Mayhall Fondren Blaize

Business litigation may be limited by arbitration, Court rules

Business disputes in Louisiana and nationwide are more often than not concerned with some kind of a contract or purported agreement between the parties. A modern technique of trying to keep contract disputes out of the business litigation arena is to insert a clause in the written agreement, compelling the parties to arbitrate their dispute. Arbitration usually involves a more informal procedure where one or more lawyers or retired judges hear the case and render a decision.

This usually involves a waiver of the right to sue, and with respect to contracts that businesses enter into with consumers, there is also usually a clause, prohibiting the filing of class action suits. Such contracts can also be between two businesses, with the arbitration clause being inserted to save the expenses of protracted litigation. Arbitration is not inexpensive, but it is nowhere as costly as court litigation.

The parties also often give up their right to appeal the arbitration decision to a court of law. In general, the courts have trended nationally toward upholding the validity and enforceability of arbitration provisions. Such clauses have also been implemented by employers to prevent their employees from suing in court and from bringing class actions against the employer. The U.S. Supreme Court recently decided the enforceability of such employment arbitration clauses.

The Court, in a closely contested 5-4 decision, decided that such clauses can be enforced by the employer. The dissenting Justices argued that this result would conflict with the Labor Relations Act and other federal and state guarantees of workers to band together to protect their rights and their security regarding their income and working conditions. It is doubtful that the outcome will severely limit existing collective bargaining institutions and practices, because such rights are established through a large web of various federal and state laws. In Louisiana, many businesses may welcome this latest affirmation of their right to compel arbitration in lieu of business litigation in the courts. 

Source: The New York Times, "Supreme Court Upholds Workplace Arbitration Contracts Barring Class Actions", Adam Liptak, May 21, 2018

No Comments

Leave a comment
Comment Information