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Summers, Clyde

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Cornell University ILR School 
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Federal Publications Key Workplace Documents 
April 1994 
Statement of Clyde Summers Before the Commission on the 
Future of Worker-Management Relations 
Clyde Summers 
University of Pennsylvania 
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Statement of Clyde Summers Before the Commission on the Future of Worker-
Management Relations 
Comments 
Suggested Citation 
Summers, C. (1994). Statement of Clyde Summers before the Commission on the Future of Worker-
Management Relations. Retrieved [insert date], from Cornell University, School of Industrial and Labor 
Relations site: http://digitalcommons.ilr.cornell.edu/key_workplace/383/ 
This statement is available at DigitalCommons@ILR: https://digitalcommons.ilr.cornell.edu/key_workplace/383 
MARTIN P. C A T H E R W O O D LIBRAE " KCYVy*- W o v K * • 
NEW YORK STATE SCHOOL 
INDUSTRIAL AND LABOR RELATIONS S T A T E M E N T 
Cornell University TO 
COMMISSION ON THE FUTURE OF UNION - MANAGEMENT RELATIONS 
April 6, 1994 
My name is Clyde Summers, and I am Professor of Law at the University of 
Pennsylvania. 
One of the important weaknesses in our labor law is that although we increasingly 
recognize legal rights of individual employees, those legal rights are empty promises because 
the remedies are not effective. 
Cost is a major factor. Most individual employees cannot afford to sue in court. In 
wrongful discharge cases, the cost to a plaintiff of bringing a case to trial is $10,000 to 
$15,000 and the cost of trial is another $10,000 to $20,000. Lawyers may take cases on a 
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contingency fee, but lawyers who handle these cases say that unless there is relatively sure 
prospect of winning $25,000, they cannot afford to take the case. 
The high cost of litigation is not only a bar to most individual employees except 
middle and upper management, it is a heavy burden on employers who ultimately bear almost 
all of the costs. The direct cost to an employer to bring a case to trial is $25,000 to $30,000, 
and the cost of trial adds another $30,000 to $50,000. Perhaps more important, the social 
waste in the transaction costs is enormous. A California study showed that for every $50,000 
recovered by a discharged employee, the cost to an employer is nearly $200,000 - four times 
as much in legal fees for cases won and lost and the judgment. This is less a process for 
remedying wrongs suffered by employees than a device for redistribution which enriches 
lawyers at the expense of both the employer and employee. 
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The litigation costs in other individual employment cases are roughly similar. Under 
Title VII, a winning plaintiff is entitled to attorney's fees, which helps a plaintiff with a sure 
case. But a lawyer is at risk in taking a case which might be lost, and many plaintiffs 
claiming discrimination are unable to find a lawyer to take their case. The social costs here 
are also burdensome. It is not unusual for the attorney's costs awarded to the winning 
plaintiff to be more than the damages. When one counts the employer's legal fees in cases 
won and lost, the amount received by employees who have suffered discrimination is only 
one-third or one-fourth of the cost borne by the employer. 
In wage-hour cases, litigation is largely an empty remedy, for the amounts recovered 
are too small, even with liquidated damages. Pervasive violations and the prevalence of 
repeat violators shows the inadequacy of the remedy. Again, where suit is brought, the 
attorney's fees are commonly multiples of the back pay awarded. The transaction costs 
swallow the transaction. 
NLRB procedures have an advantage for the individual employee, for the General 
Counsel prosecutes the case. The individual, however, may feel the need for a lawyer, 
particularly in appeals to the Board and the courts. Completely buried, is the public cost of 
the General Counsel's preparing and presenting the case. The employer or union respondent 
must, of course, have a lawyer. The legal costs here are substantially less than in court 
litigation, but still substantial. 
A second factor making litigation inadequate is delay. In both federal and state courts 
it often takes three to five years for a case to come to trial. Title VII cases are, by law, 
expedited in the federal courts, but from the filing of a charge to the trial takes a year and a 
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half, and in 10% of the cases the delay is more than three years. The NLRB procedures 
informally dispose of more than 95 % of the cases before they go to a hearing before an 
Administrative Law Judge with a median time of less than five months. But if the case is 
contested before the Board, it takes nearly two years to obtain a decision. 
It is quite clear that remedies through the courts and administrative agencies drain the 
substance from legal rights, common law and statutory, which purport to protect individual 
employees. Those remedies give meager protection to employees, heavily burden employers, 
and waste social resources. There must be a better way. 
Is arbitration a better way? Comparison of court or administration procedures with 
grievance arbitration under collective agreements is striking. The legal costs for both unions 
and employers, in those cases where lawyers are used, are only one-fourth what it is for 
litigation, and the arbitrator's fees add about fifteen percent. The average time between 
requesting arbitration and an award is less than eight months, with some contracts providing 
for expedited arbitration. In the anthracite coal industry, for example, all discharge cases are 
decided within two weeks from the time of discharge. 
We need to ask: Why is arbitration so much less expensive and faster? First, there 
are no pre-trial procedures — drafting of complaints, motions to dismiss, depositions, 
interrogatories, memoranda of law and motions for summary judgment and trial briefs. All 
of these take an enormous amount of lawyer's time, all billed by the hour. In arbitration, 
there is normally nothing beyond a demand for arbitration and a copy of the grievance. The 
case goes direct to hearing. 
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Second, the procedure is informal. Many of the facts are simply stated without the 
necessity of witnesses. There is little or no haggling over admissability of evidence, 
authenticity of documents, expert testimony, or use of hearsay. And there are no juries to be 
impanelled, shielded from irrelevant or prejudicial testimony and instructed, and no verdicts 
to move to set aside. Transcripts can often be dispensed with. 
Third, the arbitrator is generally knowledgeable about the issue. Not all of the 
background and details need to be spelled out and placed in the record. The arbitrator has an 
understanding of collective agreements, how they come into being, how they are to be 
interpreted and the role of the common law of the shop. Briefs are seldom needed, and 
reference to authorities play a minor role. 
Fourth, there is no docket to cause delay. Individual arbitrators may have a backlog, 
but other arbitrators who are available can be chosen. The parties need not stand in line 
waiting for other cases to be disposed of. 
We come now to the obvious question. Can we transpose grievance arbitration which 
has worked so well in deciding collective contract disputes to deciding disputes as to the 
individual employee's legal rights. 
I would point out three factors which require some modification of grievance 
arbitration. First, when a grievance comes the arbitration it has been through a process of 
investigation by the union and discussion in the grievance procedure which further develops 
the facts and focuses the issue. If there is no union and no grievance procedure it may be 
useful to provide some limited discovery and development of the issue in advance of hearing. 
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Much of this might be done at the outset of the hearing, extending the hearing to later dates 
as necessary to allow full exploration of the facts and the issue. 
Second, the issues to be decided in grievance arbitration are contract issues, not legal 
issues. Experienced grievance arbitrators may be well versed in the law of the shop but 
have, at most, limited knowledge of common law or statutory rights. Arbitration of these 
issues requires arbitrators who are knowledgeable in the field of individual employee rights. 
The arbitration panels of the AAA and the FMCS, as they now stand, are not suitable for this 
purpose. Special panels will need to be created. 
Third, and most important, in grievance arbitration the arbitrator is chosen by mutual 
agreement of the union and the employer, parties who are relatively equal in their experience 
with arbitrators and their knowledge or ability to find out the propensity or philosophy of 
particular arbitrators. The efforts of each to pick an arbitrator believed to be favorable is 
counterbalanced by the parallel efforts of the other. Also, the arbitrator concerned about 
continued acceptability by both parties will try to be neutral. 
The same process will not work when an individual employee, unaided by a union, is 
involved. The employer will know which arbitrators tend to favor the employer's viewpoint 
and which tend to favor the employee's viewpoint. It will have not only the benefit of 
experience as a repeat player, but access to those who systematically collect and provide such 
information. The lonely employee will have no experience and not know the sources of 
information. Moreover, the arbitrator may consciously or subconsciously recognize that the 
employer can affect his future as an arbitrator but the employee most probably cannot. 
5 J 
This brings me to what I consider the most crucial and difficult question: How do we 
structure a process for selecting arbitrators which will give the individual employee an equal 
chance? Unless we solve that problem we cannot conscientiously urge employees to accept 
arbitration. 
The process of the AAA and the FMCS of submitting lists of seven or nine names, 
allowing each party to strike names seems to me fatally flawed when used for individual 
rights disputes. All on the panel may be competent and disinterested, but some, if not most, 
will inevitably have leanings in one direction or another. The employer with experience and 
access to information will know who to strike. The individual can only guess or throw darts. 
The only way to avoid this problem is to have the arbitrators chosen from a panel in rotation 
or by lot. Each party then has an equal chance. This then raises the question of how the 
panel is to be selected. 
The panel needs to be selected in a manner which, so far as possible, is composed of 
arbitrators who are relatively neutral. But who is to do the choosing? One solution, would 
be to have panels selected by the FMCS and by the various state boards of mediation. This 
would carry some risks. As administrations changed the membership on the panels might 
change to reflect "neutrality" from that administration's perspective. Also, employers would 
be more likely to complain about unfavorable decisions than individual employees, and their 
complaints would carry more weight, pressuring the agency to drop names from the list as 
not sufficiently "neutral" from the employer's viewpoint. 
Entrusting the selection of the panels to the AAA would seem even more risky. The 
AAA is in the business of selling its services and employers are important repeat customers, 
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not only in labor arbitration but also in commercial arbitration. The AAA would be 
vulnerable to employer pressure to drop from the panel those who, from the employer's point 
of view, were biased. 
Panels might be created by other private organizations or institutions such as the 
Section on Labor Relations of the American Bar Association, and labor law sections of state 
and local bar associations. But in these sections employer lawyers far outnumber union 
lawyers, and lawyers who represent individual employees have little or no voice. Such 
organizations are likely to produce panels which reflect the interests of their members. 
Of all of the methods of selecting arbitrators the least risky alternative in my judgment 
would be to have them assigned in rotation or by lot, from panels developed, by the FMCS 
and state boards of mediation. 
It goes without saying that arbitration of legal rights should be completely voluntary. 
Employers may provide in their handbooks, or other statements, for arbitration of employee 
disputes, and the employees may choose, once a dispute has arisen, to go to arbitration rather 
than to court. But an employee can not be required to give up her right to a jury trial under 
Title VII, or to have his rights under the NLRA adjudicated by an arbitrator. To require an 
employee to agree to arbitration of legal rights as a condition of being hired or of continued 
employment cannot be considered voluntarily except by those who live in marble palaces 
detached from the real world. For most employees, this is compulsory arbitration parading 
under sheep's clothing to pull the wool over judges eyes. The Gilmer case may do little 
damage if confined to the canyons of Wall Street, but this Commission ought to recommend 
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legislation to at least keep it so confined. Arbitration of individual employee disputes should 
be limited to agreements to arbitrate a dispute after it has arisen. 
Once reliable and balanced arbitration panels are created, the problem is to encourage 
the parties to use them. In view of the great advantages to arbitration for both parties, this 
would seem not to be difficult. But it may not be easy to cure lawyers of their litigation 
syndrome. One discouraging straw in the wind. Montana enacted a statute giving general 
protection against unjust discharge. Either party may demand arbitration; if the other refuses 
and then loses when the case goes to trial, the one who refused arbitration must pay the 
other's attorney's fees. A field study of lawyers in Montana shows that arbitration was 
seldom requested. Whether this was due to unfamiliarity with, or distrust of, arbitration, a 
desire for more billable hours, or some other reason is unclear. It may be only a short term 
phenomenon reflecting the lawyers slowness to change. " 
It should be pointed out that there is already in existence arbitration systems applicable 
to individual employee disputes. A number of federal district courts and some state courts 
have established arbitration procedures for cases involving smaller amounts - in some federal 
courts up to $100,000 and in some state courts up to less than $25,000. In the federal courts, 
the clerk of the court maintains three lists, a plaintiffs list, a defendant's list and a neutral 
list. The arbitrators are essentially pro bono, paid $100 per case. Three arbitrators are from 
each list, sit on a panel, hear the case and make an award. If neither party objects, it 
becomes an order of the court, but either party can demand a trial de novo. However, if the 
party rejecting the award loses at trial, there is a mild sanction, sometimes only the cost of 
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the arbitration. Although the award is not final and binding, less than 3% of the cases 
originally on the arbitration list end up in court. 
This form of arbitration has been used increasingly and some federal courts make 
submission to arbitration compulsory, with the award not binding. This procedure saves time 
and money, but it goes only part way. The arbitration comes only after the parties have 
substantially prepared for trial, which may be more than half the cost. The experience here 
suggests that arbitration might be more acceptable, particularly to lawyers, if it were not 
stated to be final and binding but left the possibility of going to trial when the award was not 
acceptable. Whether the parties in employment rights cases would accept the awards and not 
ask for a trial de novo is uncertain. Only experience would tell. 
There is one measure available to unions which could significantly increase the 
viability of arbitration of disputes over individual employee's legal rights. "Unions do not 
need to have a majority in a workplace to represent employees in enforcing their legal rights. 
Union actions to protect those legal rights is protected concerted activities. In a plant where 
the union did not have a majority, it could inform employees of their legal rights, help them 
pursue those rights, give them advice in choosing an arbitrator and provide a competent 
advocate in the arbitration. Where the union performed this function, there would be no need 
for special panels. The union would not only help choose an arbitrator, but the arbitrator 
would be equally concerned about continuing acceptability by both the employer and the 
union. This would, in my judgment, be the most acceptable process for promoting and 
administering arbitration of legal rights of individual employees. What is needed is for 
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unions to recognize that they can play a significant role in protecting employees' legal rights, 
and they need not win an election to do so. 
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Statement of Clyde Summers Before the Commission on the Future of Worker-Management Relations

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Statement of Clyde Summers Before the Commission on the Future of Worker-Management Relations

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