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Labor, Employment and Benefits
Newsletter - June 2002
 
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Green Light for Arbitration
 
 June 26, 2002
 

Predispute arbitration agreements just received another boost in a decision from the United States Court of Appeals for the Ninth Circuit (Western states and Hawaii), a court that has held fast to its dislike for arbitration in the workplace arena. In Circuit City Stores vs. Najd, 02 C.D.O.S. 5606, the Circuit upheld an arbitration clause in a case involving claims of discrimination based on ethnicity. The employee had sued under the California Fair Employment and Housing Act (FEHA) but had not filed suit under the federal discrimination statute, Title VII, most likely because the state remedies are broader that those provided under Title VII.

The employee relied on an earlier decision of the Ninth Circuit, Duffield v Robertson Stephens & Co., in which the Court had refused to compel arbitration of FEHA claims when Title VII claims were asserted. The Court had reasoned that Title VII claims are not subject to arbitration and a FEHA claim linked with a Title VII claim is governed by the Title VII procedures. Possibly in recognition of how out of step the Ninth Circuit has been with the pro-arbitration trend confirmed recently by the U.S. Supreme Court in Circuit City v. Adams, the Ninth Circuit held that when a FEHA claim is asserted without a Title VII claim, the FEHA claim is subject to arbitration. The Court noted that its holding in Duffield is now dubious, in view of the Adams case, but it declined to address whether Title VII claims are subject to arbitration. Also rejecting Mr. Najd’s claim that the arbitration agreement was unconscionable, the Court held that the opt-out provision in the arbitration agreement rendered it enforceable.

This case is another blow to foes of arbitration and a green light for carefully drafted arbitration agreements. At least in California, however, employers must be careful that the arbitration process offers full remedies, some discovery, neutral arbitrators, written decisions and the right to appeal.

For more information, contact Wendy Lazerson at 888-688-8500 or via e-mail by clicking on her name.

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