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Sterling Jewelers Worker Arbitration Standoff Encapsulates Goal of H.R. 985

  • Mar 9, 2017
  • Corrado Rizzi
  • What You Need To Know

The Fairness in Class Action Litigation Act of 2017 (H.R. 985) is Rep. Bob Goodlatte’s (R-Va.) ostensible, shameless, flagrantly pro-business, and strenuously opposed silver bullet meant to kill class action lawsuits as a way of recourse for injured consumers and workers. Thanks to a revealing Washington Post piece on the nightmarish, ceaseless arbitration endured by current and former Sterling Jewelers employees, we’re provided with some foreshadowing of the future under H.R. 985: a landscape in which employers, corporations and their legal teams are firmly and irrevocably in control, and consumers and workers can do nothing about it.

The pace at which a nearly decade-old employee arbitration claim against Sterling Jewelers—the parent conglomerate of Jared the Galleria of Jewelry and Kay Jewelers—has moved can accurately be described as “glacial.” And one has no reason to doubt that Sterling and its attorneys prefer it to stay that way.

Thanks to mandatory arbitration policies, large corporations have a playbook to work from that ensures they remain in control of any and all legal action.

Thanks to the company’s mandatory employee arbitration policy, Sterling and its legal team have securely been in control of the proceedings (if anything about this can be considered forward progress) ever since the first dozen women—one of whom has since died—claimed in 2008 that they were “routinely groped, demeaned and urged to sexually cater to their bosses” to keep their jobs. Today, an estimated 69,000 women are covered by the case, which now includes allegations that Sterling systematically paid women less than men and passed over others for promotions that were then given to male workers.

On top of the ease with which the company has been able to sidestep a class action lawsuit, here are a few other things that work in Sterling’s favor:

  • Sterling has reserved the right to refuse an arbitrator if the company believes he or she will not fairly rule on the case.

  • Even when a decision is handed down by a Sterling-approved arbitrator, very limited grounds exist on which an appeal can be made.

  • Despite this action crawling along for nearly 10 years, only in late February 2017 did Sterling grant workers’ lawyers permission to release more than 1,300 pages of years-old sworn statements.

  • What’s more, the case documents were only made public under Sterling’s condition that none of the individuals wrapped up in the allegations would be identified by name.

  • Until the Washington Post obtained the case documents, it was kept under tight seal that the 2013 class certification claimed Sterling and its parent company’s now-CEO was himself accused of sexual misconduct with female employees.

  • Although the first claims were made back in 2008, an arbitrator only certified a class of women, allowing the case to move forward, in 2015.

  • Even after all this, current and former Sterling employees still have to wait until at least 2018 for a class hearing before an arbitration judge of the company’s choosing.

Thanks to mandatory arbitration policies, large corporations have a playbook to work from that ensures they and their legal teams, not injured workers or consumers, remain in control of any and all legal action. If the Fairness in Class Action Litigation Act of 2017 is put into law, this situation will only get worse. Mandatory arbitration policies are already a dubious, if legal, method to handcuff consumer and workers’ rights. The goal of H.R. 985, quite frankly, is to throw away the key.

With the national embarrassment of mandatory arbitration already a built-in weapon for some corporations, H.R. 985 would provide companies even more tools to fight off—or, per the bill’s goal, dodge entirely—lawsuits brought by consumers and workers:

  • The “same type and scope of injury” provision – This is the part of H.R. 985 that, in one fell swoop, would essentially eliminate consumers’ and workers’ right to pursue class action lawsuits, where one or more people file a case on behalf of potentially thousands. It is the ace-up-the-sleeve weapon corporate attorneys will turn to to shut down class action lawsuits as an option for legal recourse. By forcing attorneys to jump over such an insurmountable hurdle for class certification—namely, by having to prove that all class members suffered the exact same type and scope of injury—it will be almost impossible for any class action litigation move forward.
    • A situation in which corporate counsel would use this to their advantage would be, for example, in a lawsuit filed over injuries caused by contaminated water. In such a case, where thousands of people were injured but suffered different ailments, it would be impossible to clear the “same type and scope of injury” obstacle.

  • The automatic appeal provision – H.R. 985 would allow defendants to automatically appeal class certification in class action lawsuits. As noted in an opposition letter penned by Impact Fund executive director Jocelyn D. Larkin, this tool would add years to the life of class action cases, during which consumers’ and workers’ costs would sharply increase, victims’ and witnesses’ memories would fade, evidential corporate documents and communications could be lost, and courts could be thrown into further disarray. H.R. 985 allows for corporations to appeal class certifications in the middle of every lawsuit.

  • The “conflicts of interest” provision – This part of the bill unfairly targets plaintiffs’ attorneys by imposing upon them burdens that do not apply in the same way to corporate defense lawyers. This provision aims to prevent instances where, say, a family member may be representing another family member—or, similarly, where an attorney may represent a client he or she has previously represented—in a class action case by requiring consumers’ and workers’ counsel to disclose precisely how the named plaintiff came to be involved in the litigation. In short, this provision is Congress’ attempt to dictate who you can retain for legal services.

  • The “issues classes” provision – H.R. 985 would prohibit courts from certifying classes with respect to particular issues, cases that are commonly called “issue class actions.” Under current law, issue class actions can be brought under a different process than standard class action litigation because certain cases involve fundamental civil rights claims, such as racial and gender discrimination. The Fairness in Class Action Litigation Act of 2017 would eliminate these types of lawsuits from being certified as a class, with another side effect being the evisceration of lawsuits where injunctive relief is the desired outcome.

The above is by no means a complete roundup of the problems with the Fairness in Class Action Litigation Act of 2017 and the lasting harm it could cause consumers and workers. The proposed law is breathtakingly narrow in its scope, one-sided, poorly written, would throw away decades of established legal precedent, and is an unabashed attack on the rights of consumers and workers.

Furthermore, the Sterling Jewelers situation is an extreme example of the kind of wiggle room corporations will have when the law is completely on their side, and should not be viewed as a procedural cookie cutter by which other arbitration issues are handled. But a clear parallel exists between how long it’s taken for any progress to manifest in the Sterling case, how beneficial that is for the company, and the goals of H.R. 985: the more bogged down consumer and worker litigation becomes, the more hurdles injured American citizens and their attorneys need to jump through, the more time it takes to resolve cases, the better for the corporations.

How Can I Oppose the Fairness in Class Action Litigation Act of 2017?

ClassAction.org stands with the American Association for Justice, hundreds of civil rights organizations, the American Bar Association, The Leadership Conference on Civil and Human Rights, and many others in opposing H.R. 985.

Let your voice be heard. Visit TakeJusticeBack.com to call or write a letter to your elected officials.

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Stop H.R. 985

A reckless new bill represents an unprecedented threat to consumer rights, essentially gutting class action and mass tort litigation. Congress has tried to ram it through without us noticing. Read more about the implications of this bill, and contact your members of Congress to protect your rights.

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