On June 14, 2011 the Missouri Court of Appeals handed former Anheuser-Busch executive Francine Katz a victory in her discrimination claim against the former brewery. At the center of the dispute was the brewery’s attempt to enforce a mandatory arbitration clause in her employment contract. The Missouri Court of Appeals rejected the brewery’s arguments and reasoned that, since the brewery had been bought by a new entity, her former contract was no longer valid. Although the case turned on the interpretation of her employment contract, Francine Katz’s case points up a hot topic regarding arbitration clauses in employment contracts and other consumer contracts.
In two separate decisions, the United States Supreme Court handed consumers and employees major defeats on the issue of the enforcement of arbitration clauses. In an April decision, the United States Supreme Court in AT&T Mobility vs. Concepcion handed consumers a major defeat by ruling that mandatory arbitration clauses in consumer contracts were enforceable to defeat class-action lawsuits. Consumer advocates decried the position as being anti-consumer and pro-business. In the fine print of many credit card contracts, phone bills and other stock consumer contracts are little-known arbitration clauses that are enforceable to deprive injured consumers of the right to a jury trial. Businesses generally favor arbitration because they are handled by attorneys hired by both sides to mediate or decide the case outside of a jury trial. Businesses generally believe that arbitration clauses lower their exposure to class action and other tort litigation.
Earlier this month, the United States Supreme Court handed injured employees a major defeat in the Wal-Mart class action litigation. Wal-Mart successfully persuaded the United States Supreme Court to overrule a lower court’s approval of a massive class action lawsuit against the employer for discriminatory practices. The Court ruled that the individual claims were too dissimilar, and therefore there could not be a nationwide class action but rather individual classes would have to be examined from State to State and locale to locale. In the wake of the AT&T decision, Wal-Mart can probably expect it to include arbitration clauses in their employment agreements.
The decision in Katz vs. Anheuser-Busch, AT&T and Wal-Mart all point up the increasing efforts by businesses to include arbitration clauses in consumer and employee contracts. If properly drawn and disclosed, arbitration clauses are absolutely enforceable and can be used to defeat civil tort claims in a jury trial setting.
Industries that are also fond of using arbitration clauses are law firms, nursing homes and some doctors. If you think that your rights have been affected adversely by an arbitration clause, contact the Meehan Law Firm and we can discuss your options.