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Limitations on Third-Party Discovery in Arbitration
In recent years, it has become almost a foregone conclusion that a savvy employer seeking to avoid costly litigation with its employees will require those employees to sign agreements that provide for mandatory arbitration of any claims arising out of their employment. However, the decision to submit all employment disputes to mandatory arbitration only should be made after a careful analysis of the pros and cons of arbitration so that the employer can determine whether the perceived benefits of arbitration actually are worth the significant disadvantages.
One perceived benefit of arbitration is that it is assumed to be less expensive than court litigation. This assumption is based in large part on the notion that discovery is limited in arbitration. However, in many cases, the same amount of discovery takes place in arbitration as it does in court litigation, and thus no cost saving is achieved.
In arbitration, the parties can issue written discovery to each other and take depositions in the same manner as they would if they were litigating in a court of law. Prior to the arbitration, the employer can send document requests and interrogatories to the plaintiff and take his or her deposition. The plaintiff also can take the deposition of a corporate representative of the employer and likely can depose any current employee of the employer. The only sense in which discovery is even arguably limited in arbitration is as it relates to third parties (i.e., persons and entities that are not parties to the arbitration or the arbitration agreement).
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