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Employer and employee groups have been waging a behind-the-scenes battle at the Equal Employment Opportunity Commission (EEOC) as the agency reconsiders a Clinton-era policy opposing the use of mandatory arbitration agreements as a condition of employment. The 1997 policy statement is the “most comprehensive, written statement documenting how mandatory arbitration agreements undermine civil rights laws,” said employee counsel Cliff Palefsky of San Francisco’s McGuinn, Hillsman & Palefsky. “Every word is as true today as when it was adopted by the commission. It doesn’t need to be updated.” Employer groups say the policy’s viability is questionable because of recent U.S. Supreme Court decisions. “Here you’ve got a guidance that didn’t make any sense when they adopted it and isn’t deserving of any particular deference,” said employer counsel Lawrence Lorber of the Washington, D.C., office of New York-based Proskauer Rose. “If the agency wants to get credibility, it should look quickly at its guidance.” LENGTHY REVIEW The agency, led by three Bush appointees and one Clinton appointee, confirmed last week that it is examining the 1997 policy in light of subsequent case law. But there will be nothing quick about the process, said EEOC attorney Lynne Clements of the Office of Legal Counsel. “Right now we don’t have a time-frame on it,” she said. “We’re very much in the exploratory stages.” But the agency appeared to be on a faster track earlier this year when its actions in a suit against the San Diego law firm Luce, Forward, Hamilton & Scripps on behalf of a job seeker ignited a controversy. The agency sued on behalf of Donald Lagatree, whose offer of a job as a legal assistant there was rescinded after he refused to agree to mandatory arbitration of any future discrimination claim. The EEOC accused the firm of illegal retaliation against Lagatree. The agency won in the district court but lost before a 9th U.S. Circuit Court of Appeals panel. When the time arrived for seeking a rehearing by the full circuit, none of the parties, including the EEOC, sought one. Fourteen Democratic congressmen filed a brief urging a rehearing, as did outsiders including the National Employment Lawyers Association and AARP (formerly known as American Association of Retired Persons), as did Lagatree himself, in a brief by Palefsky. EEOC lawyers, according to a number of sources, had prepared a request for a rehearing. Employer groups reportedly were furious and informed EEOC Chairwoman Cari Dominguez that the agency’s position was contrary to case law in most circuits and the Supreme Court. Until the panel decision in Lagatree’s case, the 9th Circuit stood alone in holding that a mandatory-arbitration agreement could not prevent an employee from litigating a discrimination claim under Title VII of the Civil Rights Act of 1964. The Lagatree panel based its decision on the 2001 Supreme Court decision Circuit City v. Adams. The circuit in February granted the rehearing, and the EEOC is defending Lagatree’s position. Lawyers say the agency is unlikely to change its policy while the case is pending. The policy says agreements that mandate binding arbitration of discrimination claims as a condition of employment are inconsistent with anti-discrimination laws. Among the reasons: Private arbitration does not allow for development of the law through precedent; mandatory arbitration systems are biased against plaintiffs; and they threaten the enforcement of discrimination laws because workers may be discouraged from coming to the EEOC since they can’t litigate claims. Palefsky and some other consumer and employee lawyers contend the battle is political, not legal. Employment law scholar Charles Craver of George Washington University Law School said the Bush administration is more conservative in this area than the Clinton administration was. And, he said, the Supreme Court clearly favors arbitration in many areas. The 1997 policy is a “losing” policy, said Craver, because of the Circuit City decision holding that the Federal Arbitration Act applies to predispute arbitration agreements signed by most employees, even though the decision says nothing about Title VII claims. “It ought to be simple,” said Randy Johnson, vice president for labor and employee relations at the U.S. Chamber of Commerce. “Look at the weight of the case law against the EEOC.” Michael Foreman, employment project director for Lawyers Committee for Civil Rights Under Law, said the agency should do something with the policy. “They can basically continue to say, ‘While the Supreme Court has said that in appropriate circumstances, arbitration is permissible, from a policy point of view the agency maintains it undermines the rights of employees, and here are the types of things they are going to be looking at to make sure that does not happen,” he said. “The bottom line is employees get the short end of the bargaining stick.” A policy change may result in the agency suing less where claims initially were covered by arbitration agreements, suggested some experts. It could help employers in courts that are now hostile to predispute arbitration agreements, Lorber said. The EEOC’s action probably will be more important for the arbitration debate than its legal effect, both sides say. There’s evidence that the EEOC’s concerns about mandatory arbitration in 1997 are accurate, said F. Paul Bland Jr., head of the mandatory-arbitration project for Trial Lawyers for Public Justice. “The EEOC can’t litigate counter to direct Supreme Court decisions, but it has an obligation to speak the truth as it understands it,” he said. “If they’re just going to cave in to businesses who say it would make our lives easier if you said we could do this, that would be unfortunate. It would be a terrible signal of a reduced commitment to meaningful civil rights enforcement.”

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