[Senate Hearing 111-396]
[From the U.S. Government Publishing Office]
S. Hrg. 111-396
``WORKPLACE FAIRNESS: HAS THE SUPREME COURT BEEN MISINTERPRETING LAWS
DESIGNED TO PROTECT AMERICAN WORKERS FROM DISCRIMINATION?''
=======================================================================
HEARING
before the
COMMITTEE ON THE JUDICIARY
UNITED STATES SENATE
ONE HUNDRED ELEVENTH CONGRESS
FIRST SESSION
__________
OCTOBER 7, 2009
__________
Serial No. J-111-55
__________
Printed for the use of the Committee on the Judiciary
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COMMITTEE ON THE JUDICIARY
PATRICK J. LEAHY, Vermont, Chairman
HERB KOHL, Wisconsin JEFF SESSIONS, Alabama
DIANNE FEINSTEIN, California ORRIN G. HATCH, Utah
RUSSELL D. FEINGOLD, Wisconsin CHARLES E. GRASSLEY, Iowa
CHARLES E. SCHUMER, New York JON KYL, Arizona
RICHARD J. DURBIN, Illinois LINDSEY GRAHAM, South Carolina
BENJAMIN L. CARDIN, Maryland JOHN CORNYN, Texas
SHELDON WHITEHOUSE, Rhode Island TOM COBURN, Oklahoma
AMY KLOBUCHAR, Minnesota
EDWARD E. KAUFMAN, Delaware
ARLEN SPECTER, Pennsylvania
AL FRANKEN, Minnesota
Bruce A. Cohen, Chief Counsel and Staff Director
Matt Miner, Republican Chief Counsel
C O N T E N T S
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STATEMENTS OF COMMITTEE MEMBERS
Page
Leahy, Hon. Patrick J., a U.S. Senator from the State of Vermont. 1
prepared statement........................................... 185
Sessions, Hon. Jeff, a U.S. Senator from the State of Alabama.... 3
WITNESSES
de Bernardo, Mark A., Partner, Jackson Lewis, LLP, Washington, DC 8
Foreman, Michael, Professor & Director, Civil Rights Appellate
Clinic, Dickinson Section of Law, Pennsylvania State
University, University Park, Pennsylvania...................... 12
Fox, Michael W., Shareholder, Ogletree, Deakins, Nash, Smoak &
Steward, P.C., Austin, Texas................................... 10
Gross, Jack, Des Moines, Iowa.................................... 7
Jones, Jamie Leigh, Founder/Chief Executive Officer, The Jamie
Leigh Foundation, Spring, Texas................................ 5
QUESTIONS AND ANSWERS
Responses of Mark A. de Bernardo to questions submitted by
Senator Sessions............................................... 28
Responses of Michael W. Fox to questions submitted by Senator
Sessions....................................................... 42
SUBMISSIONS FOR THE RECORD
Coleman, Francis T., Waffling Circuits, article.................. 46
Davis, Daniel J., Gibson, Dunn & Crutcher, LLP, Washington, DC,
article........................................................ 53
de Bernardo, Mark A., Partner, Jackson Lewis, LLP, Washington, DC 59
Foreman, Michael, Professor & Director, Civil Rights Appellate
Clinic, Dickinson Section of Law, Pennsylvania State
University, University Park, Pennsylvania...................... 81
Fox, Michael W., Shareholder, Ogletree, Deakins, Nash, Smoak &
Steward, P.C., Austin, Texas................................... 95
Gross, Jack, Des Moines, Iowa.................................... 136
Hill, Elizabeth, Dispute Resolution Journal, May/July 2003,
article........................................................ 142
JAMS, Washington, DC:
June 26, 2009, article 150
August 2002, article 153
July 15, 2009, article 156
Jones, Jamie Leigh, Founder/Chief Executive Officer, The Jamie
Leigh Foundation, Spring, Texas................................ 176
LexisNexis, New York University Law Review, Albany, New York:
Estreicher, Samuel, December 1997, article................... 187
Maltby, Lewis L., Fall 1998, article......................... 213
Mogilnicki, Eric J. and Kirk D. Jensen, Spring 2003, article..... 237
Townsend, John M., U.S. Chamber Institute for Legal Reform,
Washington, DC, October 2006, agreements....................... 257
U.S. District Court, Judicial Case load Profile, report.......... 286
Westlaw, Dianne LaRocca, report.................................. 287
``WORKPLACE FAIRNESS: HAS THE SUPREME COURT BEEN MISINTERPRETING LAWS
DESIGNED TO PROTECT AMERICAN WORKERS FROM DISCRIMINATION?''
----------
WEDNESDAY, OCTOBER 7, 2009
U.S. Senate,
Committee on the Judiciary,
Washington, DC.
The Committee met, Pursuant to notice, at 10 a.m., in room
SD-226, Dirksen Senate Office Building, Hon. Patrick J. Leahy,
Chairman of the Committee, presiding.
Present: Senators Specter, Franken, Sessions, and Grassley.
OPENING STATEMENT OF HON. PATRICK J. LEAHY, A U.S. SENATOR FROM
THE STATE OF VERMONT
Chairman Leahy. Good morning. This week the U.S. Supreme
Court met to officially begin its new term. While I talked
about this yesterday at another Committee I thought we would
have this hearing to highlight how decisions of the Supreme
Court affect the everyday lives of Americans. And what we see
on the headlines about a U.S. Supreme Court decision may look
one way, but with the average Americans it can have quite an
effect.
Our hearing will focus on how a bare majority of the
Supreme Court has overridden statutory protections to make it
more difficult to prove age discrimination in the workplace. In
two narrowly divided 5/4 decisions the conservative majority of
the court threatens to eliminate more of America's civil rights
in the workplace. Just as it eliminated Lilly Ledbetter's claim
to equal pay, basically said a woman does not have to be paid
the same as a man until Congress stepped in to set the law
right.
It is difficult that we have these laws on the books. For
some time it worked very well to protect Americans and then
time and time again, the very, very activist, Supreme Court,
overturns them. Their recent decisions make it more difficult
for victims of employment discrimination to seek relief in
court, more difficult for those victims to get their day in
court to vindicate their rights.
For anyone that doubts that there is this activism in our
courts and the effect it is having, they need to look no
further than the decisions that are affecting two of our
witnesses, Jamie Leigh Jones and Jack Gross.
The Supreme Court's misinterpretation of the Federal
Arbitration Act in the Circuit City case threatens to undermine
the effective enforcement of our Civil Rights laws.
When Congress passed the Arbitration Act, passed by a
bipartisan majority, it intended to provide sophisticated
businesses an alternative venue to resolve their disputes. That
is what was intended.
I know what was not intended. Congress never intended the
law to become a hammer for corporations to use against their
employees. But in Circuit City the Supreme Court allowed for
just that.
Now, after the Circuit City decision, employers are able to
unilaterally strip their employees of their Civil Rights by
including arbitration clauses in every employment contract they
draft. Some have estimated that at least 30 million workers
have unknowingly waived their constitutional and guaranteed
right to have Civil Rights claims resolved by a jury by
accepting employment which necessarily meant signing a contract
that included such a clause in the fine print.
There is no rule of law in arbitration. There are no
juries, there are no independent judges in the arbitration
industry. There is no appellate review. There is no
transparency. And we are going to hear from Jamie Leigh Jones
today, there is no justice.
We will also hear from Mr. Gross. His case shows that for
those employees who are able to preliminary open the courtroom
doors, the Supreme Court then placed additional obstacles on
the path to justice.
Let me just tell you a little bit about it. After spending
32 years working for an Iowa subsidiary of a major financial
company, Jack Gross was demoted, and his job duties were
reassigned to a younger worker who was significantly less
qualified.
In his lawsuit under the Age Discrimination Act, a jury
concluded that age had been the motivating factor in his
demotion and they awarded him nearly $50,000 in lost
compensation. But a slim, activist, conservative majority of
the Supreme Court overturned the jury verdict and decided to
rewrite the law. The five justices adopted a standard that the
Supreme Court itself had rejected in a prior case and the
Congress had rejected when we enacted by bipartisan majority
the Civil Rights Act of 1991.
So I am concerned that the Gross decision will allow
employers to discriminate on the basis of age with impunity as
long as they ``get other reasons.'' I fear in the wake of
Gross, few, if any, of these victims of age discrimination will
achieve justice.
The worst part about it, the lower courts have been
applying the rationale endorsed in this case to weaken other
anti-discrimination statutes as well.
When President Obama signed the Lilly Ledbetter Fair Pay
Restoration Act into law earlier this year, he reminded us of
the real world impact of Supreme Court decisions on workplace
rights. He said that economic justice isn't about some abstract
legal theory or footnote in a casebook. It is about how our
laws affect the daily reality of people's lives, their ability
to make a living and care for their families, achieve their
goals. He also reminded us of making our economy work. That
means making sure it works for everyone. In that case he was
saying that women should be paid the same as men, contrary to
what the Supreme Court has said.
Senator Sessions.
STATEMENT OF HON. JEFF SESSIONS, A U.S. SENATOR FROM THE STATE
OF ALABAMA
Senator Sessions. Thank you, Chairman Leahy. I look forward
to this panel. We are talking about some important issues.
Fairness in courts is essential for justice in America. It is
what people expect. The small person, the individual, should
have clear protections and rights that they can assert in an
employment case. We all believe in that.
But we do set up rules. And employers do, on occasion, have
to reduce work forces, no matter how painful that might be. And
it causes pain for people who lose their jobs and often they
assert whatever rights they believe they have to maintain their
employment.
So I think those are things that are just inevitable in our
business community today. Having clarity, having appropriate
principles to guide employers and the courts in deciding these
matters is important.
So this kind of discussion, I believe, is worthwhile, Mr.
Chairman. I just do not believe that we should see every
decision on termination of employment or other business-related
matters as somehow necessarily a discrimination. It's just a
choice of how to go forward.
I also would object to a view that arbitration is not a
healthy way to handle many of these cases. One survey by the
American Arbitration Association showed that employees won 63
percent of the cases in arbitration and that same year only 14
percent of the employees bringing claims in Federal court
prevailed. The results of arbitration are similar to jury
verdicts in terms of value to the employee and also can be less
expensive for the employee and the legal fees can be less in
sizeable than the employee.
So I think the idea that is assumed that arbitration
automatically is a disadvantage to an employee is not true.
And, in fact, the opposite may well be the case. So the Supreme
Court has affirmed arbitration and I hope that as we move
forward we do not undevelop ideas and strategies and
legislation that undermines something that is important.
If every employment dispute, employee/employer dispute,
ends up in Federal court, I would just note parenthetically, we
are really going to have a problem with the case loads in
Federal court. And that is really not what Federal courts are
for, to settle every employment dispute that exists out there,
and there are so many of them.
So, Mr. Chairman, I look forward to this panel.
Senator Grassley has got a meeting he has to go to in a few
minutes and I believe he would like to introduce one of the
panelists early on in this process if you could do that.
I would note that I am going to have to slip out in a
little bit because Alabama will be adding to the Statuary Hall
a statue of Helen Keller, the person who has done more, I
think, than any other person in history throughout her life to
highlight the abilities of the disabled. So it is an exciting
day for us today and we will do that at 11. I will need to get
over there a few minutes early.
So I thank you for that. And you know as we review her life
and that great movie and all that developed out of her life
story, you really do realize that persons who may not be able
to do everything can do so many things exceedingly well. And,
they can contribute so fabulously to our National productivity.
The Disabilities Act that many of you worked on to pass has
really given so many employees a right to full participation in
the American economy.
So, thank you, Mr. Chairman, I look forward to the hearing.
Chairman Leahy. I appreciate that and you should be there.
I walked through the Rotunda late last night and it is all set
up for that statue.
I would say, as a child I sometimes, as a child will, felt
badly because I had been born blind in one eye. Then I saw the
Helen Keller story and I realized how greatly advantaged I was,
but also what she did for all the rest of us.
Senator Grassley, you wanted to introduce the panel.
Please, go ahead, sir.
Senator Grassley. If I could. I will not take any time to
discuss policy because we will have a chance to review the
testimony of all the witnesses. But one of the witnesses is a
constituent with a famous political name in Iowa, even though
he is not politically inclined, maybe himself. But Mr. Gross is
with us today. So I wanted to say a couple words because of him
and show him the courtesy. I will also be meeting with him in
my office this afternoon at my appointment schedule.
Jack Gross now lives in Creston, Iowa, and he is here today
to testify about his case before the Supreme Court last year.
He is still living in the part of the state he was born in. He
was born near the community of Material. Ayr, Iowa. Mr. Gross
is a graduate of Drake University and was employed by the Iowa
Farm Bureau for over 30 years.
His great uncle happened to be Have. R. Gross. Your first 2
years in the Senate would have been Mr. Gross' 25th and 26th
year in the U.S. House of Representatives. Then he retired and
I took his place in the House of Representatives.
Mr. Gross is here today to testify about his experience in
litigating the age discrimination employment case from Iowa
Federal District Court to the Eighth Circuit Court and then to
the U.S. Supreme Court just very recently. Unfortunately,
because of Finance Committee work, I won't be able to be here
beyond about 10:27. But I look forward to either hearing his
testimony or else reading about it and visiting with him in the
afternoon to find out first-hand how he has been impacted by
his employer and by the courts.
Chairman Leahy. Thank you.
Senator Grassley. And thank you, Mr. Chairman.
Chairman Leahy. I know I enjoyed meeting both Mr. and Mrs.
Gross yesterday.
Our first witness will be Jamie Leigh Jones, the founder
and CEO of the Jamie Leigh Jones--is it Lee or Leigh?
Ms. Jones. Leigh.
Chairman Leahy. Leigh Jones--Jamie Leigh Jones Foundation.
It is a nonprofit ``organization'' wanted dedicated to helping
Americans who are victims of crime while working abroad for
government contractors and subcontractors.
Ms. Jones currently teaches math, science, and social
studies to middle school children.
My children are all grown up and now I have at least one
grandchild and soon a second one in that. I know how important
the middle school is.
So, please, Ms. Jones, go ahead.
STATEMENT OF JAMIE LEIGH JONES FOUNDER/CHIEF EXECUTIVE OFFICER
THE JAMIE LEIGH FOUNDATION SPRING, TEXAS
Ms. Jones. Chairman Leahy, Ranking Member Sessions,
distinguished members of the committee, thank you for the
opportunity to testify before you today. I am here today to
share with you a personal tragedy. I do this to bring awareness
to legislation--the Arbitration Fairness Act--introduced by
Senator Feingold, which is designed to ensure that no American
will be deprived of their constitutionally guaranteed right to
the fair administration of justice.
At an age barely old enough to vote I took a job in Iraq
with Halliburton. When hired I signed an employment contract.
Days later I was sent to Camp Hope in the Green Zone in
Baghdad, Iraq to support Operation Iraqi Freedom. Before my
deployment Haliburton showed me photographs of the trailer I
would live in, a suite with one other woman and a shared
bathroom.
Upon arrival I was assigned to a barracks which was
predominantly male. I found myself subject to repeated catcalls
and partially dressed men while I was walking to the restroom.
I complained to Halliburton managers about these living
conditions and asked them to move me into the quarters that I
had been promised. My requests were not only ignored, they were
mocked.
On the fourth day in Iraq I was socializing outside the
barracks with several other contractors Halliburton had sent to
the Green Zone. The men known only to me as Halliburton
firefighters offered me an alcoholic drink which I took. I
remember nothing after taking a couple of sips.
When I awoke in my room, I was naked, sore, bruised, and
bleeding. As the grogginess wore off, and I returned from the
bathroom--where evidence that I had been raped was abundantly
clear to me--I found a naked firefighter still laying in the
bunk bed. I was shocked. How could he have raped me like that
and not even bothered to leave.
I know now that this is because he knew there would not
likely be punishment for his crime. There had never been
before.
After reporting the rape to KBR operations coordinator I
was taken to the Army CASH where a rape kit confirmed that I
had been assaulted both vaginally and anally by multiple
perpetrators. The Army doctor then handed my rape kit to KBR
security personnel.
I was then taken to a container where I was held captive by
two armed guards. I requested a phone from KBR officials who
denied me this request.
Eventually one of the guards gave in to my pleading and
allowed me to use his cell phone. I called my father who then
contacted Congressman Ted Poe. Congressman Poe dispatched the
State Department officials to ensure my release and safe return
to the United States.
Prior to my return to the U.S. Halliburton management told
me that I could either stay and get over it or go home with no
guarantee of a job in Houston or Iraq.
The severity of my physical injuries necessitated my
decision and I went home in the face of threats of termination,
which later proved to be true.
When I returned home the pains in my chest continued and I
sought medical help. It was confirmed that my breasts were
disfigured and my pectoral muscles had been turned.
Reconstructive surgery was required.
After I filed a complaint with the Equal Employment
Opportunity Commission they conducted an investigation and
concluded that I had been sexually assaulted, that the physical
trauma was evident, that Halliburton's investigation and
response had been inadequate.
I turned to the civil court system for justice when the
criminal justice system was slow to respond. When my lawyers
filed the suit they were met with Halliburton's response that
all of my claims were to be decided in arbitration because I
had signed away my right to a trial by jury at such an early
age. Halliburton said that my employment contract included a
pre-dispute, binding arbitration clause that required me to
submit all my claims in mandatory, secret arbitration. I didn't
even know that I had signed such a clause. But even if I had
known, I would never have guessed that it would cover claims of
sexual assault and false imprisonment.
Also, I had no choice but to sign this contract because I
needed this job. I had no idea that the clause was part of the
contract, what the clause actually meant, or that I would
eventually end up in this horrible situation.
I fought the forced arbitration clause and just last month
after almost 4 years of litigation, the Fifth Circuit ruled
that my--that four of my claims against Halliburton relating to
the rape were not covered by the clause in my employment
contract. The rest of my claims, including my discrimination
claims under Title V--Title VII, sorry, had been forced into
binding arbitration. Just yesterday Halliburton filed an appeal
to this decision.
The problem of forcing claims like mine into a secret
system of binding arbitration goes well beyond me. Numerous
other women who were assaulted or raped then retaliated against
for reporting those attacks and forced into secret arbitration
have contacted me for help through the Jamie Leigh Foundation.
Even when victims pursue their claims in arbitration, the
information is sealed and kept confidential. The system of
arbitration keeps this evidence from ever coming to public
light and allows companies like Halliburton to continue to
allow the abuse of their employees without repercussion or
public scrutiny.
Distinguished members of the committee, you have the power
to stop these abuses that hide behind the veil of arbitration.
And I hope that you take this opportunity to protect employees
and stop this practice from continuing.
Thank you for your time.
Chairman Leahy. Thank you. And we will go through each of
the witnesses and then back to questions. And I will have some
about obviously Halliburton acting as a government and law unto
itself, something they did in a number of areas, as we have
known, in Iraq.
Mr. Gross, you have already been introduced by Senator
Grassley. I had the opportunity of meeting you and your wife
yesterday. Please, go ahead, sir.
STATEMENT OF JACK GROSS DES MOINES, IOWA
Mr. Gross. Thank you, Senator or Chairman Leahy. I really
appreciate the opportunity to be here. Thank you, Senator
Grassley for your remarks. I join many Iowans in saying how
proud we have been to have you as our Senator for a great many
years.
Mr. Franken, I appreciated your remarks about my case
during the Sotomayor debate. I was very impressed with the
detailed knowledge that you exhibited in such a short time
about what had happened.
Mr. Sessions, I appreciate your comments also. I kind of
come from the white, corporate world and was asked a question
during our trial if I didn't really think that corporate
management should have the right to make decisions that
affected the bottom line for their shareholders and their
employees. And my answer was, absolutely, I believe that; as
long as they stay within the confines of the law. And that was
why we were there.
I wanted to participate in the process. I feel like I'm a
little bit of an unlikely candidate simply because mine is not
the face that is normally associated with discrimination. But
age is discrimination in its own right.
I certainly never imagined that my case would end up here
when it all started nearly 7 years ago. That's when my
employer, Farm Bureau Insurance, or FBL merged with the Kansas
Farm Bureau. Apparently not wanting to add any more older
workers to their workforce, when Kansas came on board, they
bought out all the Kansas employees, claims employees who were
over 50 years of age. At the same time, in the Iowa Farm Bureau
and the other original states they simply demoted every one of
us who were over 50 and had a supervisory level or above. A
pretty clear signal to all of us that if you are over 50 they
would kind of like to get us out of there.
I was 54 at the time and I was swept out with the whole
thing. Even though I had 13 consecutive years of performance
reviews in the top 5 percent of the company, and had dedicated
my working life to making Farm Bureau a better company.
My contributions were very well documented including I had
just completed the development of taking all of our policies,
combining them into one unique policy, a package policy. It's a
policy that Farm Bureau is now using to base all of their
future growth upon.
My position was, as stated, given to a much younger and
newer employee with far less experience and education. Age was
the obvious reason that I filed a complaint and two years later
a Federal jury spent an entire week listening to all the
testimony, seeing all the evidence, being instructed on the
law, the ADEA, and they were even admonished to rule against me
and in favor of Farm Bureau if they could find any reason,
other than age, for Farm Bureau's actions. Still the verdict
came back in my favor and I thought in 2005 that my ordeal was
over.
Then it started getting lawyered to death. Eventually
ending up in at the Supreme Court in March of this year over
one single issue in the jury instruction. And that was whether
direct evidence was required in a mixed motive context. That's
what--that's the question that the Supreme Court accepted sui
juris on, the one that we expected to get addressed.
However, instead of addressing that one issue, the court
broke with its own protocol and precedent to literally hijack
my case and use it as a vehicle to water down the law written
by the branch of government closest to the people, yourselves.
We came here in March believing in the rule of law and its
consistent application to all areas of discrimination. We were
disappointed and I was personally disillusioned by a lot of
what I observed at the court level.
We believe that this issue does transcend partisan politics
and presents an opportunity for both parties to come together
to protect their aging constituents back home in the workforce.
On a personal level, this has been a rough ride. But what
is becoming even harder is watching the collateral damage being
inflicted by older workers on the courts by this ruling.
Because of their decision my legacy to working Americans will
be having my name associated with pain and injustice inflicted
on older workers because it will be nearly impossible to
provide the level of proof now ascribed to this one type of
employment discrimination.
That is a heavy burden to place on one guy who simply
sought to right one act of discrimination. I wasn't the one who
changed the law, five justices did. I can only urge Congress to
step up, like they did in the Ledbetter case and restore the
ADEA to its original intent.
Thank you very much.
Chairman Leahy. Thank you very much, Mr. Gross.
Mark de Benardo is a partner at Jackson Lewis here in
Washington, am I correct on that?
Mr. de Bernardo. That's right.
Chairman Leahy. And he served as Director of Labor Law for
the U.S. Chamber of Commerce. Please go ahead.
STATEMENT OF MARK A. DE BERNARDO PARTNER, JACKSON LEWIS, LLP
WASHINGTON, DC
Mr. de Bernardo. Thank you, Mr. Chairman. Thank you,
members of the committee, and Ranking Minority Sessions.
I am pleased to be here today to testify in strong support
of the use of mediation and arbitration as an adjunct to our
jurisprudence system in America, in support of ADR in
employment, in support of the Supreme Court's decision in
Circuit City v. Adams, and in opposition to S. 931.
The reason that we oppose S. 931 is that if this
legislation were enacted, effectively arbitration in employment
in America and in other contexts would end. That is the net
effect.
It is my firm and unequivocal belief that the use of ADR is
both pro employer and pro employee. And when implemented
appropriately, it's a tremendous asset to both employee
relations and our system of justice.
Jackson Lewis has a long and proud record of support for
effective and equitable ADR programs as an alternative to
costly, time-consuming, deleterious, and relationship
destructive litigation.
I want to underscore that the reality is, again, that S.
931, if it were enacted, effectively would end arbitration in
America, would abolish this practice in the non-union sector.
Organized labor has long embraced binding arbitration as a
foundation of union representation. And my law firm and the
organization I represent agree in that context.
The seminal question is, should employers and employees be
able to engage in mediation and mandatory, binding arbitration
for employment disputes as alternatives to litigation. The
seminal answer is, absolutely. ADR in employment programs are
flourishing. When implemented appropriately they are decisively
in employees' best interests, and yes--and yet S. 931 would
effectively deny this option to employers and employees.
Given the costs, delays, and divisiveness of employment
litigation the more sensible and conciliatory options
preferable for employers and for their employees, the net
result of the use of ADR is more employee complaints resolved
and addressed.
As many as 20 times, if you take a look at the experience
in ADR programs, dispute resolution programs across the
country, what you have is many more complaints that are raised
by employees, grievances that are addressed, they are addressed
in a much more civil fashion, they are addressed much more
comprehensively, and are resolved on a much quicker basis.
Thus, again, complaints addressed sooner with less tension,
less turnover.
What you have is that litigation is a job destroyer.
Arbitration is a job preserver. In the typical situation as
discussed in the testimony at length, arbitrations take 104
days. Litigation in the Southern District of New York if you
have an employment law case, typically takes 2.8 years for that
case to be heard. The backlog in the Federal court system is
huge. One-third of the backlog in the Federal court system are
employment law cases.
The old adage that ``justice delayed is justice denied''
certainly is true in this case. So you have many more employee
grievances that are addressed, as many as 20 times as many
addressed much sooner and addressed in a context which is much
more amicable and more likely to resolve the situation and
preserve the job.
It improved morale; 83 percent of employees support ADR in
the workplace. It is a popular concept for those employers who
have adopted it and adopted it appropriately. It provides for
more effective communication.
Chairman Leahy. In your comments----
Mr. de Bernardo. Sure.
Chairman Leahy.--you also tell how arbitration would be
helpful to somebody like Ms. Jones when her employer
Halliburton, in effect, said that rape and sexual assault has
to just be considered part of the job.
Mr. de Bernardo. There are literally millions of employees
that are covered by ADR programs in the United States. There
are 160 million workers in the United States. I understand the
situation alleged by Ms. Jones is awful, tragic. I agree with
her that it was a tragedy that she alleged. This is a terrible
situation. This is an assault. I think those that are engaged
in rape or heinous crimes such as rape should be punished----
And, in fact, there is recourse. I am not here representing
anyone involved in that case, I am not involved in that case.
Like Mr. Gross, Ms. Jones has had her day in court and maybe
more than she wanted, it goes on and on and on, I understand
that.
What we are talking about is the concept of Alternate
Dispute Resolution programs overall. In that regards what you
have is a concept that is fully entrenched in the American
workplace and is popular across the board with almost all
constituencies; employers, employees, parties to arbitration.
You know, more than 70 percent of those surveyed--as discussed
in the testimony, Mr. Chairman--more than 70 percent of those
who have engaged in employment arbitration favor the system and
nearly two-thirds say that they would do it again.
So, you know, it has a very positive role to play. The
facts of one incident and one individual incident, as terrible
as they may be, don't necessarily reflect on whether or not as
a concept in America today we should embrace or withdraw from
the concept of arbitration in employment.
And this was my final point that I was saying in this one
section is that ADR in employment results in better work
places. It's an early warning system to employers on what may
be bothersome in the workplace. Typically the types of
complaints that come in, employees have a situation where they
are concerned, you have informal mediation, formal mediation,
if necessary, arbitration, those issues are resolved. Employers
might end up being better employers and addressing and
correcting situations that need to be addressed and corrected.
Circuit City, I know we are going to talk about that. But
Circuit City was a decision that was wholly consistent with
past precedent. It was wholly consistent with all of the other
Circuits except for the Ninth Circuit decision and
appropriately decided.
And I mentioned how litigation results in----
Chairman Leahy. I know I interrupted your testimony. So
I've given you two extra minutes.
Mr. de Bernardo. OK. Thank you, Mr. Chairman.
Chairman Leahy. Your whole statement will, of course, be
made a part of the record.
Mr. de Bernardo. I appreciate that.
Chairman Leahy. Michael Fox is an attorney in the Austin
Branch of the firm of Ogletree, Deakins, Nash, Smoak, and
Stewart in Texas. Mr. Fox, it is good to have you here.
STATEMENT OF MICHAEL W. FOX, SHAREHOLDER, OGLETREE, DEAKINS,
NASH, SMOAK, & STEWART, P.C., AUSTIN, TEXAS
Mr. Fox. Thank you, Chairman Leahy, Ranking Member
Sessions, and members of the committee, I am pleased and
honored to be here today.
I am a trial lawyer from Texas.
Chairman Leahy. Mr. Fox, is your microphone on?
Mr. Fox. Sorry about that. Chairman Leahy, thanks for the
invitation. I am honored to be here.
I am a trial lawyer from Texas. For more than 30 years I
have represented employers in labor and employment law matters.
I have handled discrimination claims against employers in jury
trials and non-jury proceedings. A distinction that I think is
important and one reason I strongly believe that reversing the
Gross v. FBL Services case would be a tragic mistake.
I have had a ring-side seat to the changing American
workplace. There is no question that it is not only changed,
but is significantly better particularly for women and
minorities than when I was licensed to practice law in 1975.
There is also no question that the Civil Rights Act of 1964
and the other Federal legislation that followed have been
significant and positive factors in that change.
More germane to today's discussion there should also be no
question that the law which has provided the base for the
improved workplace has developed and flourished under the
interpretation and guidance of the Supreme Court.
Turning to the Gross decision and the proposed legislative
remedy, there has been much written about the Supreme Court's
holding that age discrimination plaintiffs are not entitled to
a mixed motive instruction. But almost all of the criticism
fails to acknowledge the significance of the difference between
the ADEA and Title VII and the spotty history of the mixed
motive theory.
More importantly, none makes the distinction between a
theory that was developed for cases that were to be tried by
judges and is now being applied to cases that are tried before
juries.
I have covered it more extensively in my written testimony,
but briefly, the mixed motive analysis was first introduced in
Price Waterhouse v. Hopkins, at a time when Title VII cases
were non-jury.
Two years later Congress codified it for Title VII, but did
not include the Age Act in that section of the amendment.
Congress also provided, for the first time ever, that Title VII
cases would now be tried to juries, not to judges. The end
result is, that when the Gross case came before the court this
past summer, it had the advantage of seeing how a theory that
was developed for cases to be tried by judges had worked in the
real world of jury trials and adopted a more common-sense rule
that actually does little to alter the real world of age
discrimination litigation.
One reason why I say the court adopted a common-sense rule
is because of the difficulties the courts have had in trying to
adjust the mixed motive analysis to jury trials. From my
experience in the courtroom, the most important thing for the
effective enforcement of anti-discrimination laws through jury
trials is a method of instructing the jury which is simple, not
complex; practical, not theoretical. The mixed motive
instruction is the opposite. It focuses attention on legal
theories, not the facts, and is both complex and theoretical.
In short, it is the antithesis of what makes for an effective
jury instruction.
The net result is that the mixed motive analysis created
for a non-jury system which is applicable to Title VII does not
work for jury trials. In the real world the courts have had
significant difficulty in applying it. It is not widely used by
plaintiffs and may not really be needed.
According to one plaintiff's lawyer who does still advocate
the legislative overturning of Gross, as far as the loss of
getting a mixed motive instruction in an age discrimination
case, most plaintiffs' lawyers don't care. It's too confusing
to the jury.
In closing, before using Gross as a reason to expand the
use of the mixed motive analysis, which the proposed
legislation introduced yesterday, would do to the entirety of
Federal employment laws, not just age discrimination, I would
respectfully suggest that all those interested in the
enforcement of the anti-discrimination laws, which includes
people on both sides of the docket would be better served by a
closer examination of how successful and necessary the concept
of a mixed motive instruction created in a non-jury world has
actually worked in the real world of jury trials, the one that
we actually have, before taking any action to extend this
concept to the entire body of Federal employment law.
I would also say that having participated in arbitration I
totally support the testimony of Mr. de Bernardo about its good
impact on the workplace.
Chairman Leahy. Thank you very much. And with everybody,
the whole statement, of course, will be part of the record.
Our last witness is Professor Michael Foreman who is the
Director of the Civil Rights Clinic at Penn State's Dickinson
Section of Law. I understand, Professor, you teach a course on
employment discrimination there; is that correct?
Mr. Foreman. Yes, I teach advanced employment
discrimination law.
Chairman Leahy. Thank you very, very much.
Please go ahead, sir.
STATEMENT OF PROFESSOR MICHAEL FOREMAN, DIRECTOR, CIVIL RIGHTS
APPELLATE CLINIC, DICKINSON SCHOOL OF LAW, PENNSYLVANIA STATE
UNIVERSITY, UNIVERSITY PARK, PENNSYLVANIA
Mr. Foreman. Chairman Leahy, Ranking Member Sessions, and
members of the committee, I welcome this opportunity to address
these important issues and particularly the Gross decision and
the Pyett decision and that line of cases that deal with pre-
dispute binding arbitration. And particularly with an eye to
has the court been misinterpreting Congressional intent and the
meaning of these statutes? In my view that's a resounding yes
in these cases they misinterpreted Congressional intent and
they distort the purposes of these laws.
I want to turn first to Gross. And I would be remiss if I
don't point out that in Gross the majority of the Supreme Court
took on an issue that was not before them. It was not in the
petition for cert. It was not briefed. It was not briefed by
either side. And, indeed, it was exactly opposite of what the
Federal Government and the Solicitors Office recommended that
they do.
Despite all that, they chose to take on this case. And they
sent, I think, a very important message to the Senate that if
you want specific protections against discrimination in the
workplace you, Congress, have to be very, very specific.
And many of us believe you have been specific. But for this
majority they say, no, not specific enough. It is very clear
that Congress did not intend age discrimination to be treated
differently from any of the other types of discrimination. But
despite that, the majority concluded, in Gross, that you could
no longer prove that age was a motivating factor. That is not
enough any more in an age context.
And in Mr. Gross' case he proved this was not
discrimination in the area--in the air. He proved that this was
a motivating factor and the jury made that conclusion. So
contrary to my colleague's belief, the jury can deal with these
issues and they deal with them every day. They had dealt with
them.
This is a standard that the Supreme Court rejected in Price
Waterhouse, that Congress rejected in the Civil Rights Act of
1991 and indeed they rejected almost 45 years ago when the
Title VII and they rejected it solely because of language.
Now, Chairman, you indicated one of the things we are
trying to sort through is how do we sort the difference between
what the headlines say and the reality. Well, the headlines
were very clear, ``Gross makes it much more difficult for
Plaintiffs to prevail in age discrimination cases.'' Another,
``Supreme Court majority makes it harder to prove
discrimination.'' Another quote, ``The plaintiffs' job in court
will be much more difficult.''
Now, how do these headlines match reality? Well, the court
cases following that match perfectly. A case out of the Sixth
Circuit which I have cited in my materials, ``In the Wake of
Gross'' and this is a quote, ``it is not enough to show that
age was a motivating factor.'' Another court quote, ``This
court interprets Gross as elevating the quantum of causation
required under the ADA.''
So it is very clear that what we heard about raising the
burden of proof is in fact what happened. And it is leading to
very strange, nonsensical results. I will cite just two quick
cases. Because many courts are taking what the Supreme Court
said and now saying, it must be the sole factor.
In the Culver case where a person alleged discrimination
because they were over 40 years old and race, the court says,
well, you cannot win your age claim because you've pled another
claim over here. You were out of court at the get-go. There is
another line of cases that follow that line of cases.
The third thing it does is it calls into question the
jurisprudence under hundreds of discrimination statutes in
Federal law and state law that used the term ``because of''.
They had been interpreted consistently to mean, if the
protected classification infecting the decision was a
motivating factor, that is a violation of law, we will fight
about damages. After Gross that is no longer the case.
Turning quickly to the pre-dispute binding arbitration
issue, this Congress worked for decades to come up with
discrimination laws that provided open-forum, jury trials
damages. You've also recognized that pre-dispute--that
arbitration may have a role when you passed the Civil Rights
Act. But I don't believe Congress ever envisioned that role to
be pre-dispute, binding arbitration agreements placed in
employee handbooks, in applications for employment, and
basically shoved down employees' throats with no--no--and I
stress that--consent.
I want to address, very quickly, some of the statistics
that I know my colleagues laid out about the importance of
binding arbitration and how it is good for employees. Those
studies deal with situations where a dispute has arisen and the
person voluntarily enters into the agreement. And in those
cases it is usually senior managers that have done this. They
find arbitration to be good, but they have a dispute and they
have volunteered to do it. That is not the case for most blue-
collar workers. They have no choice. They have to give up a
paycheck. In today's economy, they may have to choose between
having a job and not having health care because they won't get
the job if they refuse to sign a binding arbitration agreement.
In this area, also, the court has sent a message to
Congress that we are going to force people into employment
binding arbitration unless you, Congress, tell us differently.
They said that explicitly in the Pyett case. And to paraphrase
Justice Ginsberg from the Ledbetter case, when you get that
challenge thrown down, ``the ball is in Congress' court.''
I stand here ready to answer any questions on either the
binding arbitration or on the Gross decision. And I thank you
for the opportunity to address the committee.
Chairman Leahy. Thank you very much, Professor. You echoed
a point I had made earlier and actually made yesterday and
actually made a number of times on the Gross case that the
Supreme Court seemed to be looking for an ability to come out
with law that they wanted to make. I'm not trying to put words
in your mouth, but, don't you find it unusual that a CERT was
granted on a different reason, the sides did not argue this
issue, it was not part of the debate, the Solicitor General did
not, and yet they reached the decision they did. Is that a
typical thing in the Supreme Court?
Mr. Foreman. That is extremely atypical to the extent that
the majority dropped a footnote to try to explain why they were
talking away from this and they were called to task
appropriately by the dissent in that case. That the Supreme
Court grants CERT on a very specific issue. The issue was--I
don't want to say, ``a no brainer'' but the issue that they
granted CERT on was this whole issue on the age context. You
need direct evidence in order to get a mixed motive instruction
to the jury. That was what they granted CERT on. That's what--
there were probably 40 briefs filed. That's what everyone
briefed. No one saw this decision coming. And a five-person
majority walked out of their way to take this on and change the
burden of proof in all age cases and change possibly the burden
of proof on all employment discrimination cases where you have
not specifically said there is a motivating factor standard of
proof.
Chairman Leahy. I know at the time I was pretty surprised
with such an activist court. And it acting as a legislative
body and a judicial body all at once.
And I guess maybe as a Vermonter I am somewhat old
fashioned. I think of the judiciary acting as a judiciary, the
legislative body acting as a legislative body, the executive is
the executive body and not have the judiciary become the
legislative body too. It makes it--having argued an awful lot
of appellate cases in the Second Circuit in the Vermont Supreme
Court, I would find myself at somewhat of a disadvantage if
court decided that, gosh you have a nice case. We know what you
are supposed to talk about, but we've decided to do something
entirely different. It puts both sides pretty much at a
disadvantage unless they have already made up their mind to
rule for one side.
Mr. Foreman. And, if I may, it raises this other issue
that--and I need to be delicate because I'm talking to the
Senate, but by the same token, that the court, the majority
specifically says, you did not say in 1991 that this would be
the causation standard in the age context. Therefore we are not
going to adopt what virtually every court had said the standard
was. We are going to ignore what the meaning of the 1991 law
is.
Chairman Leahy. Of course that--don't worry about being
delicate with the Senate.
[Laughter.]
Chairman Leahy. The hundred of us certainly aren't with
each other at all.
[Laughter.]
Chairman Leahy. You should sit in on some of our private
meetings.
Mr. Foreman. Well, they took you to task and said, go ahead
and move forward and change the law if you don't like what
we've done.
Chairman Leahy. But they also overruled the precedent of
every other court including some of their own decisions. I had
never had any problem with the law as written. I mean, this
came out of the blue. It overturned a whole lot of cases.
Everybody else seemed to understand what the--as did four of
the nine members of the Supreme Court what the law was. Am I
correct?
Mr. Foreman. Yes, you are correct in a point. But I don't
want us to lose sight of the tentacles of the Gross decision
because they reach very deep. And I don't want to get bogged
down on legalese but there is a case----
Chairman Leahy. I just have a----
[Simultaneous conversation.]
Mr. Fox. Mr. Chairman----
Chairman Leahy. If I wasn't worried about the tentacles of
the case, we wouldn't be holding this hearing today.
Mr. Fox. Mr. Chairman.
Mr. Foreman. There's a case called McDonnell Douglas v.
Greene that has been cited thousands, tens of thousands, it is
a standard way to prove discrimination cases, age, race, sex,
we teach it in law school every day. The Supreme Court dropped
a footnote and said, we don't acknowledge whether the McDonnell
Douglas standard even applies to these age cases. And the lower
courts are now taking that and running with it and putting a
different burden on age discrimination cases and ignoring the
McDonnell Douglas. It is so deep that the Congress really must
act to fix it.
Chairman Leahy. Mr. Fox, you wanted to say something?
Mr. Fox. Yes. It is not really my role to defend the
Supreme Court. I think they can do it capably themselves. But I
would point out that if they had answered the question that
they granted CERT on, that would have presumed the answer to
the question that they ultimately answered in the reverse.
Since they decided that it was not a proper instruction for age
cases, it made no sense to decide under what standard you would
give that instruction. So their really only choice was to
either rule as they did or to say that writ was improvidently--
writ was improvidently granted and that would have then just
delayed the inevitable.
Also, the issue was raised in the respondent's brief when
they asked that Price Waterhouse be overruled, if necessary.
And with respect to the McDonnell Douglas test, although that
is in the footnote, I don't think there is any question that
the McDonnell Douglas standard remains the same. And, in fact,
that is what I would say 99 percent of all cases including age
cases are tried under.
The mixed motive analysis is not used in the real world.
And when it is used, it causes complexity and complication and
ends up with situations like happened to Mr. Gross. If he had
gone in with a straightforward instruction I have no doubt he
would have won the trial, just as he did. But what would have
been avoided were two appeals and now the possibility of having
to retry it again.
Chairman Leahy. We could differ on that. We'll get back to
that later. But I want to go to--and I will--and I appreciate
you stepping forward. But I will let you and Mr. Foreman speak
to this again.
Ms. Jones, the Fifth Circuit recently ruled that you
actually could pursue some of your claims before a jury. Those
are the claims related to sexual assault.
I was a prosecutor and proud to be. The people involved in
that I couldn't help but think I would be charging them with
numerous kinds of assault. And I have to feel that if convicted
our courts in Vermont would send them to prison for a long
time. But your former employer KBR or Halliburton argued the
brutal sexual assault was somehow related to your employment
and therefore had to be handled in arbitration tends to defy
common sense. That's the argument they took, you had to appeal
to the Fifth Circuit. And now they are actually moving to
rehear. What kind of a signal does this send to women in the
workplace?
Ms. Jones. Well, first of all, corporations do this by----
Chairman Leahy. Is your----
Ms. Jones. It is very apparent to me through working with
the Foundation and working with other women and my past
experience, that corporations can adopt arbitration as a way to
wipe clean the record of all disputes that have arisen. And if
women before me that had been sexually assaulted working
overseas in Iraq or Afghanistan or anyplace that we were
deployed, if they were able to go and sit in front of a trial
by jury, that would have been public record. I would have known
before going to Iraq what I was getting into and likely this
would have never occurred.
I feel like this sends a clear message that the
corporations are able to have more power than the individual.
And I don't think it's right. And I think that it's important
for people to be aware of such practices that arbitration has
cast upon the workers.
Chairman Leahy. Considering the position that Halliburton
has taken on this, is it safe to say you would much rather the
decision of how you might be treated would be done by an
impartial court and jury rather than an arbitration system they
might have helped set up?
Ms. Jones. Well, Halliburton would hire my arbitrator. And
they are taking the position that a sexual assault is part of
employment. Why would I ever want to walk into an arbitration
knowing that they hired the arbitrator and knowing that that's
how they feel about sexual assault? Do you think I'm going to
win? And if I win, do you think I'll win much? Or do you think
I will win just to be quiet?
Chairman Leahy. We are agreeing with each other, Ms. Jones.
Ms. Jones. Exactly.
[Laughter.]
Chairman Leahy. And if we weren't, I wouldn't be holding
this hearing.
[Laughter.]
Chairman Leahy. And Mr. Gross, Senator Franken has had to
go vote another Committee and I was going to ask you one more
question and then I'm going to have to step out for a moment,
myself and turn the gavel over to Senator Franken, but I'll be
right back.
Do you think it's fair to ask victims of discrimination to
prove that age was the decisive factor for discrimination;
especially when they often lack access to necessary records
that employers possess that might help them prove their case?
Mr. Gross. Senator Leahy, I don't think there is anything
particularly complicated about the jury instruction. My fellow
Iowans who served on the jury, I believe, understood the rule
of law perfectly and came to the sound understanding,
especially with the final thing they heard was that if you can
find any reason other than age for their actions, you have to
find in favor of Farm Bureau.
Now, that's pretty clear. To me that just eliminates
everything else. I had made the prima facie case. There was age
discrimination, they could find no other reason after a week of
testimony evidence. They boiled it down to this, there is one
sole cause for what happened here. And as Justice Souter said
during the hearings, a lot of times, juries are just smarter
than judges. And I tend to believe that was the case.
They knew that age was not only a motivating factor, they
knew that--actually, I think if we had to go back and try this,
and it's been 7 years already, 10 percent of my life is
invested in this. I really don't want to start over. But if we
had to start over, even under this new one, I'm confident that
we would win. However, that does not mean that it was a good
decision.
I was terribly disillusioned about how they broke with
their own protocol to come to their conclusion. As has already
been mentioned, they almost ignored the issue that the CERT was
granted on. They allowed new evidence--a new argument to be
introduced right at the last minute. I don't think that--well,
there's just a number of things that I think broke with
protocol.
As the claims guy, I taught a lot of adjusters over the
years, and the first thing I taught them and the most important
thing was to never do anything that could create any appearance
of impropriety or self-conflict. And I expected no less than
that from the highest court in the land. And I thought I saw a
lot of things that just plain disillusioned me about how our
Supreme Court system functioned in my case.
Chairman Leahy. I am glad of the comment by my fellow New
Englander, Justice Souter.
But let's go back to the Midwest, Senator Franken.
Senator Franken. Thank you, Mr. Chairman. Thank you, for
calling this hearing. Thank you to all the witnesses.
I am sorry I had to make a vote on another Committee so I
missed Mr. Fox and Mr. Foreman.
First, I just want to say something to Ms. Jones.
Yesterday we had an amendment to the Department of Defense
Appropriations and we passed the bill, quite handily, saying
that we are not going to hire contractors who do mandatory,
binding arbitration on things like sexual assault.
Ms. Jones. Uh-huh.
Senator Franken. We had a little press thing afterwards and
I talked about your courage and your persistence. One thing I
left out is your strength, and I want to thank you for that.
Ms. Jones. Thanks.
Senator Franken. You are an amazing young woman.
Ms. Jones. Thank you.
Senator Franken. Mr. de Bernardo said that you have had
your day in court.
Ms. Jones. He did say that.
Senator Franken. Isn't it true that what you have been in
court doing is trying to get your day in court?
Ms. Jones. Exactly. I wanted to quote him, actually,
justice denied is--wait, ``justice delayed is justice denied.''
Senator Franken. He did say that in his testimony.
Ms. Jones. I totally agree with that. I have been fighting
arbitration for 4 years. I have been wanting my day in front of
a trial by jury for 4 years. I don't believe that claims like
this should ever be in front an arbitrator. They need to be
public knowledge. They don't need to be private, discrete, and
binding.
So I feel that what Bernardo said was accurate about
justice delayed is justice denied. But those of us that need
this as public knowledge need to not go in front of a secret
arbitrator.
I was also curious if Bernardo represents individuals or
corporations. And also if the polled employees represented
likely include people who have gone through the process or have
not gone through the process.
Senator Franken. Well----
Ms. Jones. So I was kind of curious about that.
Senator Franken.--I'll ask the questions here, Ms. Jones.
[Laughter.]
Senator Franken. And I do have a question for Mr. Bernardo.
[Laughter.]
Senator Franken. You put in your written--
Mr. de Bernardo. It's de Bernardo.
Senator Franken. Oh, I'm sorry, Mr. de Bernardo. Excuse me.
You said in your written testimony--you write in your
written testimony you cite something which, by the way in the
footnotes I can't--you cite essentially page 30 of a 10-page
report. That employees have a 63 percent chance of prevailing
in arbitration and a 43 percent chance of prevailing in
employment litigation, forgetting the fact that the Committee
couldn't actually look that up.
Would you consider if Jamie Leigh had gotten a settlement
of $50 that she would have prevailed under this definition?
Mr. de Bernardo. Senator Franken----
Senator Franken. Please answer yes or no, sir.
Mr. de Bernardo. Not yes or no, let me just say----
Senator Franken. Please answer yes or no, sir. Are you
saying no?
Mr. de Bernardo. I say no.
Senator Franken. So, in other words, if the statistics on
who prevailed and who didn't prevail, what would she have
needed to have gotten? $100? Would she have prevailed if she
had gotten $100?
Mr. de Bernardo. You know, I think this is a distinction
without a difference. What we are talking about----
Senator Franken. Answer yes or no, please, sir.
Mr. de Bernardo. The question is, what is the number that
counts as prevailing?
Senator Franken. I think that is sort of the question;
isn't it?
Mr. de Bernardo. You know, what I am looking at is the
research that's been done, the studies that have been done on
who prevails in----
Senator Franken. Yeah. And I'm saying, what's prevailing?
Mr. de Bernardo. I don't know what their definition is
going to be.
Senator Franken. So you don't know what their definition
is. So when you said, ``no'' you didn't know whether that was
true or not, did you?
Mr. de Bernardo. Well----
Senator Franken. Did you?
Mr. de Bernardo.--Senator, if we are talking about an
assault or a sexual assault or assault and battery or false
imprisonment, that is not what I am here to address. What I am
here to address----
Senator Franken. That's what this case was about, sir.
[Simultaneous conversation.]
Senator Franken. And the company--sir, please.
The company asserted that it had the right to arbitrate. In
fact, she's been in court 4 years because this--and, by the
way, they are appealing again.
So you write something that you didn't know about, that 63
percent of the time the employees prevail. So, presumably if
they, as far as you know, if she had gotten $50, that would
have counted under your 63 percent.
And would she also have prevailed if she got $50 and that
the price of that was her silence?
Mr. de Bernardo. You know, Senator, I would like to
respond, not in yes or no, but a little bit more broadly.
Senator Franken. Go ahead.
Mr. de Bernardo. And the answer is we go to the research
that is out there. We go to the statistics that are available.
They're reliable statistics from credible, neutral sources. As
for prevailing, this is an awful set of facts that Ms. Jones
alleges----
Senator Franken. I just asked you a question, would that be
considered onerous to say that she prevailed? Because that
seems to be part of your case that this is better for
employees. That's your case. So I am asking, what do those
statistics mean? And you don't seem to know what they mean.
Mr. de Bernardo. Well, I do know what they mean----
Senator Franken. OK. For example----
Mr. de Bernardo.--because the overwhelming majority of
times, 99.9999 percent of the time the facts aren't going to be
anything near what we are talking about here. It's not going
to----
Senator Franken. But here they are the facts here and she's
been in court for 4 years, sir.
Mr. de Bernardo. There's a criminal situation, there's a
civil action that----
Senator Franken. She had no criminal--this took place in
Iraq. So at that time she had no recourse, sir.
Mr. de Bernardo. All right.
Senator Franken. She has not had her day in court, sir. She
has litigated to have her day in court, sir, Mr. de Bernardo.
Mr. de Bernardo. I would like to address that issue.
I would like to address that issue in terms----
Senator Franken. No. No, please answer my question, sir.
Mr. de Bernardo. OK.
Senator Franken. I read some of your testimony to Ms.
Jones. You said, ``the net result of the use of arbitration is
better work places.''
Mr. de Bernardo. Correct.
Senator Franken. Better work places.
Mr. de Bernardo. Correct.
Senator Franken. She was housed with 400 men. She told KBR
twice that she was being sexually harassed. She was drugged by
men that the KBR employment people knew did this kind of thing.
She was raped, gang raped. She had to have reconstructive
surgery, sir.
They had this arbitration. Now, if that created a better
work place. And then she was locked in a shipping container
with an armed guard.
Now, my question to you is, if that's a better work place,
what was the work place like before? That's a rhetorical
question. I am not really asking that question.
They had binding arbitration at KBR. And because of that,
and they asserted it on cases like this.
Ms. Jones, in your foundation, you have heard from other
women who were raped; is that not true?
Ms. Jones. Yes, sir, I have.
Senator Franken. And women who under arbitration----
Ms. Jones. Yes, sir.
Senator Franken.--were told to keep silent; is that right?
Ms. Jones. Exactly.
Senator Franken. And because of that silence you didn't
know about anything like this, did you?
Ms. Jones. Exactly. I didn't know. It was not public
knowledge, unfortunately. I think it was a very big injustice
for it not to be public knowledge. It was an injustice for me
and all future mothers, wives, daughters, sisters, who want to
go to Iraq that don't know about all of the crimes that have
occurred overseas. Because it's been in secret arbitration,
it's a big injustice.
Senator Franken. And when Mr. de Bernardo said that you had
your day in court, what was your reaction?
Ms. Jones. I was livid, sir. Four years to fight to get in
court is not a day in court.
Senator Franken. I was livid too.
This is the result of your binding, mandatory arbitration,
Mr. de Bernardo.
Thank you, Mr. Chairman.
Chairman Leahy. Thank you.
Mr. de Bernardo, you wanted to say more and I don't want to
cut you off. Obviously I'll give you a chance to do that. But
let me ask you this question.
Mr. de Bernardo. I do want to say more when we have a
chance.
Chairman Leahy. I'll give you that. But when you do it
could you also answer this. If arbitration is cheaper for both
sides, it's fair for both sides, it's easier for both sides,
then why not have voluntary arbitration?
Mr. de Bernardo. OK. Should I make my comment or respond to
that first?
Chairman Leahy. Do both. Whatever you----
Mr. de Bernardo. I guess I'll start with your question, Mr.
Chairman, which is, this is the issue of pre-dispute versus
post-dispute. And there is the option of doing post-dispute
now, but it is not used. Because as a practical matter, once
you've gone through the process by which an individual
approaches a plaintiff's lawyer, secures a plaintiff's lawyer,
and they accept less than 5 percent of the people who go in who
wish for representation, they're convinced--that plaintiff's
lawyer is convinced that this case has a significant enough
chance of receiving either a settlement or damages that would
entice them to carry it forward and work on this case. We all
have limited time and resources, I understand that.
A complaint has been filed and either the lawsuit or the
charge has been filed. And, in effect, the individual has
reconciled to this point that they're--mentally that they're
going to do battle with their employer. You know, it's too late
at that point post-dispute arbitration as a practical matter
doesn't occur. It's very, very rare in the United States now
when there is the option for that.
Chairman Leahy. But, it would be----
Mr. de Bernardo. Of course it would be rare later----
Chairman Leahy. If there's no option it's a moot point.
That's my question. I mean, why not give the alternative?
You've testified, if I understand your testimony correctly, in
favor of these arbitrary arbitration clauses----
Mr. de Bernardo. Correct.
Chairman Leahy.--like the one that Ms. Jones faced. And I
would be one of the first to agree that there are many, many
times arbitration makes a great deal of sense.
In private practice, I was involved at different times in
arbitration and it made a lot of sense. But, shouldn't that be
something where each of the parties has that option? Not that
requirement, but that option?
Mr. de Bernardo. Well, if it is a post-dispute vis-a-vis
pre-dispute, it hasn't been used and it's not going to be used.
So, you know, should it be an option? As a practical matter it
wouldn't be an option that would be in use. That's the bottom
line. That's why I say that this legislation, the Arbitration
Fairness Act, if it were enacted, would end arbitration
employment in the United States. Effectively it would abolish
it because the overwhelming majority of arbitrations which
occur are based on pre-dispute agreements.
Chairman Leahy. Now, you wanted to say something further
to----
Mr. de Bernardo. Well, yeah, you know----
Chairman Leahy.--Senator Franken----
Mr. de Bernardo.--we're not a court of law. We are not here
to--I am not familiar with many, most, the entire record in
terms of the situation involving Ms. Jones. I have said how I
thought that this is a terrible situation with terrible facts.
What I do want to say is, if we're talking about justice in
the United States and who has access to justice, arbitration
provides a means by which employees, most specifically
employees, have tremendous access that they otherwise would not
have. If S. 931 were enacted, those 95 percent plus of
employees who now have their issues addressed and resolved
would not have that option. Because, you know, the first
threshold that I talk about is the fact that the plaintiffs'
bar is only going to accept less than 5 percent of the cases
that are brought to them.
The second thing is, the motions practice, there was some
reference to that earlier, and as cited in the testimony a
study by the National Work Rights Institute, 3,400 cases, 60
percent of those were decided by pre-trial motions, motions for
summary judgment, motions for dismissal. And in 98 percent of
the time the employers prevailed. So you can't get that
threshold to get to court. If you get to court it's likely you
are going to have it dismissed. Even if it goes to--you know,
1.3 percent of the cases in the Federal court system go to
trial. The vast majority of those are not jury trials. So, you
know, this idea that everybody has their day----
Chairman Leahy. Of course, a great number of them are
settled too.
Mr. de Bernardo. What's that?
Chairman Leahy. A great number of them are settled.
Mr. de Bernardo. Correct.
Chairman Leahy. OK.
Senator Franken.
Senator Franken. I just want to----
Chairman Leahy. We can be a little more flexible on the
time because there is only the two of us here because there are
so many other committees meeting.
Senator Franken. So does this 5 percent include the ones
that have been settled or not?
Here's my--I guess then I have a bigger--larger question.
Mr. de Bernardo. OK.
Senator Franken. In the statistics you cite in your written
testimony and in your present testimony, are these things that
you are actually familiar with?
Mr. de Bernardo. Yes, I would say----
Senator Franken. Well, you weren't familiar with the other
statistic and what 67 percent prevailing meant.
Mr. de Bernardo. Sixty-three percent.
Senator Franken. Now, I'm asking you another question and
you seem stymied.
Does the 5 percent include those that have been settled?
Mr. de Bernardo. You know, I have many, many statistics
that are cited in many footnotes. And I will say, if that's
from the National Work Rights Institute instant survey, many of
these statistics are from the National Work Rights Institute.
That is headed up by the former head of----
Senator Franken. I just want to know what the statistic----
[Simultaneous conversation.]
Mr. de Bernardo.--the employee rights----
Senator Franken.--means.
[Simultaneous conversation.]
Senator Franken. I want to know if----
Mr. de Bernardo.--reliable statistic, Senator, yes, I do.
Senator Franken. That's not what I asked. I didn't ask if
it was a reliable statistic. Reliable about what? That's what
I'm asking, what is it reliable about? You're talking about--
you're saying that employees don't have access to hearing their
case because only 5 percent get heard. And I'm asking what that
means? What that 5 percent means and you don't seem to know.
Mr. de Bernardo. No, what it means is that plaintiffs'
attorneys are not going to take every case that comes into
their offices----
Senator Franken. I want to know what the 5 percent
statistic means, sir. If you don't know, just say you don't
know. Could you do that, at least?
Mr. de Bernardo. Well, I do know. There's a survey that
says that less than 5 percent of the time plaintiffs' attorneys
are going to accept the cases that come to them. The
plaintiffs' bar, the plaintiffs' attorneys that I deal with
would readily admit that. There are many, many cases that come
in and they're going to say no unless they're convinced that--
--
Senator Franken. What if you went to 20 attorneys, would
that mean 100 percent of the cases are taken?
Mr. de Bernardo. You know----
Senator Franken. Let me--let me----
Mr. de Bernardo.--100 percent of the grievances--Senator,
if I could respond? One hundred percent of the grievances that
are filed in arbitration programs and dispute resolution
programs are addressed.
Senator Franken. Yeah, and you told me that----
Mr. de Bernardo. Less than 5 percent of litigation----
[Simultaneous conversation.]
Senator Franken.--that you don't know if $50 to Ms. Jones
would be considered in your statistic of whether that would be
her prevailing. So you don't really know too much about your
statistics.
Mr. de Bernardo. There are two studies----
Senator Franken. Here's another statistic, sir, from the
National Work Rights Institute.
Mr. de Bernardo. Senator, could I respond?
Senator Franken. No, give me a second here.
Mr. de Bernardo. OK.
Senator Franken. Found that the mean damages awarded by
arbitrations was 49,000, the mean damages awarded by district
courts is $530,000. That seems to be more beneficial to the
employee; doesn't it?
Mr. de Bernardo. Sure. Those numbers would be more
beneficial to the employee.
Senator Franken. Thank you, sir.
Chairman Leahy. Thank you.
Senator Franken. Thank you, Mr. Chairman.
Mr. de Bernardo. I would respond, if I can?
Chairman Leahy. Go ahead.
Mr. de Bernardo. That there are two surveys that I am
familiar with. I am not familiar with that survey. The two
surveys that are detailed and discussed and cited in my
testimony both found that the median or the mean or the average
awards given in arbitration in fact either exceed or are just
slightly less than what happens in litigation.
And, in fact, in the vast majority of times, if you are
talking about arbitration, you also don't have the 33 to 40
percent that has to go to the plaintiffs' attorney plus
expenses as well. So in fact the net----
Chairman Leahy. Mr. de Bernardo----
Mr. de Bernardo.--I'm talking about for the average
employee.
Chairman Leahy. Those studies----
Mr. de Bernardo. The average situation, the average
employee, they are more likely to get their issue addressed.
They are more likely to prevail and they are more likely to
receive a larger return if they go to arbitration than if they
go to litigation.
Chairman Leahy. And those statistics are in your testimony?
Mr. de Bernardo. They are, Senator.
Chairman Leahy. Thank you. So they will be before the
Committee. Appreciate that.
Mr. de Bernardo. Thank you, Senator.
Chairman Leahy. Professor Foreman, Circuit City and Gross,
do these make it more difficult for victims of employment
discrimination to seek relief in the court and does it--and if
you do get into court, does it put further obstacles in your
path in going before a jury?
Mr. Foreman. I mean, without a doubt. And I think there is
a consensus opinion that Gross makes it harder for people to
prove age discrimination. The courts have all said that, the
media have said that, the academic literature said that. There
is no debate. It is harder if you are a victim of age
discrimination after Gross to prove your burden.
And on the binding arbitration, Circuit City opened the
doors for arbitration of employment discrimination claims and
what happened is employers en mass adopted these. Almost 30
percent of employers now have some type of pre-dispute binding
arbitration. And I really want the Committee to focus on what
we heard from the employment community today. And what this
Committee was told was, well, you couldn't give the employee a
choice because they would choose not to go into binding
arbitration. When arbitration works is when we put it in
employee applications and handbooks where they don't really see
it, they don't have any ability to react.
But the comment was made once they know their rights, once
they get an attorney, then maybe they will choose not to go
into binding arbitration because they know there is not as much
discovery, they don't have as many appeal rights, and sort of
combining the two issues there's limited discovery in
arbitration.
Under the Gross decision the plaintiff has the burden of
proof and they have the burden of proving by some courts that
age was the sole motive. Well, with limited discovery and a
higher burden, how does a plaintiff ever win in these claim
cases?
And a bit on the statistics and Senator Franken, I think
you covered the prevailing party issue. I am not going to touch
on that at all.
Senator Franken. Please.
[Laughter.]
Mr. Foreman. But the statistics that the employment
community relies on are those bargained-for exchanges. They are
not pre-dispute binding arbitration by blue-collar workers. If
you want statistics that have done that analysis, they're cited
in footnote 50 of my materials. They are not my statistics,
they are not a think tank's statistics, they are an analysis
and it comes out two ways.
One, plaintiffs win less in arbitrations, and they win less
money in arbitrations across the board. And I think that's what
this Senate needs to deal with is how do you do this balance to
allow employees to have a free choice. After a dispute has
arisen is a different category than in pre-dispute binding
arbitration where there is no agreement.
And I think, Senator Franken, you raise a very good point
in the bill that you've introduced. Is it a time to revisit
Circuit City and determine whether when Congresses passes these
very meaningful statutes, freedom from discrimination based on
race and sex, they should be subject to binding arbitration at
all.
Chairman Leahy. Well, I'm going to have to be leaving, but
Senator Specter is here. I am going over to him to ask
questions. So that nobody will feel that they have been in any
way cutoff, any one of you, I will keep the record open for 1
week for you to add to any statement you have made or wish to
add to this so the record will be complete. I have found this
to be a very good and very worthwhile hearing.
Senator Specter, I will yield to you.
Senator Specter. Thank you, Mr. Chairman. I came to meet
with you and I will stay around for that. I am going to ask
just one question. I came in late, but I have been very deeply
involved in this issue as it's been percolating for a long
time.
As you professionals know, there has been a lot of talk
about the arbitration provision in the Employee Free Choice
Act. And my question is for you, Mr. de Bernardo. I heard your
last response to Senator Franken's question. The business
interests have been very much opposed to any kind of
arbitration in the Employee Free Choice Act even last best
offer, which very sharply restricts the arbitrator's choice. Of
the arguments which you have made, I heard the tail end, of the
advantages of arbitration and how much you are pushing it,
obviously in the context as an alternative to litigation. But
in the context of all of the virtues you extol as to
arbitration, doesn't that pretty much cut out the efficacy or
weight of business' opposition to arbitration in the context in
the Employee Free Choice Act proposals?
Mr. de Bernardo. Senator, I think we are talking about
apples and oranges. I would say no as my response.
One is arbitration----
Senator Specter. I am not surprised at your response. Now
tell me why?
Mr. de Bernardo. One is arbitration in lieu of litigation
the other is arbitration in lieu of collective bargaining. They
are totally different situations.
What is analogous in a union sector to what happens in the
non-union sector in terms of employment arbitration is the
arbitrations that occur when there is a collective bargaining
agreement for employee disputes which are common, and is
sacrosanct to the labor movement. When the labor movement, has
tried to--when they've tried to export unionization to Mexico,
Central America, and South America, they call for arbitration
of employment disputes. So in an organized labor setting,
arbitration of employment disputes is in fact as entrenched as
it is in our jurisprudence system in the non-union sector.
In EFCA, the Employee Free Choice Act, what we are talking
about there is arbitration in lieu of collective bargaining, a
totally different situation whereby you would have very, very
little incentive or no incentive for the union representative
to reach agreement with the employer because they would rather
go to an arbitrator on a very expedited, quicky basis and have
a third party make a decision in terms of what the terms and
conditions of employment are long term including wages,
benefits, and a whole host of other terms and conditions of
employment. They are really not analogous situations.
Senator Specter. Just a concluding comment, I am aware of
that distinction. I am aware of that argument.
Mr. de Bernardo. I am sure you are, Senator. Appreciate
that.
Senator Specter. The consequence of collective bargaining
has been unsuccessful about half of the cases where there is no
first contract and a year passes and then a move is made for
decertification and sometimes better resourced employers are
able to outweigh the union. So what the Congress has to decide
is whether you need a little push on collective bargaining. And
if there is arbitration even limited to the last best offer,
which restricts the arbitrator's discretion, that isn't an
appropriate conclusion to implement collective bargaining with
the thought that if there is that end product that people will
be a lot more anxious to come to agreements without even having
the limited last best offer.
But these are weighty issues and I compliment the Chairman
and the Committee for taking it up and we will be spending a
lot of attention.
Mr. de Bernardo. Sir, if I could respond just briefly, I
would say that EFCA doesn't represent a little push, it's a
huge push, it's a knock-down, drag-out push. So, you know, if
there are problems that need to be addressed that is an over
response, frankly, analogous to what I think is with S. 931,
which is an over response to--you know, are there reforms that
are necessary? Certainly that's a possibility. Are there
reforms that I would support? Yes, there are. But it is not to
completely abolish arbitration in employment in America today.
Senator Specter. I will use the prerogative of the chair to
have the last word. You say there are possibly reforms. I look
at Mr. Gross and Ms. Jones I'd say that's a good possibility.
Thank you. We stand in recess.
[Whereupon, at 11:38 a.m., the Committee was adjourned.]
[Questions and answers and submissions for the record
follow.]
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