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Justice Denied

You deserve the chance to hold a corporation accountable when it has harmed you. But what if you are deprived of that right? These three stories illustrate what happens to people when forced arbitration closes the courthouse doors.

Kate Halloran January 2017

No Accountability

Tia Holloman started working at Circuit City in Marlow Heights, Md., right out of college. An excellent employee, she was invited to join a management train­ing program and was assigned a mentor—an older manager named Curtis. Excited about this opportunity, Tia was unprepared for what happened next. Curtis began making inappropriate sexual comments to her when they were in a back room at the store. Things only got worse: Curtis would brush up against Tia when they worked together, and once he exposed himself to her.

Eventually, Tia spoke to another manager. “They noticed that I wasn’t enthusiastic anymore and had stopped doing the training,” she said. “So I explained why.” But management dismissed her concerns. Tia decided she no longer wanted to work at the store and started studying for a social work license so she could find another job, bringing her study materials to work and reviewing them during breaks.

One day during Tia’s break, a longtime customer came into the store and asked for her. She walked onto the store floor with her study materials rolled up in her hand so she could help the customer, but Curtis confronted her. “He demanded to see what I had. He grabbed my hand and squeezed,” Tia recounted. As she pleaded with him to stop, Curtis dragged her around the store in front of ­customers and other employees. Tia’s wrist was in a brace for nearly a month—Curtis had torn a ligament in her hand.

Curtis was fired, and Tia discovered that sexual harassment complaints had been filed against him before Circuit City assigned him as her mentor. After the attack, which the store’s video surveillance captured, Tia was told that she only could bring a sexual harassment claim against the store through arbitration. Tia did not recall signing an agreement to arbitrate any claims against the company, but Circuit City had made her sign a forced arbitration agreement as a condition of employment—with a manager instructing her where to sign but not allowing her to review it.

Her attorney, Brian Markovitz, said that other employees came forward who also had unknowingly signed away their rights. “There was active encouragement [by Circuit City] for employees to sign the agreement without knowing what they were getting into,” Markovitz said. “The manager held onto their application paperwork while instructing them where to sign. The application states they were given copies of the arbitration agreement, but they never were. Also, assuming an employee knew of the arbitration process, to review a copy of the arbitration rules, they had to request them from management—thus tipping management off that they wanted to file a grievance.”

Tia filed a complaint with the U.S. Equal Employment Opportunity Commission and received a cause finding of sexual harassment—based on the evidence, there was reasonable cause to believe harassment had occurred. She sued Circuit City in Maryland state court, but the trial court granted the defendant’s motion to compel arbitration. Tia decided to fight for her right to have her case heard by a jury. “If anybody had a shot, it was Tia. She presented well, she was a sympathetic person in a horrible situation where the defendant had either total indifference or utter disregard for her safety,” Markovitz said. The case went up to the state’s highest court, which sided with the defendant.

With her court options exhausted, Tia moved ­forward with arbitration. As the parties began discovery, Circuit City announced that it was bankrupt, which ended the arbitration proceeding. Tia recalled how she felt after learning that the company would never be held accountable: “I was upset that after all that hard work, I was let down. From my point of view, Curtis wasn’t held responsible and neither was Circuit City. I felt violated. Therapy helps, but something like this stays with you for the rest of your life. Plenty of women don’t say anything because they feel like nothing is going to be done. Even though I said something, I was still let down.” Markovitz said that this case still bothers him because justice was denied.

Forced arbitration clauses are so pervasive, they are impossible to avoid. “If you want to live as a hermit and not have a cell phone or a job or health care, then maybe you can avoid arbitration,” Markovitz said. “But these agreements are everywhere—it’s not a choice at all. It’s the corporate larceny of our democracy.”

The experience still resonates with Tia. “Because of what I went through, I now read any contract from front to back and ask questions,” she said. “I don’t trust the judicial system. It failed me, and I didn’t do anything wrong. I did the right thing—I fought for my rights.”

Today, Tia is a licensed social worker and is raising a daughter. Despite her ordeal, she doesn’t regret standing up against a big corporation. “You have to continue to fight, even if you lose,” Tia advised. “I have to be an example to my child. Don’t let anyone get away with doing something to you that’s unjust. I wouldn’t want my daughter to go through that. So I continue to fight.”

Broken Trust

Dean Cole had dementia. His family could no longer care for him, so his wife, Virginia, entrusted his well-being to a Golden Living nursing home in Minnesota.

But the nursing home staff neglected Dean: Within three weeks at the facility, he was severely dehydrated and had lost 20 pounds. Neither his family nor his doctors were contacted during this time period. He eventually fell into a coma and was rushed to a hospital, but the damage was irreparable—he died of kidney failure a month later.

Dean’s family filed a wrongful death claim against Golden Living, but the admission contract Virginia signed contained a forced arbitration clause. The family challenged the arbitration agreement because Dean had not signed it.

“Minnesota is one of the few states where there is no survival of Dean’s claim for what he went through. The only thing that survives is the family’s wrongful death claim for each individual loss,” said Mark Kosieradzki, the Coles’ attorney. “Dean’s wife was given a stack of papers to sign for him to enter the facility and unknowingly signed away the right to a trial for every other member of the family,” he said.

The family challenged the arbitration clause in federal court and petitioned the court to certify to the Minnesota Supreme Court the question of whether a family member could sign away the rights of other family members to bring a wrongful death property claim. The court denied their petition, and the question remains undetermined under Minnesota law. Unable to overcome the arbitration clause, the family moved forward with a panel of three arbitrators.

“Each one of the arbitrators charged between $400 and $500 per hour. Each side had to pay for the arbitrator they selected and then split the bill for the third,” Kosieradzki said. “So that means Dean’s family was paying for everything that was done in the arbitration. Every time a dispute had to be resolved, we were billed—for the arbitrators’ review of our briefing, listening to our arguments, their deliberations, and then writing the opinion. Every single thing that would have been free in court ended up costing my clients more than $700 per hour.”

The family won a judgment of about $223,000, but after paying for arbitration, Dean’s entire family received less than $20,000. “They were very disillusioned with the American judicial system. They were disappointed in how Golden Living could drag this case out through arbitration. And it wasn’t about money—what frustrated them was that the process is so costly that it’s almost impossible for families to find out what happened, to try to hold the nursing home accountable,” Kosieradzki said.

In September, the Centers for Medicaid and Medicare Services (CMS) banned pre-dispute forced arbitration clauses in nursing home contracts, which would have protected the Coles’ right to have their case heard by a jury. Unfortunately, thousands of families must still fight existing clauses in court (the rule applies to contracts entered into on Nov. 28, 2016 and later).

The nursing home industry challenged the rule in court, and in November, the Northern District of Mississippi granted the American Health Care Association’s motion for a preliminary injunction to enjoin CMS from enforcing its ban. Additional proceedings are anticipated.

Kosieradzki said he would advise people never to sign a forced arbitration agreement. “If parties choose to enter into an arbitration agreement, that’s one thing. But in these coercive situations, you’re walking into a trap,” he said.

An Untenable Choice

Before his overseas deployment as a lieutenant in the U.S. Navy Reserve, Kevin Ziober’s employer, BLB Resources, Inc., in Irvine, Calif., threw him a going-away party. Hours later, BLB informed him that he was being terminated and his job would not be there when he returned. But under the Uniformed Services Employment and Reemployment Rights Act (USERRA)—a federal law protecting servicemembers’ right to take military leave and be reemployed in the civilian workforce—Kevin should have been able to return to his position with the same rights and benefits he would have received if he had not been deployed.

When Kevin returned from his deployment, he sued BLB, alleging that he was fired in violation of USERRA. But he had signed a forced arbitration agreement six months into his employment, and the Central District of California granted the defendant’s motion to compel arbitration. Kevin appealed to the Ninth Circuit.

“I was shocked to learn that I was being terminated from my job on the eve of my deployment to a combat zone,” Kevin said in testimony before the ­Senate Committee on Veterans Affairs in support of proposed legislation that would bar forced arbitration agreements for ­servicemembers under USERRA. “It created an unimaginable amount of concern and anxiety about how I would earn a living once my military orders ended.”

Peter Romer-Friedman, Kevin’s attorney, described him as a high-performing­ manager who helped the company grow and who was dedicated to fulfilling his commitment to the Navy. He called Kevin “one of the most committed people I’ve met—to his employer, to his country, to the Navy. He wanted to do the right thing and was put in an unbearable situation where he was asked to choose.”

In October, the Ninth Circuit affirmed the lower court’s ruling. Ziober has filed a petition for rehearing.

Romer-Friedman explained that USERRA imparts “distinctly federal rights”—including the right to file a ­federal lawsuit that cannot be waived—and that the law and Congress’s intent about those rights are clear.

“The Supreme Court said in 1958 that servicemembers should be able to sue in court to immediately enforce their rights and to have a judge hear their case quickly. USERRA provides powerful rights, and arbitration weakens servicemembers’ ability to enforce USERRA rights, and it weakens their ability to serve with confidence that they will be able to come back to a job.”

Kate Halloran is an associate editor at Trial magazine. She can be reached at kate.halloran@justice.org.