Navy Reservist Wants a Day in Court, Not Arbitration

By: Margot Roosevelt, Source:

In November 2012, about 40 employees of BLB Resources, an Irvine real estate firm, gathered in a room festooned with balloons to celebrate a colleague who was deploying to Afghanistan.

Kevin Ziober, a lieutenant in the U.S. Navy Reserve, dug into a cake decorated with an American flag and the words, “Best Wishes Kevin” in red, white and blue. “I texted my brother, my mom and my grandma to tell them, ‘What a great sendoff!'” he recalls.

Three hours later, as he was packing up his desk, the 43-year-old was terminated from his $180,000 a year job. He was told, he said, that the project he was working on would likely not outlast his year overseas.

A federal law, the Uniformed Services Employment and Reemployment Rights Act, gives military service members the right to recover their jobs when they return from war. But since 2014, after Ziober got back to Orange County and filed a lawsuit, BLB has been battling to force him into a private arbitration proceeding, rather than allow his court case to proceed.

Ziober’s case comes as opposition to mandatory arbitration is gaining national traction, part of a growing debate over whether corporate policies are fueling economic inequality. Last month, the federal Consumer Financial Protection Bureau proposed a rule to prevent banks and credit card companies from using arbitration to prevent customers from filing class-action lawsuits.

Forced arbitration contracts in the nonunion workforce, once rare, have exploded since a 1991 U.S. Supreme Court decision opened the door for companies to require them as a condition of employment.

Six years ago, a UC Berkeley study estimated that 27 percent of employers were making workers sign agreements waiving their rights to a court hearing in the event of a dispute — a figure that experts say has risen since then.

Consumer and labor groups say arbitration, which takes place behind closed doors with no public accountability and no right of appeal, can be unfair to workers. Private arbitrators, paid by companies, depend on employers for repeat business and so have been accused of bias.

Businesses, however, prefer arbitration to open court proceedings, which can be more costly and protracted. Arbitration, by requiring individual treatment of each case, also protects companies from class-action lawsuits in which employees might be more likely to prevail.

BLB Resources, the company that fired Ziober, “believes an arbitration agreement provides a more efficient and expeditious manner to resolve claims,” said BLB’s attorney Lonnie Giamela, adding that the Navy reservist had voluntarily signed the arbitration agreement shortly after he was hired.

A U.S. district court in Santa Ana ruled in July 2014 that Ziober’s case had to go to arbitration. Next month, the 9th U.S. Circuit Court of Appeals in Pasadena will hear his claim that the federal law protecting service members’ jobs also protects their right to go to court.

Last year, the California Legislature passed a bill to forbid retaliation against workers who refuse to sign mandatory arbitration agreements giving up their right to sue. The bill was vetoed by Gov. Jerry Brown after the California Chamber of Commerce labeled it “a job killer.”

However, Brown’s veto message left open a small window, saying, “If abuses remain, they should be specified and solved by targeted legislation, not a blanket prohibition.”

With that in mind, the Consumer Attorneys of California, a Sacramento-based association, teamed up this year with Assemblyman Mark Stone, D-Monterey Bay, on a bill to prohibit employers from forcing reservists into arbitration over disputes arising when they are called to deploy.

Eight veterans groups, including the National Guard Association of California, the American Legion and Veterans of Foreign Wars, backed the bill, AB2879. According to the National Guard, 583 cases of employer retaliation against its members arose in California last year.

The bill passed two Assembly committees after veterans, including a Rancho Cordova Army reservist who was forced into arbitration after losing his auto parts sales job, testified in favor.

But the state Chamber of Commerce placed the bill on its 2016 “job killer” list, saying it would “lead to confusion and litigation.” Business lobbying against the measure was fierce.

In a Sacramento Bee op-ed, chamber ally Ken Barnes, executive director of California Citizens Against Lawsuit Abuse, wrote that arbitration agreements “allow for higher wages, because without them, employers would be forced to set aside large amounts of cash for legal expenses.”

On Thursday, Stone withdrew the bill after opposition from Republicans, allied with a caucus of business-backed Democrats, made clear it would be defeated.

With mandatory arbitration, “most workers have no idea they are signing away their constitutional right to a jury trial in favor of a rigged system,” said Elise Sanguinetti, president of the Consumer Attorneys of California. She expressed surprise that “certain members of the Assembly would choose to side with big business over protecting our veterans.”

On Wednesday, the day before the veterans bill died, the full Assembly voted to defeat a separate measure that would have limited mandatory arbitration in civil rights and discrimination cases.

In one case, a woman with breast cancer was forced into arbitration over an age and disability claim after being dismissed by her college. Because arbitrators are not bound by the same rules as courts, “her counsel was unable to compel any documents or take depositions, which were needed to corroborate disparate treatment between their client and younger, healthier students,” according to the consumer attorneys group.

All Orange County Assembly members voted against the civil rights arbitration measure, with the exception of the delegation’s lone Democrat, Tom Daly, who did not vote. Assemblyman Donald Wagner, R-Irvine, who voted against both bills — the veterans measure in committee and the civil rights legislation on the floor — did not respond to a request for comment.

Three other bills to limit mandatory arbitration, all narrowly tailored, have passed the California Senate and will move to Assembly committees in coming weeks.

One addresses elder abuse claims against nursing homes. Another concerns California plaintiffs forced to travel long distances for arbitration because their company headquarters are located outside the state. A third bill seeks to place ethics-related rules on arbitration companies.

Meanwhile, Ziober, the Navy reservist, is hoping for the passage of federal legislation introduced last month by Sen. Richard Blumenthal, D-Conn., to clarify that reservists are exempt from mandatory arbitration.

Ziober is settled in a new job as a real estate manager for a federal agency in Santa Ana, albeit at half his old salary. But he plans to pursue his arbitration case up to the Supreme Court, if necessary, to shed light on discrimination by companies “who find it inconvenient to have their workers take leave to serve in the armed forces.”

“We have the strongest military in the world, which makes us the safest nation in the world,” Ziober said. “We can’t have soldiers and sailors afraid to represent their country because they might lose their jobs through an arbitration process which is pro-employer.”