New York Times Article: Arbitration Everywhere, Stacking the Deck of Justice -- Is Mainstream Media Finally Recognizing Class Action Waivers as a Political Issue?

As every lawyer practicing in the field has known since at least 2011, the U.S. Supreme Court's approval of mandatory class action waivers in AT&T v. Concepcion has reshaped the entire field of consumer and employment law.  

The odd thing is that this momentous legal development has flown entirely under the radar of the media.  I am sure it's hard for journalist to make the technicalities of Federal Arbitration Act preemption seem "sexy."  But that's still a pretty lame excuse for totally ignoring one of the most important legal story of the decade.  

It was therefore surprising and interesting to see that the nation's "paper of record" is finally on the class-waiver beat.  In an October 31, 2015 New York Times feature article:  Beware the Fine Print: Arbitration Everywhere, Stacking the Deck of Justice, the authors correctly identify the importance of the issue:

By banning class actions, companies have essentially disabled consumer challenges to practices like predatory lending, wage theft and discrimination, court records show.

“This is among the most profound shifts in our legal history,” William G. Young, a federal judge in Boston who was appointed by President Ronald Reagan, said in an interview. “Ominously, business has a good chance of opting out of the legal system altogether and misbehaving without reproach.”
 

However, the authors also go a little overboard in blaming the Supreme Court's rulings on a shady cabal of corporate conspirators. 

More than a decade in the making, the move to block class actions was engineered by a Wall Street-led coalition of credit card companies and retailers, according to interviews with coalition members and court records. Strategizing from law offices on Park Avenue and in Washington, members of the group came up with a plan to insulate themselves from the costly lawsuits.

(But like I said, it must be hard to make arbitration "sexy" without a secret conspiracy of evil-doers).

To the extent the class action ban is bad law or bad policy the only people really responsible are the five Supreme Court Justices who created the rule.  Indeed, one interesting revelation is that when Chief Justice Roberts was a private attorney working for Discover Bank, he argued for overturning the California Supreme Court decision that held such class action bans to be unenforceable.  As Chief Justice he was able to implement his own arguments by providing the fifth vote in AT&T v. Conception, which struck down the same California "Discover Bank" rule that he had advocated against as a lawyer.  

When the court ruled 5-4 in favor of AT&T, it largely skipped over Mr. Pincus’s central argument [of states' rights].

“Requiring the availability of classwide arbitration,” Justice Scalia wrote for the majority, “interferes with fundamental attributes of arbitration.” The main purpose of the Federal Arbitration Act, he wrote, “is to ensure the enforcement of arbitration agreements according to their terms.”

It was essentially the same argument Mr. Roberts had made as a lawyer in the Discover case.

 Perhaps the Times' article will start a long-overdue trend of more media attention and political discourse on the subject of class action waivers.  Or, more likely, the issue will hing on the next appointment to the Court which may result in a new 5-vote coalition to re-examine the rule.   

Side Note:  I couldn't help looking up the NYT subscriber agreement to see if it has a class action waiver clause. It doesn't.   But the WSJ has one.  

 

 

 

 

 

 

 

Has California Just Enacted the "Comparable Worth" Doctrine?

California and federal law both currently require equal pay for "equal work." 

On October 6, Gov. Jerry Brown signed into law the "California Fair Pay Act," which changes the requirement to include equal pay for "substantially similar work."   This key phrase is not defined except to note that it should be "viewed as a composite of skill, effort and responsibility" and should generally involve work performed under "substantially similar working conditions."  

As there is no definitive weight assigned to any of these "composite" factors, judges and juries will be entering uncharted territory in considering whether any two positions are "substantially similar."  For example, does a VP of Human Resources utilize "a composite of skill, effort and responsibility" that is "substantially similar" to a VP of Finance?  Who knows.  

If two positions are found to be "substantially similar," however, under the Fair Pay Act it is the employer's burden to prove that 100% of any pay difference is based upon seniority, merit, production, or a "bona fide factor other than sex, such as education, training, or experience."

Courts may interpret the Fair Pay Act as merely extending the Equal Pay Act.  Or it may be interpreted as a wide-ranging implementation of the "comparable worth" movement of the 1980's.  

In the meantime, however, employers and workers will need to look at the compensation levels attached to various position in a whole new light -- i.e., not as not merely what the "market will bear," but what can be justified to a court or jury.