The Supremes' Federalist Hypocrisy
Death Sentence for Employee Rights

Progressive Populist (April 15, 2001)

By Nathan Newman

So you may have heard about our conservative Supreme Court that respects states rights? Yeah, right.

Oh sure, when a state government discriminates against its employees based on their age or disabilities, the rightwing Rehnquist majority has been johnny-on-the-spot to strike down federal laws requiring compensation to those victims in, respectively, the last year's Kimel and last month's Garrett decision.

And when a woman sought economic compensation under the federal Violence Against Women Act for being raped, the Supremes in last year's Morrison case blocked the lawsuit, arguing that Congress had no constitutional power to stop the sexual subjugation of women, either under its commerce power or under the 14th Amendment. Thirty-eight state attorneys general argued in supporting the law that Congress had just such power, but the Rehnquist Five apparently know what state governments want better than those states themselves.

However, when the states actually try to fight discrimination, the Supreme Court majority has been hell-bent on asserting that federal power blocks such state efforts. In case after case, the conservatives on the Supreme Court have been striking down any state and local efforts promoting affirmative action and minority voting districts. When the Boy Scouts "won" their right to exclude gays in last year's Dale decision, this "states rights" court majority was overruling a 1991 New Jersey law against discrimination based on sexual discrimination.

The only consistency is that, whatever level of government is trying to fight discrimination, Rehnquist's majority tries to find an excuse to undermine the effort.

Which brings us to the recent Supreme Court decision in Circuit City Stores v. Adams -- essentially a death warrant for most employee rights. The usual rightwing majority ruled that employees can be forced to give up their right to ever sue in favor of arbitration systems chosen by their employer. Even if a state government has laws banning such mandatory arbitration, the majority held that a 1925 law, the Federal Arbitration Act, may overrule the states and thereby bar employees from reaching a jury.

Oh, you may be thinking about your right to trial by jury in the Bill of Rights. Forget it. For any employee who "voluntarily" signs an arbitration agreement as a condition of employment -- as roughly one-quarter of employees at medium and large companies already have -- you can kiss that right goodbye. Lower courts have even ruled that employers can just mail you notice that an arbitration policy has been instituted. If you don't quit immediately, the court assumes acceptance by the employee. We've returned to the age of a latter-day "yellow dog" contract where the Supreme Court assumes any individual facing multinational corporations can fairly bargain away their legal rights.

Yes, but arbitration doesn't take away rights, say its defenders, it is just more efficient. One reason for that efficiency is that employees often have to shoulder the costs upfront for paying the arbitrator and other expenses, deterring many complaints. Discovery is usually far more limited under arbitration, so employer wrongdoing may be impossible to prove. Unlike under state law, employees under arbitration agreements often are forced to give up punitive damages, consequential damages, attorneys' fees, injunctive relief, reinstatement, or other remedies that might be available in court.

And the arbitrators? Since they want to be hired again, they usually rule for the employer. Academic studies have noted that any arbitration process is stacked against nonunion employees because arbitrators favor repeat users -- managements -- over individuals who use it only once.

Make no mistake, the employers know this court ruling is their salvation from most employee legal complaints. As Mark A. de Bernardo, a consultant who writes arbitration plans for companies, commented in the New York Times, "This is a litigation killer."

To understand how shamelessly lawless and cynical the Rehnquist majority has become -- if Bush v. Gore did not convince you -- you need only understand that the 1925 federal law in question specifically excluded employment contracts from its provisions for mandatory arbitration.

The law was originally passed to enforce business-to-business arbitration agreements. When organized labor objected to the law for fear of its application to labor contracts, then-Commerce Secretary Herbert Hoover advocated the inclusion of the explicit exemption. In his message to Congress, he said, "[i]f objection appears to the inclusion of workers' contracts in the law's scheme, it might be well amended by stating `but nothing herein contained shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in interstate or foreign commerce.'" In response to this amendment, organized labor dropped its opposition.

So how did the Court majority make its ruling with this clear legislative history? They ignored it. Wrote Justice Kennedy, "we need not assess the legislative history of the exclusion provision." So much for respect of "original intent." Instead, the majority seized on the "seamen" language to mean that only employment involved in interstate "transportation" was exempted, not the usual legal definition of interstate commerce encompassing all employment.

As the dissenters noted, the "seamen" language stemmed from the fact that in that earlier era of restrictive judicial doctrine, it was assumed that Congress could reach only a limited class of industries, so the Congress was listing the most obvious ones. Perversely, the majority was defying judicial precedents on the meaning of commerce to undermine employee rights. "Today," wrote Justice Stevens for the four dissenters, "the Court fulfills the original -- and originally unfounded -- fears of organized labor by essentially rewriting the text" of the law.

So how to respond?

This decision will now give a green light to many firms, who were holding back until the court settled the issue, to institute a rush of mandatory arbitration for employees. Some lower courts have made rulings that have questioned the fairness of particular arbitration procedures, but that is likely to be a thin reed for protecting employee rights.

Instead, progressives need to organize hard for two goals. First, we need to amend the Federal Arbitration Act to explicitly restore the right to a jury trial for all employee lawsuits. Second, if the courts are not going to protect employee rights, we need to redouble union organizing efforts as the only sure way to restore some balance in employee bargaining for their rights in the workplace.

Nathan Newman of New Haven, Conn., a longtime union activist, is the Student National Vice President of the National Lawyers Guild, and author of the forthcoming book Net Loss, on inequality in the Internet economy.

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