Many employers strongly prefer arbitration to litigating with their employees in court. Employers often believe—and the Supreme Court has agreed—that arbitration of employment disputes has many benefits, including potential cost savings, more limited discovery, a greater ability to keep the dispute confidential, and speedier resolutions.
A class action allows a plaintiff to sue not only on his own behalf, but also on behalf of others similarly affected by a defendant’s misconduct. In the employment context, for example, plaintiffs can bring class actions against employers for violations of labor codes, wage and hour laws, and discrimination laws.
Companies and individuals frequently enter into arbitration agreements requiring that claims be brought before a private arbitrator, rather than a judge and jury. Arbitration has various benefits: it can provide quicker resolutions, reduced costs, the right to participate in the selection of the arbitrator, and arbitral expertise. In addition, some parties prefer arbitration because it offers a cloak of confidentiality that does not exist in the state and federal courts.
When the calendar flips from December to January, it’s a good time to take stock of what to expect over the next 12 months. Here are four major issues in employment law that we’ll be watching in 2018:
A party seeking to enforce a contract has to show mutual assent, also referred to as “a meeting of the minds.” In other words, both parties actually have to agree on the same thing. If the parties don’t agree, then a contract does not exist.
In a recent case, T3 Motion, Inc. (a Segway competitor) used a lack of mutual assent to avoid arbitration of its claims against its former CEO, William Tsumpes. This posture was somewhat unusual - typically, employers try to enforce arbitration agreements, and employees try to avoid them so that they can present their claims publicly in court, before a jury of their peers.
A fundamental principle of contract law is that a written contract is an agreement in writing that serves as proof of the parties’ obligations. What happens, however, when the parties forget some of the niceties of formalizing a written contract?
For one answer, consider the recent decision in the case of Shank v. Fiserv, Inc., in which the Eastern District of Pennsylvania addressed Fiserv’s motion to dismiss and compel arbitration at the outset of the case.
Last summer, we covered in depth the resounding repercussions from American Apparel’s decision to terminate its CEO and founder, Dov Charney. Now, the sequel has arrived – and it promises lots of action.
Matt Townsend of Bloomberg Business reports that Charney has resumed his arbitration against his former employer, in which he is seeking $40 million from the clothing company. Charney previously agreed to put his claims on hold while American Apparel made its final decision about whether to terminate him. After an investigation, the board decided in December to cut Charney loose.
Silicon Valley is buzzing about the trial in Ellen Pao v. Kleiner Perkins Caufield and Byers LLP, which got underway on Tuesday. According to USA Today, a UC-Berkeley professor says that you “can’t be within a stone’s throw of the Valley without hearing” about the case.
The cast of characters (described here by the San Francisco Business Times) includes a number of heavy hitters, including Pao herself. Pao, a graduate of Princeton, Harvard Law, and Harvard Business School, is now the CEO of Reddit. Kleiner Perkins is a well-known venture capital firm in Menlo Park, a city that has been described as the “center of the venture capital universe.”
Pao’s allegations are explosive. She contends that she had a brief affair with a married junior partner who continued to harass her after she broke off their relationship. Her claims about the firm go deeper than just this harassment; she contends that the firm had an overarching culture of discrimination against women, culminating in her dismissal in October 2012.
One recurring topic here at Suits by Suits is the default corporate practice of including mandatory arbitration clauses in employment contracts; we’ve written frequently about that practice. Such clauses typically specify that “the parties agree to submit any dispute arising out of this Agreement to binding arbitration.”
If you’re following our coverage of the Alex Rodriguez story at all (See our Part 1, a general primer; and Part 2 on the specifics of the 162-game suspension), you probably watched last night’s 60 Minutes, which contained interviews with Tony Bosch of Biogenesis, who claims that he personally administered banned Performance Enhancing Substances to Alex Rodriguez; MLB executive Rob Manfred; and one of Alex Rodriguez’s attorneys, Joseph Tacopina, Esq.
Concurrent with the airing of the program, sports journalists began reporting that the Major League Baseball Players Association (“MLBPA,” the players’ union) was “furious” at MLB’s participation in the TV program. The MLBPA subsequently issued the following statement:
MLB's post-decision rush to the media is inconsistent with our collectively-bargained arbitration process, in general, as well as the confidentiality and credibility of the Joint Drug Agreement, in particular. After learning of tonight's "60 Minutes" segment, Players have expressed anger over, among other things, MLB's inability to let the result of yesterday's decision speak for itself. As a result, the Players Association is considering all legal options available to remedy any breaches committed by MLB.
Let’s evaluate those two arguments.
As the regulatory and business environments in which our clients operate grow increasingly complex, we identify and offer perspectives on significant legal developments affecting businesses, organizations, and individuals. Each post aims to address timely issues and trends by evaluating impactful decisions, sharing observations of key enforcement changes, or distilling best practices drawn from experience. InsightZS also features personal interest pieces about the impact of our legal work in our communities and about associate life at Zuckerman Spaeder.
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