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There is significant conventional wisdom about how arbitration differs from trial by jury. One component is that arbitration saves money for an employer. The savings are supposed to come from greater efficiency in arbitration, which reduces defense costs; faster hearing dates, which reduce backpay and future pay awards; and finally, arbitration awards themselves are supposed to be lower than jury verdicts. Recently, some of the first empirical studies have been published. The cases studied all came from claims filed with the American Arbitration Association during 1999 and 2000. There were 261 total arbitration awards issued, 173 of them in 2000. Those claims were compared with state court data from 45 large counties and federal court results for 1999 and 2000. The first item studied was the “win rate” in non-civil rights cases, such as a breach of contract or other common law matters. In arbitration of these cases, higher-paid (over $60,000 salary) employees won approximately 65 percent of the cases; lower-paid employees won approximately 40 percent. In state courts, in non-civil rights cases, overall, employees prevailed approximately 57 percent of the time (there was no way to measure the income of the plaintiff in state court). In civil rights cases, the sampling of claims by higher-paid employees was too small to be predictive (two, out of only five cases filed, resulted in awards for the claimants). With lower-paid employees, approximately 25 percent prevailed in arbitration. In comparison, 44 percent of the employees won their cases in the state courts, and slightly over 36 percent prevailed in the federal courts. So, when looking at the “win rate,” it makes a difference whether the case is a discrimination case or something else, for example, a breach of contract or other common law case. While discrimination cases are more difficult no matter what forum is used, the courts may be better for plaintiffs claiming discrimination. Of course, the “win rate” is not the only factor of importance. The size of the award is of equal or greater importance. For higher-paid employees who won non-civil rights cases in arbitration, the median award was approximately $95,000; the mean award $212,000. In the state courts, the median was $69,000 and the mean was $462,000. There is not a lot a difference here — the mean in state court trials was substantially higher but the median in arbitration was higher. Again, however, for lower-paid employees there was a significant difference. For them, the median award in a non-civil rights case was about $13,000, the mean about $31,000. Those results compare unfavorably with the trial results noted above. In civil rights disputes, however, the disparity is much more prominent, although the sample size of arbitration awards was too small to be particularly helpful. Six AAA awards to lower-paid employees resulted in a median award of $56,000 and a mean award of $260,000. On the other hand, 68 state court verdicts resulted in a median award of $207,000 and a mean award of approximately $480,000. In the federal courts, 408 verdicts showed a median award of $150,000, and the mean of $336,000. For this research to be meaningful, however, there must be a much higher number of arbitrations involving discrimination claims. For the time being, however, this beginning research appears to confirm that arbitrators award less than juries — particularly for low-income claimants. The conventional wisdom that arbitration is more efficient is confirmed by this research. Arbitrations tended to resolve claims within approximately eight to 10 months, no matter what the nature of the dispute was. In the courts, disputes took from 20 to 24 months from filing to verdict. The bottom line, then, is reasonably clear. If you represent a highly-paid employee with other than discrimination claims, arbitration is at least as good as, if not better than, litigation. The awards are comparable, and the “win rate” is slightly better. In all other cases, however, if this research is a guide to the future, lower-paid employees with common law and discrimination cases will fare better in court, at least as far as obtaining a verdict goes. Holding a verdict on appeal is a different kettle of fish altogether and may, ironically, also argue favorably for arbitration. That research is yet to be completed. Joseph Garrison is a partner at Garrison, Levin-Epstein, Chimes & Richardson in New Haven, Conn.

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