Arbitration Changes Unlikely to See Blanket Reform

by Julia Cardi

Through new federal legislation, a blocked federal rule and a decision from a tech giant, mandatory arbitration agreements had a landmark year in 2017 with a patchwork of events reshaping the playbook for the future. Considering the significant attention on sexual harassment, some experts noted the importance of distinguishing between shifting attitudes toward arbitration in the harassment context from arbitration in other types of disputes.

“The ubiquitousness of the #MeToo movement has to make every employer sit up and wonder, what do we do about sexual harassment differently now from how we’ve been dealing with it?” said John Doran, a labor and employment attorney with Sherman & Howard in Arizona. “And one of those ways is how you resolve conflicts like that, through arbitration or otherwise.” He explained he doesn’t believe the move away from arbitration in the sexual harassment context represents a shift away from it in other types of disputes, such as consumer finance matters.

“You look at a credit card provider who will have hundreds of thousands, if not millions, of users, and could have all kinds of tiny little claims against it,” Doran said. “And I think there is, at least in some views, an acknowledgement that a company [with] that many potential pieces of litigation should have the right to control its legal exposure through consumer arbitration agreements.” He added comparing consumer grievances to sexual harassment is comparing apples and oranges.

In October, the U.S. Senate voted to block a rule rolled out by the Consumer Financial Protection Bureau last summer that would have banned arbitration agreements from barring class actions in consumer disputes with financial institutions. Also in October, the U.S. Supreme Court heard arguments consolidating three cases that will have implications for how far arbitration agreements can reach in the employment context.

To read this story and other complete articles featured in the January 8, 2018 print edition of Law Week Colorado, copies are available for purchase online.