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Who Says Arbitration Speeds Up Justice?

Katherine Neff

Last week the Wall Street Journal chronicled the 44-year battle Cleveland, Ohio railroad workers had with their former employer Pennsylvania Railroad.  After Pennsylvania Railroad merged with New York Central Railroad to form Penn Central Transportation Corp. in 1968, the 32 workers lost their jobs and seniority.  After initially filing in an Ohio federal district court, the workers were forced to go through arbitration, one case at a time, as a result of the court’s 1979 decision to enforce the arbitration agreement.

The 44-year battle included three arbitration panels, several courts and a review by the federal Surface Transportation Board.  By the time the lawsuit concluded, only two workers were alive.

Finally, after an appeal by Penn Central of the third arbitration panel’s 2009 decision to award $14.2 million, nearly all of which was interest, in August the United States Court of Appeals for the Third Circuit affirmed the award.

Although the chairman of the arbitration panel that awarded the workers $14.7 million in damages accused all parties involved in the proceedings of bearing some responsibility for the delay, he identified Penn Central, as “rarely miss[ing] an opportunity” to lengthen the dispute.

Although this case is certainly an extreme example of delayed justice, it is important to consider when entering into an arbitration agreement that arbitration may not result in a speedy resolution of your dispute or save you court costs.

View the decision here.

 

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