Experienced Lawyers Providing Trusted Advice

Arbitration spotlighted in much-debated SCOTUS case

On Behalf of | Apr 29, 2019 | Business Litigation |

Arbitration as a dispute resolution mechanism has legions of proponents and sharp critics, respectively.

The former camp stresses that requiring an employee to take a grievance to arbitration rather than court yields greater efficiency and savings.

A common rejoinder from naysayers is that forced arbitration favors employers by precluding collective action in cases where multiple individuals suffer similar injuries.

That divergence of opinion was quickly spotlighted in the wake of a U.S. Supreme Court ruling issued last week in an arbitration dispute. Case commentary was voluminous and covered a wide spectrum of viewpoints.

That is unsurprising, because many people regard an arbitration-linked federal law and supporting SCOTUS endorsement of it in a landmark case last year as controversial. The law provides that agreements requiring workers with grievances to proceed to individual arbitration rather than to a court are enforceable.

That law served as backdrop for a case that yielded a 5-4 SCOTUS ruling last week on ideological lines. The case bottom line stressed that parties cannot be deemed to have agreed to class arbitration just because the language in their agreement is ambiguous concerning the matter.

The plaintiff in the case was an employee whose personal data was compromised in an online hack and later used to his detriment. Other company workers were similarly injured.

The worker brought a class action lawsuit on behalf of all injured parties, which was moved to arbitration as required under his employment contract. The arbitration language was silent concerning whether the parties had agreed to class arbitration to address a dispute. State courts interpreted that silence in favor of the non-drafter, ruling that the worker could litigate on behalf of a larger class.

The Supreme Court reversed that decision, with the bottom line in the narrowly prevailing ruling stressing that a court cannot designate class arbitration in the absence of clear contractual language agreeing to it.

Business groups widely applaud the judicial outcome. Unsurprisingly, worker groups and labor advocates don’t. They argue that it stifles actions in matters where many injured parties share a common claim and can best bring it by banding together in court or before an arbitration body.

More arbitration cases will undoubtedly weave their way up the judicial ladder. We will be sure to track them for our readers across Connecticut and elsewhere.