Arbitration Agreements Take a Hit From the Supremes
The U.S. Supreme Court let stand a California Supreme Court decision that arbitration agreements banning class action relief are unenforceable if class relief would be more effective (Circuit City, Inc. v. Gentry).
The California court ruled that “at least in some cases, the prohibition of classwide relief would undermine the vindication of the employees’ unwaivable statutory rights and would pose a serious obstacle to the enforcement of the state’s overtime laws.” It then set forth the following factors to be considered in determining whether class relief would be more effective than individual arbitration:
- the potential size and scope of individual recoveries;
- the likelihood of retaliation against current employees;
- the employees’ knowledge (or lack thereof) of their rights; and
- “other real world obstacles to the vindication of class members’ right to overtime pay through individual arbitration.”
This is unlikely to be the last word on this subject. Stay tuned for more.
April 26th, 2008 at 3:33 pm
GOOD. Now the Supremes just need to kick mandatory arbitration agreements to the curb when a crime is commited against an employee and the company mishandles/loses evidence ala KBR.