The Jury's Still Out -- Way Out

By Jan 1, 2005
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HR Magazine, January 2005 Legal Trends

Subtracting the jury from the equation decreases uncertainty in employment cases.

In Las Vegas, the odds may be against you, but at least they are consistent. Jury trials, by contrast, are notoriously unpredictable. Whenever you face a jury trial, you face ever-changing odds that make it difficult to assess the wisdom of a decision to continue or settle.

In a mock trial program designed by my law firm, managers watch a videotaped trial and then deliberate like a jury. The verdicts in this training exercise always vary widely, even though the "jurors" are all members of management in the same company and all watch the exact same trial.

Are these managers so different from actual jurors? Probably not.

Jurors inevitably bring varying perspectives and backgrounds to the jury box and use those experiences like a prism to see facts and events in ways impossible to anticipate. The naked truth is that it is tricky to predict how a jury will respond to any set of facts. Fortunately, however, there are alternatives-some more promising than others.

Less Impressive Options

Many employers have implemented elaborate multistep dispute resolution procedures designed to settle employment claims at the earliest possible stage. Other employers have taken more limited approaches, adopting one or two specific alternatives-mediation or arbitration, for example-with the same goal in mind.

Typically, however, the last resort in a multistep procedure -- and the only alternative to a jury trial in many organizations -- is arbitration.

Some employers require employees to agree to arbitration as a condition of employment (a practice known as "mandatory pre-dispute arbitration agreements"). Others offer arbitration to employees as a voluntary alternative to litigation when all else has failed.

While employment arbitrators may be more knowledgeable and less fickle than juries, and while the cost of arbitration may be lower than that of a court trial, arbitration is not necessarily all that it has been cracked up to be. In fact, some experts and practitioners believe that mandatory arbitration encourages claims and, in the long run, doesn't save money at all.

In addition, the legality of some arbitration agreements has been heavily litigated. Some courts simply excise offending provisions and order arbitration to proceed. Others void the entire arbitration agreement if any part of it fails to afford due process to the employee. When that happens, the case proceeds in court.

Most courts have held that arbitration provisions must provide employees with remedies similar to those they would have in court, such as back pay, compensatory and punitive damages, and attorney's fees. Employers often lack comparable remedies in arbitration.

Arbitrators seldom dismiss cases without a hearing, even when there is no arguable basis for a claim. And their decisions are subject to review only on very narrow grounds but not subject to a full appeal on the merits, even where there is no legal justification for the award.

Is it any wonder many companies have concluded that arbitration ultimately is no better than traditional litigation in holding down costs?

But what else is there?

Cooler Heads

The goal of establishing a dispute resolution mechanism before any conflict arises and the drawbacks associated with mandatory arbitration are prompting many employers to consider jury trial waiver agreements. Used as an alternative dispute resolution tool, the employer requires employees to sign a jury waiver agreement as a condition of employment.

Under a jury waiver agreement, employees retain all substantive and procedural rights to sue their employers, except the right to request a jury. Instead, they agree to have their claims tried before a judge, who is the ultimate decision-maker. This is the state of affairs that prevailed before the 1991 amendments to Title VII of the Civil Rights Act of 1964 created the right to a jury trial in federal employment discrimination cases.

The judge decides all motions as if the case were ultimately being tried to a jury. Discovery disputes are decided on the basis of case precedent and applicable rules of civil procedure, as in any other court case. And all possible remedies remain available to the employee; the only difference is that the risk of one juror running amok and convincing the rest to go along is eliminated if the waiver is enforced. And that is a huge benefit for employers.

There are other benefits for employers as well: no voir dire (i.e., vetting of potential jurors), no "sympathy" witnesses called to tug the jurors' heartstrings and no need for jury instructions, all of which make for a much shorter, and less expensive, trial.

Further, if the judge errs in making a judgment, appeals are subject to full review-just as in jury cases. This is a key difference between decisions under jury waiver agreements and arbitration decisions; the latter are subject to a very limited standard of review.

Enforceability

The case law on jury waivers is limited for employment cases, but jury waivers are widely enforced in commercial cases in both federal and state courts.

Almost all jurisdictions enforce mandatory pre-dispute arbitration agreements in employment cases. Jury trial waivers are less restrictive of employee rights than these, so it is likely that waivers will be broadly enforceable too.

In fact, federal courts already have enforced jury waivers in some employment agreements. In Brown v. Cushman & Wakefield, Inc., 235 F. Supp. 2d 291 (S.D.N.Y. 2002), for example, a terminated employee filed a discrimination claim under Title VII and demanded a jury trial, even after signing an employment agreement containing a jury waiver. The federal trial court in New York held that the employee signed the waiver "knowingly and voluntarily," so the waiver was enforceable. The case proceeded as a bench trial. The Brown decision is consistent with decisions that enforce jury waivers in commercial contexts.

To date, a federal court has declined to enforce a jury waiver in only one employment case. In Hammaker v. Brown & Brown, 214 F. Supp. 2d 575 (E.D. Va. 2002), the trial judge ruled that a jury waiver was not enforceable because it did not satisfy the requirements for waivers of rights under the Age Discrimination in Employment Act as set forth in the Older Workers Benefits Protection Act (OWBPA). But implicit in this decision is the idea that a jury waiver that satisfied the requirements of the OWBPA would be enforceable. The premise of the Hammaker ruling may be on shaky ground anyway, because it conflicts with the decisions of three other federal district courts, which found that OWBPA requirements do not apply to procedural rights such as the right to a jury trial.

At the state level, only Georgia and California have refused to enforce a pre-dispute jury waiver. In Bank South N.A. v. Howard, 444 S.E. 2d 799 (Ga. 1994), the Georgia Supreme Court held that "pre-litigation contractual waivers of jury trials are not provided for by our Constitution or Code and are not to be enforced in cases tried under the laws of Georgia." The court noted that the waiver of a jury trial requires that the parties give up valuable rights, much like a confession of judgment, which also may not be waived before beginning litigation. The Bank South case was not an employment case.

Two California Court of Appeals cases have held that jury trial waivers are per se unenforceable under the California constitution. Neither of these decisions was an employment case and, at press time, the appeal of one of them was pending before the California Supreme Court.

Most recent decisions support the enforcement of jury trial waivers. For example, in In rePrudential Insurance Company of America, 2004 WL 1966015 (Tex. 2004), the Texas Supreme Court held that jury trial waivers are enforceable in commercial cases. There is no reason to believe the court would not make the same ruling in an employment context.

Jury waivers are probably still a viable alternative for Georgia and even California employers for cases tried in federal court under federal law. Most employment actions in Georgia will be adjudicated in federal court, because Georgia has no state antidiscrimination laws. And, because the Bank South case is a state case, it is not binding in federal court. California, however, has very stringent state laws prohibiting discrimination, and many employment lawsuits are litigated in California state court.

It is safe to assume that lawyers who represent employees will challenge the validity of jury waiver agreements. The unpredictability of jury trials is precisely what they rely on as leverage for settlement. The focus in settlement discussions many times is on the lawyers' predictions about the jury's reaction to certain evidence. The same evidence that would persuade a jury to empathize with a plaintiff, however, may have very little influence on a judge. For example, a jury may be swayed by a plaintiff's tearful testimony that she was humiliated by being escorted from the building by a security guard when her employment was terminated. The same testimony may have no impact on a judge who understands that the employer was simply taking steps to protect the company's other employees and that a security escort is rather common in such circumstances.

Make no mistake: Plaintiffs' counsel recognize that cases are less valuable when the jury has been removed from the equation, and you and your counsel should anticipate litigating the enforceability of jury waivers. Accordingly, the only real downside to a jury waiver agreement is the additional attorney's fees the employer will incur when the plaintiff challenges its enforceability.

If the waiver is enforced, then the value of the plaintiff's case will be diminished-in most cases, substantially. If the waiver is not enforced, then the case will simply proceed to a jury trial as if there had been no waiver. The cost associated with litigating the enforceability of the waiver should not be significant, and, in the near future, there are likely to be more case precedents concerning jury waivers in employment cases to guide employers' litigation containment strategy.

Cost Savings

A study released in April 2004 by the U.S. Department of Justice strongly supports the premise that employers fare better in bench trials (cases heard by a judge) than in those heard by juries. The study, which analyzed civil trial cases and verdicts in 75 of the country's largest counties from 2001, found that winning plaintiffs in employment discrimination cases received a median award of $218,000 from juries, but only $40,000 from judges.

In addition, jury trials lasted 4.3 days on average, compared to only 1.9 days for bench trials. Just as important, the time between filing the case and its ultimate disposition was shorter with nonjury cases. During 2001, 78 percent of bench trials were disposed of within 24 months of filing-compared to only 57 percent of jury trials.

Implementation Issues

It is relatively simple to introduce jury trial waiver agreements to employees; they are less complicated than arbitration procedures, and they preserve more of employees' rights to file claims.

Further, jury waivers are as practical for small employers as they are for large companies. To enhance enforceability and employee acceptance, employers can bundle a jury trial waiver agreement with an agreement to mediate workplace disputes at the employer's cost.

This benefits employees because they can get their concerns mediated early, at no cost to them. And courts view mediation as a benefit being provided to an employee in exchange for the jury waiver agreement, which helps solidify the enforceability of the waiver. (Courts sometimes require that employees receive a benefit in exchange for signing a waiver.)

Of course, mediation also benefits employers because early mediation is helpful in most cases and generally saves money.

It is important for employers to educate their employees regarding their antidiscrimination and anti-harassment policies, their program to mediate disputes and their requirement that employees waive a jury trial. Explain to employees that juries are as unpredictable on the plaintiff's side as they are on the employer's side.

Employers that already make a mandatory arbitration agreement a condition of employment will have to explain to their employees why they are making the switch to jury waivers. Rather than converting all at once, larger employers may wish to consider a pilot jury trial waiver program in a particular location or business unit. If the employer has concerns about enforceability, one approach is to include both a jury waiver and an arbitration clause, providing that the arbitration clause applies if the jury waiver is not enforced.

Conclusion

If employment litigation represents a significant burden in your organization, the overall risk of submitting claims to a jury is likely to outweigh any risk that a court will refuse to enforce the jury waiver. Early mediation, and a thorough education and training process-combined with a jury waiver-should decrease the number of claims employees file against the employer.

Employers also should realize speedier resolution of claims and less overall expense. Cases will be handled more efficiently and with more predictable outcomes. And your company can get back to the business at hand!

Editor's note: This article should not be construed as legal advice or as pertaining to specific factual situations.

Chad Shultz is a partner with the employment law firm Ford & Harrison LLP in Atlanta. His practice focuses on assisting management with crea-tive workplace solutions to human resource-related challenges.

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