Arbitration

High Profile Case Shines Light on "Onerous Tactic"

Earlier this month, the StarTribune and national media outlets ran the headline saying that Gretchen Carlson finds mandatory arbitration an obstacle to justice. Or, as the StarTribune reported on March 8th,

Arbitration that forces employees into secret hearings conducted by company-picked decisionmakers “silences survivors of sexual harassment,” Carlson said.

Last year, Carlson was knee-deep in a high stakes sexual harassment lawsuit against Roger Ailes and Fox News. It took someone of Carlson's visibility and credibility to raise a point that many litigators have believed for a long time. Mandatory arbitration clauses, found in small print sections of small dollar transactions and even big ones, flies in the face of our basic rights. The 7th Amendment to the U.S. Constitution states:

In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise re-examined in any Court of the United States, than according to the rules of the common law.

Somewhere in her employment contract with Fox, there was a clause of just a few sentences that consigned any disagreement between Carlson and her employer to a mandatory arbitration - exempting it from ever reaching a judge and jury. It's possible she chose to sue Ailes directly in order to avoid the limits imposed by arbitration.

Carlson joins a long list of people who feel burned by boilerplate language that takes away their rights, granted by the Constitution. My only knowledge of Carlson's case is what I get from the news. My experience with these clauses, however, has made me a tenacious educator on the topic. Where does it appear in the paperwork you're signing this week, like a mortgage, selling/buying a home, or enrolling Uncle Louie in the nursing home?

Mandatory Arbitration isn't always a bad thing, depending upon which side of the transaction you're on. In Minnesota, you are allowed to negotiate it out in real estate purchase contracts. When you buy your house, take it out! It is always more favorable to the real estate company and seller—I have never seen it favor the buyer. But if you're the seller then you want to leave it in.

Now about the process. Once a dispute has escalated to the point where the only relief will come through arbitration, you get to choose from a pre-selected panel of professional arbitrators. Sometimes the panel may all be people right off the bat who are not favorable to your side, so you have to choose the “best" of the worst from a bad panel.

You'll hear many say that arbitration is a less expensive way to arrive at an agreement and it's quicker. Sure, some times. Less expensive in that since it doesn't involve the court system, you can represent yourself. Quicker in that if you're representing yourself and juggling all the other details and duties in your life, you'll cave early on. What Carlson has learned is that this process is stacked against an individual and the forced resolution out of court.

What is never brought up is that once a case is in litigation and moving its way through the court system, the parties can always voluntarily agree to go to binding arbitration. And when they do—the parties themselves get to choose who and how that arbitration process will proceed. I have no problem with that and in the right circumstance have recommended it for my clients. But we get to make that decision. We aren’t forced in to it with no bargaining power. I am sure Ms. Carlson’s lawyers are developing a strong case on her behalf. Her situation - or anyone's claim of workplace harassment - should be able to have its day in court and allow a jury of her peers to decide her case.

Our legal staff at Schroeder & Mandel will be watching Carlson's case and headlines closely. It seems clear from her words that she's pursuing this action of changing the law on mandatory arbitration clauses on principle, not because she needs the money. Growing up in Anoka she understands that she has power to help the hard working folks against big corporations and big government. Good for her. And like so many of our clients (though she's not one), Carlson is smart, worked hard and endured what appears to be a lot of frustration, pain and unfair treatment. People deserve the chance to pursue their day in court rather than mandatory arbitration - unless they choose to do so.

Headlines help us explain the law. Our law firm tracked the drawn out litigation that surrounded the Wal Mart truck driver who fell asleep at the wheel and crashed into comedian Tracy Morgan's tour bus. Much can be learned from real life and we think that providing explanations about these areas of the law helps our clients and friends make decisions that are more informed and in their best interests. Carlson started the conversation, so here's your chance to add to the discussion. Talk to your elected representatives about refraining from passing any more laws that further dilute our 7th Amendment Rights granted by the Constitution. Our Founders had this as a basic right and in its purest form, it protects all of us.