| Call for a FREE case evaluation: (713) 255-2055 |
| Kelly Law Firm's Defeat of Halliburton's Arbitration Provision is a Boost to the Arbitration Fairness Act |
Jamie Leigh Jones’ claim that she was
gang-raped by co-workers in Iraq four
years ago has become a rallying cry for
congressional efforts to ban the mandatory
binding arbitration clauses that thousands
of companies insert into their employment
contracts.
Jones is part of a growing political lobby
spearheaded by the plaintiffs’ bar and
consumer advocates against pre-dispute
mandatory arbitration. Their cause got a
legal boost recently when the 5th Circuit
affirmed that Jones may sue her ex-
employer, Halliburton Co./KBR Kellogg
Brown & Root, even though she signed an
employment contract with wholly owned
subsidiary Overseas Administrative
Services Ltd. that requires virtually all
disputes to be privately arbitrated.
gang-raped by co-workers in Iraq four
years ago has become a rallying cry for
congressional efforts to ban the mandatory
binding arbitration clauses that thousands
of companies insert into their employment
contracts.
Jones is part of a growing political lobby
spearheaded by the plaintiffs’ bar and
consumer advocates against pre-dispute
mandatory arbitration. Their cause got a
legal boost recently when the 5th Circuit
affirmed that Jones may sue her ex-
employer, Halliburton Co./KBR Kellogg
Brown & Root, even though she signed an
employment contract with wholly owned
subsidiary Overseas Administrative
Services Ltd. that requires virtually all
disputes to be privately arbitrated.
| Assault Actions U.S. courts disagree over compelling employees to arbitrate sexual assault claims. For example, last year a federal judge in Texas compelled an ex-Halliburton employee with claims similar to Jones’ to arbitrate her negligence claims against the company on the basis that the company’s barracks in Baghdad were part of her working environment (Barker v. Halliburton Co.). In a case involving a different employer, the Mississippi Supreme Court in 2007 refused to compel to arbitration a restaurant worker’s claim that she was raped on duty by her manager, even though her employment contract specified all "claims...arising out of or relating to employment" would be resolved by arbitration. The court held her claim was "unquestionably" beyond the scope of the arbitration clause (Smith ex rel. Smith v. Captain D’s). Similarly, the Kentucky Court of Appeals ruled in 1996 that a mandatory arbitration clause covering any controversy "arising out of employment" didn’t apply to an employee’s claim that her supervisor raped her at a work- related convention. "What the supervisor is accused of doing is independent of the employment relationship," the appeals court reasoned (Hill v. Hilliard). |
In a decision for which Halliburton has requested en banc review, the 5th Circuit
split 2-1 Sept. 15 to allow Jones to sue the U.S. defense contractor for assault and
battery, intentional infliction of emotional distress, forcible confinement, and
negligently hiring, retaining and supervising the men she alleges raped her. The
alleged incident took place in 2005 when Jones was a 19-year-old clerical worker
in Baghdad’s Green Zone.
Jones’ lawyer, Houston attorney Todd Kelly of The Kelly Law Firm, says he
believes Jones’ case is the first time Halliburton’s sweeping arbitration clause has
been defeated in court.
Kelly argues mandatory binding arbitration can work for parties with equal
bargaining power but not when an employer imposes private arbitration on
individuals as a condition of their employment. "Employers sell it as quicker,
cheaper and confidential," Kelly says, "but if it were fair it wouldn’t have to be
forced."
Many employers embrace mandatory binding arbitration as a fast and effective
way to handle disputes with their employees. According to testimony at a recent
Senate hearing, 15 to 25 percent of employers nationally have adopted mandatory
employment arbitration procedures, and arbitration is used to resolve disputes
involving at least one-third of the nation’s non-union employees.
"Courts across the country broadly favor arbitration, and it would take a case
like [Jones] with some unusual twist to allow an employee to get out of an
arbitration agreement," says Reggie Belcher, a shareholder at Turner Padget
Graham Laney.
Outer Limits
Jones alleged that she was drugged at an after-hours party and then, while
unconscious in her barracks bedroom, repeatedly sexually assaulted by several
Halliburton workers. That was enough of a departure from ordinary workplace
misconduct to convince the 5th Circuit’s majority to uphold the U.S. District
Court for the Southern District of Texas’ refusal last year to compel Jones’s
claims into private arbitration.
Halliburton’s broadly worded arbitration clause stipulated that "any and all
claims that you might have against employer related to your employment" and
"any and all personal injury claim[s] arising in the workplace" must go to binding
arbitration rather than court.
The 5th Circuit found the claim exceeded the "outer limits" of even that
expansive wording because the alleged torts occurred while Jones was off duty
and, moreover, they didn’t "arise in the workplace."
If the decision stands, it may embolden plaintiffs attorneys who find themselves
on the losing end of employers’ motions to compel arbitration.
"Certainly if you are a lawyer and you represent employees and you are trying to
wriggle out of an arbitration agreement, this is a case that you would cite,"
Belcher says.
PR Boost
Halliburton’s failed motion to compel arbitration was a public relations boost for
the proposed Arbitration Fairness Act (AFA), which would prohibit pre-dispute
mandatory arbitration clauses in employment and consumer contracts.
"Pre-dispute, mandatory, confidential, binding arbitration has made corporate
entities above the law," Jones testified Oct. 7 at a Senate hearing.
In other testimony, Jackson Lewis Partner Mark de Bernardo warned on behalf of
a group of large employers that if the AFA passes, "it would in effect spell the end
of all employment arbitration in America. The cost to employees and employers
and to the interests of justice and sound employee relations would be enormous
and extremely destructive."
That view cut little ice in Congress the day before when Sen. Al Franken, D-Minn.,
pushed through, with bipartisan support, the "Jones amendment" to the 2010
Defense Appropriations Bill. The amendment would bar federal funds to defense
contractors that use mandatory arbitration for claims of workplace
discrimination, sexual assault and other torts.
Because the House did not include similar arbitration language in its version of
the defense spending bill, it will be up to a House-Senate conference committee to
decide whether Franken’s amendment will remain in the legislation.
split 2-1 Sept. 15 to allow Jones to sue the U.S. defense contractor for assault and
battery, intentional infliction of emotional distress, forcible confinement, and
negligently hiring, retaining and supervising the men she alleges raped her. The
alleged incident took place in 2005 when Jones was a 19-year-old clerical worker
in Baghdad’s Green Zone.
Jones’ lawyer, Houston attorney Todd Kelly of The Kelly Law Firm, says he
believes Jones’ case is the first time Halliburton’s sweeping arbitration clause has
been defeated in court.
Kelly argues mandatory binding arbitration can work for parties with equal
bargaining power but not when an employer imposes private arbitration on
individuals as a condition of their employment. "Employers sell it as quicker,
cheaper and confidential," Kelly says, "but if it were fair it wouldn’t have to be
forced."
Many employers embrace mandatory binding arbitration as a fast and effective
way to handle disputes with their employees. According to testimony at a recent
Senate hearing, 15 to 25 percent of employers nationally have adopted mandatory
employment arbitration procedures, and arbitration is used to resolve disputes
involving at least one-third of the nation’s non-union employees.
"Courts across the country broadly favor arbitration, and it would take a case
like [Jones] with some unusual twist to allow an employee to get out of an
arbitration agreement," says Reggie Belcher, a shareholder at Turner Padget
Graham Laney.
Outer Limits
Jones alleged that she was drugged at an after-hours party and then, while
unconscious in her barracks bedroom, repeatedly sexually assaulted by several
Halliburton workers. That was enough of a departure from ordinary workplace
misconduct to convince the 5th Circuit’s majority to uphold the U.S. District
Court for the Southern District of Texas’ refusal last year to compel Jones’s
claims into private arbitration.
Halliburton’s broadly worded arbitration clause stipulated that "any and all
claims that you might have against employer related to your employment" and
"any and all personal injury claim[s] arising in the workplace" must go to binding
arbitration rather than court.
The 5th Circuit found the claim exceeded the "outer limits" of even that
expansive wording because the alleged torts occurred while Jones was off duty
and, moreover, they didn’t "arise in the workplace."
If the decision stands, it may embolden plaintiffs attorneys who find themselves
on the losing end of employers’ motions to compel arbitration.
"Certainly if you are a lawyer and you represent employees and you are trying to
wriggle out of an arbitration agreement, this is a case that you would cite,"
Belcher says.
PR Boost
Halliburton’s failed motion to compel arbitration was a public relations boost for
the proposed Arbitration Fairness Act (AFA), which would prohibit pre-dispute
mandatory arbitration clauses in employment and consumer contracts.
"Pre-dispute, mandatory, confidential, binding arbitration has made corporate
entities above the law," Jones testified Oct. 7 at a Senate hearing.
In other testimony, Jackson Lewis Partner Mark de Bernardo warned on behalf of
a group of large employers that if the AFA passes, "it would in effect spell the end
of all employment arbitration in America. The cost to employees and employers
and to the interests of justice and sound employee relations would be enormous
and extremely destructive."
That view cut little ice in Congress the day before when Sen. Al Franken, D-Minn.,
pushed through, with bipartisan support, the "Jones amendment" to the 2010
Defense Appropriations Bill. The amendment would bar federal funds to defense
contractors that use mandatory arbitration for claims of workplace
discrimination, sexual assault and other torts.
Because the House did not include similar arbitration language in its version of
the defense spending bill, it will be up to a House-Senate conference committee to
decide whether Franken’s amendment will remain in the legislation.
