The Virginia Supreme Court has enforced an arbitration
agreement against a housekeeper who sought to sue her former boss after he physically
assaulted her.
By this point, like it or not (not), consumer and worker advocates
expect to find arbitration clauses hidden in virtually all of our form
contracts, whether it be for our cell phones, credit cards, online purchases,
or mortgages. And we certainly wouldn’t be surprised to find them in the
employment contracts of employees working for companies, particularly large
ones. But finding an arbitration agreement that’s been foisted on the live-in
housekeeper by her individual homeowner-employer is unexpected. In other words, just when you think arbitration
unfairness can’t get any worse, it does.
Here, the live-in housekeeper signed a one-page agreement to
arbitrate that was presented to her by her employer, a car dealership owner, sometime
after she started working, and it contained no other agreement about her pay,
hours, or other terms of employment. A few years later, the employer beat the
housekeeper after she accepted service of his witness summons in an unrelated
case (apparently, he really dislikes being in courts). Her employment ended,
and she sued the car dealer.
One extra element of unfairness is that car dealers as a
group ran to Congress to get protection for themselves from mandatory
arbitration, with respect to their disputes with car manufacturers. Potentially motivated by the huge sums of
money that car dealers contribute to campaigns each year, the Congress passed a
law in 2001 that exempted car dealers from the Federal Arbitration Act with
respect to their disputes with Ford, GM, Toyota, etc. At the time, the head of
the car dealers’ trade association promised Congress that car dealers would
support legislation banning car dealers from using arbitration clauses against
their own customers. That promise was promptly broken, and today nearly all car
dealers force their customers to sign arbitration clauses before they can buy a
car. No wonder the homeowner-car dealer here was familiar with the power of
arbitration agreements.
In this case, Schuiling
v. Harris, the Virginia Supreme Court sent the dispute to arbitration
(decision here).
The issue before that court was whether the provision designating the
now-unavailable National Arbitration Forum (NAF) was severable, or whether the
unavailability of the arbitration forum defeated the agreement altogether. The
court reasoned that because the contract had a non-severability clause and
because the contract was only about
arbitration, it could still be enforced. Implausibly, the court assumed that
housekeeper was familiar with the state statute that provided for a
court-designated arbitrator in the event the designated arbitrator was
unavailable. Right. My colleague Paul Bland has historically blogged
extensively about the problems with courts rewriting arbitration clauses
that had designated the shut-down-by-state-authorities, corrupt NAF.
Aside from the (large) NAF problem in this case, the fact
that an individual homeowner foisted an arbitration agreement on his already
employed housekeeper and then successfully used it to get out of a case in
which he was alleged to have assaulted her is disconcerting. It’s one thing for
me to have to arbitrate my dispute with AT&T over my phone bill—after all,
I don’t live with AT&T, and any dispute is likely to be over money. I am
almost certainly still getting the short end of the stick, and, as a consumer
rights attorney, I sort of expect not to be able to hold AT&T accountable
for treating me poorly anymore. It seems very different in kind for an
individual homeowner to be able to invoke forced arbitration over his assault
of his individual domestic employee—different perhaps because the employer’s
power grab is personal, violent, and transparent. Not to mention a million
miles away from the policy justifications spouted by arbitration apologists.
I admit, this case makes me a little sick, but what’s even
scarier is that the unanimous Virginia court didn’t bat an eyelid.
This post originally appeared on the Public Justice Blog.
