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How An Obscure Federal Court Decision Just Gave The Shaft To American Workers

By Nicole Flatow  

"How An Obscure Federal Court Decision Just Gave The Shaft To American Workers"


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The U.S. Supreme Court has gone to great lengths under Chief Justice John G. Roberts to erode the rights of individuals to band together and challenge corporations through lawsuits and arbitration.

But until Tuesday, the National Labor Relations Board had managed to preserve some of those rights for workers challenging their wages, hours, or working conditions through arbitration, a private forum for resolving disputes. A 2012 National Labor Relations Board decision had invalidated construction firm D.R. Horton’s employment contract clause that required workers to sign away their right to arbitrate claims as a class, and held that workers have a right to arbitrate their claims together under federal labor law.

The U.S. Court of Appeals for the Fifth Circuit overturned that ruling this week, holding that individuals workers have no right to arbitrate collectively, even when individual proceedings would be so costly that it is not economical for any one person to pursue arbitration alone. In its ruling, the 2-1 majority cited one of the most incendiary in the string of anti-class Supreme Court rulings, AT&T v. Concepcion.

In that case, the U.S. Supreme Court rejected a move by AT&T consumers to collectively challenge a $30 charge that, in the aggregate, yielded a whole lot of extra profit to AT&T. Instead, the court held, consumers had to abide by a provision in their boilerplate cell phone contracts that required each consumer to arbitrate their case individually, even though few individuals would bear the time and expense of an individual challenge to save $30. Another case last term hammered home the court’s commitment to anti-consumer, anti-worker provisions. This time, the plaintiffs introduced into evidence affidavits by economists attesting that the cost of arbitrating claims individually against American Express far exceeded their potential monetary recovery, meaning the challenges were prohibitively expensive. No matter, the five-justice majority held. Corporations have broad discretion under the Federal Arbitration Act to include any terms they want in a contract.

In a scathing dissent to last term’s ruling in American Express v. Italian Colors, Justice Elena Kagan lamented that the ruling effectively “depriv[es] its victims of all legal recourse.” But this is not even the only reason why contracts barring class mechanisms are so noxious. They also mean that corporations and other large institutions are not held accountable for their malfeasance.

With today’s ruling, the Fifth Circuit eliminated one prominent carve-out to the Supreme Court’s string of rulings that have already ravaged access to justice for workers in many other ways. And no one’s holding out hope that it will be overturned on appeal to the high court justices.

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