Jonathan R. Harkavy, a lawyer, arbitrator and mediator, has taught labor and employment law at Wake Forest School of Law and corporate finance at Duke Law School and the University of North Carolina at Chapel Hill School of Law. He has written and lectured widely on employment law and alternative dispute resolution.
Citing the plight of employees ranging from female Goldman Sachs bankers to African-American Taco Bell restaurant workers, The New York Times lamented earlier this year that a double whammy of compelled arbitration and class action waivers is effectively disabling employees from enforcing their statutory rights. Around the same time, Senators Leahy, Franken and others introduced legislation to limit forced individual arbitration of various employment and consumer disputes. (S.2506 – Restoring Statutory Rights and Interests of the States Act of 2016) That legislation has promptly gone nowhere. But, are the Times’ lament and the proposed legislation necessary to protect class litigation of Title VII claims? Maybe not, if the Supreme Court heeds its own words.
Common wisdom has it that, in the wake of AT&T Mobility, LLC v. Concepcion and American Express Co. v. Italian Colors Restaurant, the Court effectively foreclosed class arbitration of consumer and employment claims. To be sure, Italian Colors enforced a class arbitration waiver in an agreement used by American Express with merchants who honor its charge cards. Justice Scalia’s opinion for the Court concluded that the Federal Arbitration Act’s mandate to enforce arbitration agreements according to their terms required upholding the waiver in the absence of a “contrary congressional command.” Moreover, Justice Scalia noted that the antitrust laws on which the merchants’ claim was based “do not guarantee an affordable procedural path to the vindication of every claim.” But Title VII does for employees what the antitrust laws failed to do for merchants: It provides an affordable procedural path for vindicating every employment discrimination claim and thus supplies the “contrary congressional command” missing in Italian Colors.
Look first at a rarely-cited obscurity in the Civil Rights Act of 1964 – one that has largely been ignored by judges and lawyers alike. Sections 706(f)(4) and (5) require that Title VII suits – alone among other civil actions – are to be expedited and advanced on the district courts’ dockets, even to the point of using Circuit Judges as trial judges and appointing special masters under Rule 53 to ensure prompt trials. Also, section 706(f)(1) commands that in appropriate cases an employee need not pay a filing fee, need not pay costs and need not advance security to vindicate her rights. Trial judges may also appoint counsel for employees and permit intervention by the EEOC or the Attorney General. Congress has thus singled out Title VII claims for expedited and affordable treatment.
Likewise, Title VII claims have also been singled out for class, collective or concerted treatment. When Congress considered the 1966 class action amendments to the Federal Rules of Civil Procedure, it did so in the wake of a growing body of civil rights actions, as well as the recent prohibition of class-based discrimination by Title VII itself. Indeed, the Advisory Committee’s note to the new Rule 23 specifically refers to civil rights discrimination actions as the kind of cases appropriate for class treatment under the newly amended rule. Congress’ approval of this special reference to civil rights actions is thus telling. It highlights the point that neither individual nor Government suits are adequate to assure effective enforcement of Title VII and is further evidence of a “contrary congressional command” against class action waivers in Title VII disputes.
Later amendments to Title VII nourish the notion that mandatory individual arbitration of employment discrimination claims is contrary to Congress’ command that employees have an affordable and expeditious way to enforce their Title VII rights on a class-wide basis. For example, the explicit congressional command found in sections 2 and 3 of the 1991 amendments is “to provide additional protections against unlawful discrimination in employment.” (Emphasis added) Although arbitration is mentioned as an alternative remedy in the 1991 enactment, the amendment’s text simply encourages arbitration as one means of dispute resolution and does not mention, much less approve, class waivers or compelled individual arbitration. Moreover, section 1107 of the 1991 amendments expressly directs that they not be interpreted “as a basis for limiting” rights and remedies and theories of liability under Title VII. It is clear, therefore, that by including arbitration as a dispute resolution device in the 1991 amendments, Congress did not intend to limit or diminish Title VII’s original remedial commands. To the contrary, the amendments were expressly intended to fortify, not impoverish, employee remedies. In no way, therefore, do the 1991 amendments even hint at approving class action waivers.
Finally, a freshly minted circuit split may shed more light on the scope of mandatory individual arbitration. In May the Seventh Circuit, in Lewis v. Epic Systems Corp., No. 15-2997 (May 26, 2016), struck down an employer’s imposition of individual arbitration of wage-and-hour claims as a violation of section 8(a)(1) of the National Labor Relations Act. And, late last month the Ninth Circuit ruled in similar fashion in Morris v. Ernst & Young, LLP, No. 13-16599 (August 22, 2016), another wage payment case. These refusals to enforce collective action waivers thus put the Seventh and Ninth Circuits at odds with the Second, Fifth and Eighth Circuits where such waivers have been upheld in spite of the National Labor Relations Board’s contrary rule adopted first in D.R. Horton, Inc., 357 N.L.R.B. No. 184 ( 2012.) Now, with the looming prospect of Supreme Court review by a bench missing Justice Scalia, who was an ardent and vocal proponent of forced individual arbitration for a decade, can we fairly conclude that Title VII claims are in harm’s way when it comes to mandatory individual arbitration? I don’t think so – if the Court honestly heeds its own rationale for class arbitration waivers penned by Justice Scalia himself in Italian Colors and Concepcion.
In short, when Congress addressed workplace discrimination, it declined to remain silent in the face of the FAA’s policy of strict enforcement of contractual obligations. Instead, it determined that vindication of Title VII’s class-based rights is a matter of such transcendent importance that employees must have access to a special enforcement regime embodied in section 706(f). Mandatory individual arbitration is inconsistent with this regime and would undoubtedly constrain full enforcement of Title VII’s legal, moral, social and economic imperatives. Class action waivers are thus contrary to Congress’ command of ready and robust employee access to Title VII’s full remedial scope. Whatever shadow Italian Colors and Concepcion may cast over other employment-related disputes, Title VII claims surely fall outside its perimeter.