Good News or Bad
News?
From the April,
1999 issue of Registered
Representative magazine
Under NYSE and NASD rules,
employees are no longer forced to take their
discrimination and harassment claims to
arbitration. Firms can still require a contract
mandating arbitration, but some are offering
alternatives. PaineWebber has set up an alternative
dispute resolution system for discrimination and
harassment claims, and Merrill Lynch now allows all
employee disputes to go to any of four arbitration
forums.
With more choices come more
questions. Should you consider letting a claim go
to arbitration if you are not required to do
so?
Let’s consider the
different types of employment claims. Regarding
discrimination claims, employees and their
representatives vehemently and rightfully argue
that mandatory arbitration eviscerates the right to
a jury trial. That’s true, but is
arbitration always a bad deal for the employee? The
claimant and the attorney should look at the
big picture before deciding whether to exercise the
right to go to court.
Suing your employer will put your career under a
microscope. This means that arbitration may
have some benfits from your point of view.
Arbitration testimony is taken
in private, transcripts are rarely prepared, and
awards don’t often describe the underlying
facts in detail. These aspects of arbitration may
benefit employees who don’t want to see their
dirty laundry (true or false) aired in a courtroom
open to all.
Speed is another factor. I
recently chaired an NASD arbitration panel that
resolved an age discrimination claim 18 months
after it was filed and after seven days of
testimony. I doubt a similar case in either federal
or state court in my home state of Massachusetts
would have gone to trial for at least two to three
years.
An employer’s almost
certain appeal from an adverse jury verdict could
further delay the receipt of benefits. Arbitrations
wrap up more quickly— and, in some cases,
more cheaply—because panels focus on setting
a fixed trial date almost immediately after a claim
is filed and because an appeal is almost
impossible.
Furthermore, NASD and NYSE rules
ordinarily do not permit witnesses to be deposed
before a hearing. This may cost you the ability to
“discover” what evidence your employer
will present against you. The absence of
depositions, however, also means that arbitrators
will rarely exercise their power to dismiss a claim
without a hearing.
In court, employers often move
to dismiss discrimination cases on the ground that
no evidence elicited during discovery points to
wrongdoing. Judges often grant these motions, as
was the case with Paula Jones’ claim against
President Clinton. You’re more likely to get
a chance to present live testimony in a close case
in arbitration.
The NASD makes an effort to
train all arbitrators who expect to hear
discrimination cases. I’ve watched the
three-hour video the NASD uses for this purpose. It
isn’t a detailed course. Nonetheless, it
presented the law in an even-handed manner.
Arbitrators who have attended these courses have a
frame of reference that jurors don’t at the
start of trial. Arbitrators will also be more
familiar with the day-to-day operations of
securities firms than jurors.
Finally, there is no simple
answer to the question of whether you have a better
shot at winning before arbitrators instead of a
jury. A study of 1998 California employment cases
revealed that 54% of the juries in the cases at
issue—and 87% of jurors in race
discrimination cases—ruled in favor of
employers.
If you must assert claims
against a current or former employer, you may have
a choice of legal forums. You’ll need to
reach your own conclusions on which forum is best
for you and your case.
Reprinted with permission of Registered
Representative magazine
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Copyright ©2000-01 Edward R.
Wiest, P.C.
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