Outten & Golden: Empowering Employees in the Workplace

Posts Tagged ‘binding arbitration’

KBR is Asking for It

Tuesday, February 9th, 2010

To paraphrase comedian Henny Youngman’s famous one-liner, take my KBR, please.

After all the bad press U.S. engineering and construction company KBR has received over the years for its operations in Iraq , both during its time as a Halliburton subsidiary and since, one might think it had learned a thing or two about how to avoid sticking its foot in its mouth.

But you would be wrong, As case in point consider the following legal brief KBR filed, which was posted online by the estimable Ms. Sparky — who is to chronicling KBR misdeeds, including those against it own employees, as white is to rice — in regard to the case of Jamie Leigh Jones,

For those who missed this news Ms. Jones is the then 20-year old former KBR/Halliburton worker, who says she was gang-raped by Halliburton/KBR coworkers in Baghdad in late July 2005.

The main points are by now well known. She says that just four days after arriving in Iraq she was raped by multiple men at a KBR camp in the Green Zone, the company put her under guard in a shipping container with a bed and warned her that if she left Iraq for medical treatment, she’d be out of a job.

In a lawsuit filed in federal court against Halliburton and its then-subsidiary KBR, Jones says she was held in the shipping container for at least 24 hours without food or water by KBR, which posted armed security guards outside her door, who would not let her leave.

According to her lawsuit, Jones was raped by “several attackers who first drugged her, then repeatedly raped and injured her, both physically and emotionally.” Jones said that an examination by Army doctors showed she had been raped “both vaginally and anally,” but that the rape kit disappeared after it was handed over to KBR security officers.

Ms. Jones had to be rescued from her American employer by U.S. State Department agents from the U.S. Embassy in Baghdad, after she was able to contact her father by cell phone, who then contacted his congressman, Rep. Ted Poe (R-TX), who contacted the State Department.

In late 2007, over two years after the reported rape occurred, the Justice Department had brought no criminal charges in the matter. In fact, an investigation by ABC News could not confirm any federal agency was investigating the case.

Early on, in a statement, KBR said it was “instructed to cease” its own investigation by U.S. government authorities “because they were assuming sole responsibility for the criminal investigations.”

Since no criminal charges were filed, the only other option was the civil system, which Jones tried. But KBR didn’t want this case to see the inside of a civil courtroom. Instead, KBR moved for Jones’ claim to be heard in private arbitration, instead of a public courtroom. It says her employment contract requires it.

When Jones went to work for KBR in Texas, and later for its subsidiary, Overseas Administrative Services, she signed contracts containing mandatory binding arbitration clauses, which required her to give up her right to sue the companies and any right to a jury trial. Instead, the contracts forced Jones to press her case through private arbitration, which she did in 2006.

At the time of the alleged attack, KBR was a subsidiary of Halliburton. So Jones was covered by the Halliburton dispute-resolution program, which was implemented when Dick Cheney was Halliburton’s CEO. On his watch, Halliburton, in late 1997, made it more difficult for its employees to sue the company for discrimination, sexual harassment, and other workplace-related issues.

One day, Halliburton sent all its employees a brochure explaining that the company was implementing a new dispute resolution system. The company sold the new program as an employee perk that would create an “open door” policy for bringing grievances to management and as a forum for resolving disputes without expensive and lengthy litigation. In practice, it meant that anyone who had a legitimate civil-rights or personal-injury claim signed away his or her constitutional right to a jury trial. Anyone who showed up for work after getting the brochure was considered to have agreed to give up his or her rights, regardless of whether the employees had actually read it. In 2001, the conservative and pro-business Texas Supreme Court overturned two lower courts to declare that this move was legal.

In arbitration, there is no public record or transcript of the proceedings, meaning that Jones’ claims would not be heard before a judge and jury. Rather, a private arbitrator hired by the corporation would decide Jones’ case.

When Ms. Jones testified before the House subcommittee on crime, terrorism, and homeland security in December 2007 the point was made that as KBR employees working on contract for the U.S. Army, Jones’ attackers were almost certainly covered under the Military Extraterritorial Jurisdiction Act, more simply known as MEJA, which subjects all civilians working abroad with U.S. armed forces to a defined legal code. But in Jones’ case, MEJA seems to have fallen short for a different reason: a lack of investigative muscle in the Green Zone. Both then and now the Department of Justice lacks investigators in Baghdad with responsibility for looking into crimes committed by private contractors against their own.

KBR has not shown much adroitness in its handling of Ms. Jones’s case. In a December 2007 e-mail with the subject line titled “Recent media coverage,” KBR President and Chairman Bill Utt said the company has disputed allegations by Jamie Leigh Jones.

“While the allegations raised by Ms. Jones are serious, after a review of the case KBR noted inaccuracies in the accounts of the incident in question, and disputes portions of Ms. Jones’ version of the facts,” Utt wrote in an e-mail obtained by the Houston Chronicle.

There is reason to think that Ms. Jones was not an isolated case. In her lawsuit, Jones asserted that “KBR and Halliburton created a ‘boys will be boys’ atmosphere at the company barracks which put her and other female employees at risk.” Another former KBR employee, Linda Lindsey, supported Jones’s claims about the “boys will be boys” environment of KBR barracks in Iraq. “I saw rampant sexual harassment and discrimination,” said Lindsey in a sworn affidavit for Jones’s case.

In a December 2007 letter to Secretary of Robert Defense Gates, Senator Bill Nelson (D-FL) mentioned “a second alleged assault, this time of a woman from Florida who reportedly worked for a KBR subsidiary in Ramadi, Iraq in 2005.”

Since the attacks, Jones has started a nonprofit foundation called the Jamie Leigh Foundation, which is dedicated to helping victims who were raped or sexually assaulted overseas while working for government contractors or other corporations. Since Ms. Jones came forward, other women have come forward with similar lawsuits against KBR

It was primarily because of Ms. Jones that the fiscal 2010 Defense appropriations measure includes a provision barring the Defense Department from entering into contracts with companies that restrict alleged sexual assault victims from taking legal action.

The amendment was introduced by Sen. Al Franken, D-MN. Support for the amendment was broad, but far from universal. The provision passed the Senate 68-30 in October, when the chamber was considering an initial version of the spending bill. Some Republican opponents argued that it was not Congress’ place to interfere in private sector contracts.

“Congress should not be involved in writing or rewriting private contracts,” said Sen. Jeff Sessions, R-AL, during floor debate on the provision. “Instead of eliminating arbitration we should look into how to utilize arbitration more in these kinds of disputes.” Sessions called the amendment a “political attack directed at Halliburton,” KBR’s former parent company.

The Obama administration and the Defense Department initially opposed the amendment, although the White House insisted it supported the provision’s intent. The Pentagon’s primary concern, according to a letter Defense officials sent to lawmakers before the Senate’s vote, was enforcement.

“The Department of Defense, the prime contractor, and higher tier subcontractors may not be in a position to know about such things,” the letter stated. “Enforcement would be problematic, especially in cases where privity of contract does not exist between parties within the supply chain that supports a contract.”

The letter stated that if the Senate deemed these types of contract clauses to be unacceptable, it might be more effective to prohibit them in any business transaction within the jurisdiction of the United States.

Negotiations between the department and Capitol Hill eventually resulted in a number of changes, including an agreement that the restriction would apply only to companies with government contracts valued at more than $1 million and that it would contain a waiver for national security concerns.

The provision, now law, does not require companies to change existing employment contracts, but will bar the government from entering into future pacts with those firms if they do not modify employment clauses. When the provision passed the Senate, Franken said it “narrowly targets the most egregious violations.”

With all this one might think that both KBR and Halliburton would have long ago seen given up trying to treat this as some sort of labor dispute, which should be handled by arbitration. Especially in light of recent court decisions.

Last September the United States District Court for the Southern District of Texas issued a decision in regard to an appeal from Halliburton regarding the case. According to the case summary:

PROCEDURAL POSTURE: Appellant employer sought review of a decision from the United States District Court for the Southern District of Texas, which partially refused to compel arbitration of some of appellee employee’s claims against the employer, which stemmed from the alleged gang rape of the employee by coworkers while working in Iraq.

OVERVIEW: The employee alleged that she informed the employer that conditions at the barracks were not safe and that she was gang raped in her bedroom after a social gathering outside the barracks. The claims for assault and battery, emotional distress, negligent hiring, retention, and supervision, and false imprisonment were found not arbitrable. At issue was whether these claims were related to the employee’s employment or constituted personal injury arising in the workplace, so as to render them arbitrable under the arbitration agreement. The employer argued that the claims were covered by the agreement because the alleged incident “related to” the employee’s employment. The court disagreed. Sexual assault was not within the course and scope of employment. This was true even though the employee received workers’ compensation benefits in connection with the incident, as the terms “course and scope of employment” were more narrowly defined under the agreement than in workers’ compensation laws such as the Defense Base Act. That the employee lived in employer-provided barracks was inconsequential because she was off duty at the time, and the barracks were located away from the work place.

OUTCOME: The court affirmed the district court’s decision and remanded the case to the district court for further proceedings.

Yet KBR is preparing to fight Ms. Jones over her right to settle her suit with the company, all the way to the Supreme Court. Its strategy? Destroying Jones’ credibility.

In its most recent 188-page brief KBR petitions for a writ of certiorari, which is a document a losing party files with the Supreme Court asking the Court to review the decision of a lower court.

To quote from the brief:

This interlocutory appeal from a partial refusal to compel arbitration concerns the arbitrability vel non of tort claims by an employee who, while working at an overseas location, was allegedly gang-raped by her co-workers in her bedroom in employer-provided housing. Halliburton Company/Kellogg Brown & Root, and various affiliates (Halliburton/KBR), contest the denial, in part, of their motion to compel arbitration of Jamie Leigh Jones’ claims concerning her alleged rape by Halliburton/KBR employees, while she was stationed at a company facility in Baghdad, Iraq. All of her claims were deemed arbitrable except for: (1) assault and battery; (2) intentional infliction of emotional distress arising out of the alleged assault; (3) negligent hiring, retention, and supervision of employees involved in the alleged assault; and (4) false imprisonment.

At issue is whether those four claims found non-arbitrable are, for purposes of Jones’ employment contract, “related to [her] employment” or constitute personal injury “arising in the workplace”. That contract incorporated Halliburton/KBR’s dispute resolution program (DRP), which required her to arbitrate all claims brought against the company falling within the scope of related-to or workplace language. In the alternative, should the alleged rape be deemed covered by the arbitration clause, at issue is whether the doctrine of unclean hands precludes granting equitable relief of specific enforcement of that clause.

Not being a lawyer myself I can’t comment on the jurisprudence of all this but I do find it amazing that KBR fights so hard to avoid doing the right thing; namely letting Ms. Jones have her day in court.

After all, on other issues, KBR can show signs of rationality. An example is the op-ed that appeared in this past Sunday’s Washington Post. The author, a former Air Force loadmaster, who was discharged for being gay, notes that within three weeks of his discharge, KBR hired him to go back to Iraq as a radio repair technician. (KBR knew that he was gay.)

So, for the time being, I can only suggest that KBR be subjected to the full barrage of ridicule it so richly deserves. After all, to cite a defense often heard in rape cases, it is asking for it.

*This post originally appeared in the Huffington Post on February 8, 2010. Reprinted with permission from the author.

**For more on binding arbitration visit the Workplace Fairness arbitration resources page and Fair Arbitration website.

About the Author: David Isenberg is the author of the book Shadow Force: Private Security Contractors in Iraq. He wrote the “Dogs of War” weekly column for UPI from 2008 to 2009. During 2009 he ran the Norwegian Initiative on Small Arms Transfers project at the International Peace Research Institute, Oslo. His affiliations include the Straus Military Reform Project, Cato Institute, and the Independent Institute. He is a US Navy veteran. His e-mail is sento@earthlink.net.

New Legislation Bans Artibtration In Federal Defense Contracts

Wednesday, January 20th, 2010

As Congress ended its last session, a legislative victory for employee rights advocates came with it.

The bill, signed by President Obama at the end of December,  came about because of the horrible story involving Jamie Leigh Jones. Here’s one description of what happened as reported in September by  Think Progress:

In 2005, Jamie Leigh Jones was gang-raped by her co-workers while she was working for Halliburton/KBR in Baghdad. In an apparent attempt to cover up the incident, the company then put her in a shipping container for at least 24 hours without food, water, or a bed, and “warned her that if she left Iraq for medical treatment, she’d be out of a job.”

Even more insultingly, the DOJ resisted bringing any criminal charges in the matter. KBR argued that Jones’ employment contract warranted her claims being heard in private arbitration — without jury, judge, public record, or transcript of the proceedings. After 15 months in arbitration, Jones and her lawyers went to court to fight the KBR claims. Yesterday, a court ruled in favor of Jones.

The tragedy spurred the bill which became known as both  the “Franken Amendment” and the”Jamie Leigh Jones Amendment” (to the Defense Appropriations Act for 2010) . It’s the first federal legislation that prevents employees from forcing binding arbitration on their employees as a forum for resolving employment disputes.

In recent years, many companies have required employees to sign contracts, handbooks, and other documents which require them to go to arbitration to resolve their employment disputes.

When employees sign — which they are forced to do to either get the job or keep the job — they give up their right to take claims against their employers to court. Cases involving discrimination and sexual harassment, to name a few, are compelled to go to arbitration instead.

An arbitration is generally held before three arbitrators and is commonly viewed as a favorable forum for employers versus employees.

Without binding arbitration, employees have the right to take their discrimination cases to court, and with sufficient evidence, in front of a jury. It is this precious right to a jury trial which is at the heart of this issue.

The Franken Amendment prohibits the award of Department of Defense contracts of over one million dollars to any company that forces its employees or independent contractors to submit to pre-dispute binding arbitration of Title VII and sexual assault-related tort claims

Under the bill, defense contractors:

  • with over $1 million (which is most) that are funded by 2010 appropriations will not be able to force arbitration of Title VII and sexual assault-related tort claims
  • will not be able to enter into forced arbitration agreements with their employees or independent contractors or enforce any agreements that have such provisions.

The list of covered sexual assault-related tort claims covers:

any tort related to or arising out of sexual assault or harassment, including assault and battery, intentional infliction of emotional distress, false imprisonment, or negligent hiring, supervision, or retention

The Franken Amendment will protect hundreds of thousands of employees around the country from being forced to arbitrate their Title VII claims. It also provides persuasive authority for employee advocates to strike down forced arbitration clauses in other federal contracts.

It’s also a step forward to getting rid of forced arbitration in other employment settings.

All in all, it’s a great victory on a critical issue for employee advocates and we thank Senator Franken for his efforts on behalf of employee rights.

image: bsmith101.files.wordpress.com

*This post originally appeared in Employee Rights Post on January 14, 2009. Reprinted with permission from the author.

About the Author: Ellen Simon is recognized as one of the first and foremost employment and civil rights lawyers in the United States. With more than $50* million in verdicts and settlements and over 30 years of experience, Ellen has been listed in Best Lawyers in America and in the National Law Journal as one of the nation’s leading litigators. She has been lauded for her work on landmark cases that established employment law in both state and federal court. Ellen also possesses a wealth of knowledge as a legal analyst discussing high-profile civil cases, employment discrimination and women’s issues. Ms. Simon has been quoted often in local and national news media and is a regular guest on television and radio, including appearances on Court TV. She is the author of the Employee Rights Post, a legal blog devoted to employee and civil rights.

*prior results do not guarantee a similar outcome

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