workers lose right to sue corporations

joanna bujes joanna.bujes at ebay.sun.com
Thu Mar 22 12:36:27 PST 2001


High Court Limits Workers' Rights

To File Lawsuits

Harriet Chiang, Chronicle Legal Affairs Writer

Thursday, March 22, 2001

In a stunning decision affecting millions of

employees, the U.S. Supreme Court yesterday

cleared the way for employers to force workers to

give up their right to sue over on-the-job disputes.

By a 5-to-4 vote, the court ruled in a Santa Rosa

case that employees cannot rely on state laws to

challenge arbitration agreements preventing them

from going to court. Instead, the justices said that

these agreements were enforceable under federal

law.

Although the legal issues involved are relatively

obscure, the practical impact is monumental,

attorneys for businesses said.

"It's a tremendous victory for employers, especially

in California," said William J. Emanual, a Los

Angeles attorney who filed a brief on behalf of the

Employers Group, which represents 5,000

companies in the state. He said it would prevent

state lawmakers from trying to ban these types of

employment agreements.

The justices ruled against Saint Clair Adams, who

had sued Circuit City for discrimination, claiming he

had been harassed by supervisors at the chain's

Santa Rosa store because he is gay. Circuit City

said the former salesman was barred from going to

court because he had signed an agreement when he

was hired to take any dispute to arbitration.

25% REQUIRE ARBITRATION

The decision is expected to have a huge impact

because of the growing popularity of arbitration

agreements in virtually all industries. In California,

experts estimate that one-fourth of all businesses

require employees to take their disputes to

arbitration.

Employers prefer out-of-court arbitration because

they say it is a cheaper, faster, less disruptive way

to settle disputes with employees. But employees

say private judging is weighted against them,

decided by an arbitrator who often knows the

employers from prior cases and is likely to award

them lower damages than a jury.

The U.S. Chamber of Commerce and several

leading business groups had backed Circuit City,

urging the court to protect their right to enforce

these agreements.

STATES BACKED EMPLOYEE

California and 21 other states had sided with

Adams, insisting that the states should be able to

regulate employment contracts and enforce laws

forbidding discrimination.

"The decision is yet another green light to arbitration

contracts," said Paul Cane, a San Francisco

attorney representing management.

Sandra Michioku, a spokeswoman for the state

attorney general, said her office was disappointed

with the ruling. "We're concerned that this will place

further obstacles in the path of victims of

employment discrimination," she said.

Adams, who now lives in San Diego, said he was

shocked by the decision. The court is allowing

corporations "to abuse employees by forcing them

to give up their rights because they need a job," he

said.

CALLED A BLOW TO CIVIL RIGHTS

San Francisco attorney Cliff Palefsky, one of

Adams' lawyers, said the court prevented

employees from turning to state or federal civil rights

agencies for legal help.

"They have gutted the nation's civil rights and labor

laws," he said.

Adams went to work for Circuit City in 1995 as a

salesman. His job application included a clause

requiring him to settle any complaints out of court

through the arbitration process.

Two years later, he sued the retail electronics chain

for discrimination. A federal judge agreed with

Circuit City that Adams was barred from going to

court because of the arbitration clause.

The U.S. Court of Appeals in San Francisco sided

with Adams, ruling that a 1925 federal law

enforcing arbitration contracts did not apply to

employment contracts.

COURT'S CONSERVATIVES

PREVAIL

But the U.S. Supreme Court overturned that

decision, splitting along conservative-liberal lines in

ruling for the company.

"'There are real benefits to the enforcement of

arbitration provisions," Justice Anthony Kennedy

wrote in the majority opinion. He said arbitration

agreements allowed the parties to avoid costly

litigation and difficult legal questions that often

arose.

The ruling "is yet another pronouncement by the

U.S. Supreme Court that the judiciary favors

arbitration of disputes, including employment

disputes," said Jeffrey Wohl, a San Francisco

attorney for employers.

Michael Rubin, the San Francisco lawyer who

argued the appeal for Adams, said his client could

still go back to federal court and argue that Circuit

City's arbitration agreement was unconscionable

because it imposed a strict deadline by which he

could bring a claim and limited the amount of money

he could collect if he won.

OTHER ARGUMENTS POSSIBLE

The California Supreme Court last year allowed

employers to impose mandatory arbitration

agreements but imposed minimum requirements for

the proceedings.

Rubin said his client could also argue that his federal

civil rights were being violated because he had been

discriminated against because he is gay. A federal

appeals court in San Francisco ruled in 1998 that a

broker could sue a brokerage firm for sex

discrimination even though she had signed an

arbitration agreement when she was hired.

Experts for both employers and employees say the

high court left unanswered the question of whether

employees could be forced to arbitrate

discrimination rights protected by federal or state

civil rights laws. .

.

THE RULING

-- What the court did: Ruled that companies can

insist that workplace disputes go to arbitration

rather than to court.

-- Why employers like arbitration: They regard it as

a cheaper, faster and less disruptive way to settle

employee disputes.

-- Why employees don't like it: They argue that

private judges often are biased in favor of

companies.

-- What it means: "It's a tremendous victory for

employers, especially in California."

-- William J. Emanual, L.A. attorney



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