The cheerleaders for the Oakland Raiders have alleged a laundry list of labor law violations by the NFL team that employs them. They claim they are paid less than minimum wage and deprived overtime, that their wages are withheld until the end of the season, and that they face fines docked from their $1,250 a season salary for violations like forgetting to bring their pom poms.
A number of Raiderettes filed a class action lawsuit in January against the franchise. But rather than respond to their legal claims, the Raiders are arguing that the cheerleaders have no right to take their allegations to court in the first place, thanks to a clause in their contract. Instead, they are required to take their qualms to arbitration before the NFL commissioner, who is charged with making an unbiased assessment of claims against one of his own teams.
The Raiderettes’ lawyers anticipated this, and argued in their initial complaint that the contract does not stand up to California law.
“As we see it, this is a contract full of illegal provisions, and trying to appoint the NFL commissioner to act as judge and jury is just one more,” the Raiderettes’ attorney Sharon Vinick told the Los Angeles Times. “It just doesn’t pass the smell test for the Raiders to suggest that the NFL commissioner is unbiased when it comes to a dispute between the team owners who elect him and pay him his $44-million salary and a group of non-unionized cheerleaders.”
If this seems unfair to you, you have something in common with four U.S. Supreme Court justices who have signed on to scathing dissents in cases on just this problem. But thanks to the other five justices who prevailed in those cases, scenarios like the one Vinick described are all too common.
Consider this scenario. Substitute the cheerleaders for consumers, and the NFL for AT&T or some other major corporation. Imagine that consumers who purchase mobile phone service are bound to a boilerplate contract that requires them to take their claims to a private individual who is paid by AT&T, and who has a docket full of claims also involving AT&T, the overwhelming majority of which AT&T wins. Going to court to challenge legal violations is not an option.
The contract doesn’t end there. It also says that, when these consumers do take their claims against AT&T to this private individual known as the arbitrator, they are not permitted to argue their claim together, even though they all have the same claim that they were overcharged $30 by the firm, and even though no one person alone can afford to hire a lawyer to challenge their own $30 fee.
This is the simplified fact pattern of a case that went before the U.S. Supreme Court less than four years ago. And the court sided with AT&T. The plaintiffs initially took their case to the California courts also, and a California court held their contract was unconscionable, as the cheerleaders in this case are arguing. But the five conservative justices on the U.S. Supreme Court said that the Federal Arbitration Act trumps state law, and interpreted that law as not allowing the California courts to invalidate the contract. The high court has since issued similar rulings in denying Comcast consumers the right to allege monopolistic practices, denying workers the right to file a collective claim alleging they had been docked pay, and even rejecting the attempt of several small businesses to together sue American Express.
Around the country, there are, literally, tens of millions of individuals subject to these arbitration clauses just for contracts in the financial industry. In addition to binding these individuals to an outside, private arbitrator, they also deprive individuals of the right to appeal the outcome of the determination. And they impose additional terms, such as the one barring class arbitration in the AT&T case.
Justice Elena Kagan, who has been among the dissenters in several of these cases described the situation this way in a 2013 case challenging alleged monopolistic practices by American Express: “The monopolist gets to use its monopoly power to insist on a contract effectively depriving its victims of all legal recourse. And here is the nutshell version of today’s opinion, admirably flaunted rather than camouflaged: Too darn bad. That answer is a betrayal of our precedents, and of federal statutes like the antitrust laws.”
Proponents of arbitration clauses argue that they are more economical for both parties, and that consumers and workers actually prefer the ease of arbitration. But research by the Consumer Financial Protection Bureau has found that worries about these arbitration clauses are not hypothetical: While 3,000 class action lawsuits involving potentially millions of consumers were filed to challenge credit card disputes between 2010 and 2012, almost no one opted to go to arbitration.
Pending before Congress is a measure, the Arbitration Fairness Act, that would impose an outright ban on these clauses. But barring congressional action, the cheerleaders’ odds of succeeding in court are not high, and their lawyers are likely gunning for a settlement of their claims to quell the negative publicity.