Comprehensive Book on Employment Arbitration Tackles Class Actions and More

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Comprehensive Book on Employment Arbitration Tackles Class Actions and More O'Meara Employment Arbitration By Daniel P. O'Meara. New York City: Matthew Bender & Co., a member of the LexisNexis Group (www.lexisnexis.com), 2007. Loose-leaf binder. $295.

To some people, the subject of this book, employment arbitration, is controversial, but the arbitration of class actions is arguably more so. And Daniel O'Meara, a partner in the Philadelphia-based law firm Montgomery McCracken Walker & Rhoads, does not shy away from the topic, devoting a chapter to it in his latest work.

The controversy rests on whether arbitration clauses in employment and consumer agreements should preclude class actions, and whether these clauses violate public policy allowing class litigation. O'Meara starts his analysis with Rule 23 of the Federal Rules of Civil Procedure. Rule 23 allows parties to bring class actions in federal court, but it does not apply to actions in state court. More importantly, it does not apply to arbitration proceedings.

Many plaintiff's lawyers view Rule 23 as a vehicle of individual empowerment and the basis of a substantive right. But O'Meara says that, for the most part, courts see the rule as a procedural tool to enhance judicial efficiency.

O'Meara notes that a desire to litigate in the form of a class action will not lessen a party's contractual duty to arbitrate. "A party cannot avoid an obligation to arbitrate by filing his or her action in court as a class action. The party typically is compelled to arbitration to pursue that claim on an individual basis," he writes. This is based on the language of the Federal Arbitration Act and a number of U.S. Supreme Court decisions (e.g., Gilmer v. Interstate/Johnson Lane Corp.) holding that there is a strong federal policy favoring arbitration.

Where an arbitration agreement or rule prohibits class actions in arbitration, courts will compel arbitration of the named plaintiff's individual claim, unless the arbitration agreement is deemed unconscionable due to the class arbitration waiver.

If an arbitration agreement or rule expressly excludes class actions from claims that must be arbitrated, federal courts will allow the parties to proceed to litigate on a classwide basis. For example, O'Meara cites the NASD Code of Arbitration Procedure, which provides that a "claim submitted as a class action shall not be eligible for arbitration. …