Reinsurance Focus

The United States Court of Appeals for the Second Circuit has affirmed a district court’s grant of defendants’ motion to dismiss a complaint for employment discrimination and motion to compel arbitration. The district court rejected the plaintiff’s assertion that an arbitration agreement between herself and co-defendant Atlantic Video was procedurally and substantially unconscionable. The district court further held the plaintiff could be compelled to arbitrate with co-defendant ESPN, although it was not a signatory to the arbitration agreement.

The Second Circuit affirmed. The arbitration agreement was not procedurally unconscionable under New York law simply because it was offered on a “take it or leave it” basis and, in any event, the plaintiff admitted she did not even read the agreement before signing it. The agreement also was not substantively unconscionable because, as plaintiff urged, “in its totality” it contained “numerous unconscionable and oppressive terms.” The defendants agreed to waive several of the challenged terms relating to the statutes of limitations and fee-shifting provisions, and further represented that a provision forbidding any appeal of the arbitrator’s decision would not prevent the plaintiff from later moving to vacate an arbitration award. New York law allowed for the enforcement of the arbitration agreement as modified by the defendants’ waivers, although the court cautioned that had “the defendants attempted to enforce the arbitration agreement as originally written it is not clear that we would hold in their favor.” Finally, the court found plaintiff was equitably estopped from avoiding arbitration with ESPN, which was not mentioned in the agreement but which the plaintiff understood to be her co-employer. Ragone v. Atlantic Video, No. 08-4666 (2d Cir. Feb. 17, 2010).

This post written by Brian Perryman.