High Court Backs Workers’ Right to Sue

Workers generally have a right to go to court to sue their employers for discrimination, the Supreme Court said Monday, even when their unions or companies have a policy calling for arbitration of disputes.

By a 9-0 vote, the justices reversed two lower courts that had blocked a South Carolina longshoreman, who previously had been injured on the job but recovered, from suing his employer.

The shipping firm had refused to rehire Ceasar Wright, the longshoreman, because of his back injury, and he sued for damages under the Americans with Disabilities Act.

But the case came to the Supreme Court to test another issue, one that has divided American corporations and civil rights lawyers for much of this decade.

Since 1991, companies have been pressing for the adoption of mandatory arbitration policies as an alternative to costly federal court battles. Some of these are written into union contracts. In other instances, they are included in papers signed by newly hired employees.

Corporate lawyers rely on a 1991 high court ruling that touted the virtues of arbitration as quick and convenient.

But civil rights lawyers have resisted this move as fundamentally unfair to workers. Companies choose the arbitrators who will hear a dispute, and the plaintiffs cannot gather the evidence they need to prove their claims of discrimination, lawyers say. They rely on the federal civil rights laws that, since 1964, have made it illegal for employers to discriminate based on race, sex, religion and ethnicity as well as age and disability.

Two Rulings Against Arbitration

In the last week, the foes of arbitration have won two important court decisions. Neither case finally resolves the issue, however.

Last week, the Supreme Court refused to hear an employer’s appeal in a closely watched California case that rejected “compulsory arbitration” for new employees.

Tonyja Duffield went to work as a stock broker in 1988 and signed a standard industry form requiring arbitration of all disputes. In 1995, she said that she was a victim of sexual harassment at work and sued her employer.

The company sought to have her case thrown out of court and sent to arbitration.

But the U.S. 9th Circuit Court of Appeals ruled that federal civil rights laws trump the binding arbitration clauses. Companies cannot “as a condition of employment, compel persons to forego their right” to go to court, wrote Judge Stephen Reinhardt of Los Angeles. Workers can agree voluntarily to arbitration, but they cannot be forced to do so without their knowledge or consent, he said.

The securities company, backed by the U.S. Chamber of Commerce and several other employer groups, appealed to the high court. But the justices turned down the appeal (Robertson, Stephens & Co. vs. Duffield, 98-237) last week.

Meanwhile, in the case of the South Carolina longshoreman, the more conservative U.S. court of appeals based in Richmond, Va., had ruled that employers can enforce binding arbitration clauses on unwilling workers.

In Wright’s case, his union contract said that “any dispute” over the “terms and conditions of employment” shall be resolved by a grievance committee made up of management and labor representatives. The appeals court said that this clause is “binding” and barred Wright from suing in federal court.

All nine justices voted to reverse that ruling (Wright vs. Universal Maritime Services Corp., 97-889), although Justice Antonin Scalia’s opinion focused on a narrow reason for doing so.

The union contract “does not contain a clear and unmistakable waiver” of the longshoreman’s right to sue, Scalia said. “The right to a federal judicial forum is of sufficient importance,” he said, that it cannot be casually waived.

But the court stopped short of deciding whether the worker could sue had the contract gone further and absolutely barred employees from going to court.

Predictably, lawyers for plaintiffs and corporations interpreted the outcome differently.

Cliff Palefsky, a San Francisco employment lawyer, said that the decisions show arbitration is falling out of favor.

“I think there is a clear trend here. The court is backing away from Gilmer,” he said, referring to the 1991 ruling that endorsed arbitration.

By contrast, a lawyer for a group of 300 of America’s largest private companies said that Monday’s ruling “was very narrow” and did not disturb the trend toward arbitration.

“I don’t think this is really an anti-arbitration decision,” said Ann Reesman of the Equal Employment Advisory Council. “Gilmer is still alive and well,” she added.