Justices Skeptical of Requiring Arbitration for Bias Claims

The Supreme Court took up the case of a Northern California computer salesman Monday to decide whether companies can block their workers from going to court and instead force them to arbitrate their claims of discrimination.

Over the last decade, many large companies have insisted that new workers sign binding arbitration agreements. Company lawyers say arbitration is quicker and less costly than jury trials in settling disputes.

If the high court were to agree, binding arbitration could become the standard way to resolve job discrimination claims nationwide.

But that prospect looked less likely after Monday’s oral argument. Instead, most of the justices said they were skeptical of relying on a 1925 law to mandate binding arbitration of all job claims.

In the Federal Arbitration Act of 1925, Congress said commercial arbitration agreements between businesses can be enforced, but it specifically excluded “contracts of employment . . . of workers engaged in foreign or interstate commerce.”

Pointing to this language, a lawyer for the California salesman said that the federal arbitration law does not cover employment disputes.

A Disparity in Bargaining Power

Congress understood that there is a “disparity in bargaining power” between a worker and an employer, said Michael Rubin. For that reason, it excluded employment disputes from the arbitration law, he said.

Of course, a worker and a company can always agree voluntarily to arbitration, he added.

Circuit City Stores, a retailer of electronics and, until recently, appliances, requires all of its employees to sign arbitration agreements.

Saint Clair Adams, 37, was a top-selling salesman at Circuit City’s outlet in Santa Rosa, Calif. But in 1997, he complained to managers when he was crudely insulted by co-workers because he is gay.

“I went to the supervisor and then the store manager,” Adams said in a phone interview. “And they said I should forget it and just do the job.”

Adams did neither. He quit the job and sued Circuit City in Sonoma County Superior Court, alleging that he was a victim of sexual harassment and discrimination based on his sexual orientation. Discrimination against gays and lesbians is illegal under California law, but not under federal law.

Judge Sends Case to Arbitration

Before his case could be heard, Circuit City’s lawyers went to a federal judge in San Francisco and won an order sending the dispute to arbitration. The judge relied on the Federal Arbitration Act for the order.

Adams appealed. “If this was a money issue, like a dispute over commissions, arbitration would make sense. But this is a civil rights issue, and I think I have a right to go before a jury of my peers,” said Adams, who now lives in San Diego.

The U.S. 9th Circuit Court of Appeals, which covers the West Coast, has refused to enforce arbitration in employment disputes, but most other courts have sided with the companies.

Courts around the nation are divided on the legal status of arbitration agreements, and the justices took up the case of Circuit City vs. Adams, 99-1379, to resolve the issue. A ruling is expected in several months.

Meanwhile, the court agreed to decide whether newspapers are violating the copyrights of freelancers by including their works in electronic databases.

A lower court in New York sided with the freelancers, ruling that they did not allow their works to be reused in databases, such as Lexis-Nexis.

But the New York Times and the Tribune Co.’s Newsday appealed to the high court, arguing that “tens of thousands” of articles would have to be deleted from electronic archives. The justices will hear the case of New York Times vs. Tasini, 00-201, early next year.