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Forced Arbitration Isn’t Just for Employees of Corporations Anymore. It’s Also for Your Housekeeper (Who You Assaulted).

Forced Arbitration Isn’t Just for Employees of Corporations Anymore. It’s Also for Your Housekeeper (Who You Assaulted).

By Leah Nicholls, Kazan-Budd Attorney

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.