Wednesday, June 26, 2013

Justice Kennedy Finds Compassion for LGBT Americans, Striking down DOMA in U.S. v. Windsor

After many dark days, today the Supreme Court shone a light across the world with a decision that will make this day stand among the landmark days in the history of our diverse America. Like with Brown v. Board of Education, Loving v. Virginia, and its other great decisions, today, in U.S. v. Windsor, the Supreme Court did what that Court should always do - stood as the last defense for the Constitution, for the rights of ordinary Americans, against those who would use power to desecrate American freedom and denigrate American citizens.

DOMA is unconstitutional as a deprivation of the equal liberty of persons that is protected by the Fifth Amendment, the Court held. The Defense of Marriage Act (DOMA), which "defended" only the rights of those who wish to discriminate against America's lesbian, gay, bisexual, and transgender minority, is no more. Hard-working, tax-paying, law-abiding LGBT Americans like Edith Windsor and Thea Spyer are entitled to the same rights as the rest of us - including the rights to love one another, have their love sanctioned by the state, and obtain the same benefits as other married couples - even the right to care for one another after death, by providing for each other in their estates.

Justices Ginsburg, Sotomayor, Breyer, and Kagan have fought in recent days to defend civil rights, the rights of the disenfranchised, of small businesses - of all ordinary Americans. Justice Kennedy has voted against these protections. Only yesterday, Justice Kennedy wrote for the majority, making it harder for those who stand against civil rights violations and suffer retaliation to obtain redress, in University of Texas Southwestern Med. Center v. Nassar. But today, Justice Kennedy did the right thing.

As his opinion today said of the now-dead DOMA:

DOMA singles out a class of persons deemed by a State entitled to recognition and protection to enhance their own liberty. It imposes a disability on the class by refusing to acknowledge a status the State finds to be dignified and proper. DOMA instructs all federal officials, and indeed all persons with whom same-sex couples interact, including their own children, that their marriage is less worthy than the marriages of others. The federal statute is invalid, for no legitimate purpose overcomes the purpose and effect to disparage and to injure those whom the State, by its marriage laws, sought to protect in personhood and dignity. By seeking to displace this protection and treating those persons as living in marriages less respected than others,the federal statute is in violation of the Fifth Amendment.

Slip Op., at pp. 25-26.

When dignity triumphs in the Supreme Court, it is a great day for America. I will remember today. We all will.

Tuesday, June 25, 2013

The Supreme Court Continues to Hinder Efforts to End Retaliation and Workplace Harassment: Univ. of Texas Southwestern Med. Center v. Nassar and Vance v. Ball State University

Very quietly, over the past several years, the Supreme Court has been making it more difficult for Americans to sue businesses for class actions, retaliation and/or discrimination.  The Court seems far more concerned with protecting employers from lawsuits than vindicating employees’ statutory rights.  Two decisions by the Supreme Court on Monday continue this unfortunate trend.

On June 23, 2013, a sharply divided Supreme Court issued two decisions that reveal the Court is out touch with the realities of the workplace and out of touch with the realities of workplace harassment and retaliation.  The Court issued University of Texas Southwestern Medical Center v. Nassar, No. 12-484 (opinion, here) and Vance v. Ball State University, No. 11-556 (opinion here), two 5-4 pro-employer decisions authored by Justice Samuel Alito and Justice Anthony Kennedy, respectively.  Justice Ginsburg authored two dissents that she read from the bench.

In the first case, Nassar, who is of Middle Eastern descent, alleged that the University of Texas Southwestern Medical Center blocked him from getting a new job.  According to Dr. Nassar, the Medical Center denied him the new job after he complained that his supervisor discriminated against him based on his race and ethnicity.  The U.S. Equal Employment Opportunity Commission found “credible, testimonial evidence” that the Medical Center retaliated against Dr. Nassar, and a jury found that the University violated the anti-retaliation provision of Title VII.  Nassar, Slip Op., Dissent at p. 4. The U.S. Court of Appeals for the Fifth Circuit upheld the jury verdict.

Supreme Court overturned the decisions of the district and appellate courts, and the Equal Employment Opportunity Commission.  Instead of applying the same standard of proof that is used for race and gender discrimination claims, the Court adopted a more stringent standard for retaliation, which Justice Ginsburg, in her dissenting opinion, recognized “lacks sensitivity to the realities of life at work.”  Nassar, Slip Op., Dissent at p. 25. The lack of sensitivity to the realities of life at work is further reflected in Justice Kennedy’s words that convey empathy for the employer and disdain for employees: “The fair and responsible allocation of resources in the judicial and litigation system” requires raising the standard for retaliation claims because “[i]t would be inconsistent with the structure and operation of Title VII to so raise the costs, both financial and reputational, on an employer whose actions were not in fact the result of any discriminatory or retaliatory intent.”  Nassar, Slip Op., at p. 19.  Moreover, the majority’s lack of concern for the financial, reputational and emotional cost of retaliatory harassment to the employee in comparison to the Courts’ desire to reduce the number of retaliation claims filed, regardless of merit, is reflected in the acceptance of the following hypothetical considered by the Court: “Consider…the case of an employee who knows that he or she is about to be fired for poor performance, given a lower pay grade, or even just transferred to a different assignment or location.  To forestall that lawful action, he or she might be tempted to make an unfounded charge of racial, sexual, or religious discrimination: then when the unrelated employment action comes, the employee could allege that this is retaliation.” Nassar, Slip Op., at p. 18.

For race and gender discrimination, the Court ruled that Title VII requires an employee to show only that race or gender was one of multiple “motivating” reasons for the employer’s decision-making.  Nassar, Slip Op., at p. 23.  However, for a claim of retaliation, the Court ruled that the employee must show that the employer would not have made the decision “but for” its improper retaliatory motive.  Id.  The Court remanded the case to the trial court to apply this higher standard to Dr. Nassar’s retaliation claim.

Unfortunately, the Court’s decision to raise the burden of proof for retaliation claims is in contrast to the strong safeguards necessary to shield employees who protest discriminatory actions.  These protections particularly are important since the number of Equal Employment Opportunity Commission complaints has nearly doubled in the past 15 years from over 16,000 in 1997 to 31,000 in 2012. Nassar, Slip Op., at p. 18.

In Vance v. Ball State the Court ruled that in Title VII cases a person must be able to take “tangible employment actions against the victim, such as hiring and firing someone to be considered a supervisor in discrimination lawsuits, thereby making it harder to blame a business for a co-worker's unlawful and discriminatory behavior.  Vance, Slip Op., at p. 30.  Maetta Vance, the only African-American employee in the Ball State University kitchen, was exposed to racial slurs from Saundra Davis, the kitchen staff worker who gave Ms. Vance her daily work assignments.

The Court previously held that an employer is accountable under Title VII when one of its supervisors harasses an employee.  In Vance, the Court ruled that Ball State was not responsible for Davis’s discriminatory conduct because Davis did not fit the Court’s narrow definition of “supervisor.”  Vance, Slip Op., at p. 30.  The Court’s ruling also rejected EEOC’s guidance regarding who is a supervisor.  Vance, Slip Op. at pp. 20-21. The Court determined that because Davis did not have the power to make certain formal employment decisions, such as hiring, firing, or promoting, she was not a “supervisor” under Title VII, despite the fact that she controlled and supervised Ms. Vance’s day-to-day activities. Vance, Slip Op. at pp. 29-30.

Unfortunately, the Vance decision will leave employees without judicial recourse when faced with harassment by supervisors who may not have the ability to fire workers, but do have the ability to harass them in the workplace.

Both decisions show that the Court is out of touch with the realities of today’s workplace.  In the real world, a coworker who assigns work, even without hiring and firing responsibility, can use that authority to make the conditions of another employees’ life miserable or unsafe because of a protected category. When there is unlawful behavior in the work place, the law should protect employees who try to make the workplace safe for everyone by reporting the situation.  When there is unlawful behavior in the work place, the employer should be required either to fix the situation or be held accountable for not doing so. This is not just the reality of the workplace but this is common sense because everyone-regardless of race, gender or other-wants to work in a workplace free from harassment. Instead of ensuring justice and equality to all, the Court continues to listen to one singular voice-business. As Justice Ginsburg noted in her dissent, “[t]he ball is once again in Congress’ court to correct the error into which this Court has fallen, and to restore the robust protections against workplace harassment the Court weakens today.”

Regressive Supreme Court Majority Dismantles Key Victory of Civil Rights Era in Shelby County, Alabama v. Holder

Today the Supreme Court's majority continued its relentless march to restrict civil rights protections and place obstacles before those seeking to promote diversity, and combat discrimination, retaliation and wage theft. Read the Shelby County, Alabama v. Holder decision here, which slashes the Voting Rights Act of 1965.

It appears that a basic question in America is whether the advances of the Civil Rights era 50 years ago are anachronistic today - essentially, whether we have fully realized the goals of the civil rights struggle, the dreams of our nation's founders and heroes.

We have not. In America, people of color remain disproportionately among the poor and disenfranchised, among the socioeconomically depressed. Blacks, Latinos, and Native Americans are not represented in proportionate numbers in the highest echelons of business and government, and too many minority-concentrated neighborhoods continue to struggle with violence, lack of educational opportunity, and the grinding cycle of poverty. We still have a lot of work to do to correct America's greatest tragedies, slavery and the Native American genocide. America is the most diverse nation in the world, and our diversity and shared values give us more potential than any other - but only if we move forward together, continuing to pursue the struggle for life, liberty, and the pursuit of happiness for all Americans.

I am part of a campaign called Civil Rights at 50, led by the Equal Justice Society, which seeks to reflect on the great victories of the civil rights struggle 50 years ago, and create momentum toward continuing the important work of that struggle. I hope you will join us.

Monday, June 24, 2013

Diversity Programs Reconsidered after Supreme Court Ruling in Fisher v. University of Texas

The Supreme Court continues to erode affirmative action policies in a way that could eventually collapse race-conscious admissions policies, crucial to ensuring diversity in higher education. The Supreme Court, in a 7-1 vote with Justice Elena Kagan not taking part, ruled that the Fifth Circuit Court of Appeals did not apply the correct standard of strict scrutiny in deciding whether the University of Texas’ decision to use race as an admissions factor violated the U.S. Constitution’s guarantee of equal protection. In Fisher v. University of Texas, No. 11–345 (opinion available here), the Court vacated and remanded back to the Fifth Circuit, which previously upheld the University of Texas’ affirmative action plan. In so doing, the Supreme Court further complicated the efforts of all who work proactively to create a diverse student body, workforce, etc., by considering race a “plus factor” in an admissions program that considers the overall individual contribution of each candidate.

Fisher, a Caucasian applicant to the University of Texas who was denied admission, sued under the Equal Protection Clause of the Fourteenth Amendment, blaming her denied application on affirmative action. She argued that eliminating race-based factors and using race-blind alternatives would be able to produce a diverse student body to a satisfactory degree, and therefore race-conscious admissions ought to be eliminated.

The District Court granted summary judgment to the University. Affirming, the Fifth Circuit held that Grutter v. Bollinger, 539 U. S. 306 (2003), required courts to give substantial deference to the University, both in the definition of the compelling interest in diversity’s benefits and in deciding whether its specific plan was narrowly tailored to achieve its stated goal.

In his majority opinion, Justice Anthony Kennedy wrote that strict scrutiny requires a searching examination, and the University bears the burden to prove “‘that the reasons for any [racial] classification [are] clearly identified and unquestionably legitimate.’” Fisher, Slip Op. at p. 8. The majority perceived that, rather than perform this searching examination, the Fifth Circuit held petitioner could challenge only whether the University’s decision to use race as an admissions factor “was made in good faith.” Fisher, Slip Op. at pp. 8-12. The majority found that Fifth Circuit incorrectly presumed that the school had acted in good faith and gave Fisher the burden of rebutting that presumption. The majority held that the Fifth Circuit thus undertook the narrow tailoring requirement with an improper “degree of deference” to the school. Id.

The outcome of the Fisher decision is to send the case back to the lower courts to sort out, though each Supreme Court decision rejecting an affirmative action plan makes it more difficult for well-intentioned institutions to create diversity in their respective populations. Justice Ruth Bader Ginsburg used her dissent to attempt to provide an outline for the University of Texas to follow in defending its admissions program when the case returns to the Fifth Circuit. She also her used her dissent to remind the Court of the “lingering effects of ‘an overtly discriminatory past,’” and “the legacy of ‘centuries of law-sanctioned inequality’” which led to the need for affirmative action in the first place. Fisher, Slip Op., Dissent at p. 3.

The University of Texas’s Top Ten Percent plan, which was the predecessor to the challenged affirmative action plan, and which was advocated as a preferred alternative by Fisher, “grant[ed] automatic admission to any public state college, including the University, to all students in the top 10% of their class at high schools in Texas that comply with certain standards.” Fisher, Slip Op. at p. 3.

There are several problems with the “race-blind” Top Ten Percent plan, and others like it. Most notably, it seemingly does not make much of an impact on diversity, based upon the information in the Court’s decision, noting that the Top Ten Percent plan only increased African-American admissions 0.4% and Hispanic admissions 2.4%. Id.

Justice Ginsberg wrote that seemingly race-neutral alternatives fail because of persistent and enduring residential segregation that determines where students go to school, and that as such, “race consciousness, not blindness to race, …drives such plans.” Fisher, Slip Op., Dissent at p. 2. As she explained, “[O]nly an ostrich could regard the supposedly neutral alternatives as race unconscious.” Fisher, Slip Op., Dissent at p. 2.

Far from simply making a modest, “good faith” effort to meet constitutional scrutiny, the University of Texas, which considers race as but one of many plus factors in its admissions process, puts its admissions program up for regular review to determine whether its consideration of race remains necessary and proper to achieve the University’s education objectives. Fisher, Dissent, at p. 3. Ginsburg concluded that “Justice Powell’s opinion in [Regents of Univ. of Cal. v. Bakke, 438 U. S. 265] and the Court’s decision in Grutter require no further determinations. Id.

Ultimately, the Court’s decision will raise difficult challenges for universities and institutions that want to have diversity programs which meet constitutional muster. Fortunately, though, Fisher does not shut the door on diversity recruiting. The Court maintained the framework created by Justice Powell’s opinion in Bakke, and enshrined in Grutter, allowing affirmative action to be a plus factor – notwithstanding Justice Thomas’s lengthy concurrence which would end consideration of diversity factors altogether. In Bakke’s principal opinion, Justice Powell recognized that state university “decisions based on race or ethnic origin…are reviewable under the Fourteenth Amendment,” 438 U. S., at 287, using a strict scrutiny standard, id., at 299. He identified the educational benefits that flow from a diverse student body as a compelling interest that could justify the consideration of race but noted that this interest is complex, encompassing a broad array “of qualifications and characteristics of which racial or ethnic origin is but a single though important element.” Id. at 315. See Fisher, Slip Op. at pp. 8-9.

Hopefully, on remand, the lower courts will subject the University of Texas plan to strict scrutiny, and find that their affirmative action program passes the test.

Thursday, June 20, 2013

Why Regular People Need to Pay Attention to the Supreme Court’s Arbitration Obsession: American Express Co. v. Italian Colors Restaurant Cries for Amending the Federal Arbitration Act

Today the Supreme Court, in American Express Co. v. Italian Colors Restaurant (Italian Colors), gave companies a tool to use to keep you from enforcing the legal protections for your wages, against discrimination, and for average consumers and small businesses. Please, pay attention. It is not right, and it affects you, no matter who you are.

I am for big corporations. They give lots of people jobs. They give us stuff we want. They pay taxes that help build roads and schools and hospitals. They sometimes donate money to worthy causes. I get it. They don’t need a thank you note from me. I pay them every day, and so does everyone else. And, I don’t have a problem with good businesspeople getting rich. America is, in part, about capitalist incentives that we each have to work hard, get ahead, and provide for our families, friends, and causes we believe in.

But, that’s not all America is about. America is also about fairness, protecting the little guy’s/gal’s rights against the big guy/gal. Anyone being honest knows that big corporations will trample individual workers’, consumers’, and small businesses’ rights, if left unchecked. I do not need to view this as a conspiracy by Big Business in every instance. I can simply observe that companies do sometimes violate workers’ rights, based on years of seeing employment law violations and holding companies (and the government) accountable in my law practice. I know the same is true regarding consumers and small businesses, based on my own experiences as a consumer and small business owner. Teddy Roosevelt (a Republican) figured this out over 100 years ago when he helped put an end to (or at least put checks upon) the Gilded Age. FDR (a Democrat) figured this out when he helped end the Great Depression with the Fair Labor Standards Act, 75 years ago. I don’t know why we need to keep figuring this out. But, here we go again. Big companies need to be regulated.

When companies overstep – sometimes deliberately, based upon a cost-benefit analysis or harboring discriminatory or retaliatory animus – or even when they inadvertently fail to comply with legal protections for workers, consumers, and small businesses – we all need to have effective recourse to bring companies back into line. That recourse is litigation, or the threat of litigation, to enforce important statutory principles. Sometimes companies respond to employees, consumers, or small businesses providing helpful feedback, and come into compliance voluntarily. But, without the risk that litigation can pose to the companies’ bottom line, companies become immune to the important protections that exist for ordinary citizens.

What if a big corporation, like AT&T Mobility, is cheating their cell phone customers out of $30 or $40 on their bills, millions of times, for years? You have to take the kids to school and get to work. You have to get home and fix dinner after work. You have to clean the dishes. Then, you’re tired and want to sit in front of the TV. Maybe this is not your average day but, whatever your day looks like for you, I suspect it does not leave a lot of hours to fight over $30 or $40 dollars you were once cheated. If someone walked up to you and stole your wallet, with $30 or $40 in it, you might call the police, and they would take a report, and might even try to find the culprit, if they got there in time. But, if AT&T Mobility decides to steal this money, millions of times, there is nothing you can do about it, unless the company fixes the overcharge out of the goodness of their corporate heart. They will often not be motivated by the threat that customers or workers or small businesses will go elsewhere – because the other big companies are doing the same thing. They will respond to you if you are prepared to litigate.

You won’t litigate this $30-$40 case by yourself. In fact, even if your case is worth $30,000-$40,000, which is real money to most of us, you can’t do it by yourself. The company will hire lawyers to fight the case, and you need to fight them on a level playing field to have a shot at getting back what was taken from you. Trouble is, fully litigating a case – either in Court or arbitration – usually costs tens or hundreds of thousands of dollars in attorneys’ fees and costs, if not more, takes many months or years of your time and energy, and, there is always a risk you won’t win. Those of us who have arbitrated cases know that it is not true that arbitration is always cheaper, simpler, or quicker, than proceeding in court, as the Supreme Court seems to suggest. (Slip Op. at 9.) Unless you have been so wronged that it changed your life – you lost your job, you suffered egregious harassment or retaliation, you had so much stolen from you that you were on the verge of going broke, hundreds of thousands – you just won’t undertake this long and expensive litigation alone in arbitration, any more than you would in court. Big companies know this.

So, what will happen? If you have been violated –had your wages stolen, been subjected to discrimination, retaliated against for exposing wrongdoing – and you and/or your attorneys are not prepared to spend the resources and effort necessary to fight, then companies will most often simply deny wrongdoing, and spend whatever resources are necessary to bury your claims.

This is why class and collective action litigation is so important. It is a cornerstone of American democracy and capitalism in the modern era. It is what allows the little guy/gal to stand up to the big guy/gal and get ahead. You can’t afford to keep the company in check by yourself. But if there are dozens, or hundreds, or thousands, or millions of people who are standing with you, you have a fighting chance.

For several years, Justice Scalia and his allies on the United States Supreme Court have seemingly taken any opportunity to edify big corporations’ defenses against workers, consumers, and small businesses. Though always railing against “judicial activism,” Justice Scalia has become the chief judicial activist, reshaping the 1925 Federal Arbitration Act (FAA) to become a major weapon against class and collective action litigation – something the FAA’s architects never could have envisioned, since class and collective actions did not evolve to their modern form until well after the FAA came about. Though average Joe or Jane on the street has never heard of the FAA, it now affects every one of us.

Back to today’s decision in Italian Colors. In AT&T Mobility v. Concepcion, 131 S.Ct. 1740 (2011), the Court overturned California’s Supreme Court which had held that a class action waiver in a consumer arbitration agreement was presumptively unconscionable. I previously spoke about this decision on NPR, posted on the blog here. Though California had held (correctly) that it was unfair for a big company to strip away our rights to come together to fight against wrongdoing with words hidden somewhere in the fine print of an arbitration agreement, the Supreme Court said that the FAA allowed companies to do exactly that.

Since AT&T Mobility, consumer, antitrust, and employment lawyers have argued that arbitration agreements that preclude class actions can still be combated where we were effectively barred from vindicating statutory rights – in other words, where we would have no fighting chance proceeding as an individual. Today, the Supreme Court (as Justice Elena Kagan’s dissent explains) held as follows, with respect to the fact that arbitration agreements with class action waivers effectively deprive victims of all legal recourse: “Too darn bad.” Slip Op., Dissent at p. 1.

According to Justice Scalia, it doesn’t matter that the wage laws, consumer protection laws, anti-discrimination laws, and antitrust laws won’t be effectively enforceable in many instances, without class or collective action recourse, because we all “contracted to” litigate our claims individually. Slip Op., at p.4. But Justice Scalia’s reasoning is just disingenuous.

We never knowingly agreed to that. We took a job because we needed to work. We bought a cell phone because we needed a cell phone. We started a business and got credit card service for our customers’ use. We did not negotiate with AT&T Mobility, or American Express, the terms of these arrangements. They handed us some fine print documents – maybe put them in the box when we bought a product – maybe (in the employment context) told us that we needed to sign all the paperwork to get added to payroll. Of course, at the time, we had no idea that we would have a dispute with these big companies, that they would cheat us of money, or discriminate against us, or break some other laws. We only learned later – when the big companies did these things – that we were without any meaningful recourse, because none of us are going to spend $100,000 to try to get $10,000, or $100, or $10. Remember – we are Americans, and we care about capitalist incentives, too, just like the big companies. We’re not asking for handouts, but we don’t think the big guy/gal is above the law, either. When they break the law, we need to be able to hold them accountable. We can’t put a company in jail, like the pickpocket who steals your wallet, but we can hit them where it counts – the bottom line.

Since it is clear the FAA is going to be used to take away all of our meaningful recourse to fight big companies, we need to change the FAA. The Arbitration Fairness Act of 2013 is currently pending (HR 1844; S878). Most of us never cared about arbitration before, but it is time to start paying attention. Contact your congressperson or senator, before big companies hurt you too, and leave you with no way to fight for your rights. To find who you need to contact, click here.

Monday, June 10, 2013

Oxford Health Plans, LLC, v. Sutter: Supreme Court Tells Company that Chose Arbitration: You Made Your Bed. Now Lie in It...With a Whole Class of Plaintiffs.

Today, the United States Supreme Court surprised a lot of us. The Court acted unanimously, and with reasoning so unimpeachable and self-evident it can practically be described with a series of  truisms and proverbial expressions: Be careful what you wish for. What's good for the goose is good for the gander. You cannot have your cake and eat it, too. Do not go for a second bite of the apple. And, perhaps most of all: you have made your bed, and now you must lie in it.

In Oxford HealthPlans, LLC, v. Sutter, Slip Op. (June 10, 2013), Justice Elena Kagan, writing for all nine justices, permitted an arbitrator to authorize class arbitration where the arbitration agreement did not contain express language referencing class action, clarifying Stolt-Nielsen v. AnimalFeeds Int'l Corp., 559 U.S. 662, 684 (2010).

The immediate significance of the decision cannot be overstated in cases where a broad general arbitration agreement exists without an explicit class action waiver. In such cases, arbitration may become a viable alternative for seasoned workers' and consumer advocates bringing class claims. And, for companies faced with a potential class action, the outcome sends a clear message, reiterating what this blog has said repeatedly on the question:[1] be careful what you wish for!

In Oxford Health, the arbitration clause - like many companies' - left much unsaid, simply stating:
No civil action concerning any dispute arising under this Agreement shall be instituted before any court, and all such disputes shall be submitted to final and binding  arbitration in New Jersey, pursuant to the rules of the American Arbitration Association with one arbitrator.
Slip Op. at 2.

The arbitrator applied the contract's terms and reasoned essentially that mutuality prevailed, i.e., that the sweeping clause "sent to arbitration 'the same universal class of disputes' that it barred the parties from bringing 'as civil actions' in court: The 'intent of the clause' was 'to vest in the arbitration process everything that is prohibited from the court process.'"  Id. What's good for the goose is good for the gander, in other words.

But, the company wanted to have its cake and eat it, too. It wanted to compel arbitration as a short-cut to sweep away class allegations, but then - when the arbitrator charged with enforcing its agreement found class allegations permissible - wanted a court to step in and say the arbitrator had exceeded his powers. The District Court and Third Circuit refused the invitation to do away with the principle of finality of arbitration awards.

Then came Stolt-Nielsen. The Supreme Court held there that "a party may not be compelled under the FAA [Federal Arbitration Act] to submit to class arbitration unless there is a contractual basis for concluding that the party agreed to do so." 559 U.S. at 684. Oxford went for a second bite of the proverbial apple, seeking a new decision.

The problem for Oxford was that in Stolt-Nielsen, the parties had stipulated that they never reached an agreement for class arbitration. Here, the arbitrator had found that the parties' agreement to arbitrate all disputes naturally encompassed class allegations which otherwise would have been brought in court. Accordingly, the arbitrator held that Stolt-Nielsen was of no consequence. The company again sought judicial review, notwithstanding the fact that Oxford - not the plaintiffs - first sought to extricate the case from the courts.

The Third Circuit upheld the District Court, again rejecting the company's attempt to seek vacatur under §10(a)(4) of the Federal Arbitration Act of the arbitrator's decision permitting class arbitration. See 675 F.3d 215 (3rd Cir. 2012). The Third Circuit's decision was in line with a Second Circuit decision, Jock v. Sterling Jewelers, Inc., 646 F.3d 113 (2nd Cir. 2011), which split with a Fifth Circuit decision, Reed v. Florida Metropolitan Univ., Inc., 681 F.3d 630 (5th Cir. 2012).

Today's decision in Oxford Health sides with the Second and Third Circuits. The opinion is summarized as follows: "Oxford chose arbitration, and it must now live with that choice." Slip Op. at 8. Having moved to compel arbitration, and twice asking the arbitrator to decide whether class arbitration was permissible under the arbitration clause, the company could not seek to vacate the arbitrator's decision, which was based upon an arguable construction of the parties' contract. Slip Op. at 4, 8 (quoting Eastern Associated Coal Corp. v. Mine Workers, 531 U.S. 57, 62 (2000)). Courts' "sole question" when faced with a request to vacate an arbitral decision is "whether the arbitrator (even arguably) interpreted the parties' contract, not whether he got its meaning right or wrong." Slip Op. at 5.

Justice Samuel Alito's concurrence, joined by Justice Clarence Thomas, goes a step farther, saying that they would "have little trouble concluding that [the arbitrator] improperly inferred" an agreement to class-wide arbitration into the arbitration clause referenced above, and essentially arguing for creation of an opt-in class action mechanism in arbitration, contrary to Fed.R.Civ.P. 23's opt-out mechanism. Slip Op., concurrence at 2. Ultimately, though, the concurrence concedes that Oxford put the matter outside the Court's prerogatives by submitting the question for decision to the arbitrator.

Two remaining questions after Oxford Health are: 1) whether companies (i.e., in the context of Bryan Schwartz Law's work, employers) will more consistently implement arbitration agreements with explicit waivers of class claims, which they may have done after AT& T Mobility v. Concepcion, but perhaps felt they did not need to do, in light of Stolt-Nielsen; and 2) whether companies will successfully argue, as alluded to in Footnote 2 of Oxford Health (Slip Op. at 5), that the availability of class arbitration is a question of arbitrability - i.e., for courts to decide as part of their gatekeeper function?

Though the Supreme Court seemingly invites the latter as its arbitration case for the next term, it begs the question - why would employers be eager to pursue expensive private arbitration, but not be eager to have their chosen arbitrator decide the most important question in most class action litigation - namely, whether it is indeed a class action or not? It may invite forum shopping, as companies' attorneys decide which side has the greener grass - i.e., whether they like their chances better with the particular judge they draw or with an arbitration service - though both courts and arbitrators alike are increasingly deciding like the arbitrator in Oxford Health did, that sweeping arbitration provisions are intended to encompass all class and individual allegations.

Though the victory may be short-lived, depending on the Supreme Court's decision on arbitration class waivers, in American Express Co. v. Italian Colors Restaurant, workers' and consumer advocates live to fight another day. Oxford Health was not the death knell. Certainly for the many companies with some kind of broad arbitration provision which does not specify a class waiver, Oxford Health will have an impact.

At the end of the day, today's decision boils down to this: Oxford made its bed, and must lie in it. Companies will have to shop carefully for bedding, going forward.

If you are an employee with a question about an arbitration agreement or a class action claim you may have, contact Bryan Schwartz Law today.

Disclaimer: The discussion in the foregoing article is not intended to provide legal advice in any particular case but is a general expression of viewpoints on current legal issues of general interest. Bryan Schwartz Law does not represent you until you have a signed representation agreement or are a member of a certified class represented by the firm.

[1] See "Employers: Be Careful What You Wish For - YourMotion to Compel Arbitration Can Lead to Expensive, Class-Wide Arbitration," December 26, 2012 (citing to prior articles).