Jottings By An Employer's Lawyer

Tuesday, August 19, 2003

Write Your Arbitration Agreement In 1996 and Have It Applied Today and Be Wary of the Results

Today's 3rd Circuit decision is a good lesson in the dangers of letting a policy age without keeping it in tune with the times; although more accurately in this case a lesson in how long it sometimes takes to get matters resolved through litigation. Here the arbitration agreement in questions was signed in August, 1996 and referred to 1993 rules of the AAA. The disputed employment actions occurred in December 1996 and early 1997. Perhaps not surprisingly for an arbitration agreement of those times it allowed only a 30 day statute of limitations, limited remedies to actual damages, and required the loser to pay for all costs of the arbitration. Unfortunately, measured by 2003 standards it was (no doubt correctly) found to be both procedurally and substantively unconscionable. Alexander v. Anthony International, Inc. (3rd Cir. 8/19/03) [pdf]. The most serious difference was whether or not these elements could be severed thus leaving an enforceable agreement. The majority held they could not, the dissent would at least have sent it back for a further look. So, although through no apparent fault of the employer's, a case begun amost seven years ago now heads for its first determination on the merits. Not an ideal way to run a railroad, or more accurately, a justice system.


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