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AT&T v. Concepcion's Dwindling Influence on Employment Arbitration

Tuesday, February, 14, 2012


In the beginning, it was assumed that the results of AT&T v. Concepction, as a confirmation of the Stolt-Nielsen decision, was the final word on contract mandatory arbitration clauses. That is, until the employment arbitration case of Cuda v. Horton and several other cases that contradicted these rulings. This can appear to be confusing at first.

 

Contract Arbitration—AT&T Compared to Horton

 

In both cases, the madatory arbitration clauses prohibited class actions. To many people, DR Horton Inc. included, AT&T v. Concepcion pretty much made it an open-and-closed case. What the decision in Cuda v. Horton proved is that not all contracts (and their clauses by proxy) can be held to the same rules. In particular, employment contracts and customer contracts cannot be enforced by the same standards.

 

Legal Arbitration—Stolt-Nielsen's Slipping Grip

 

The Stolt-Nielsen and AT&T decision were the prototypes for declaring class actions invalid in the wake of contract arbitration agreements. Cuda v. Horton concluded that AT&T v. Concepcion did not apply to work-related arbitration clauses. But what of Stolt-Nielsen?

 

The Stolt-Nielsen v. AnimalFeeds International decision regarded a contract agreement between two corporate entities. In cases such as Yahoo! v. Iversen, where Stolt-Nielsen is invoked, it tends to be disregarded. The simple fact of the matter is that by and large, individuals do not have the same bargaining power as corporations, and the opinion is being conveyed that a decision that applied between two corporations does not apply to a dispute between a corporation and an individual.

 

This does not just apply to employment arbitration either. In the recently decided case of AmEx and more recently in the class action of Ross et al. v. Bank of America et al., the precedent is growing more towards a general restriction on class action waivers to favor the individual's right to class action—be it in arbitration or litigation.