Arbitration clauses in consumer agreements (read credit card and various retail-related contracts, for example) have been common for years. Companies strongly favor them for their ability to drive disputes to a private venue and keep them out of courts. Arbitration is generally perceived by business principals to be cheaper and quicker than formal litigation, as well as a more predictable process.
And then there’s this: The U.S. Supreme Court has ruled that customers bound by an arbitration-only dispute-resolution clause must go it alone. That is, they cannot collectively band to pursue a common grievance.
Pro-worker groups had hoped that things might turn out differently in the Supreme Court’s most recent consideration of arbitration-versus litigation, with the tribunal evaluating arbitration clauses in the context of employment agreements.
No such luck. Once again, SCOTUS ruled that American employers can use such provisions to completely bar aggrieved employees from collectively staking a claim and pursuing a remedy for an alleged work-related injustice.
The high-court’s ruling was concededly close, but its pro-employer bottom line was clear enough. Writing for a narrow 5-4 majority, Justice Neil Gorsuch stated that both longstanding federal legislation and past judicial precedent make amply clear companies’ ability to draft arbitration clauses and require that workers follow their stated processes.
Such clauses flatly preclude collective actions through the courts, Gorsuch noted, and logically so. If an allowance was granted to permit class actions, he stated, “arbitration would wind up looking like the litigation it was meant to displace.”
Court dissenters invoked a different tone, with Justice Ruth Bader Ginsburg stating that the ruling would weaken workers by keeping them isolated and vulnerable. Her orally delivered dissent (a court rarity) challenged Congress to amend existing statutory law.