Reinsurance Focus

In an employment dispute, a Magistrate Judge issued a Report and Recommendation which broadly interpreted the arbitration provision in an employment agreement in favor of arbitration. The judge interpreted the term providing that either party “may submit the matter to arbitration” (emphasis added) to mean that once one party elects to arbitrate, the arbitration becomes mandatory with respect to the other party. The judge also interpreted the term which explains that the arbitration clause applies to “any disputes . . . in connection with [Plaintiff’s] rights and obligations under this agreement” (emphasis added) to cover plaintiff’s sex and pay discrimination claims. The district court adopted the Report and Recommendation, except that it granted an objection to a fee-shifting provision of the arbitration clause, requiring that it be severed, finding it to be unenforceable and not essential to the arbitration clause. The fee-shifting provision required the losing party to pay attorneys’ fees. The court found the provision to be unenforceable because the claimant would not have to pay attorneys’ fees to vindicate her federal statutory rights under Title VII and the Equal Pay Act in court, and requiring the claimant to be exposed to that risk to vindicate her rights in an arbitral formum was not consistent with the statute. The district court specifically declined to follow cases from other circuits, which have held that fee-shifting provisions are generally too speculative to prevent a plaintiff from vindicating his or her federal statutory rights in an arbitral forum. Smith v. AHS Oklahoma Heart, LLC, Case No. 11-00691 (USDC N.D. Okla. Aug. 3, 2012).

This post written by Abigail Kortz.

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