06.21.10

Comment On Supreme Court Decision In Rent-A-Center v. Jackson

The Supreme Court today issued a ruling in Rent-A-Center v. Jackson that upholds the power of arbitration agreements to remove even threshold questions of validity from review by a court. In a 5-4 decision, the majority reversed the Ninth Circuit and held that courts do not retain the authority to hear claims that an arbitration agreement is unconscionable if the agreement delegates that determination to the arbitrator.

Today, five members of the Supreme Court struck a blow to our nation’s civil rights laws and the protections that American workers have long enjoyed under those laws.  The issue before the Court was whether a court or an arbitrator should decide the enforceability of an agreement to settle disputes that may arise. With this decision, a conservative, activist majority of justices ruled, contrary to longstanding legal protections, that Mr. Jackson could not have a court determine whether his arbitration agreement was unconscionable. 

The four dissenting Justices noted that the question of whether a legally binding and valid arbitration agreement existed is an issue that the relevant statute assigns to the courts.  When Congress passed the Federal Arbitration Act, it was clearly not intended to prevent employers from having access to an impartial court determination of whether the agreement was unconscionable.  In this way, today’s ruling turns that purpose, and even the Court’s own precedent, upside down.  Justice Stevens, writing for the dissent, notes that he does “not think an agreement to arbitrate can ever manifest a clear and unmistakable intent to arbitrate its own validity.”

It is estimated that more than one hundred million Americans work under binding mandatory arbitration agreements.  Most Americans are not even aware that they have waived their constitutional right to a jury trial when they accept a job to provide for their families. 

Congress worked for years on a bipartisan basis to pass laws to protect workers from race discrimination, gender discrimination and age discrimination.  Today’s decision in Rent-a-Center is unfortunately just the latest in a line of divisive and devastating Supreme Court decisions where five justices have, in effect, gutted those statutory protections.  I have chaired several hearings in the past few years to highlight the unfairness and inherent lack of justice in arbitration.  Congress should now take a closer look at the way in which binding mandatory arbitration is creating a legal underground where American workers are left without protection. 

There is no rule of law in arbitration. There are no juries or independent judges in the arbitration industry. There is no appellate review. There is no transparency. And as a result of today’s divisive ruling, there will likely be no justice for millions of American workers and their families.  The courthouse doors have simply been closed to them.  Today’s opinion also gives big business a disincentive to treat their employees fairly and will no doubt lead to virtually all companies requiring their employees to sign one-sided arbitration agreements as a condition of employment. 

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