"x x x.
POTENTIAL DISADVANTAGES TO ARBITRATION
While arbitration agreements have long been allowed in California, many employers have elected not to implement arbitration agreements or have even abandoned their existing programs due to their experiences in arbitration.
- Increased trial costs: While arbitration costs can be roughly equal to or less than court litigation up to the point of trial, the balance frequently tips the other way once the parties are trying their claims. Particularly in California, where most arbitrators allow wide latitude in pre-trial litigation, such as motions. Experienced employment law arbitrators charge as much as $5,000-$10,000 per day. In California, employers generally must pay the entire cost of the arbitration after the initial filing fee which means a 10-day trial could cost a company $100,000 just for the arbitrator's trial time. That does not include the company's attorneys' fees, the additional amount charged by the arbitrator for review time during trial, or the time he takes to write-up the final decision or deal with any other post-hearing briefs.
- Settlement floor due to arbitrator costs: In an added twist to the "cost of defense" argument plaintiffs' attorneys often make in negotiations, they may try to convince the company that it is going to spend tens of thousands of dollars on just the arbitrator alone, and therefore, a settlement for anything less than that amount makes economic sense. They may try to use that increased cost to justify higher settlement demands, particularly in otherwise low dollar cases.
- Arbitrators often act like mediators looking for the happy medium: Most arbitrators also work as mediators, and it can seem that arbitrators never quite fully escape their mediator mentality (which is also a reason why some programs allow for retired judges only). Rather than make definitive decisions that one party is right and the other is wrong, arbitrators may attempt to "split the difference." This may mean giving a party some, but not all the discovery they seek, or awarding the plaintiff a small monetary recovery even if the proper application of the law should have produced a full defense verdict. It is also commonly thought that arbitrators are much less likely to award summary judgment, perhaps because they do not mind working the case.
- Generally more limited discovery: Depending on the arbitrator, the time to conduct discovery may be limited along with the amount of discovery. Discovery may also prove frustrating in arbitrations that require significant third party involvement because subpoenas for documents and witnesses can be more difficult to obtain and enforce.
POTENTIAL ADVANTAGES TO ARBITRATION
Despite the potential downsides, arbitration programs can provide a far more favorable litigation forum for many employers. Even apart from a class action waiver, arbitration agreements can bring numerous advantages.
- Arbitrators are better than juries: Conventional wisdom dictates that arbitrators are less likely than juries to be swayed by sympathies or facts that are irrelevant to the legal claims. Arbitrators are also thought to be less influenced by the "little employee vs. big company that won't miss the money" dynamic, and thus, able to award zero to an employee when warranted or at least award less in emotional distress or punitive damages than a jury would award. This reputation tends to lower the settlement value of lawsuits in arbitration, particularly in higher risk cases that could draw a large jury verdict or cases where the employee's lawyer took the case based on jury appeal of the plaintiff before disclosure of the arbitration agreement.
- Confidentiality: Although arbitration awards are public if they are confirmed in court, the arbitration hearings and sessions are generally confidential, which means employers need not be as concerned about salacious allegations or other information disclosed in the proceedings being an accessible part of the public record.
- Ability to choose arbitrator: Parties can choose from among panels of arbitrators presented by the arbitration agency, and in many cases, mutually select an arbitrator. Although an employer may not get its first choice of arbitrators, it can use the selection process to avoid arbitrators that it believes are particularly problematic.
- Speed and cost: Arbitrators are generally flexible about permitting the arbitration to proceed either as quickly or as slowly as the parties want it to proceed. Also, arbitrators often handle discovery issues and other disputes informally through conference calls, which can provide a considerable cost savings and more immediate relief. Arbitrators can often be available to hear issues and take action after little more than an email from a party, in contrast with the delay that can often mar efforts to get before a judge in court — particularly as court budgets (and staff) continue to shrink in California's state and federal courts. Most conferences and even motion hearings are conducted via telephone. Thus, whereas a court appearance may result in hours of fees for a lawyer traveling to or waiting in court, the same appearance may just take minutes with an arbitrator.
- x xx."
Read more: http://www.law.com/jsp/ca/PubArticleCA.jsp?id=1202624349257&In_Practice_The_Pros_and_Cons_of_ADR_Clauses#ixzz2iiuTzD3g
