Mark D. Gough’s Study Seeks To Correct For Systematic Differences In Case Characteristics Between Arbitral And Court Forums.
Back on August 19, 2014, I posted about Mark D. Gough’s study of arbitration outcomes arising from his research comparing employment discrimination cases heard in arbitration and civil litigation. At the time, I couldn’t find his study on-line. Good news: it is now available on-line. And here’s a citation: Mark D. Gough, The High Costs of an Inexpensive Forum: An Empirical Analysis of Employment Discrimination Claims Heard in Arbitration and Civil Litigation, 35 Berkeley J. Emp. & Lab. L. (2015).
I was most curious to see how Dr. Gough compared cases in litigation with cases in arbitration, because there are a lot of variables to take into account: “claim amount, award amount, winning party, employee salary, alleged discriminatory action, whether a motion for summary judgment was filed, defendant size, and the attorney’s fee arrangement, among other variables.”
Given that employees win less often and obtain smaller awards in arbitration than in litigation, might this be explained by the fact that the arbitration cases are weaker, that summary judgment is used more often in litigation to winnow out weak cases, that arbitration claims are smaller, that the arbitration clauses are less likely to be individually negotiated, or some combination of factors?
After making heroic efforts to compare apples to apples, Dr. Gough’s bottom line is that in contemporary employment discrimination cases, arbitration outcomes “are starkly inferior to outcomes reported in litigation.” After taking into consideration whether cases survived summary judgment, how the plaintiff’s attorney evaluated the case, plaintiffs’ salaries, employer size, and the discriminatory claims, Gough concludes that inferior outcomes in arbitration cannot be explained by systematic differences in case characteristics between the two forums. Thus, the difference is not in the cases, but in the forums. While the arbitral forum may be relatively “inexpensive”, Dr. Gough’s study concludes that mandatory arbitration in employment discrimination cases costs employees dearly.
Judges, arbitrators, employers, and employees can draw their conclusions. Employers who have embraced arbitration and employees who have challenged mandatory employment arbitration clauses in courts have already drawn their conclusions.