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Workers’ Lawyers End Turf War After High Court Arbitration Loss

Bloomberg Law—Ben Penn

Workers’ lawyers are uniting around arbitration as the new reality, following a recent Supreme Court decision that upended the business model for suing employers.

The justices ruled in May that companies may require workers to sign arbitration agreements waiving their rights to file a class or collective action. The decision, in Epic Systems Corp. v. Lewis, is widely recognized as a major victory for employers. They now have the high court’s blessing to shield themselves from costly and sometimes embarrassing class actions.

Several big plaintiffs’ firms are fighting back by filing hundreds of solo arbitration claims against individual companies. Businesses generally pick up the tab for arbitration, which can run into the millions with mass filings.

But smaller plaintiffs’ firms are getting into the game, too, by collaborating instead of fighting for clients. Their mission: Show employers that inundating a business with arbitration filings is a strategy available to any employment lawyer, not just the handful of national players, if they share resources.

“The fact of the matter is that I think plaintiffs’ lawyers are going to have to be less territorial about their cases,” Rachhana Srey, co-chair of the National Employment Lawyers Association’s wage-and-hour practice group, told Bloomberg Law. “I think people are thinking hard about that and letting other people know when they’ve got good claims.”

For instance, that means a lawyer saying, “‘I’ve got this good case on the merits, I’ve got these good claims, our firm can handle 100 of them, your firm can handle 100 of them,’” said Srey, who’s also a partner at Nichols Kaster in Minneapolis.

Most plaintiffs’ lawyers don’t have the resources to deploy the mass filing strategy. It usually takes a heavyweight such as Outten & Golden, Cohen Milstein, or Nichols Kaster to pull it off. That realization has prompted the discussions about banding together.

The strategy builds on existing, less formalized plaintiff’s bar coordination. It generally involves firms sharing clients and collaborating with other firms, while developing a system to share experiences about individual arbitrators. Although the plaintiffs’ bar has a steep climb from the Epic Systems ruling, their willingness to pool thin resources with competitors shows practitioners are focused on long-term survival.

Play Well Together

The plans started to take shape at NELA’s annual conference in late June. With Epic Systems fresh on their minds, plaintiff bar attendees discussed the need to disprove a common assumption within the management community that the mass arbitration approach is an empty threat.

“I think the defense bar may be thinking, ‘If it’s not an Outten & Golden or it’s not a Nichols Kaster, they’re not going to do it.’ But we all have friends out there in the bar, and people know us,” Srey said. “This is our push back. I don’t know how it works on the defense bar side, and whether they’re as good at playing together in the sandbox as we are.”

Case in point: Last fall, national firm Outten teamed with the smaller Werman Salas to file nearly 400 arbitration demands against restaurant chain Buffalo Wild Wings. The parties are now in settlement negotiations.

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Arbitration Database

The other prong of the game plan involves building a database on arbitrators and past decisions to overcome the lack of transparency in arbitration.

Unlike typical litigation, there are no publicly accessible court dockets to demonstrate a particular arbitrator’s case history. Although arbitration databases are available to fill some of the gap, lawyers are often left with incomplete information about arbitrators and their previous decisions.

This type of information-sharing already takes place on both sides of the bar, “but the stakes are higher now because there’s going to be more privatized adjudications,” Cathy Ruckelshaus, general counsel at the National Employment Law Project, told Bloomberg Law.

“They’re not going to know by doing a case law search what’s happening,” Ruckelshaus added. “Everything is secret so you need to communicate better on the plaintiffs’ side.”

Leaders Know What They’re Up Against

Plaintiff attorney leaders are careful to avoid an overly optimistic assessment of what Epic Systems has done to their practices. They once thrived on the efficiency of one client suing on behalf of thousands of similarly situated colleagues. Now they’re preparing for hordes of companies to start inserting class action waivers into arbitration agreements.

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