DON’T SUE AFTER READING THIS: ACC files California amicus brief supporting employment arbitration

Sorry to do this to you. But take the words in the next sentence, and sing them to the song from Barney:

“I sue you, you sue me, we live in court and pay money.”

First, please don’t sue us for implanting the Barney song into your head — it’ll go away in a week or so. Second, you’re maybe thinking that spending time with Barney sounds like a lot more fun than living in court and paying money to lawyers.

Correct! That’s how much people and companies hate litigation. And that’s why in-house counsel encourage arbitration, even before disputes get going. No one wants to waste time and money on lawyers and courtrooms. That’s especially true when it comes to employment disputes. According to one study, in-house counsel use pre-dispute arbitration in employment matters more than in anything else.

Well, it’s not true that nobody likes litigation. The lawyers who get paid to litigate like it. So it’s not surprising that there’s a case out in California trying to poke holes into an arbitration agreement. That shouldn’t happen. The U.S. Supreme Court back in 2011 shut down one attempt to do that, saying that under the Federal Arbitration Act, California can’t use its laws on unconscionability to wiggle out of an arbitration contract. But some lawyers are trying again, this time saying that other California laws, known as a “private attorney general statute,” should allow an employee to effectively join a class action even when the arbitration agreement prohibits that. The case, in the California Supreme Court, is Iskanian v. CLS Transportation.

ACC’s brief essentially says that in-house counsel use arbitration because it’s so much more efficient than litigation — it’s cheaper, and it takes less time. That’s what one study after another has shown. It’s what the U.S. Supreme Court has pointed out in a long string of cases. And it’s why Congress passed the Federal Arbitration Act in the first place.

The brief also points out that California is itself a pretty big place where a whole lot of companies do business. If lawyers can’t count on arbitration agreements working there, they’ll need to draft multiple versions of all their arbitration agreements, one for California and one for everywhere else in the US. In addition, if the California Supreme Court provides back-door exits from arbitration, other states will probably try to follow suit.

Finally, the brief points out that the Federal Arbitration Act gets its power from the Supremacy Clause of the U.S. Constitution. If the California Supreme Court starts to weaken the constitutional protection of this one federal law, in-house counsel might well see the fallout in a whole lot of other areas where they rely on the Supremacy Clause.

And, while we didn’t put this in the brief, Barney’s never seemed like the litigious sort, anyway. Definitely an alternate dispute resolution dinosaur if there ever was one.

— Evan Schultz