents of arbitration suggest that victims of harassment or other forms of discrimination are unable to get justice without filing a lawsuit in court, but this is untrue.
Arbitration does not limit a person’s right to pursue a legal claim or receive financial compensation. It simply provides a different forum for resolving disputes.
In arbitration, claimants can pursue all of the same remedies they would pursue in court. The difference is that, in arbitration, evidence is presented in a less formal setting than a trial to a private fact-finder selected by the parties, as opposed to a judge or jury.
Arbitration is typically cheaper, faster, and more efficient than litigation in court. And employees actually win more often and collect more money in arbitration than they do in court.
In fact, a study of more than 100,000 employment cases by NDP Analytics found that employees whose cases were arbitrated to completion won three times as often as employees who tried their cases to completion in court — 32 percent compared to 11 percent. The average award in arbitration was $520,630, compared to $269,885 in court.
Trial lawyers, however, would rather take their chances in court, where one runaway jury can deliver a sky-high windfall. For their part, #MeToo activists prefer to force all cases to be tried in court, as part of some sort of public reckoning. Yet, many victims prefer the private, less intimidating setting of arbitration, which allows them to tell their stories in their own words, rather than face a public and formal interrogation in court.
Contrary to the suggestion of #MeToo activists, arbitration in no way “silences” victims. Although arbitration proceedings are private and confidential, absent other confidentiality agreements, victims may still hold press conferences, give interviews, write articles, author books, and otherwise exercise their First Amendment right to tell their stories. Arbitration agreements that prohibit the exercise of such rights are generally held to be unenforceable.
By contrast, settlement agreements in court cases usually contain strict confidentiality provisions that are much more onerous than the rules of arbitration, which generally prohibit discussion of the proceedings, as opposed to the underlying facts.
Perhaps most important, arbitration agreements do not prevent a victim from reporting misconduct to government enforcement agencies or cooperating with government investigations. An employee who signed an arbitration agreement remains free to file charges of sex discrimination, including harassment, with the Equal Employment Opportunity Commission, and the employee can still assist the EEOC with the investigation. And, of course, a victim can always file charges of criminal harassment or sexual assault with the police. The only thing that parties to arbitration agreements cannot do is bring civil claims for monetary damages in court.
Although self-interested trial lawyers and activists won’t admit it, arbitration plays an important role in resolving disputes without the expense and delay that often accompany full-blown civil litigation.
Unfortunately, the House of Representatives last week passed the Forced Arbitration Injustice Repeal Act, which would invalidate all arbitration contracts for employment, consumer, antitrust, or civil rights disputes.
The cleverly marketed “FAIR Act” may sound good (who could possibly be against fairness?) but it will drive up the cost of dispute resolution, further clog up our already backlogged court system, and deprive individuals of the opportunity to resolve claims in a less expensive, more efficient, and less adversarial system.
Prohibiting arbitration agreements may help trial lawyers and advance the political objectives of the #MeToo movement, but it won’t help employees get justice.