Tuesday, November 2, 2010

Rare anti-arbitration victory in 2d Circuit

A.J. White got a job as a broker with BCG Partners, LLP, in May 2004. When she got the job, she agreed that the employment handbook would govern the terms of her employment. The handbook said that any claims arising from the employment relationship, including discrimination claims, would be resolved at arbitration. The handbook's arbitration provision also said that if the enters into an employment agreement with BCG, "the arbitration of any disputes shall be as set forth in your written employment agreement," and that if that agreement said nothing about arbitrating any disputes, then the handbook arbitration provision would govern.

Less then eight months later, White (who was hired as an at-will employee) entered into another agreement with the company, this one stating that any disputes arising from that agreement would be resolved at arbitration. When White involuntarily resigned her position and sued BCG in court, BCG convinced the federal court to dismiss the case and send it arbitration. The Second Circuit (Leval, Raggi and Gleeson [D.J.]) reverses.

The case is White v. Cantor Fitzgerald, a summary order decided on September 22. The world of arbitration agreements may not make sense to the uninitiated. Who cares if the case goes to court or arbitration? Actually, this is a big deal. Plaintiffs prefer court to arbitration so they can benefit from discovery and a jury. But courts like arbitration agreements because it reduces the burden on the judicial system. Plaintiffs like White will fight like hell just to keep the out of arbitration.

White is able to litigate her discrimination case in court because the only operative arbitration provision is the one she signed eight months after taking the job. The restrictive arbitration provision in the handbook said that it would die off once the employee signs any agreement that contains any new arbitration provisions. When the parties signed that new employment agreement, it contained a new arbitration provision, which killed off the handbook provision. While the new agreement mentioned arbitration, it was only to arbitrate any disputes over that agreement, not discrimination disputes. That may seem a minor difference, but it's enough for the Court of Appeals to say that management walked away from the handbook arbitration that most employers (and courts) love.

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