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The Circuit City Case
On March 21, 2001, the United States Supreme Court settled the issue, at least for now. A Circuit City employee signed an employment agreement with such an arbitration provision and then fought to get his case out of arbitration and before a jury. It eventually got to the Supreme Court, which seized upon the case as way to settle the arbitration issue. In a 5-4 decision, the Court ruled that a properly-drafted arbitration clause in an employment agreement must be enforced by the courts, even though the arbitration clause might circumvent the right to a jury trial pro-vided by the various federal employment laws, and even if the employee lives in a state that bars these kinds of contractual provisions.
The Circuit City case is monumentally important. Like Mr. Muhnie, for years plaintiffs' lawyers have been using the inherent risks of an employer going before a jury as a sword that could be used to extract a "nuisance" settlement. Employers often felt that they had no choice but to pay something to avoid the burdens and risks of a trial by jury. The proliferation of these "nuisance" settlements has had the effect of encouraging more employees to take their shot at easy money, creating an upward spiral of employment practices litigation, as almost all employers have become painfully aware. But for now - and there is always the possibility that Congress could step in and rewrite the law from the ground up - the balance has shifted. Employers have a come back. "Mr. Muhnie," you might say, "you and I both know that you do not have the evidence to prove your case. Were this a jury case, you might be able to overcome that deficiency by playing on the emotions of a jury, and that risk might cause me to settle. But you won't have that option here. This case will be decided by an objective, professional arbitrator. And he or she will see your case for what it is. See you in court." Cue the Battle Hymn of the Republic, as justice prevails.
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