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At first, it looked like a watershed decision. When the U.S. Supreme Court last year gave the green light for companies to require employees to arbitrate their employment complaints, the predictions for American workers generally were dire. Many plaintiffs’ lawyers worried that the high court’s split decision in Circuit City Stores, Inc. v. Adams was a ripe opportunity for corporate America to gain the upper hand in workplace disputes. But in the 16 months since Circuit City came down, in a 5-to-4 decision, the anticipated rush to craft arbitration clauses hasn’t happened, says Robert Meade, senior vice president of the American Arbitration Association. While he fielded questions from scores of curious in-house lawyers immediately after the March 2001 ruling, so far, corporations appear to be holding back, trying to assess the optimal strategy. Companies have a number of concerns — including the logistics of how to set up an alternate dispute resolution program, how to find qualified arbitrators, and how to write employment contracts that will hold up in court. Indeed, the 9th U.S. Circuit Court of Appeals, in revisiting the case on remand from the U.S. Supreme Court, once again gave Circuit City’s mandatory arbitration clause the heave-ho. The appeals court, in its February 2002 opinion, steered clear of the enforceability issue and instead attacked the wording of the arbitration provision as too lopsided. For one thing, the court noted that Circuit City’s clause limited the damages that employees could recover and forced workers who lost their cases to foot half the arbitration bill. “The fight is far from over,” predicts labor arbitrator George Nicolau. Circuit City may not be the tipping point, but mandatory arbitration has, over time, become more common. Meade knows of only two or three companies that had a formal ADR policy a decade ago. He estimates that close to 1,000 do today. More are likely to follow, predicts Meade, if the volume of employment lawsuits continues to grow and especially if companies find themselves getting burned in court. The savings could be substantial for many businesses: Though far from ideal, arbitration is considered a promising alternative to the expense, delay, and bad publicity associated with traditional litigation. Arbitration can be cheaper for employees too — especially if their companies pay the bill — but the decisions are generally sealed and unappealable, so a worker who loses an arbitration has little recourse.

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