The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act: Is this the beginning of the end of mandatory employment arbitration?

Event Video

Listen & Download

The “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act” amended the Federal Arbitration Act to bar mandatory employment arbitration agreements covering sexual harassment and sexual assault claims. This program will feature Prof. Alexander J.S. Colvin and G. Roger King who testified before Congress as the legislation was being considered (see here and here respectively, for their written testimony). 

The panel will discuss the new statute, its intended purposes, and its impact more broadly on mandatory employment arbitration. The program will also cover why sexual harassment and assault claims, in particular, have been excluded from mandatory arbitration. Will this exclusion for such claims remain unique under the FAA or will it lead towards a ban on mandatory arbitration for employment claims generally? How does the Act connect to the more general issue of class, collective, and joint action waivers in predispute arbitration, and will the Act impact the mass filing strategy that plaintiff side firms are increasingly using?

Featuring:

Prof. Alexander J.S. Colvin, Kenneth F. Kahn '69 Dean and Martin F. Scheinman Professor of Conflict Resolution, School of Industrial and Labor Relations, Cornell University

G. Roger King, Senior Labor and Employment Counsel, HR Policy Association

Moderator: Christopher C. Murray, Shareholder, Ogletree, Deakins, Nash, Smoak & Stewart

*******

As always, the Federalist Society takes no position on particular legal or public policy issues; all expressions of opinion are those of the speaker.

Event Transcript

[Music]

 

Guy DeSanctis:  Welcome to The Federalist Society’s webinar call. Today, June 13, we discuss “The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act: Is this the beginning of the end of mandatory employment arbitration?”

 

My name is Guy DeSanctis, and I’m an Assistant Director of Practice Groups at The Federalist Society. As always, please note that all expressions of opinion are those of the experts on today’s call.

 

      Today, we are fortunate to have with us our moderator, Christopher C. Murray, Shareholder, Ogletree, Deakins, Nash, Smoak & Stewart.

 

      Throughout the panel, if you have any questions, please submit them through the question-and-answer feature so that our speakers will have access to them for when we get to that portion of the webinar.

 

      With that, thank you for being with us today. Chris, the floor is yours.

 

Christopher C. Murray:  All right. Thank you, Guy. Good morning, and good morning -- or good morning to those in the west, and good afternoon to those of you who are on the eastern half of the country. Thank you for joining us for today’s Federalist Society Teleforum.

 

      As Guy noted, our topic today is “The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act.” And our panel will discuss this new federal statute and the future of employment arbitration more generally.

 

      We’re fortunate to have as our panelists today Alexander Colvin and Roger King. Alex is the Kenneth F. Kahn Dean and Martin F. Scheinman Professor of Conflict Resolution at the School of Industrial and Labor Relations at Cornell University. And he’s also an associate member of the Cornell Law Faculty. His research and teaching focuses on employment dispute resolution, with a particular emphasis on procedures and nonunion workplaces and the impact of the legal environment on organizations. Alex’s current research projects include empirical investigations of employment arbitration. He’s published numerous articles in a variety of journals and is co-author of the textbook An Introduction to Collective Bargaining. Alex received his J.D. from the University of Toronto and his Ph.D. from Cornell. He has recently testified before the House Subcommittee on health, employment, labor, and pensions on the hearing on closing the courthouse doors—the injustice of forced arbitration agreements.

 

      Roger King is a highly regarded labor relations attorney, whose career spans more than 40 years. Roger recently retired as a partner with Jones Day law firm. He now serves as the Senior Labor and Employment counsel for the HR Policy Association. Roger specializes in labor and employment, collective bargaining, and contract administration—among other subjects. And he represented the winning side as co-counsel in the landmark U.S. Supreme Court case known as Noel Canning, which successfully challenged President Obama’s authority to make recess appointments to the National Labor Relations Board. After graduating from Cornell University Law School, Roger was a Captain and Legal Services Officer in the United States Air Force, served on the staff of United States Senator Robert Taft Jr., and subsequently was appointed as Professional Staff Counsel to the United States Senate Labor Committee. Roger has testified before both the U.S. Senate and House Labor Committees.

 

      Again, my name is Chris Murray, and I’m a shareholder with Ogletree, Deakins law firm, where I chair the firm’s arbitration and ADR practice group. It’s my pleasure to moderate our discussion today.

 

      As I noted, we’ll be discussing “The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act,” which amended the Federal Arbitration Act earlier this year to bar enforcement of mandatory employment arbitration agreements covering sexual harassment and sexual assault. Our panel will discuss the new statute and its possible impact more broadly on mandatory employment arbitration.

 

      Alex and Roger, thank you both for joining us today. Before we turn to the new statute, I wanted to give you each an opportunity to provide some opening remarks and to share your thoughts on mandatory pre-dispute employment arbitration more generally—perhaps as a background for the rest of our discussion.

 

      So, Alex, I guess, going in alphabetical order, let me give you the floor for your opening thoughts on employment arbitration. Thank you.

 

Alexander J.S. Colvin:  Sure. Thanks so much, Chris, and a pleasure to be talking with you and Roger here today. So I think this statute is an interesting one that I think surprised me, to be honest, how quickly it came together and was passed. But I think it really is a confluence of two aspects that come together here.

 

      One is the power of the MeToo movement and the breadth of concerns around sexual harassment that we’ve seen. And I think you can’t really separate it from that. But I do think there’s also this confluence with the issue of forced arbitration. That is obviously the other key part of the statute and the general debates over that.

 

      So just to outline, I think, the kind of key -- I’ll lay out the key concerns about forced arbitration that are -- have driven the adoption of the statute. And I put it in kind of two categories: one is issues of the nature of forced arbitration, right?

 

      And so the first main concern is around this question of how you get into arbitration—sort of the forced or mandatory enforced arbitration. And that’s the fact that the agreements arise generally as “contracts of adhesion” presented to employees on a take-it-or-leave-it basis. If you want a job, you have to agree to arbitration. And that question of lack of choice that you have to agree in order to get employment—that concern—versus the argument that you could have a voluntary arbitration setting arising post dispute, or situations where you have bilateral negotiation of arbitration agreements. A classic example being the labor management setting, where you have two sophisticated parties that negotiate the arbitration agreement.

 

      So firstly, that question of how you get into arbitration. Secondly, the predominantly private, confidential nature of arbitration in the employment arbitration setting where you generally don’t know what’s going on in the hearings. It’s not generally publicized—and that being a particular concern of the sexual harassment area—where there’s been concerns about the secrecy around sexual harassment and predators’ continuing patterns over time—certainly, the accusations around, say, Harvey Weinstein or other prominent individuals being accused of it.

 

      And then thirdly, some of the structural features of forced arbitration—particularly a more limited discovery—has been one of the perennial concerns. And that sort of comes from really a couple of places. One is sometimes rules limiting discovery. But then, even when you don’t have rules limiting arbitrators having discretion but not using discretion to provide the same discovery that you’d have in the court system.

 

      And then the final structure one I’d say is the limitation on class actions, which isn’t present in all arbitration agreements but in many arbitration agreements -- bars on bringing class actions in arbitration that effectively eliminates the ability to bring a class or collective actions entirely because you can’t go to court if you sign the arbitration agreement. And then you can’t bring a class or a collective action in arbitration. So those are structural features.

 

      And then the other concerns driving it on the practice side—this is more in my own area of research on the empirical side—a few of the key facts, I think, that have raised the concern in this.

 

      One is that it’s very widespread. My research finds a little over half of all employees—nonunion employees—are covered by forced arbitration. So this is a widespread thing, and that, I think, explains why it’s gotten the prominence it has, and now we’re seeing legislative action.

 

      Secondly, the employees tend to do worse in arbitration than litigation, winning fewer cases and recovering less damages. You know, I’ve done some past research on this. The most recent work on this is from a colleague of mine, Mark Gough at Penn State, who finds employees receiving about half the damages in the federal court and state court than they do in forced arbitration.

 

      And then relating to that, the empirical finding that we see relatively few cases being brought. It seems to be a deterrent to bringing cases. And that’s somewhat, I think, a function of the reality that most cases are brought by plaintiff attorneys on contingency fees.

 

      And contingency fees have two sides, right? They’re often subject to criticism, but they are, in America, the primary mechanism for financing representation of non-wealthy individuals, right? If you’re going to bring a case, you need a contingency fee. And what we see systematically is plaintiff attorneys not being able to bring many cases in forced arbitration because they don’t see the payoff in terms of damages and chances of winning.

 

      So you see something like the American Arbitration Association administering about 3,000 cases a year in employment arbitration. That’s a small number. Probably about half of all arbitration, at least, is run through them. You’d expect—if it was proportional to the courts—more like 60,000 cases. There should be 20 times as many cases being brought. We just don’t see the cases being brought as often. So it gets into that question of “Are we seeing a suppression of cases?”

 

      This kind of comes back, though—I think with sexual harassment—why this bill on sexual harassment? I mean, certainly, it’s the MeToo pressures, the organizing by people like Gretchen Carlson around this issue that was very successful.

 

      I do think there’s something about sexual harassment particularly because that is a category of claims that’s all around consent—consensual relationships not being harassing. It’s the lack of consent that drives sexual harassment.

 

      Well, I think that kind of pulls back into the forced arbitration setting, where the argument is you don’t have the true choice not to engage in arbitration there. So I do think there’s something particular about sexual harassment as an area that’s really heightened this.

 

Christopher C. Murray:  Okay, great. Thanks a lot for that introduction, Alex. Roger, from your perspective, what are some of your, I guess, general thoughts on employment arbitration generally as sort of the background for this statute and where it came from?

 

G. Roger King:  So, Chris and Alex, it’s great to be with you. In my case, I’m on Pacific Time this morning, and it’s always enjoyable to have a conversation like this on an important topic.

 

      And as I always try to do, I try to establish some commonality with individuals, whether it be a debate setting or a discussion like this. So I certainly would agree with some of the points that Alex made. And we certainly, I think, both could agree that Cornell is a great place to have discussions on labor and employment matters. The School of Industrial Relations at Cornell is absolutely one of the best in the world, and the law school is also very prominent. So I’m glad to associate myself with a fellow Cornellian this morning.

 

      Let me talk just a bit about the forced arbitration act that passed the Congress—one of the few statutes, frankly, that has emerged from this Congress in any topic. As Alex mentioned, it was somewhat surprising.

 

      I was deeply involved in that on behalf of our trade association and just a level set to the discussion. My position with the HR Policy Association is to represent our roughly 400-plus members, who constitute most of the Fortune 400 companies in the country, for labor and employment matters. The association also is deeply involved in healthcare policy and also matters of executive compensation and SEC matters. So the arbitration issue really crosses a lot of practice lines and a lot of policy lines in our office for our members.

 

      And arbitration as a general philosophical approach, I think, is well established certainly in our nation’s jurisprudence. There’s no question about that. Our jurisprudence on arbitration goes back literally decades. And until recently, it’s been relatively well accepted in all circles, albeit we’ve had this emerging challenge from class action lawsuits, which, Chris and Alex, I’ll return to in a moment.

 

      But the MeToo movement really overtook the discussion in the Congress on the merits, or lack thereof, of arbitration with a significant lobbying push, I might add, to trial attorneys in this country that represent plaintiffs. A very powerful, political force, a lot of financial resources, well connected with this administration and particularly the Democrat Caucus.

 

      So the confluence of those entities made it difficult, from my perspective, to have really a thoughtful conversation about the attributes of arbitration. And when you put it in a context of very troubling sexual harassment stories coming out of various cases in this country, it became even more difficult.

 

      And just to be clear, the HR Policy Association and my personal views certainly align on this issue. We absolutely would not condone any type of activity that has occurred in certain cases. I mean, it’s totally repugnant to having a safe and thoughtful workplace. I don’t think there’s any question about that. And we need to resolve those issues.

 

      So the question is, how do we resolve them? And the MeToo movement was effective with the assistance of the trial lawyers basically having the discussions centered around secrecy, confidentiality, and the need for a greater public discourse of disclosure of inappropriate actions in the workplace.

 

      And the solution to that, from my testimony in both the House Judiciary Committee and the House Education and Labor Committee in this current Congress—and also behind the scenes working with various senate offices—was as follows: let’s curtail—if not completely eliminate, to a certain extent—NDAs, non-disclosure agreements, in the arbitration arena for sexual harassment.

 

      Let’s take the secrecy and confidentiality out of the process, unless all parties strongly agree otherwise, because, to be candid about this, certain employers in this country, Chris and Alex, from my perspective, have overused, misused, the non-disclosure agreement approach. And that has come back, unfortunately, I think, to haunt all employers. And maybe employers, unfortunately, have no one to blame, to a certain extent, but themselves because of the overuse and misuse of NDAs.

 

      But if you take that out of the equation and make this much more of a public forum, unless the parties all agree, that really takes the sting out of a lot of the criticism of arbitration. And then when you add to that—at least my recommendation was to add to that—absolute guarantee procedural due process protocols to make sure that the claimant has all of the due-process rights that she or he would have in a judicial tribunal, you really solve that issue of the alleged unfairness of the process.

 

Had we gone down that route, we would not have needed this statute, or we would have had a different statute. But in the end, it attracted ten Republican senators, which was critical, of course, to get beyond the filibuster issue in the Senate. And it had enough appeal in both the House and the Senate for a number of moderate and even somewhat conservative Republican legislatures.

 

So that’s how we came to where we came. But unfortunately, the statute, from my perspective, is a bit of a train wreck drafting-wise. It was done, from my perspective, not as cleanly and as thoughtfully as it could’ve been. We have all this debate now going on in the country where we have mixed allegations about sexual harassment and other non-sexual harassment issues that are coming up in the arbitration context. How are they to be addressed is pre-dispute, not available to all in these mixed cases. The statute was poorly drafted, done in a hurried fashion without thoughtful, congressional consideration.

 

And I guess the last point I would leave for the preliminary part of our discussion today -- unfortunately, this issue has become very politicized, and we have it becoming somewhat of a Democrat/Republican issue. That’s just, from my perspective, not appropriate.

 

This is not a political issue. This is a discussion of how the disputes between employees and employers should be resolved. And should we continue to utilize what has been a well-accepted way to do that in this country—i.e. use of arbitration—or are we going to force virtually all of these disputes into the judicial arena, which I think is a bad policy decision and a bad decision as a matter of jurisprudence?

 

So there will be some issues where I’m sure Alex and I will agree, but there will be others where we will have a departing point of view.

 

Christopher C. Murray:  Great. Thank you, Roger. All right. Well, that, I think, leads us -- is a good introduction—leads us right to the new statute itself and to the language, which you referred to a moment ago as presenting some drafting challenges.

 

So again, the new statute is formally called “The Ending Forced Arbitration of Sexual Harassment and Sexual” -- I’m sorry -- “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021.” And that’s quite a mouthful. I don’t know about you each, but I’m not aware of any short names that have sort of caught on yet for this statute other than maybe H.R.4445—I guess I’ve heard it referred to.

 

So turning specifically to what the new statute does, it amends the Federal Arbitration Act, and it appears to do three main things. It bans enforcement, at the election of the claimant, of mandatory arbitration agreements for cases involving sexual harassment or sexual assault disputes. It also bans enforcement, at the election of the claimant, of mandatory pre-dispute class action or joint-action waivers in cases relating to such disputes and bans enforcement of delegation clauses to the extent they would delegate questions about the enforceability of these prohibited clauses to an arbitrator rather than allow them to be cited by a court. The statute was also effective as of March 3rd, 2022.

 

So you’ve each touched on this a little bit, but I’ll -- maybe we can address it a little more specifically. Was this new statute -- was it needed at this point? Why or why not? And why does it focus on sexual harassment and sexual assault? And I know you’ve each touched on that a little bit, but I suppose I’m thinking in terms of why these particular employment claims and not other types of employment claims. How did they come to be a part of the statute?

 

Maybe, Alex, turning back to you first for your thoughts on that.

 

Alexander J.S. Colvin:  Sure. So I think that part of the reason that it has focus on this one particular category is that has tended to be kind of the American way of dealing with labor employment issues—that we tend to focus on particular rights. I mean, if you look across our statutes, you see a different statute.

 

Title VII gives us general protection against discrimination on a number of grounds, but then we have a separate one for age that operates a little differently. We have a different statute on disability. Family medical leave has done a different thing. Any employment law practitioner in America knows that there is a whole stack of different statutes that they have to think about—not even getting into the federal versus state level.

 

But it tends to be how we think about things and what gets debated. So there’s clearly commonalities across the anti-discrimination statutes and category of claims. But there is something very particular about the sexual harassment area. And the MeToo movement is a movement around that.

 

It has, I think, cross-cutting concerns, as Roger says. It’s something that, I think -- there’s a broad swath of popular view now that it’s not something that we’re willing to accept any longer in our workplaces. We’re not in the madman era, right? And when we watch those shows, they do seem something alien to us more broadly. And so, I do think that’s part of why this was their particular focus—that there was this kind of broad concern about this issue.

 

Then, we get into why the particular focus on forced arbitration in relation to sexual harassment. And I think part of that is because we saw particular cases where this was a real issue. The Fox News Roger Ailes cases—which were some of the most prominent on this—dramatized the impact of the forced arbitration in relation to bringing the sexual harassment claims. So I do think that’s part of what’s driving the particular focus here.

 

G. Roger King:  So, Chris, just to follow up on your question, I would submit, A, this was not needed for reasons I’ve already articulated. That is to say, again, if you take non-disclosure agreements, confidentiality, secrecy—use your term—out of the equation, you would have responded to virtually the entirety of the valid criticism of the misuse and overuse of this type of mechanism to address workplace disputes.

 

I mean, Alex is absolutely right. The whole Fox News situation was a blot on our society and how we resolve disputes. So it was certainly not a good situation. It comes to mind “bad facts make bad law.” And these were very bad facts, which, from my opinion, made a very bad law that the Congress is going to have to, at a minimum, clean up in the future.

 

But put that aside for the moment. If we also then incorporate due-process protocols—which the American Arbitration Association and any reputable dispute group in this country now embodies in arbitration—you would have had a form that would have permitted these issues to be addressed. And as California and other states have moved toward limiting or prohibiting NDAs and requiring public disclosure of awards, we would have had this broader societal view of bad actors in the workplace.

 

And where we have rogue employers, they should be called out, frankly. But let’s -- don’t destroy a system that works very, very well. Here’s the political reality. I mean, my day is spent interacting with people on Capitol Hill on a regular basis and in the administration. That’s part of the essential functions of my job. And it’s very clear to me and others that what has happened with this statute is the first part of a broad-based attack on arbitration—period. And this was the easiest target. This was the fact setting that permitted that first frontal attack on arbitration. And I would disagree. And, Alex, I’m sure we’ll discuss this in more detail about the amount of recovery and time of any type of recovery in arbitration versus the courts.

 

I submit—and there are many studies; I know we have countervailing studies—many studies, from my perspective, that show that arbitration is a far better form in virtually every circumstance for the worker. And the award is on, a general rule, a much better award for the worker.

 

So what we’ve done—at least for sexual harassment cases in this country—prohibited this very attractive and productive way to settle disputes out of the equation for this type of matter. I think that’s unfortunate. And it’s going to have ramifications in the future, unfortunately, from my perspective—adverse arbitration.

 

Christopher C. Murray:  Alex, I guess, following up on that -- or extending that point Roger made a little bit, would -- if Congress had focused on some of the things Roger mentioned—limiting or nullifying NDAs in sexual harassment cases or banning confidentiality in such cases maybe at the election of the claimant—would that have sufficiently addressed some of the issues that were raised by the MeToo movement from your perspective?

 

Alexander J.S. Colvin:  I think it addresses some of the issues, right? And I do think that’s correct that that is a significant part of the issue -- is the sort of feeling of secrecy, the not knowing if you’ve got a repetitive predator in the workplace—the really kind of shocking things that we’ve seen in some of the MeToo cases.

 

      You could get to that type of thing in arbitration under this statute if you do post-dispute voluntarily engaging in arbitration. You can choose to set up your arbitration agreement however you want. So you can include those provisions in the arbitration you choose to engage in post-dispute.

 

      What the statute is eliminates your inability of the corporation to require that employees engage in arbitration under the particular set of rules that the arbitration contract specifies, right? So it’s changing the circumstances under which you enter into your dispute resolution mechanism—whether that be arbitration, mediation, or other kinds of mechanisms.

 

      So, yes. I think those are concerns, but—and they’re part of the concerns—but there’s other ways to address it. And I think there are other concerns, too. I think the -- what I see as the lower damages and outcomes that we see in the research in the area -- and frankly, I think reflected in the lower number of cases. I mean, I think that’s sort of the proof in the pudding that we don’t really see equal outcomes because we don’t see the number of cases that you’d expect otherwise.

 

Christopher C. Murray:  Okay, thanks. Roger, what about, I guess, Alex’s point that one of the big concerns is the pre-dispute mandatory condition of employment aspect of these agreements. Would the system function from the employer’s perspective if we relied on post-dispute arbitration agreements? Why or why not would that be effective?

 

G. Roger King:  Chris, that’s often the response. Arbitration’s all well and fine, just make it voluntary post-dispute. But let’s dissect that just for a moment.

 

      As a practical matter, that just doesn’t work. It would be like saying in a court system after we have a dispute, “Let’s see if we can sit down and put together a set of rules to resolve that dispute.” And it’s just not the way our jurisprudence system in this country works nor do parties have any incentive to do that.

 

      You need to have an established set procedure to resolve the dispute agreed upon in the future. I mean, we don’t change the civil rules of procedure after a case is filed. That would be extremely difficult because both sides would try to maneuver the procedural rules to their advantage. The same is in arbitration.

 

      You need to have a set way before a dispute ever arises to resolve your matter in question. And pre-dispute can and should be worked out by the parties in advance. And virtually every company that we work with—in fact, I don’t know of any member of our association that would deviate from this—to the extent they have an arbitration system, it is extremely fair. It provides for all the procedural due process rights that one would have in the courts. There’s no limitation on damages, and it proceeds in a much more expeditious manner.

 

      And I see these articles out: “Well, there’s fine print. People can’t understand arbitration. It’s not fair to the claimant.” I challenge those people to read the civil rules of procedure for the federal courts or the state courts. The complexities of dealing with the judicial system are far more challenging for a claimant than arbitration. And in a thoughtful way, arbitration is just a much better procedure and a much more expeditious procedure for all parties.

 

      But let’s just put that aside for a moment. And we can get to the studies that are out there on the amount of words and the time it takes to get them. The fact of the matter is the court systems right now are not and have not been equipped to handle a great influx of cases.

 

      I was just looking at a rather recent article out of the Wall Street Journal entitled “State Courts Confront a Case Log Jam.” Virtually every docket I know of—certainly in the federal courts and in virtually every state court system—is absolutely overwhelmed, particularly as a result of COVID-19 backlog. But even without that, our state courts are simply not equipped to handle the additional caseload that may be thrust upon them if we continue to erode the arbitration system in this country.

 

      And a final point I would make, my old friend and colleague—a person I know that Alex knows quite well, Professor Sam Estreicher at NYU—has consistently made this point. And Sam made it again last week at his national conference at NYU. “There simply are not enough attorneys that are going to be attracted to take these cases that otherwise will be handled or have been handled by arbitration.” The amount of controversy in question is not going to be attractive enough. Contingent fees don’t work.

 

      So we’re going to have a whole group of claimants that are not going to have, A, a forum or, B, even if there is a forum available, an advocate to represent them. And there are so many other sub-issues to doing away with pre-dispute arbitration, which are well outlined in my testimony. And I think we’ve made those available online as a resource today. Is that correct, Chris?

 

Christopher C. Murray:  I’ll have to check with The Federalist Society. I’m not sure if that’s been made -- links may go out. I don’t think they’ve gone out yet, but maybe after.

 

G. Roger King:  In fairness to that discussion, Alex also testified—Alex, as I recall—on one of the panels that I was involved in. And I know you’ve also written a lot in this area.

 

      But, Chris, just to sum this up, before we do away with a system that has worked so well, let’s try to take the emotion and the politics out of it, and as good lawyers, let’s try to improve it. Let’s don’t absolutely destroy it. And unfortunately, I see that as the direction that we are starting to go down.

 

Christopher C. Murray:  Thank you. You both touched on the role of the MeToo movement in leading to this new statute, and I think you mentioned Gretchen Carlson, for example—one of the leading voices in the MeToo movement.

 

G. Roger King:  Right.

 

Christopher C. Murray:  And, of course, she had an arbitration agreement and, I believe, wrote a number of op-ed pieces for the New York Times. Highly critical of employment arbitration based on her own experience and the experiences of others that she said had been reported to her.

 

      Is there something—I don’t know—intrinsic about the problem of workplace sexual harassment that makes arbitration particularly inappropriate for that issue, or—and I think, Roger, you’ve suggested this—was it more of a politically fortuitous or maybe opportunistic situation that ended up connecting sexual harassment and employment arbitration in the recent political discussions since 2018?

 

      Alex, you mentioned quite a number of criticisms in your opening statement of arbitration—or with respect to employment arbitration. Do any of those, in your view, apply with particular -- I guess, with particular concerns with respect to the problem of workplace sexual harassment?

 

Alexander J.S. Colvin:  Yeah. So I think that there are some that are general concerns about forced arbitration that apply to various kind of claims. I think the confidentiality ones are more extreme with sexual harassment.

 

And I think that those sort of fact patterns that one sees coming up with individual harassers with multiple cases—or perhaps even across a whole company. The examples, like you think the Wall Street Post -- sorry, the Washington Post -- had a very prominent series about Sterling Jewelers and sexual harassment cases there involving a whole pattern in history.

 

And those kind of instances, I think, have certainly made it more acute there in those instances. But I can see, certainly, some of the more general kind of critiques as being things that apply to sexual harassment cases but also apply to other kinds of cases as well.

 

Christopher C. Murray:  Did you have a sense in any of your studies on how common confidentiality provisions are or NDA provisions either kind of embedded within an arbitration agreement or as maybe supplementing an arbitration agreement?

 

 

Alexander J.S. Colvin:  Yeah. It actually turns out to be—yeah—hard to tell on that, partly because these are private agreements. And so there isn’t a repository somewhere where you can look at all of them. I mean, I would say certainly the case that it seems to be as the default that private, confidential procedures are the ones that you typically see.

 

      So that seems to be kind of the more common practice, but it doesn’t have to be for arbitration, right? So the [inaudible 37:48], I think, is with labor management arbitration where that tends not to be the case that you actually -- you can read the decisions probably because of the nature of the setting. Both sides will be discussing what’s going on in arbitration.

 

      But it does seem that—in the sexual harassment forced arbitration setting—more often than not, it is confidential and private.

 

G. Roger King:  So, Chris, if I could just jump in. I mean, your question really, I think, is an excellent one as it relates to Ms. Carlson. And by the way, she’s very articulate, as you would expect. I mean, given her professional background, very persuasive. She made an excellent witness in both the House and the Senate. She literally walked the halls of the Congress, seeking audiences with individual senators and congressmen. And she was quite effective, and there’s no doubt about that.

 

      But if you really look closely at her situation, if you take the NDA provision out, if you take confidentiality out, that really speaks to virtually every one of her issues. And it’s ironic. She signed a very comprehensive agreement drafted by Fox News lawyers that you have thought would have, on first blush, prohibited her from publicizing her case. Well, that turned out to be exactly not the situation. Her case was publicized around the country—around the world. She had no difficulty whatsoever getting out her message, notwithstanding the agreement in question. So again, her criticism almost are entirely on the confidentiality side.

 

      And again, as I said at the outside of this -- outset of this discussion, had we addressed NDAs’ confidentiality in the congressional considerations of this area, we could have solved this issue by and large.

 

      What I really see here happening is a drive to put more and more cases in class-action litigation. And if I were on a plaintiff’s trial bar side of this discussion, I wouldn’t take the same position. I’m not. I represent employers. But in a query, do we want to push more cases, A, into the courts but, B, particularly into class-action litigation? That’s what really is at the heart of the trial lawyer plaintiff bar interest in this discussion. And they’ve done exceptionally well in the class-action litigation area.

 

      But it’s an area that we don’t have time to get into today. But there are significant reforms that need to be embedded in the whole class-action procedure—both in state and federal litigation.

 

      But unfortunately, Chris, the ultimate objective here is do away with class action waivers, put more cases in the courts, and particularly put them in the class-action litigation arena. That’s bad policy from, at least, my perspective.

 

Christopher C. Murray:  Alex, Roger raises the point that class action -- this new statute does address class actions in addition to sexual assault and sexual harassment. Do you have a sense of how that ended up in this statute or why that issue is involved here?

 

And I should say that, in my own practice—I’m a defense attorney—I usually don’t think of sexual harassment cases as class actions or punitive class actions. It’s, I think, a wage an hour, or I think maybe discrimination. But harassment -- not usually something that I’m thinking of as associated with class actions. So I’m curious for your thoughts on that.

 

Alexander J.S. Colvin:  Yeah. I mean, I think it -- yeah. It is much less common in sexual harassment versus, say, like gender pay cases. Equal pay cases are often class or collective actions, right?

 

      I mean, I think it’s included because, occasionally, sometimes it does happen, and this has been one of the real concerns about forced arbitration, right? It’s essentially allowing an employer to write themselves out of the law so that they’re -- they exempt themselves from class or collective actions, which we could choose as a society to pass a federal law saying that nobody will be able to bring a class or collective action at all. We can make that sort of policy choice as a society. But it’s problematic to have individual employers get to choose to exempt themselves out of it on a one-by-one basis, which is what is allowable currently under the way arbitration has been interpreted.

 

      So I think it’s in there because of those cases, even though I agree with you. They’re not very common for sexual -- given the individual nature of the fact patterns in those cases typically. So typically, you’re not going to succeed in creating a class action if you’ve got a sexual harassment case versus if you have an equal pay case—or even better, a [inaudible 43:12] or other wage-and-hour type of case.

 

G. Roger King:  I mean, Chris, your point’s well taken, and it reinforces the political point that I made earlier. Why did you see a class action provision in a sexual harassment/sexual assault statute? And the reality is, again, the very effective political power that the plaintiff’s trial bar has. This is a precursor to other attempts to preclude or limit the use of arbitration and prohibit class action waivers.

 

      I want to come back just to the statute just for a moment because I think we’ve been sort of going around the edges of this discussion. We can’t even have a complete agreement on a waiver basis now for a sexual harassment/sexual assault case in our arbitration setting. The waiver approach, etc. is totally removed—even when the parties would desire it. No more pre-dispute tribunals.

 

      To me, that is an overreach and misuse of the attempt to limit arbitration. We do have situations—legitimate situations—where the parties, for a variety of reasons, want to keep the matter confidential or only want to limit discussion about the award. But we’ve removed that entirely from the potential of the parties to come to an agreement. To me, again, that’s bad policy.

 

      Finally, I do agree with Alex. Again, back to class-action waivers, etc., numerosity, commonality, and other common requirements to proceed on a class-action basis simply are not there is virtually any sexual harassment case, unfortunately. So why, again, did a class action type of language get in this statute to start out with?

 

Christopher C. Murray:  Yeah. And, [inaudible 45:26], I wanted to follow up on your comment about this being a drafting train wreck and a question about some of the specific terminology in this -- in the statute.

 

      The statute refers -- and I’ll read the specific language here, but it refers, generally, to banning arbitration in certain cases rather than banning arbitration with respect to certain claims. And the language—the relevant language here—is “No pre-dispute arbitration agreement or pre-dispute joint action waiver shall be valid or enforceable with respect to a case that relates to a sexual assault dispute or the sexual harassment dispute.”

 

      As a defense attorney, my thinking is, “Isn’t this going to incentivize plaintiff’s attorneys to add sexual harassment claims to what may otherwise be a case that would not relate to a sexual harassment dispute?” A wage-and-hour case, for example, because this is -- at the election of the claimant or the named representative of a class or collective action has the power to—I guess the authorization or the authority under the statute—to demand the pre-dispute agreement not be enforced.

 

      But is there a risk that this going to incentivize more sexual assault or sexual harassment claims to be added to disputes in order to get out of a class-action waiver or evade a class-action waiver? Is that a realistic concern, or is that just maybe being a little paranoid from the defense side?

 

      Roger, your thoughts first, I guess, on that.

 

G. Roger King:  This could take us down a path of how we make laws in this country—and not well. I started my legal career after leaving Cornell working in the United States Senate for Senator Robert Taft Jr. By the way, that’s not the Taft of the Taft Wagner Act 1935 or even the 1947 Taft-Hartley limits. That’s his son. I get people occasionally saying, “Were you around when Taft-Hartley was happening?” Barely.

 

      But putting that aside, I mean, what’s the word “cases” mean? And sure, if I’m on the other side of this discussion, I want to take out of the potential arena pre-dispute arbitration. I am going to try to intermingle, Chris, other claims.

 

      There wasn’t really a hearing or hearings on this statute. It was cobbled together in an effort, frankly, by the Democrat Caucus to gather ten Republican votes and get to the floor quickly. Senator Ernst from Iowa tried to get a dialogue started and was precluded from doing so.

 

      We didn’t have thoughtful hearings. We didn’t have good testimony. I mean, even if we were to reach a philosophical agreement here—and Alex and I and others could come in and make our points and provide testimony and help committees draft the legislation—that wasn’t done here. It’s a very poorly worded statute that’s going to result in, unfortunately, considerable litigation.

 

      And why did we take the waiver aspect out altogether? I think that’s a very poor policy decision. This is just not good law. As one of my colleagues said the other day, “This is a complete train wreck of how you ought to be drafting legislation.” But nevertheless, it’s political reality.

 

Christopher C. Murray:  Alex, I’m curious. How do you think plaintiff’s attorneys or employee-side counsel -- how are they going to possibly change what they do in light of this statute?

 

Alexander J.S. Colvin:  Yeah. So I think on the kind of cases versus claims language, there’s a basic idea that you don’t want multiplicity of actions going on, right? If you do it based on claims, then do you have religious discrimination and arbitration, the sexual harassment claim in litigation going on in parallel at the same time, right? That’s, I think, a basic -- because we always try to avoid that. You want to consolidate where you can. And doing it based on cases allows you to go one way or the other.

 

      I mean, yes, it’s certainly the case. Somebody could try to put in a sexual harassment claim that was sort of frivolous but just to tag on to get out of arbitration. I think, presumably then, a defense counsel like yourself would instantly be doing—moving for summary judgment and trying to knock that out.

 

      And there will be a cost there if you’ve done that on the plaintiff’s side because then you get your case bumped back to arbitration. And that imposes costs on the plaintiff’s side, right? And then typically, the plaintiff attorney is bearing the cost until they get some kind of award or settlement. So I think there’ll be risks to trying that kind of strategy.

 

Christopher C. Murray:  And we do have a -- I see we have a question from one of our audience members here about the delegation aspect of this statute and why it requires that the court—rather than arbitrator—interpret a clause that may be barred by the statute.

 

And the question is, “Was that a recognition of arbitrator financial conflicts—maybe self-interest—in finding disputes are arbitrable or a repudiation of the supposed due process of arbitration or both?”

 

      Do either of you have a sense of how or why this delegation issue also got wrapped into the statute?

 

Alexander J.S. Colvin:  Well, it kind of -- I mean, there’s been a debate for years about the question of arbitrability—who determines arbitrability—which is a -- it is a tricky question if you look at the arbitration jurisprudence. It’s actually one that is a little more nuanced, I think, than in a lot of areas because does the arbitrator have the authority to determine arbitrability?

 

      You certainly, I guess, worry about the incentives to want to say if things are arbitrable because that creates business for the arbitrator. But there’s a more, I think, a basic kind of structural question of “Does the arbitrator have any authority if they’ve misinterpreted the arbitrability clause themselves?” Right?

 

      And so, let’s suppose it was a fraudulent arbitration agreement or something. What authority, then, would the arbitrator have to decide that? So I do think it goes back to a pretty fundamental question on arbitration law.

 

Christopher C. Murray:  Okay. Well, I think we are approaching about an hour for our time. And one of the big questions I wanted to make sure I get a chance to ask you both is, what do you see happening next?

 

Is this statute, is it—as the title of our program suggests—the beginning of the end of mandatory arbitration? Is this a first step towards “Are we going to see more employment claims get excluded from arbitration?” Or is this kind of the end of the road because of the various political things that you had noted, Roger—kind of the political storm that surrounded MeToo? Is that a one-time thing? And is Congress not going to be—for the foreseeable future—in a position where they’re going to be narrowing the scope of employment arbitration?

 

So, Alex, I know you’ve written a lot about employment arbitration generally. Maybe we’ll turn to you first for what you foresee happening in the future.

 

Alexander J.S. Colvin:  Sure. I mean, I could see different ways in which it could play out, right? It could be that this is just a one-off type of thing. I could see, to Roger’s point, about it having become somewhat political if there were genuine Democratic control of Congress and the [inaudible 53:50] non-filibustered kind of advanced things. I could see a general restriction-forced arbitration. There are statutes proposed there. That depends on where the political landscape plays out.

 

      I do think that there is a possibility that we could see another version of something like this if we see the right types of claims. The example I could think of, let’s think about religious discrimination in the workplace. If you have a company limiting the religious freedom of the workers that conservatives are concerned about, you could see a different kind of coalition emerging around this, right?

 

      So a company that’s forced the employees to sign the arbitration agreement that restricts their religious freedom, you might see a different configuration of political support for a particular type of claim, similar to what happened around the MeToo movement. So that’s, I think, the wildcard here.

 

G. Roger King:  So, Chris, ask that question after the midterm elections, and then both Alex and I could give you a more clairvoyant prediction. I just noted a couple questions before we close out that I wanted just to touch upon.

 

      We haven’t really talked about the delay factor. One of our questioners asked, “Will the new statute delay ultimate so-called justice in this area or resolution in this area?” I think the answer is clearly yes.

 

Unfortunately, I think no matter what side you’re on in this discussion, we all would agree that arbitration occurs much more quickly than what happens in the courts—particularly given the backlog that we continue to see—and the procedural morass one often gets into in the federal and state courts. So delay, unfortunately, I think, will occur that has not occurred in the past in resolving many claims which should be addressed on a very expeditious basis.

 

Second, the cost. Another questioner asked about cost. Clearly, I think the new statute will add additional expenses to all parties, and that’s unfortunate. Another advantage of arbitration is that it’s much less expensive than proceeding through the court system.

 

The public hearing aspect, another questioner said, “Could we not have solved a lot of this by making sure arbitration in the sexual harassment/sexual assault area are more like a public forum?” And I think we’ve addressed that. Alex and I both have spoken to that. Absolutely. That’s why you take out NDAs. That’s why you make them much more of a public forum. So I think that was a policy area where we, unfortunately, missed an opportunity.

 

And finally, I see we have an anonymous question about “Well, it’s important that people who have been mistreated—women particularly in the workplace—have an adequate forum for their matters to be addressed both financially and otherwise.” I totally agree with that. I mean, I want to make sure it’s clear—at least from my perspective and that of the HR Policy Association, who I represent—we do not condone any kind of activity like what we saw, apparently, at Fox News. And, absolutely, people need to have a forum for complete redress here. But again, my point is it’s better to have the option at least to go through arbitration than force everybody into a judicial arena.

 

Christopher C. Murray:  Thank you. We have just a couple of minutes. I guess, Alex, if you have any closing thoughts on our discussion today, I’ll turn to you first.

 

Alexander J.S. Colvin:  Sure. Maybe just to pick up Roger’s points, I think the other thing that we will see is more sexual harassment claims being brought forward. I mean, I do think the suppression of claims effect is real, and we will see more claims being brought forward.

 

      I do think that we will see corporations that want to be responsible on them responding by doing what they can do, which is mediating—using mediation—which is a very effective technique for dealing with conflicts.

 

I think you can use voluntary post-dispute arbitration in the right kind of cases. There’s a great example of securities industry arbitration where it has to be post-dispute. And you do actually see it being used. Some argue that it would never be used, but it actually is being used in a more voluntary setting there.

 

So I do think there’s ways in which you can use ADR effectively to resolve some of these claims. So I do think there’s that potential out there.

 

Christopher C. Murray:  Great, thank you.

 

G. Roger King:  So, Chris, we, unfortunately, do have the Fair Act and other legislative proposals. I think we’ll get some attention yet in this Congress.

 

      But I would venture that Alex and I and others in this field could sit down and draft protocols and procedures. ADR—I certainly agree with Alex. There are a lot of meaningful ADR concepts. Cornell and other schools have been a leading advocate of some of those protocols and procedures.

 

      But I would venture that we could sit down, Chris—with you and others also—and draft procedural safeguards, fairness, safeguards overall, and also take out the confidentiality provisions, and have a forum where people outside of the courtroom can resolve their disputes and differences. And where the employer or other actor is rogue and acting inappropriate, have appropriate damages.

 

I’m confident we could do that. But let’s not erode a system that has worked so well in this country and has kept pressure off of our courts and has been endorsed continually by the United States Supreme Court and not just by conservative justices.

 

As I mentioned in part of my testimony, you have justices of all philosophical backgrounds in the U.S. Supreme Court endorsing arbitration. So let’s use that great body of law that we have and experience to improve the system but not discard it.

 

Christopher C. Murray:  Well, thank you. I think that brings us to the end of our time today. And I’d like to thank the audience for joining us today for our Teleforum and thank The Federalist Society for hosting it. I’m especially grateful to our panelists, Alex Colvin and Roger King, for sharing your great experience and your wonderful insights. Thank you both very much for joining us today. We really appreciate it. And with that, Guy, I’ll turn it over to you. I believe we are adjourned or close to it.

 

Guy DeSanctis:  Thank you. On behalf of The Federalist Society, I want to thank our experts for the benefit of their valuable time and expertise today. And I want to thank our audience for joining and participating.

 

      We welcome listener feedback by email at [email protected]. As always, keep an eye on our website and your emails for announcements about upcoming virtual events.

 

      Thank you all for joining us today. We are adjourned.

 

[Music]