|A Tale of Two Arbitrations: Big Labor Commences One Ambush While Trial Lawyers Prepare Another|
By CFIF Staff
Thursday, March 19 2009
Arbitration is ordinarily a very good thing. But it can sometimes be a very bad thing.
Distinguishing the two will become very critical, very soon.
Why? Because Big Labor and trial lawyers are preparing a two-pronged arbitration assault before Barack Obama, Harry Reid and Nancy Pelosi exhaust what remains of their political capital.
The term “arbitration” itself usually refers to a dispute resolution procedure that occurs outside of the traditional courtroom.
In that arena, arbitration is similar to traditional court litigation in that opposing sides present their best evidence and arguments to neutral arbitrators (usually former judges), who then render a decision after applying the law to the facts. Additionally, arbitration provides the same remedies that courts provide, and the decisions are just as binding and enforceable.
But there are many differences between voluntary arbitration and traditional litigation, which make voluntary arbitration very beneficial.
First, voluntary arbitration achieves resolution much faster than litigation in overburdened courts, and it is more confidential and non-public. This results in fewer disruptions to the parties’ everyday lives, and facilitates greater peace of mind.
Another advantage of arbitration over traditional litigation is that it is much less costly and tedious for all sides, primarily because it streamlines the evidentiary discovery process. Finally, voluntary arbitration dramatically reduces the likelihood of outrageous jury verdicts and unfair decisions, because neutral arbitrators are better-trained and more familiar with the issues in dispute.
These advantages explain precisely why voluntary arbitration is good for the economy and employment market, and why trial lawyers hate it.
After all, trial lawyers thrive upon costly litigation, potentially outrageous jury awards, attorneys’ fees and litigant inconvenience in order to extort larger settlements and pursue “jackpot jury justice.” Consequently, federal legislation to prohibit or drastically restrict voluntary arbitration agreements stands atop the trial lawyers’ lobby wish list. This is particularly true regarding arbitration of employment disputes, but attacking arbitration in consumer contracts and other agreements is also a principal tort lawyer goal.
Therefore, federal legislation to overturn voluntary arbitration could come at any time, and defeating it will be critical.
As mentioned at the outset, however, arbitration can sometimes be a very bad thing.
Namely, as it applies to the current debate over union card-check, otherwise known by its Orwellian title of the “Employee Free Choice Act.”
This form of arbitration is involuntary, and imposed by government as a tool of Big Labor during contract negotiations. When that occurs, arbitration only serves to eliminate workers’ freedom to determine their working conditions.
As many people already know, card-check literally abolishes the secret ballot during union organizing elections, and replaces it with a menacing process in which union organizers approach employees at their homes, outside the workplace or in public areas such as supermarkets and suggest in their notoriously intimidating manner a card expressing union preference. Imagine, for instance, that Democrat or Republican campaign workers were suddenly able to approach voters at their homes and publicly intimidate them into voting for candidates by card-check instead of the secret ballot, and you get the idea.
In addition to eliminating the secret ballot in union elections, however, card-check legislation would also impose a mandatory arbitration clause that is just as undemocratic and potentially destructive as eliminating the secret ballot.
Under this mandatory arbitration provision, workers and employers would lose much of their ability to determine the terms and conditions under which they work. Instead, government-chosen arbitrators, who have no stake in the preservation of workers’ jobs or continued viability of the business itself, would unilaterally impose contract terms after just 120 days.
That’s good for Big Labor, but bad for employers and workers, who would lose their freedom to set terms and conditions of the workplace.
According to statistical analysis by Dr. Anne Layne-Farrar of the Social Science Research Network, this will destroy 600,000 jobs in the first year alone.
Whether Big Labor succeeds or fails in saddling our already-weakened job climate with card-check legislation and its mandatory arbitration clause, however, the trial lawyers’ industry is preparing for its own assault on voluntary arbitration.
So be prepared for this critical upcoming battle, and keep this important distinction between the two forms of arbitration in mind.
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