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Taco ’Bout Contracts

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WORLD Radio - Taco ’Bout Contracts

A former Taco Bell employee sued her employer for unpaid wages. She wants to keep her battle in court, but the employer wants to force arbitration.


JENNY ROUGH: Even Merriam Webster recognizes the wisdom of the Biblical King Solomon. It defines a … “Solomonic decision”... as one “marked by notable wisdom, reasonableness, or discretion especially under trying circumstances.”

You’ll encounter no more trying circumstance than what’s recorded in the first book of Kings, the third chapter … in which King Solomon resolves a vexing case.

Two mothers have each given birth. One baby lives. The other dies. Both mothers lay claim to the living child. It falls to Solomon to serve as a single-justice Old Testament Supreme Court to pronounce a binding decision: Who is the real mother?

WOMAN 1: In the night, this woman’s child died because she lay upon it. Wherefore she removed my son from beside me while I slept and laid her dead child against my bosom.

WOMAN 2: She lies!

WOMAN 1: I do not lie!

SOLOMON: Silence!

JR: That’s Yul Brynner as the King. The film is Solomon and Sheba … from 1959.

WOMAN 1: When I looked at the child in my arms, I knew it was the not son that I did bear.

WOMAN 2: It was her own child and none other.

WOMAN 1: The living child is mine! The dead is yours!

WOMAN 2: The dead is yours! The living mine!

SOLOMON: Bring the infant forward. … Draw your sword, Josiah. Divide the child into two parts. Give half to the one woman, half to the other.

WOMAN 1: Oh, no! If it must be, give the child to her, that it may not be slain.

WOMAN 2: Divide it. It shall be neither hers nor mine!

PETER ROBINSON: And that was the way that Solomon discovered who the real mother was…

JR: Peter Robinson specializes in conflict resolution. He’s a lawyer and law professor who appreciates the wisdom of Solomon.

ROBINSON: The two women asked him to act as an arbitrator. But the thing that he’s renowned for in that thing was that he pretended to make a decision: Cut the baby in half, right? It wasn’t his real decision. That was something that he did to discover the heart of the women.

JR: Robinson tells the story of King Solomon in class to help law students understand one way to resolve a difficult dispute.

He says an even better example dates back further—to the book of Exodus. Moses begins to lead the children of Israel through the wilderness. The walk is long. Forty years. A multitude of men, women, and children traveling together.

Naturally, some arguments arise among all those people.

MARY REICHARD: One day, Moses’ father-in-law, Jethro, watches as Moses settles disagreements from morning to evening. Jethro asks Moses what he’s doing. Moses replies, “When they have a dispute, they come to me and I decide between one person and another.

JR: Jethro tells Moses he’s going to wear himself out. Then law professor Robinson says Jethro offers Moses excellent advice.

ROBINSON: You have a whole nation here, and you need to set up some structure. You should just have, you can’t do what you’re doing. That is unsustainable.

MR: Jethro advises Moses to look for trustworthy men. Men who hate bribes. And to “place such men over the people as chiefs of thousands, of hundreds, of fifties, and of tens.”

Tribal elders.

ROBINSON: And the tribal elders were instructed that if you have one that’s too difficult for you to handle, bring me in when you need me. But most of the stuff is routine, and you guys are wise, and you have life experience, and the people love you and trust you.

JR: In other words, Moses set up a form of what we today call alternative dispute resolution. That is, finding solutions to conflicts outside of litigating in court.

ROBINSON: I think he was setting up arbitrators. And frankly, that is still the dominant method of dispute resolution across much of the world. That they live in the village, and they go to the village elder.

JR: Robinson uses these stories in class not as Sunday School lessons. But to show that throughout history, people have tried all sorts of ways to resolve disputes. People are still experimenting with different methods.

And that brings us to our case today.

THEME

SCOTUS: I Clarence Thomas...I Sonya Sotomayor...I Steven Breyer, I Amy Coney Barrett…do solemnly swear, I Brett M. Kavanaugh do solemnly swear, do solemnly swear, do solemnly swear, that I will administer justice, without respect to persons, that I will support and defend the constitution of the United States, and that I will well and faithfully discharge the duties of the office on which I’m about to enter, so help me God…[APPLAUSE]

JR: Welcome to Legal Docket. I’m Jenny Rough.

MR: And I’m Mary Reichard. This podcast is from the creative team at WORLD Radio.

MARSHALL: The honorable Chief Justice and the associate justices of the Supreme Court of the United States. Oyez! Oyez! Oyez!

MR: Come with us inside the world of the Supreme Court as we talk to the people involved and think deeply about the most recent term’s disputes and decisions—and how they make a difference to your life.

MARSHALL: All persons having business before the honorable Supreme Court...

JR: Today, Morgan v. Sundance. A dispute about arbitration agreements.

MARSHALL: God save the United States and this honorable court.

SPONSOR: Support for The Legal Docket Podcast comes from listeners like you. Additional support comes from Samaritan Ministries, a Biblical and affordable solution to health care, connecting more than 280,000 Christians across the nation who help pay one another’s medical bills. More at samaritanministries.org/worldpodcast.

SOUND: [Pen writing signature on paper] [Pen clicking]

JR: Take a moment to think about some of the contracts you’ve signed.

TOM STIPANOWICH: Your cell phone. Your wireless contract. A credit card agreement. Apps on your phone. When you go to the doctor, you may be asked to initial an agreement.

JR: Tom Stipanowich served as the director of the Straus Institute for Dispute Resolution for 14 years. He’s also an arbitrator. An arbitrator is an independent person — not a judge — hired to settle legal disputes.

MR: He says all those agreements you sign likely contain a binding arbitration clause.

JR: Just for fun, I pulled a recent rental car agreement from my files. In teeny tiny print, it says: “Except for claims for property damage, personal injury or death, any disputes between you and us … must be resolved only by arbitration or in small claims court. … You and we each waive the right to a trial by jury.”

STIPANOWICH: There are all these settings in which a company is saying to a consumer here, sign this. And most people have no idea what this is all about. In fact, many lawyers don’t really understand many of the nuances of arbitration. … And the general member of the public has no idea.

MR: An arbitration clause is a provision in a contract that says legal disputes will be handled through private dispute resolution. In other words, you’re signing away your ability to sue in court.

JR: Employment contracts. Another common agreement that contains an arbitration clause.

STIPANOWICH: There are many arbitrators who specialize in employment cases. Employment arbitrators. And so they basically say they’re available to come — and of course they get paid. But the fact is, it is a substitute for going to court. And what you get is what is known as an arbitrator’s award. That’s basically a decision by the arbitrator, and it is binding.

MR: The plaintiff in our case today signed an employment agreement that contained a binding arbitration clause. Her name is Robyn Morgan. In 2015 she took a job at Taco Bell in Osceola, Iowa. That Taco Bell was one of over 150 owned by Sundance, a Taco Bell franchisee. So Sundance is the named defendant in this case.

Morgan claims her employer cheated her out of her wages. That Sundance violated the Fair Labor Standards Act, F-L-S-A. Here’s her attorney Rob Ash, explaining what the F-L-S-A does:

ROB ASH: The Fair Labor Standards Act, the law that’s at issue, primarily protects two things primarily, which is the minimum wages and the overtime wages. Overtime wages meaning over 40 hours a week, you’re entitled to, non-exempt employees that is, are entitled to one-and-one half times the regular hourly rate.

JR: In this case, Morgan claims her employer didn’t pay her the one-and-one half times regular hourly rate that she qualified for.

ASH: What the complaint alleges is that the defendant had a policy of depriving their hourly employees of these overtime wages by shifting hours from one work week to the next work week in order to ensure that they don’t go over 40 in one particular week. So, for example, if an employee worked 42 hours Sundance, would move two hours from the first week into the second week…

JR: To make sure neither week the employee went over 40 hours. Because if she did, that would trigger time and a half. Morgan claims another violation as well.

ASH: The plaintiff reported that she was instructed to clock out to avoid overtime, but continue working. 

JR: Morgan sued Sundance in federal court for violating the Fair Labor Standards Act. She brought a collective action, a lawsuit on behalf of herself and similarly situated individuals. Eight months passed.

MR: During that time, the parties made calculated moves, like a game of chess. First, Sundance’s opening move? File a motion. Ask the court to dismiss the case on the grounds that a similar legal battle by other Taco Bell employees was going on in Michigan. Sundance argued Morgan could join that lawsuit.

JR: Morgan’s next move was to oppose the motion. And the district court agreed with her. A successful counter.

MR: Sundance then responded to her lawsuit and listed 14 different arguments to defeat Morgan’s allegations of wage theft. Now, it’s important to say here that none of those 14 defenses even mentioned arbitration.

JR: Next, both parties attempted to negotiate a settlement through a process called mediation. Mediation also falls under the umbrella of alternative dispute resolution. But it’s a much different process than arbitration. Tom Stipanowich explains.

STIPANOWICH:  Mediators are people who come in and help parties negotiate. They facilitate getting to an agreement.

During mediation, the parties typically sit in separate rooms. That way, the mediator can talk privately with each side.

STIPANOWICH: Because people will tell the mediator things, and the mediator can say things to individuals that the mediator can't say to everybody. It's typically a very informal process. And the whole idea is not that the mediator is making a decision. The mediator is there simply as an extension of the parties themselves, to try to help them do a better job of getting a settlement. And often creative mediators can really be helpful in facilitating a negotiated agreement.

MR: Still, either party can walk away from the table at any time.

JR: And in this case, that’s exactly what happened. Robyn Morgan and her fast-food employer couldn’t agree on a settlement outside of court. So with an attempt at a mediation over, the contentious litigation chess match continued. The two parties went back to court. That’s when Sundance filed a motion to compel arbitration.

MR: Was this the end game stage? Not according to Morgan. She argued: too late! Morgan said Sundance waived its right to arbitrate. It surrendered its opportunity because it waited too long. If Sundance wanted to arbitrate, it should have brought up the arbitration clause at the beginning.

JR: Well, did Sundance waive its right to arbitrate? How do you prove that?

MR: Lower courts disagree on the answer to that question—and that’s why the Supreme Court took up the case. The parties are fighting over when and how a party waives the right to enforce an arbitration agreement.

JR: There are good reasons why Robyn Morgan, the employee, doesn’t want arbitration. And good reasons why Sundance, the employer, does.
If we’re going to arrive anywhere near a Solomonic decision, we’ve got to examine those reasons. I began with Morgan’s point of view, and for that I needed to find an expert. So I went out, in the rain, to the Access to Public Justice Project in downtown Washington, D.C. Karla Gilbride is co-director.

SOUND [City traffic.]

GILBRIDE: So we’re going to set up in the conference room, which is on the left.

Gilbride helps people who’ve been harmed enter our country’s civil court system. There are often barriers that make it difficult to go to court.

GILBRIDE: One of those is these arbitration agreements that people don’t have a choice but to enter into if they want to have a job, or buy a product, or do all sorts of things in daily life. And those arbitration causes prevent people before a conflict even comes up. It says if something happens later where you want to be able to go to court, you don’t have that option.

ROB ASH: So, in Robin Morgan’s case…

MR: This is Rob Ash, her attorney.

ASH: ...it was a small paragraph that was included in her onboarding paperwork that said she agreed not to bring a case in court and would submit everything to a private arbitration. She didn’t even know that she signed that. And that is very common, that’s generally what we see.

MR: Even if she did know, a worker often has no bargaining power. No time, energy, or resources to fight adhesion contracts. That’s a contract with non-negotiable terms. Imagine an hourly Taco Bell employee calling up corporate headquarters, and saying: “I’d like to speak with the chief legal officer, please. I have a quibble with the employment contract.” That’s not happening. It’s take it or leave it. And it’s usually “take it.”

ASH: There’s nothing at this point in time that an employee can do short of not accepting the job and going out to find another job. But it’s hard to find a good job. Employers are recognizing that they can sidestep lawsuits by inserting these arbitration provisions into employment onboarding paperwork. And that employees are desperate to find a job. They have bills to pay. They have kids to put through school. They need to get jobs...

JR: But there's a flip side to that argument. John Masslon is senior litigation counsel with the Washington Legal Foundation, a nonprofit law firm that promotes free enterprise and individual liberty. The foundation filed a friend of the court brief in support of Sundance.

MR: Masslon explains why franchises in the restaurant industry would want its contracts to have an arbitration clause. For one thing it can make a product or service cheaper.

JOHN MASSLON: If a company has to bake in the cost of litigation or potential litigation into their products, they are going to raise prices. And so you see cheaper food at Taco Bell because they have arbitration clauses in their employment contracts. Or the employees might get a higher wage because of those. And then if you’re buying a good, again, the good might be cheaper.

JR: Let’s consider arbitration more deeply. Earlier, you heard about mediation. Here’s how arbitration differs from mediation: An arbitrator isn’t allowed to have separate conversations with each side.

MASSLON: In arbitration, we're all in the same room. Okay. And in fact, as an arbitrator, it's very important that you do not have separate conversations. 

Tom Stipanowich is the arbitrator.

STIPANOWICH: You have to do it all in the clear light of day, in the same hearing room where everybody is there. They have a chance to hear everything that's said by the other side. And vice versa.

MR: The setting varies. But Stipanowich says a lot of hearings have the look and feel of court. Attorneys present evidence. Court reporters prepare transcripts. Sometimes arbitrators actually use a judge’s courtroom.

JR: But it’s not court. For one thing, the Federal Rules of Evidence don’t apply. Those rules give each side the ability to access data and documents from the other side through a process called discovery. That has both pros and cons. Masslon explains one of the pros.

MASSLON: Arbitration is much faster than litigation, especially when you’re litigating a case in federal court. There are massive discovery demands. And now that we’re into the e-discovery era, those costs have gone up even higher, where you have to search emails and every electronic record you have for relevant information. That is not cheap. For arbitration, you can have much more streamlined discovery. And therefore reduce costs.

JR: Arbitration has its own set of rules about accessing data from the opposing side, but those rules tend to be more limited. Meaning, it can be harder for a worker to prove a wage dispute.

MR: In arbitration, there’s no jury. Just the arbitrator. Or a panel of arbitrators. Karla Gilbride says there are a lot of reasons an employee like Robyn Morgan would rather litigate in court than pursue arbitration.

GILBRIDE: One of them is that in court, everything is public. So if one of the reasons that you’re bringing a case is you want other people to know what the employer did and what your allegations are. That is the way courts are set up is that everything is a matter of public record. In arbitration, things tend to be confidential and handled behind closed doors.

MR: Another difference: In federal court, cases are randomly assigned to a judge within the relevant district. In arbitration, the parties have a say in the decision-maker.

JR: The parties work from a list of potential arbitrators. And the parties can decide yes, this one, no not that one. Or if it’s a panel of three arbitrators, maybe each side picks one and then both sides pick the third jointly. Sounds fair. But Gilbride says it might not be.

GILBRIDE: That system tends to favor repeat players, which often is employers in these situations. The employer has had multiple disputes in arbitration whereas the employee usually is dealing with this system for the first time. The party that is the repeat player in the forum, the arbitrators have an incentive to want to get business from that repeat player. So there’s been a lot of empirical research done that shows that repeat players tend to get better results than first time litigants do. 

MR: Masslon of the Washington Legal Foundation says that could work the other way, too.

MASSLON: Even though Morgan might only be going to arbitration once, the law firm that’s representing her might be going to arbitration more than Taco Bell is. It’s the lawyers who are really picking the arbitrators. It’s not the individuals.

MR: We could sure use some Biblical wisdom here.

JR: Consider the story from the second book of the Bible, Exodus. This is the one that Peter Robinson brought up at the beginning of this episode. Moses’ father-in-law told him to pick arbitrators who don’t take bribes! 

MR: Arbitration can also be beneficial in cases that require special expertise. Different rules apply to different industries. Here’s arbitrator Tom Stipanowich again:

STIPANOWICH: So for example, the American Arbitration Association or JAMS, which is another leading organization—

MR: That stands for Judicial Arbitration and Mediation Services.

STIPANOWICH: ...each publish different commercial rules. And in fact, they have a selection of rules…They have employment rules that are separate. They have rules for specific kinds of other cases like construction rules. So the fact is there's a lot of tailoring to different kinds of cases.

MR: Fish merchants use arbitrators who specialize in fish.

STIPANOWICH: There’s another type of arbitration involving Thoroughbreds where if you have a dispute about the health of a horse, each side picks a veterinarian and they come in and try to resolve it together.

MR: Arbitration also resolves thorny, high-profile cases …

SPORTS ANNOUNCER: Please welcome the final competitor, representing Russia: Kamila Valieva...

JR: You may remember the controversy from this past winter Olympics with the Russian figure skater… who tested positive for a banned substance? The Court of Arbitration for Sport made the decision to allow her to compete.

JR: So, alternative dispute resolution applies in all sorts of matters.
Now, back to our Taco Bell case. Employee Robyn Morgan and her take it or leave it contract.

MR: As a reminder: Morgan filed her lawsuit in district court. Eight months passed. Then Sundance, the Taco Bell franchise, filed a motion to force arbitration. Morgan claimed Sundance had waived its right to arbitrate.

JR: I requested an interview with lawyers for Sundance and Taco Bell, but they either didn’t respond or declined to talk. We heard from Karla Gilbride earlier. She argued the case on Morgan’s behalf at the Supreme Court.

CHIEF JUSTICE JOHN ROBERTS: We will hear argument first this morning in Case 21-328, Morgan versus Sundance. Ms. Gilbride.

MS. GILBRIDE: Mr. Chief Justice, and may it please the Court: Section 2 of the Federal Arbitration Act requires that an agreement to arbitrate be enforced unless a generally applicable contract defense renders it unenforceable…

JR: She began by reminding the justices that the arbitration clause was contained in Morgan’s employment contract. And that there is a general body of law that governs contracts.

MR: One of the principles of contract law is the idea of waiver. If you don’t act consistently with your rights under the contract, you give up that right. You can’t rely on it anymore.

JR: I asked Gilbride about that. She answered with a real life example…think of car insurance.

GILBRIDE: You get into a car accident. Most insurance policies say you have to report your loss within a certain amount of time after the event occurs...

JR: Say, six months.

GILBRIDE: And if you don’t report it within a certain amount of time, then we don’t have to pay out your claim.

JR: Well, let’s say you file your claim late. Eight months after the accident instead of six. But the insurance company doesn’t mention it. Instead, they investigate the accident. Send you letters about it. And then, later on, the company says, nevermind. We’re not going to cover your claim. You filed it too late.

GILBRIDE: The court would say, well, OK, they were supposed to file their claim within six months, but the insurance company disregarded that. They didn’t say you filed your claim late. So they waived their right to insist on that time limit in the contract.

MR: Gilbride argued Morgan’s employee contract should be treated the exact same way. It’s called the equal treatment principle. All contracts treated on equal footing.

But the lower courts didn’t do that here. They added an extra layer. The district court said Morgan must show not only that the other side acted inconsistently, but also that she had been harmed by the delay.

The appeals court applied that same test. And said that Morgan couldn’t prove that she had been harmed, so it wasn’t enough to find waiver.

JR: At the Supreme Court, Gilbride argued that that additional requirement was a mistake. The lower courts messed up by including it.

GILBRIDE: It applied an arbitration-specific waiver defense that requires the person asserting waiver to prove prejudice, even though prejudice isn't required to establish waiver of other contractual rights in Iowa. That's what the Eighth Circuit did wrong, and that's why we're here.

JR: When I think back to my first year of law school, I shudder at the memory of Contracts. The hardest class my first semester. And Justice Stephen Breyer seems to agree—even this past March, during the final stage of his SCOTUS career!

JUSTICE STEPHEN BREYER: I used to have nightmares about teaching a class, and in my nightmare, someone in the class would ask me something, and I'd have to go into a long disposition on something I didn't know.

JR: Like contract law. He says in addition to waiver, there are a lot of other contract law defenses that might come into play here. He starts to list them:

BREYER: So I've written down here laches, in default, forfeiture, waiver, estoppel, which are primarily contract  and state law questions. And I know very little about them. And suddenly this Court, writing a treatise on that, could get laws in many, many places really mixed up. And so what have you read that would prevent me from getting into this nightmare? What would you recommend to me to try to get these different concepts straight in my mind?

MR: Gilbride brought him back to Morgan’s case. She pointed out that Morgan didn’t argue any of those other legal doctrines.. She only argued waiver.

GILBRIDE: Often the two can be present in the same case, but Ms. Morgan argued waiver, what should distinguish the doctrine is she would need to prove that Sundance did something intentional, that it did actions, committed actions that would lead to an inference that it did not intend to rely on its arbitration right. But what she would not have to prove is that she was harmed or prejudiced by Sundance's actions.

MR: Chief Justice John Roberts had a different concern. One that tied into the purpose of arbitration.

ROBERTS: The whole point of the Federal Arbitration Act was to expedite disputes. Yet you're, it seems to me, creating a whole new battleground before you even get to arbitration about whether or not there's been waiver under state law.

MR: In other words, Morgan caused the delay, not Sundance. Justice Breyer also pointed out that in some cases, a party like Sundance might have good reason to delay arbitration. Remember, Sundance thought Morgan should join a similar lawsuit already underway.

JR: One friend of the court brief in support of that said there might be lots of reasons to delay arbitration, reasons that don’t amount to waiver. For example, a plaintiff can spend months or even years preparing her lawsuit. Seems unfair not to give a defendant ample time to strategize a response.

MR: Or maybe the case is filed in the wrong jurisdiction. The defendant would raise that preliminary issue first, before raising arbitration. Or maybe a delay makes sense to wait for a pivotal decision from a higher court that might affect the case.

JR: That actually happened here. One reason Sundance waited to compel arbitration was because it wanted to see how the Supreme Court would rule on a related issue … in another case.

MR: Here’s how that plays out: Let’s say for the sake of argument that Robyn Morgan is owed $1000 in unpaid wages from Taco Bell. That might be a lot of money to Morgan, but few lawyers will take a case worth that little amount. But remember, Morgan brought a collective action. A case on behalf of her and others like her. That likely helped her find a lawyer who would represent her.

JR: Turns out, the Supreme Court, in that different case, was deciding whether such types of actions are even allowed in arbitration. After the court decided no, they’re generally not—that’s when Sundance filed its motion to compel arbitration.

MR: From Sundance’s perspective, the benefits of arbitration improved with that other ruling. Paul Clement argued on behalf of Sundance. And Justice Sonia Sotomayor asked Clement about that strategy.

JUSTICE SONIA SOTOMAYOR: The question becomes, did you know that you had the right to arbitration? And, here, you knew. The reason you waited was because you wanted to see how the court—by your own admission—you wanted to wait to see if the court was going to approve of class actions in arbitration. So you were taking a calculated risk by staying in litigation. … Why isn't that a waiver under any normal definition?

PAUL CLEMENT: When the other side decides not just to violate the arbitration agreement but to seek a nationwide collective action, I think my client is perfectly within its rights, and it's what I would advise my client to do under the circumstances, is don't make a motion to compel arbitration because you might get a motion to compel nationwide collective arbitration, and pretty much every defendant on the planet agrees that's the worst of both worlds. So you wait.

MR: Clement argued that other reasons also support the argument that Sundance’s wait didn’t amount to waiver.

CLEMENT: The parties here agreed to arbitrate instead of going to court. That agreement did not put a deadline on a party asserting a right to arbitrate if the other side broke the promise.

MR: Clement also argued that the Federal Arbitration Act governs this dispute. One section of that law requires courts to favor an arbitration agreement unless the party that wants it is in default. What constitutes default? A showing of prejudice, he argued. And that law should be applied first. Before general contract law principles.

Clement went on to say that the vast majority of other circuit courts have adopted the prejudice rule—that extra layer we mentioned earlier. A logical, simple rule.

CLEMENT: They basically say, look, have you done something, did you know about the arbitration agreement? Step one. Step two, did you do something inconsistent with it? And then the third factor is, is the other side, you know, materially prejudiced? And that all to me makes sense. It's been workable.

JR: And he went on to say the other side wasn’t harmed, or prejudiced, because all Sundance did was file a few motions. Neither party had started the expensive and time-consuming work of discovery. But Justice Elana Kagan said that approach allows parties like Sundance to game the system.

JUSTICE ELANA KAGAN: What that leads to is why wouldn't anybody test the waters in federal court and see if they can get the case dismissed. And only if they can't say, okay, now I'm going to rely on my arbitration agreement and let's go to arbitration. So it's like two bites at the apple. There's no incentive for anybody to go to arbitration fast, or there's no incentive for the defendant. The defendant says, I have, like, this free pass to litigate for a while and then only then go to arbitration.

JR: In the end, Justice Kagan wrote the opinion. 9-0 in favor of Morgan. The court said Morgan only needed to show two things: Sundance knew of its right to arbitrate and acted inconsistently with it. Morgan didn’t need to show the extra, special rule the lower court had required: That she had been harmed by the delay.

MR: Before this decision came down, nine circuit courts, including the one here, had adopted that extra rule. Two rejected it.
The reason nine lower courts had adopted it is because there is a strong policy to favor arbitration. But Kagan said that policy doesn’t authorize federal courts to invent special rules that only apply to arbitration clauses.
In other words, any other contract provision could be waived without that extra showing of prejudice. So, Arbitration agreements should be treated the same.

JR: Now, the case goes back to lower court to determine whether Sundance acted inconsistently with its right to arbitrate. 

MR: As a mediator and arbitrator, Tom Stipanowich says the real controversy with arbitration is the adhesion contract, the lack of bargaining power to change the clause. It takes away choice.

JR: Alternative dispute resolution used properly can help people reconcile instead of leaving one side frustrated with the legal system. Often the case with courtroom litigation.

STIPANOWICH: Many of us who are involved in the field of dispute resolution believe that there are spiritual components to our commitment to these sorts of processes and certainly mediators who help parties resolve conflict entirely out of the court system who are trying to, um, bring people together to restore harmony, to maybe fix a relationship, to put it on a different plane, to help people work together. To me that is very much in accordance with the mission that Christians embrace. Do unto others.

MR: Stipanowich says arbitration and other forms of alternative dispute resolution are advantageous when it’s what both parties want.

STIPANOWICH: If it's really a negotiated agreement, that can be very beneficial for the two of us, because we could actually set it up in a way that is mutually advantageous.

Robyn Morgan’s attorney Karla Gilbride agrees with that.

GILBRIDE: If people had the choice about whether or not to go to court or arbitration, I think there’s advantages to giving people those options.

JR: The option to uncheck a box. Opt out. And to wait until an actual dispute arises. Once the parties know what the conflict is, then they can decide the best way to resolve it.

GILBRIDE: And people can decide what makes the most sense for them at that point. But giving the right up ahead of time it just isn’t fair. And there’s no reason for it other than employers trying to get an unfair advantage.

JR: Right now, pending in Congress, a possible solution:

CONGRESSMAN HANK JOHNSON: I'm hear to give my support to the bipartisan legislation HR963 The Forced Arbitration and Justice Repeal Act. Also known as the FAIR Act which seeks to restore everyday American's 7th amendment right to access the court system as the framers of our constitution intended. 

JR: So reform might not be too far away.

THEME MUSIC

JR: Legal Docket is produced by the creative team at WORLD Radio. I’m Jenny Rough.

MR: And I’m Mary Reichard. Our script editors are Nick Eicher and Paul Butler, who is also our producer. Lillian Hamman gave audio support. Source material in this episode included Solomon and Sheba, NBC Sports, and oral arguments from SupremeCourt.gov.

JR: Special thanks go to Peter Robinson, Tom Stipanowich, Rob Ash, John Masslon, and Karla Gilbride. … And you! Thanks for listening. Please consider leaving a review on whatever platform you use. It helps others find us, and gets the word out about this very special podcast.

Next week, the Second Amendment and its scope.


WORLD Radio transcripts are created on a rush deadline. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of WORLD Radio programming is the audio record.

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