Threat to impose costs under arbitration clause may be retaliatory

The Appellate Division holds that an employer violates the New York State Human Rights Law when it threatens a discrimination plaintiff that his SDHR charge must be litigated in arbitration and that, if the plaintiff does not pursue that route, he may be subject to costs and attorneys' fees.

The case is In the Matter of Charter Communications v. Eisen, a Fourth Department ruling issued on June 26. This case went to an evidentiary hearing at the SDHR, which ruled in the plaintiff's favor, awarding him $7,500 for pain and suffering and imposing a $30,000 fine on the employer. Charter appealed this ruling to the Fourth Department, which sides with the SDHR and upholds the finding of liability and damages, as well as the fine.

Here are the facts:

After he was fired from his employment with petitioner, complainant filed a complaint with SDHR alleging age discrimination. Petitioner responded by sending a letter to complainant in September 2019 stating that, because of a binding arbitration agreement between the parties, complainant could not pursue his claim against petitioner through a court action. Petitioner advised complainant to "be aware" that the arbitration agreement entitled petitioner to costs and fees, including attorneys' fees, incurred if petitioner was forced to seek court action to compel complainant to resolve his dispute through arbitration instead of litigation. Petitioner then filed the instant complaint alleging age discrimination and retaliation. Thereafter, while the complaint was pending, petitioner sent complainant two additional letters in June 2020 and March 2021 asking complainant to withdraw his complaint with SDHR because of the arbitration agreement.

It is not uncommon for corporate defendants to tell the plaintiff that the claim falls within the arbitration clause. What probably made the difference was Charter's threat that plaintiff might have to pay costs and attorneys' fees if he did not proceed to arbitration. Under the legal standard, such threats "could have dissuaded a reasonable person from" pursuing the discrimination complaint.