Dispute Resolution Section

This section provides members the opportunity to exchange information with other practitioners regarding alternate dispute resolution, including an annual CLE seminar and co-sponsored CLE programs with other sections that use mediation in their practice.

Chair
Memphis Area Legal Services, Inc.
116 Tuckahoe Rd
Jackson, TN 38305
(731)217-8013
Immediate Past Chair
Wilson Worley Moore Gamble &...
PO Box 88
Kingsport, TN 37662
(423)723-0402

Federal Law CLE to Focus on Pre-Trial Issues

This year’s annual Federal Practice CLE on July 28 will focus on pre-trial issues, including presentations on pleadings, pre-answer motions and related strategies. Additional sessions will explore amendments to the Federal Civil Rules, which took effect in December 2015, and their impact on practioners. Finally, the program will look at rules related to expert disclosures and alternative dispute resolution techniques.

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The Continuing Struggle Over Class Action Waivers in Arbitration

The issue of mandatory arbitration of employment and consumer disputes continues to be controversial. The principal bone of contention appears to be the requirement that the employee or consumer waive the right to participate in class or collective actions, so that his or her sole recourse is the pursuit of individual claims in arbitration. No matter how employee- or consumer-friendly the arbitration provision is, if it contains a class action waiver, neither the plaintiffs’ bar nor consumer advocacy groups will like it.

But such provisions have survived judicial scrutiny in cases governed by the Federal Arbitration Act. In AT&T Mobility v. Concepcion, the Supreme Court held the California rule that a class-action waiver is per se unconscionable could not be used to avoid an agreement to arbitrate because it discriminated against arbitration and was thus contrary to the public policy in favor of arbitration enacted in the FAA.  563 U.S. 333 (2011). Thus, the opponents of employment and consumer arbitration were pushed into other avenues, legislative and regulatory, to voice their displeasure.

They have not had much success in Congress. Numerous bills to preclude pre-dispute consumer and employment arbitration agreements have been introduced in Congress but have not advanced very far. The Dodd-Frank Act, passed in 2010, however, did command both the SEC, and the consumer protection agency it created, to study the issue of mandatory arbitration and enact appropriate regulations. The Act also prohibits pre-dispute arbitration provisions in mortgage agreements.  15 U.S.C.A. § 1639c(e). Possibly other regulations are forthcoming.

By Executive Order, President Obama has restricted the award of federal contracts to companies that have mandatory arbitration plans for employees. Exec. Order No. 13673, 79 FR 45309 (July 31, 2014).

Neither of these measures has so far made much of a dent in employment and consumer arbitration.

The National Labor Relations Board got into the act in 2012. In the case of D.R. Horton, Inc., 357 N.L.R.B. 184 (2012), the NLRB held that the adoption of a mandatory arbitration plan for employees containing  a class and collective action waiver was unlawful because such provisions are an unfair labor practice under Section 7 of the National Labor Relations Act, which protects the right of employees to act in concert.

D.R. Horton petitioned for review of this ruling by the United States Court of Appeals for the Fifth Circuit, which overturned the Board in 2013.  D.R. Horton, Incorporated v. National Labor Relations Board, 737 F.3d 344 (5th Cir. 2013).  The Court held the FAA and the Supreme Court’s decisions interpreting it prevailed because the NLRA was not intended to repeal the application of the FAA by implication.

The NLRB did not accept the Fifth Circuit’s decision. It struck down a similar dispute resolution plan in Murphy Oil USA, Inc. and Sheila M. Hobson. Case

10–CA–038804 (October 28, 2014). Murphy Oil asked the Fifth Circuit to review the ruling, and the Board petitioned for hearing en banc, hoping to change the Court’s mind. But the Fifth Circuit did not budge. It granted the petition for review, denied the en banc hearing, and overturned the Board’s decision. Murphy Oil USA, Incorporated v. National Labor Relations Board, No. 14-60800 2015 WL 6457613 (2015).

But the NLRB is not going away quietly, although it does appear to have given up on the Fifth Circuit. It has decided similar cases in Arizona and California, among other venues, consistently with its previous holdings in D.R. Horton and Murphy Oil.  See Amex Card Services Company, Case 28-CA-123865 (Nov. 10, 2015), and ISS Facility Services, Inc. and United Food and Commercial Workers Union, Local 99, Case 28-CA-126024 (April 7, 2016).  Doubtless the Board is hoping its reasoning will fare better with the Court of Appeals for the Ninth and other Circuits than it did with the Fifth.

The Ninth Circuit is one of three circuits that have cited the Fifth Circuit’s decision in D.R. Horton favorable in dicta. Richards v. Ernst & Young, 744 F.3d 1072, 1075 n. 3 (Ct. App. 9th Cir. 2013).  See also, Sutherland v. Ernst & Young, LLP, 726 F.3d 290, 297 n. 8 (2d Cir. 2013) and Owen Bristol Care, Inc., 702 F.3d 1050, 1055 (8th Cir. 2013.)   Still, there is the possibility of a split in the circuits, which will mean the issue will likely ultimately reach the Supreme Court.

In the meantime, and probably thereafter, the debate will continue.

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