Compliance October 1, 2003

Appeals Judges Reverse Course on Arbitration Issue

October 1, 2003 (PLANSPONSOR.com) - Armed with a US Supreme Court endorsement of workplace arbitration, a federal appeals court has ruled that employers can force workers to sign arbitration agreements as a condition of getting hired.

Reported by

Fred Schneyer

>An 11-member panel of the US 9 ^th Circuit Court of Appeals threw out its 1998 ruling that companies couldn’t force workers to arbitrate their discrimination claims, declaring that a San Diego law firm could require private arbitration, according to The Recorder. The eight to three decision came in a case involving law firm Luce, Forward, Hamilton & Scripps.

“The presumption in ( the 1998 case) … that allowing compulsory arbitration weakens the 1991 [Civil Rights] Act is inconsistent with the US Supreme Court’s endorsement of arbitration,” Judge A. Wallace Tashima wrote for the majority. Noting that the 9th Circuit stood alone with its 1998 decision, Tashima echoed the Supreme Court, saying that arbitration “affects only the choice of forum, not substantive rights.”

The US high court ruling came in a case involving electronics retailer Circuit City in which justices decided that the company’s arbitration program met the requirements of the Federal Arbitration Act (FAA).The 9 ^th Circuit’s latest holding on the arbitration issue included several dissents including ones from Judges Harry Pregerson and Stephen Reinhardt.

“The majority opinion allows employers to force their employees to choose between their jobs and their right to bring future Title VII (discrimination) claims in court,” Pregerson wrote. “That choice is no choice at all.”

Reinhardt –who wrote the 1998 decision –penned a separate dissent that included a history of federal civil rights legislation and argued that the decision “effectively deprives American workers of their hard-won legislative victory.”

Circuit City has been fighting to save it arbitration program for several years – an effort that has generated a number of 9 ^th Circuit decisions (SeeCourt: Circuit City Arbitration Policy Still Invalid). The latest case is EEOC v. Luce, Forward , 03 C.D.O.S. 8755.