U.S. Courts Said To Abet Monopolies and Unfair Competition

The U.S. Courts were sharply criticized this week by a bipartisan subcommittee of the House Judiciary Committee for essentially undermining federal antitrust laws through the use of procedural obstacles and unfair legal doctrines.

The Subcommittee on Antitrust, Commercial and Administrative Law issued a report stating that in the decades since the U.S. Congress enacted antitrust laws “the courts have significantly weakened these laws and made it increasingly difficult for federal antitrust enforcers and private plaintiffs to successfully challenge anticompetitive conduct and mergers.”

By adopting a “narrow” definition of consumer welfare as the sole goal of antitrust laws, the report states, the U.S. Supreme Court “limited the analysis of competitive harm to focus primarily on price and output rather than the competitive process – contravening legislative history and legislative intent.”

An email request for comment sent to the Administrative Office of the U.S. Courts was not acknowledged.

The subcommittee also blasted Congress itself for failing to step in and correct court rulings adverse to the plain language of antitrust laws. In the past, the report states, Congress regularly investigated the rise and abuse of market power but its attention in recent years has “fallen short” in the face of “ferocious opposition” from lobbyists.

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A Primer On How Employers Can Exempt Themselves From Civil Rights Laws

What are the chances employers will hire job applicants who opt-out of a “voluntary” clause that requires them to forgo their right to file a lawsuit if they are subject to future civil rights violations?

Lori Burchett thought the odds were not good when she applied to work as a “My Stylist” at a Macy’s Inc. store at Oak Brook Center in Illinois in 2017.  In any case, she didn’t want to gamble. She needed a job.

Burchett, then 58, agreed to something that was clearly not in her best interests, a clause requiring her to submit to arbitration any future claims of employment discrimination based on age, gender and race.

In the following months, Burchett alleges she encountered gross age discrimination from managers and coworkers that led to her termination by Macy’s in 2018.  

U.S. District Judge Sharon Johnson Coleman earlier this month dismissed Burchett’s age discrimination lawsuit and granted Macy’s motion to compel arbitration in the case.

Judge Coleman notes that Burchett, who represented herself, “contends that Macy’s would not have hired her if she did not sign the arbitration agreement.”

But Judge Coleman said Macy’s legal team provided “painstakingly detailed evidence and averments” that Burchett was informed in advance of hire that she could opt-out of the  arbitration clause.

“Without proof to the contrary, courts will not presume that arbitration is unfair or biased, especially in light of federal policy favoring arbitration,” ruled Judge Coleman.

Apparently, Burchett’s “averments” did not constitute evidence or proof to the contrary.

The implications of Judge Coleman’s ruling is that employers can easily exempt themselves from being sued in federal courts for future violations of U.S. civil rights laws simply by asking job applicants to sign a “voluntary” arbitration clause in an employment agreement.

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Grocery Store Arbitration Policy “Unconscionable”

Policy Rigged to Protect Employer

Employees today are  increasingly being forced to sign one-sided arbitration agreements that are rigged to protect the employer if something goes wrong.

A panel of the U.S. Court of Appeals for the Ninth Circuit in San Francisco this week put its “foot” down by refusing to enforce a take-it-or-leave-it arbitration agreement that Ralphs Grocery, which is  part of The Kroger Co. of Ohio, required applicants for employment to sign.

The appeals court said the agreement was  both procedurally and substantively “unconscionable” under California contract law. In fact, the panel said,  the agreement was unjustifiably one-sided to such an extent that it “shocked the conscience.”

The panel rejected Ralphs argument that the Federal Arbitration Act (FAA) preempts state law and therefore the policy had to be enforced even if it was unconscionable. The appellate panel said its unconscionability holding is not preempted because it applies to contracts generally and does not disproportionately affect  arbitration agreement.

“If state law could not require some level of fairness in an arbitration agreement, there would be nothing to stop an employer from imposing an arbitration clause that, for example, made its own president the arbitrator of all claims brought by its employees,” said the panel.

Ralphs had sought to compel individual arbitration of a claim by former Zenia Chavarria, a former deli clerk who filed a class action lawsuit against Ralphs’ alleging violations of the California labor laws.  Chavarria had worked at Ralphs for about six months.

The appellate panel cited the following problems with Ralphs arbitration policy:

  •  Signing the agreement was a condition of applying for employment and was presented on a “take it or leave it” basis.
  •  The terms of the arbitration agreement were not disclosed to Chavarria until her employment orientation, three weeks after she had agreed to be bound by the policy and after it went into effect.
  •  The policy’s arbitrator selection process always produces an arbitrator proposed by Ralphs in employee-initiated arbitration proceedings. The policy requires the arbitrator to be a retired state or federal judge and explicitly prohibits the use of an administrator from the American Arbitration Association (“AAA”) or the Judicial Arbitration and Mediation Service (“JAMS”).  The court noted that the AAA and JAMS  have rules and procedures to select a neutral arbitrator.
  •  Ralphs’ arbitration policy required the arbitrator impose significant costs on the employee up front and severely limited the authority of the arbitrator to allocate arbitration costs in the award. The arbitrators had to apportion their fees equally between Ralphs and the employee. The court said this  arbitrator-fee-apportionment provision had the effect of pricing employees out of the dispute resolution process regardless of the merits of their claim.

The evidence showed that  fees for a qualified arbitrator under Ralphs policy ranged from $7,000 to $14,000 per day. Ralphs’ policy requires that an employee pay half of that amount—$3,500 to $7,000—for each day of the arbitration just to pay for her share of the arbitrator’s fee. “This cost likely dwarfs the amount of Chavarria’s claims,” said the appeals court.

Basic contract law holds that contracts can be invalidated for fraud, duress, or unconscionability.

See Chavarria v. Ralphs, No. 11-56673, U.S. 9th Circuit Court of Appeals, Oct. 28, 2013.