In a recent decision, Raglani v. Ripken Professional Baseball, the United States District
Court for the District of Maryland denied an employer’s motion to dismiss or
stay and compel arbitration in a gender discrimination action brought by a
former employee. The decision rested on two grounds: 1) there was insufficient
consideration for agreement, i.e., a mutual exchange of promises to arbitrate;
2) the requirement of a neutral forum was not met.
Briefly, the case involved an action under Title VII
of the Civil Rights Act of 1964 and Maryland state law, alleging that the
plaintiff was unfairly terminated for engaging in a romantic relationship with
a subordinate, when, despite a company policy forbidding such relationships,
she alleges several of her male counterparts engaged in sexual relations with
their subordinates and never were reprimanded. The plaintiff’s action also
alleged negligence, wrongful discharge and breach of contract.
Upon her hiring, the plaintiff was required to sign a
Problem Support Policy Acknowledgement and Agreement (“PSP”), which stated it
was “‘a valid and binding legal obligation … in consideration of [her] hiring
for employment or [her] continued employment … .’” The PSP stated it was a
“procedure” to be used by “‘[a]nyone who feels they have a problem that
requires management’s attention.’” The court provided a pointed criticism of what
it characterized as an unbalanced agreement: “The PSP is entirely one-directional,
binding employees to dispute resolution procedures …. but silent on [the
employer’s] obligations to do anything other than “facilitate” this process in
the event an employee submits a ‘problem’ to management.”
The “binding arbitration” provision in the company’s PSP
stated:
Human Resources will provide
a list of qualified Arbitrators upon a formal request to move to this step. … The
rules of the arbitration will be subject to the Federal Arbitration Act and
agreed to by both parties. … [Employer] will assume responsibility for the
costs of the Arbitrator. If the [employee] decides to have their attorney
present, the cost of that attorney will be the responsibility of the [employee].
After the meeting, the Arbitrator will submit a decision in writing and this
decision shall be final.
The court found the arbitration provision defective
and unenforceable because by giving the employer exclusive control over the
list of arbitrators, it denied one party (the employee) access to a neutral,
arbitral forum. The court also stated that the arbitration provision was too
vague with regard to establishing rules by which arbitration would be
conducted. (The provision does state that arbitration rules would be subject to
the Federal Arbitration Act, but the FAA does not establish rules.)
While the court addressed the potential for bias where
one party has the authority to limit the arbitrator selection process, something
not discussed is the exponential bias one might imply from the fact that the
employer both circumscribed arbitrator selection and assumed sole responsibility
for paying the arbitrator. Given this pairing of control and monetary power,
the arbitrator could be viewed as the employer’s “hired gun.”
A link to the decision is here:
