by John J. Otrompke, JD
For more than two years, many of us have participated in what we hope will be a watershed event in American history: the emergence of an alternative to the political monopoly of mainstream, capitalist politicians- to wit, the revolution of the 99%. This is a transformation that could be accomplished swiftly: after all, historical episodes such as King John’s speedy agreement to sign Magna Carta illustrate how quickly and easily a disagreement like the revolution of the 99% could be resolved.
But the past electoral cycle shows that we are not in a conflict of the 99% against the 1%, at least not right now. Instead, we have the battle of one 50% of the voters against the other 50%. (Think also of Bush v Gore, as well as BREXIT, the vote on Scottish exit, and several other elections). That kind of conflict can be intractable.
Which brings me to Epic Systems Corp v Lewis, and a recent book, “Re-Engineering Humanity” (Frischmann and Selinger, Cambridge University Press 2018).
Epic, of course, was the case decided in May considering the proper interpretation of the Federal Arbitration Act in light of the Fair Labor Standards Act. Epic was widely mourned as an upset for the labor movement, and a harbinger of worse to come. In an opinion written by Justice Gorsuch, the Supreme Court upheld the validity of “agreements” with employers which employees had “entered into” to arbitrate claims on an individual basis, over objections made by the employees, who wanted to litigate wage and hour claims collectively, based on illegality and unconscionability.
The opinions of both Gorsuch and Ginsburg could have used a lot more analysis of the unconscionability question in contract law. This issue is especially troubling to me given the growth of clickwrap contracts described in the new book by Profs. Frischmann and Selinger (see below).
The notion of unconscionability is radical, in the sense that it goes to the heart of what is wrong with our economy. I believe it is so important in our society that it should at least be a jury issue in a contract case like Epic.
However, I don’t think that Epic will actually have the apocalyptic results foreseen by some, because I don’t think things were that good for the working class even before Epic.
The Centrality of Unconscionability
According to Gorsuch, the Arbitration Act “allows courts to refuse to enforce arbitration agreements upon such grounds as exist at law or in equity for the revocation of any contract” (internal punctuation omitted). But the employees “don’t suggest that their arbitration agreements were extracted, say, by an act of fraud or duress or in some other unconscionable way that would render any contract unenforceable.” (Gorsuch slip opinion pp. 6-7).
Gorsuch seems to suggest that the contract is not unconscionable unless the arbitration clause itself is unfair- which it cannot be, because Congress sanctions it. (At times, Gorsuch’s opinion almost sounds like he thinks the employees failed to raise the unconscionability argument).
But in fact, there are several traditional elements to the defense of unconscionability in contract law. For example, the objectionable term could be buried in a mountain of type (negating the meeting-of-minds usually required for an enforceable contract). Courts also allude to the discrepancy in negotiating power between the parties, and whether the alleged agreement was an adhesion contract, offered by the stronger party on a take-it-or-leave it basis, leaving the weaker party without any power to negotiate.
It would helpful to know more about this “contract”: its length, other terms, the circumstances of contracting, etc. But neither the Gorsuch nor the Ginsburg opinion discussed the facts in a very clear way as related to unconscionability.
For example, on page 7 of Ginsburg’s opinion, she says the company “e-mailed its employees an arbitration agreement requiring resolution of wage and hours claims by individual arbitration. The agreement provided that if the employees continued to work at Epic, they would be deemed to have accepted the Agreement” (internal punctuation omitted).
But on page 6 she says, “the employers...required their employees to sign contracts stipulating to submission of wage and hours claims to binding arbitration.”
Did the employees actually sign a written contract? Were the terms buried? Did the employee have a chance to discuss the terms? Did the employee get anything in exchange for this “contract”- or were they employed on an at-will basis?
Several of the elements of the unconscionability doctrine appear to have been met by the facts in Epic.
Also, I agree with Ginsburg that the expenses faced by an employee in mounting a wage-and-hour claim, such as the employee lawsuits at issue in Epic, may be prohibitively burdensome. This would tend to refute the central advantage claimed by some in favor of arbitration (ie, economy).
I also agree with Ginsburg that the Arbitration Act should only apply to contracts between merchants, or between parties with equal bargaining power. But it sounds like that is water that went under the bridge long ago. (Slip opinion of Ginsburg at 21, citing Moses H. Cone Memorial Hospital v. Mercury Constr. Corp., 460 U. S. 1, 24 (1983)).
Perhaps a more contemporary question is: why don’t people unionize? Why don’t the people elect a Congress to change the statute at issue in Epic? Why can’t the people get together and fight the rampant wealth inequality?
Unconscionability and Autonomy: A Mini-Review of ‘Re-Engineering Humanity’
Viewed in terms of the unconscionability issue, the Court’s decision in Epic also raises troubling questions about the enforceability of adhesion contracts, which have been proliferating in number, according to the recent work of Profs. Frischmann and Selinger.
‘Boilerplate’ contracts have been around since the 1900s, but since the dawn of the internet have proliferated so that today, they account for some 99% of all contracts, according to the authors (“Re-Engineering Humanity,” p. 330, n. 10).
The information age has led to an “unprecedented orgy of contract formation,” but in disproof of the autonomy-enhancing theory of contract law, the profusion of boilerplate contracts may have a future negative effect on “two basic human capabilities, the capability to deliberate and the capability to relate to others” (p. 71). Human beings, they say, are being programmed by on-line clickwrap “agreements” to behave like automatons, to click without thinking.
On-line boilerplate is just one aspect of modernity the authors worry may result in the techno-social programming of individuals, along with on-line advertising, games, and social media. But two important sections of ‘Re-engineering Humanity’ deal with on-line “contracts”: one full chapter and an important appendix on revising contract law to promote human autonomy, along with copious notes.
Epic is especially troubling if it represents a trend of the growing enforcement of unsconscionable “agreements.” Many of the cases cited in the book seem inapposite: the federal court in Sprecht v Netscape, for example, refused to enforce a clause buried in clickwrap, and the New York state court in Jerez v JD Closeouts, 36 Misc 3d 161 (2012) refused a motion to dismiss that was based on provisions in clickwrap. True, Judge Easterbrook upheld clickwrap in ProCD v Zeidenburg, 86 F.3d 1447 (7th Cir. 1996), but that was a case between what passes for merchants these days.
Nonetheless, I was surprised to learn from Prof. Frischmann of a clickwrap victory in Fteja v Facebook, 841 F.Supp.2d 829 (SDNY 2012), in which the Southern District of New York upheld a forum selection clause contained in clickwrap promulgated by Facebook.
In any event, if the decision in Epic is any harbinger, circumstances may come to hold the people’s feet to the fire and compel them to stop behaving like automatons, and confront the hard decision of whether to suffer discomfort and refuse to consent to the outrageous unconscionability that exists in the status quo.
Why Can’t the 99% Agree on Unconscionability?
This raises for me the even bigger question of what the people can do to create the real “revolution of the 99%” we spoke of. Why do we as a society seem to be entrenched in such a precisely evenly-divided conflict?
As I mentioned, I personally don’t feel that the economic situation we had before the Epic case was much to celebrate. And I am reminded of certain unions that recently opposed a constitutional convention in New York, because of the risk that holding a con-con would endanger all the gains that had been made for labor since Haymarket. Gains may have been made, indeed, but I don’t feel that we should let our fear hold us back.
Some 50 years ago, Bob Dylan’s song “Only a Pawn in Their Game” proffered a reason why: the ruling elite manipulates the people, and turns us against one other to prevent us from uniting to unseat them. Perhaps this is the time to stop and ask two questions: should the 99% learn how to get along? And if we should, can we?
I started with the observation that the people appear to be divided 50/50. But maybe things aren’t that bad after all. Maybe it was just the Clinton candidacy which alienated people, to make it appear that our society is so starkly divided. Perhaps recent history shows that the electorate is appropriately fickle, and switches allegiance frequently enough not to put too much power in the hands of any one party or branch, thereby heeding the concerns of the drafters of the Constitution.
My hope is that the lesson of the Trump debacle, and of the challenges to come after Epic, is that if Democrats run capitalist military hawks for president, disaster will follow.
The author is an aspiring law professor. He often comments on the law at www.otrompkescommentaries.blogspot.com . He can be reached at JOtrompke@gmail.com
