Avoiding Arbitration Agreements for Employment Lawsuits; FAQs by My Employment Lawyer

If you filed suit in court and the employer wants to enforce an arbitration agreement, the employer must file a motion with the court asking it to stop, or “stay,” the lawsuit. If the court grants the motion, the lawsuit stops and the only avenue open for pursuing your claim is arbitration.

Can I oppose the motion to stay?

You can and should in many cases oppose the motion to stay. If you are in Ohio or the law of your state is similar to that in Ohio, you have the right to ask the court:

Decide the question of arbitrability i.e., whether an agreement exists that creates a duty for the parties to arbitrate this claim.
Deny arbitration unless the opposing party agreed to submit the dispute to arbitration. In deciding whether the parties have agreed to submit a particular grievance to arbitration, a court may not rule on the potential merits of the underlying claims.
Decide whether the arbitration agreement covers the claim filed in court. A presumption of arbitrability exists that says a court should order arbitration of the particular claim unless it is positively sure that the arbitration clause cannot be read to cover the dispute. In other words, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration.
In Ohio, the court must usually hold a hearing on these issues. See ORC 2711.03(B) and McDonough v. Thompson, 2003 Ohio App. LEXIS 4224 (Ohio App. , 2003).
Before the hearing on whether to enforce the arbitration agreement, the court should permit discovery into arbitrability issues. These include whether
1. there a knowing and voluntary agreement;
2. the agreement is unconscionable, lacks mutuality, limits rights or remedies or imposes costs that deter claimants;
3. the agreement covers the parties (e.g., individual, non-signatories); and
4. the agreement covers the dispute filed in court;
  
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Opposing arbitration sounds like a lot of work. What can I hope to gain?

First, you might be able to avoid arbitration altogether.

Second, you could get the court to modify or eliminate the most unfair terms of the arbitration agreement. The most offensive terms are those that limit your right to file a claim, do discovery into it or obtain a complete remedy. Ask a court to strike those out. Argue that arbitration should only be a change in who decides the case, how it gets decided.

Perhaps the most important terms to modify, however, are those involving costs. Remember that arbitration can be incredibly expensive, costing $15,000 or more just to pay the arbitrator and an arbitration service. A typical filing fee to get the case started is $1,500 or more. These costs are typically imposed on employees when they can least afford them, being after they have lost their job. If the practical effect of paying these costs will be to prevent you from pursuing your claim at all, you should ask the court to order the employer to pay them, or else let the case go forward in court.

The court modified some terms but otherwise granted the motion to stay. What should I do now?

Whether the court rules denies or grants the motion to stay, the losing party can immediately appeal the court’s ruling. Therefore, if you believe that the court made a reversible error in its decision, you should immediately appeal it.

What happens if I lose the appeal of the motion to stay?

Once a court grants a stay and you decide not to appeal or you lose the appeal, you cannot pursue your claim any further in court. Arbitration is probably the only avenue open to pursue your claim.

How do I start arbitration?

You must start the arbitration process, normally by filing a demand for an arbitration with the arbitration service named in your arbitration agreement, such as the American Arbitration Association. Importantly, the arbitration agreement will contol how the arbitration will work. Therefore, look at your arbitration agreement to see how you start the process.

What if the agreement does not say how to start the arbitration?

Surprisingly, many arbitration agreements leave out many important details, including how to begin the arbitration. If the agreement does not say how to start the arbitration or how to pick an arbitrator, and assuming that you cannot reach an agreement with the employer as to how to do that, you can ask the court to appoint a neutral arbitrator.

What happens after arbitration begins?

The arbitrator or the arbitration service will usually require a filing fee. It can be substantial. Nothing will happen until the filing fee is paid.

Once the filing fee is paid, the parties select an arbitrator. The arbitrator will usually hold a preliminary conference.

At the conference the arbitrator will follow the procedures contained in the arbitration agreement or required by the arbitration service. Those procedures typically cover the types and amount of discovery permitted and how the hearing will be conducted. After that point:

The parties conduct discovery;
The arbitrator conducts the hearing; and
The arbitrator makes a decision.
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The arbitrator made a terrible decision in my case. Can I appeal from the arbitrator’s decision?

Yes. You can appeal by filing a motion to vacate or modify the arbitration award in the court of common pleas.

The problem with arbitrations, however, is that you have very little to appeal. A court may only vacate the award if:

The award was procured by corruption, fraud, or undue means.
The arbitrator was corrupt or impartial;
The arbitrator was guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced.
The arbitrator exceeded his or her powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.
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What happens if the court vacates the arbitration award?

If you succeed in challenging the arbitration award on any of these grounds, the court will refer the matter back for a new arbitration.

What right does the court have to modify the award?

The court can modify the award if:

There was an evident material miscalculation of figures or an evident material mistake in the description of any person, thing, or property referred to in the award;
The arbitrators have awarded upon a matter not submitted to them, unless it is a matter not affecting the merits of the decision upon the matters submitted;
The award is imperfect in matter of form not affecting the merits of the controversy.
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In what ways can the court modify the order?

The court can modify and correct the award so as to effect the intent of the award and promote justice between the parties.

Is there an upside to arbitration for employees?

For employees who win at arbitration, the lack of an effective employer appeal is the silver lining of the grey cloud of mandatory arbitration. Unlike court cases, where an appeal can take a year or two and can be modified or overturned on many grounds, appeals from arbitration awards will usually be futile and over fast.

I won at arbitration and the employer lost its appeal, but the employer will not pay the award voluntarily. How do I get paid?

Go back to court and file a motion to enforce the award. The court will treat the arbitration award like any other court judgment, meaning that you will be able to use the court process to garnish bank accounts, attach liens to property and so on.

Back to Part II: Avoiding Arbitration Agreements

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Arbitrating Employment Law Claims

Part III: Employment Arbitration Practice and Procedure by Neil Klingshirn

Employment Arbitration Practice and Procedure

Part III: Employment Arbitration Practice and Procedure
by
Neil Klingshirn