No concept is more central to the American ideal of itself as of a “nation of laws” than the principle that everyone is entitled to their day in court. The problem is that it is not remotely true. With increasing frequency, the Supreme Court has been slamming the courthouse door on people using an array of shoddy legal doctrines, including ones it has been aggressively using to defend “mandatory arbitration”—the practice of enforcing draconian contracts that force people to make their cases before private arbitrators instead of in open court.
Last month, the Court accepted a new case that it will likely use to prevent workers cheated by corporations from having a fair chance to vindicate their rights—a case that will almost certainly become yet another gift to big business.
In theory, arbitration is a relatively easy way of resolving disputes without the time and expense associated with litigation. In practice, it has transformed into a tool for corporations to do an end-run around the fairness protections built into the legal system. Companies have been adding mandatory arbitration clauses to employment agreements at a rapid clip, often in the fine print where workers do not even see them until it is too late. One study found that more than half of non-union, private sector U.S. workers have signed agreements—whether they know it or not—requiring them to resolve any future claims through arbitration.
Forced arbitration generally does not go well for workers or consumers. A 2007 Public Citizen study of nearly 34,000 arbitrations between consumers and credit card companies found that arbitrators ruled for the latter at least 94% of the time. Corporations have also found an array of ways to ensure that arbitration is stacked in their favor. (One time-honored tactic: making sure arbitrators who rule against them too often are not assigned new cases.) Often, arbitration is functionally used to bully people, and the cost alone can persuade people to drop their claims and simply accept unfair treatment. In 2015, The New York Times reported on one six-hour arbitration that cost the plaintiff $150,000—and of arbitrations that took place in the offices of the lawyers defending the companies accused of misconduct.
Back in 2004, California lawmakers came up with a clever way around this emerging anti-worker regime: The Private Attorneys General Act, or PAGA, allows workers barred from suing on their own behalf to sue in the name of the state for violations of California’s labor laws. (Because they are formally suing for the state, any agreement requiring them to enter into arbitration does not apply.) Because a worker who prevails can be awarded attorneys’ fees, there are often lawyers willing to take PAGA cases. Now, legislatures from New York and New Jersey to Washington are considering similar proposals. If they were to pass, millions of workers would have a powerful new tool for fighting back when their employers cheat them.
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Unsurprisingly, corporations are pushing back. Last month, the Supreme Court accepted a major big-business-backed lawsuit, Viking River Cruises, Inc. v. Moriana, that the justices could use to invalidate private attorney general laws. Angie Moriana, a former Viking sales representative, says the company cheated her and others by, among other things, stealing their wages and shorting them on overtime, and she wants to sue. Viking, citing a mandatory arbitration provision of her employment agreement, is trying to push her into arbitration instead.
Corporate America, keenly aware of the stakes for the sprawling mandatory arbitration machine they’ve built, has hauled out the big guns for this fight. The legal attack on PAGA is being spearheaded by Paul Clement, who was Solicitor General under President George W. Bush and is well known to the Court’s conservative justices. The U.S. Chamber of Commerce and an assortment of right-wing legal groups have filed briefs calling on the Court to strike the law down; the Chamber’s brief warns of “severe adverse consequences for businesses” if Moriana gets her way.
Viking and its supporters argue that a federal law, the appropriately-named Federal Arbitration Act, preempts PAGA by preventing states from interfering with mandatory arbitration clauses. But the California Supreme Court and the U.S. Court of Appeals for the Ninth Circuit both rejected this claim, reasoning that PAGA does not interfere with arbitration, and merely allows individuals to bring claims the state could bring on its own. The Ninth Circuit noted the strong “assumption that the historic police powers of the States”—including the power to ensure that employers respect workers’ rights—are “not to be superseded” by federal law.
The problem for Moriana—and it is a big one—is that the Supreme Court has spent the last three-plus decades working to insulate corporate power in this space. It has ruled that mandatory arbitration can keep workers alleging age discrimination out of court. It has forced mobile home buyers who could not afford arbitration to give up hope of challenging illegal loan terms. And a few years ago, it upheld in Epic Systems v. Lewis a clause that denied employees the right to bring class action lawsuits for wage theft, despite the long-recognized right of workers to organize in situations like these. In each case, the Court has used the Federal Arbitration Act as a battering ram to block attempts to rein in mandatory arbitration. Now that their majority has grown from 5-4 to 6-3, the conservatives have little incentive to abandon this crusade.
The stakes in Moriana are high. Millions of workers in California and across the country are trapped in contracts that prevent them from suing when their employers steal their wages or deny them legally mandated break time. A ruling for Viking would force these workers to either bring their claims before biased arbitrators, or live with being cheated by their wealthy and powerful bosses. It is an attack not only on workers’ rights, but also on the simple, foundational guarantee that everyone is entitled to their day in court. This collection of justices, unfortunately, is sympathetic to neither.
