Let’s say you represent a worker in an employment dispute.

And you sue in federal court. But there’s an arbitration clause in the employment agreement and your case is thrown into forced arbitration.

Who pays for the arbitrator?

The company.

And who is funneling more and more cases to the arbitrator?

The law firm representing the company.

The New York Times recently ran a three-part series about forced arbitration under the headline — Privatization of the Justice System.

“Big law firms also bring repeat business to individual arbitrators, according to documents and interviews with arbitrators,” the Times reported.

“Jackson Lewis, for example, had 40 cases with the same arbitrator in San Francisco over a five-year period.”

Stephen Jaffe is an attorney in San Francisco who represents employees.

Jaffe is challenging the bias inherent in the arbitration process.

The case that the Times referred to involves Jaffe’s client David Ehrenfeld. Ehrenfeld was a salesman for K-12 Services, one of the largest online education providers in the country.

“David Ehrenfeld was a national account manager for K-12 in California,” Jaffe told Corporate Crime Reporter in an interview last week. “He was a salesman, trying to recruit school districts to sign up for virtual school programs. And he was trying to recruit parents to try and get their children to sign up for online education in a program called CAVA — California Virtual Academy.”

“My client claims that the company owes him sales commission. That was the issue at arbitration. We started the case in federal district court and then moved to arbitration.”

He loses the arbitration. Then what?

“That’s where the case sits now,” Jaffe said. “I am seeking to disqualify the arbitrator. It turns out that prior to the rendering of the award, the arbitrator had accepted 39 prior matters from the same law firm.”

“Even more egregious, in between the time the evidence was received and the time the award was rendered against my client, it turns out that the arbitrator continued to accept new matters — five of them — from the same law firm.”

“After I made my motion to disqualify the arbitrator, I received a notice from the arbitration provider — JAMS (Judicial Arbitration and Mediation Service.)”

“JAMS is the largest arbitrator in the United States. JAMS said that the arbitrator had accepted another one from the same law firm, even though there was a motion pending asking that he be disqualified for accepting matters from that same law firm. I was incredulous.”

Who is the arbitrator?

“Michael Loeb.”

Who does he work for?

“He works through JAMS. They get a fee. I don’t know how the fee is split.”

What is the name of the law firm funneling business to JAMS?

“Jackson Lewis. It’s one of the largest, if not the largest, management side law firms in the United States.”

Who is the lawyer at Jackson Lewis?

“Mark Askanas.”

Are they representing K-12 in this case?

“Yes they are.”

“What is their relationship to the arbitrator?”

“They continue to send matters to the arbitrator. Many matters. Under California law, the case that established the right of an employer to compel arbitration if the arbitration contract meets certain conditions — that case is called Armendariz.”

“That case will only allow mandatory employment arbitration if 100 percent of the fees of the arbitrator are paid by the company. That means that the arbitrator, when he gets new business from the defendant, he knows who is paying his fees.”

How often does this arbitrator rule for the company?

“I don’t have statistics. My impression is most of the time.”

When you appeal the arbitration, who do you appeal to?

“You cannot appeal a ruling by an arbitrator.”

You are challenging the decision in the Ehrenfeld case, right?

“The motion I made to disqualify the arbitrator is internal to the arbitration itself. When I first made the motion, JAMS appointed a hearing officer to hear the motion. They appointed one of their own shareholders to hear the motion. JAMS has an economic interest in the outcome of the arbitration.”

What is that economic interest?

“It wants to continue to get business from Jackson Lewis.”

What was the ruling to the person you made the motion to?

“He hasn’t ruled yet.”

What’s the basis of your motion?

“The basis of my motion is that the arbitrator has an economic interest in the outcome of the arbitration and it creates a bias to favor the defendant. The economic interest of the arbitrator is to continue to get business from Jackson Lewis.”

Has there ever been a challenge like this to an arbitrator on this basis?

“I am not aware of a challenge in this context. When there has been proposed legislation to prohibit an arbitrator from taking on new matters from a law firm involved in a pending arbitration — JAMS and the defense bar strongly opposes that legislation. The first hearing officer who JAMS appointed to hear this challenge I am making was the person who opposed that proposed legislation on behalf of JAMS.”

Where does this arbitrator sit?

“He works out of San Francisco JAMS.”

Has there been any press attention to this case?

“The case was mentioned in the New York Times article. They mentioned that one arbitrator had taken 40 matters from the same law firm.”

What are the chances that JAMS will rule in your favor?

“Slim.”

Where do you go from there?

“If and when JAMS denies my motion to disqualify the arbitrator, I intend to return the matter to the court where we started and seek to have the award set aside based on the grounds of bias.”

Has that ever been done?

“Possibly. But I’m not aware of it being done.” “I just wanted to add here — I have also made another motion for the right to conduct discovery to find out exactly what the relationship is between these three parties — JAMS, Loeb and Jackson Lewis. I want to find out what their economic relationships are. I want to find out what their contracts say.”

“I believe there are hundreds of thousands of dollars being exchanged because of this Jackson Lewis/JAMS connection. That motion is also pending.”

JAMS said they would not comment on the case.

Askanas and Loeb did not return calls seeking comment.

[For the complete q/a format Interview with Stephen Jaffe, see 29 Corporate Crime Reporter 47(12), Monday December 7, 2015, print edition only.]