No Surprise Here: Arbitration Comes Up At Coney Barrett Confirmation Hearings

This article was first published on the Securities Arbitration Alert (SAA) blog, here.

As we expected, arbitration came up at Judge Coney Barrett’s confirmation hearings. Also as expected, she declined to explain her past decisions.

Recall that we reported in our SAA 2020-36E (Oct. 1) “Extra” (and blogged) on the few arbitration-related opinions we found (five Opinions – four of which she authored – and a unanimous unexplained Order) involving Judge Amy Coney Barrett of the Seventh Circuit, who was nominated  September 26 by the President to fill the open seat at the Supreme Court resulting from the passing of Justice Ruth Bader Ginsburg. Our high level take was: “Based on this very limited sampling, the jury is out on whether Judge Coney Barrett is pro-arbitration, although she certainly seems to lean that way. And the two cases involving FINRA’s arbitration forum resulted in wins for the Authority.”

We Knew It!

Whether arbitration would be raised at her confirmation hearings at the Senate Judiciary Committee remained to be seen. That’s no longer an open question, because Sen. Kamala Harris on October 14 queried Judge Coney Barrett on the topic. We present verbatim (with some editing for space) the discussion below from a transcript posted on the Senator’s Website:

SEN. HARRIS: Thank you. As Senator Hirono mentioned yesterday in the 2018 case before the Supreme Court, a group of workers were denied overtime pay and joined together to file a lawsuit against their employer. The corporation argued that workers didn't have a right to go to court as a group and could only raise disputes in arbitration individually. Unlike a court proceeding, arbitration is private, the processes hidden from the public and generally cannot be reviewed for fairness by a court. And in many cases, people are forced to agree to arbitration if they want to get the job.

In 2018, because of a forced arbitration clause, the workers could not go to a court to fight for overtime, and instead, were forced to fight for overtime pay behind closed doors in a private arbitration.

Justice Ginsburg in dissent noted that the workers faced, “a Hobson’s choice except arbitration on their employers terms, or give up their jobs.” She went on to explain that “employees must have the capacity to act collectively in order to match their employers clout and setting terms and conditions of employment.” She urged the court to consider the, “extreme imbalance of power” in our nation's workplaces and avoid further undermining Congress's passage of labor laws to protect workers and place them on equal footing.

Do you recognize Justice Ginsburg's point that there is an “extreme imbalance of power” between large corporations and individual workers?

JUDGE CONEY BARRETT: Senator Harris, I'm going to give you the same answer that I gave you with respect to the sentence that you've quoted me from Chief Justice Roberts opinion in Shelby County that I just – I'm not going to engage in critiquing or embracing portions of opinions, especially opinions that have been recently decided and are contentious from the court.

* * *

SEN. HARRIS: And you know you have been on the bench a short time, but I'm going to just point out that I do believe and commentators have noted pattern of ruling against workers and in favor of corporations. For example, in … Wallace v. Grubhub Holdings, Inc. [, Nos. 19-1564 & 19-2156 (7th Cir. Aug. 4, 2020)], you ruled against delivery drivers seeking overtime pay, forcing them out of court and into private arbitration.

Our Past Analysis of Grubhub

We covered Grubhub in #36E. At issue was whether Federal Arbitration Act (“FAA”) section 1 exempted from the Act Grubhub drivers, who sometimes moved goods in interstate commerce. To review, it is hornbook law that the FAA enforces predispute arbitration agreements (“PDAA”) involving a hint of interstate commerce. Section 1 however, has a carveout providing: “nothing herein contained shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.”

The unanimous Wallace Court rejected the drivers’ argument that the FAA section 1 carveout covered workers moving goods that had in the past been transported in interstate commerce but who themselves did not regularly move goods or people in interstate commerce. Says Judge Coney Barrett’s Opinion: “Section 1 of the FAA carves out a narrow exception to the obligation of federal courts to enforce arbitration agreements. To show that they fall within this exception, the plaintiffs had to demonstrate that the interstate movement of goods is a central part of the job description of the class of workers to which they belong …. But to fall within the exemption, the workers must be connected not simply to the goods, but to the act of moving those goods across state or national borders.”

(ed: *We’re not surprised that the topic came up or that the Judge declined to answer with specificity. **Video of the encounter can be found here. ***As usual, we chafe at the assumption that arbitration is unfair and that class action suits are a panacea.)

 

                        author

George Friedman

George H. Friedman is the publisher and Editor-in-Chief of the Securities Arbitration Alert, a weekly online publication covering the latest developments in financial services arbitration and mediation. He is also the principal of George H. Friedman Consulting, LLC, providing expert advice on arbitration and mediation in general and the FINRA… MORE >

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