[A]fter Kimberly Matson lost her job with Reinhart Foodservice in Burlington, she took the matter to federal court.
Matson, according to court papers, felt she had been wrongfully terminated out of retaliation.
Reinhart responded to the lawsuit by seeking to move the dispute to arbitration, a process Matson had agreed to when she joined the company. Last week, a court agreed.
Matson said in an interview Tuesday that she was not aware of the agreement until she learned about it in court. The form she signed was “a no big deal type of thing,” she said — one of many documents she got at the start of her employment. She said she did not know what she agreed to.
“I never received any legal document saying my life would be abolished if I took a position,” Matson said.
She feels she doesn’t have options to move forward and find justice over her complaint. “You’re so stuck,” Matson said. “You don’t have any choices.”
Arbitration clauses — requiring that complaints be handled in private proceedings outside a courtroom, presided over by arbitrators — are common in many types of contracts, including for jobs, bank accounts, brokerage accounts, credit cards and smartphone apps.
Proponents of the practice say it saves court resources and is more affordable than going through the judicial system to resolve disputes. But critics say arbitration favors companies over consumers or employees and denies people access to fair judicial proceedings.
Now Vermont lawmakers are considering action meant to limit arbitration clauses.
Myriam Gilles, a professor at the Benjamin N. Cardozo School of Law at Yeshiva University in New York and an expert in arbitration, appeared before the Vermont Senate Judiciary Committee on Thursday.
Gilles said people agree to arbitration clauses, often buried in lengthy terms of use documents, because they want the job, the service or the product. If they want to bring a complaint, however, they find themselves forced into a process outside of the courts.
Arbitration is often private. The corporation generally selects the arbitrator, and the proceeding may be set in a part of the country far from where the consumer lives — making it difficult and expensive for people to follow through on a complaint.
Gilles has testified before Congress three times on a bill that would limit the use of arbitration, but she said federal action does not appear imminent.
“It’s nowhere closer to being enacted,” she said.
There are proposals in Congress to prohibit forced arbitration clauses, including one measure, introduced by Sen. Patrick Leahy, D-Vt., that would let states ban mandatory arbitration.
But legislation to limit arbitration does not have the support it needs in Congress. In fact, the opposite has occurred.
In October, Congress blocked a rule issued by the Consumer Financial Protection Bureau that would have allowed consumers to bring class action suits against financial institutions.
Gilles said it’s possible Vermont could run into a challenge under the federal law concerning arbitration. However, she believes states may be in a position to take effective action. California has a law regulating some employment-related arbitration cases, and New York and other states are considering similar measures.
The state Senate committee was considering S.105, a bill introduced by Sen. Chris Pearson, P/D-Chittenden, that would prohibit some arbitration clauses.
“The forced arbitration clauses are everywhere. They’re literally daily occurrence for everyone agreeing to the terms of an app on their phone, opening a credit card or bank account,” Pearson said.
He said his bill is something of a “first draft.” Pearson acknowledged the state could face challenges crafting legislation that would not be blocked by a federal law.
However, Pearson, who first introduced legislation on forced arbitration a few years ago while serving in the House, said it is an important issue.
“We’ve got to really double down and figure out what’s workable,” Pearson said.
Attorney General TJ Donovan also has major concerns about forced arbitration.
“This is an access to justice issue, this is a fairness issue, and it’s a consumer protection issue, kind of rolled up together,” Donovan said.
He said his office has had calls from Vermonters who feel “ripped off” or that they haven’t been able to access justice.
“Some fights are worth having at the end of the day,” Donovan said.
Sen. Joe Benning, R-Caledonia, a co-sponsor of Pearson’s bill and a member of the committee, said the issue would be “much better handled” at the federal level, but he sees reason for Vermont lawmakers to consider taking action.
State-level initiatives are part of the conversation and could prod federal consideration.
However, Benning said it’s a complex issue in a year when lawmakers already have many initiatives before them.
“I don’t know whether or not this particular bill is going to rise to the level of top priority for the Legislature,” he said.
Matson, whose lawsuit against her former employer was sent to arbitration, said she would not have signed the agreement if she knew what it meant.
“I would never, never give up my rights to a jury trial,” Matson said. “I would never give up my rights to tell my story to anybody.”
The clause has left her frustrated and feeling like she won’t be able to seek justice.
“I think I should be able to sue the shit out of them,” she said.
