In light of the recent
federal legislation carving out sexual assault and sexual harassment cases from
the provisions of mandatory pre-dispute arbitration, it is worth
remembering that mandatory arbitration is not as one-sided as some may
think. There were several cases decided within last
year which indicated that arbitrations are not automatically compelled. None of these decisions involved sexual harassment or
assault allegations. In Robie
v. Maxill, Inc., 2021-Ohio-2264, the court remanded the dispute for the
trial court to conduct an evidentiary hearing on the alleged unconscionability
of the arbitration agreement. In Boykin v.
Family Dollar Stores, 3 F.4th 821 (6th Cir. 2021), the Court remanded the dispute so that the trial court could evaluate
whether the underlying contract had even been made. Finally, in Ciccio v.
SmileDirectClub, LLC, 2 F.4th 577 (6th Cir. 2021), the Court held that the AAA Administrator lacked
authority to determine the arbitrability of the dispute; only the arbitrator was
authorized to conduct that analysis.
In Robie, the plaintiff alleged that she had been fired
in retaliation for complaining about illegal compensation practices (i.e.,
being required to work without pay answering client questions while she was on
furlough and receiving unemployment compensation). The trial court granted the employer’s motion
to stay pending arbitration. The
Trumbull County Court of Appeals found that the trial court was typically not
required to conduct an evidentiary hearing before staying litigation pending
arbitration, but was required to consider evidence that the agreement was
unconscionable if so alleged. The case
was remanded on that issue.
In Boykin, the plaintiff alleged that he had been unlawfully
fired on account of his age and race. The
employer moved for judgment under Rule 12(b)(3) and to compel arbitration based
on an e-signed agreement. The trial
court dismissed the case under Rule 12(b)(6) even though it considered evidence
outside the pleadings. The Sixth Circuit
reversed:
Although the Federal Arbitration Act requires a court to summarily compel arbitration upon a party’s request, the court may do so only if the opposing side has not put the making of the arbitration contract “in issue.” 9 U.S.C. § 4. The district court in this case should have evaluated whether Boykin adequately challenged the making of the contract using the standards that apply on summary judgment. And Boykin’s evidence created a genuine issue of fact over whether he electronically accepted the contract or otherwise learned of Family Dollar’s arbitration policy. Although his affidavit denying that he accepted the contract may have been “self-serving,” that description alone does not provide a valid basis to ignore it.
In Ciccio, a group of plaintiffs brought their
claims (mostly relating to false advertising) in court, but the appellant voluntarily
dismissed and submitted his claim to the AAA in accordance with a previously
signed arbitration agreement. However, the
AAA Administer refused to accept it unless the plaintiff signed a new
post-dispute arbitration agreement, which he refused to do. When the plaintiff returned to court, the
trial judge found he had satisfied his obligations under the arbitration agreement,
meaning that his dispute was not covered by the agreement. The Sixth Circuit reversed and ordered the
dispute to be submitted to an arbitrator (rather than the AAA administrator) to
determine arbitrability.
But whether an arbitration agreement covers a dispute is a gateway question of arbitrability, and here the parties delegated such questions to an arbitrator. Under the agreement and the incorporated AAA rules, it was improper for an administrator to effectively answer that gateway question or to overlook it altogether . . .
NOTICE: This summary is designed merely to inform and alert
you of recent legal developments. It does not constitute legal advice and does
not apply to any particular situation because different facts could lead to
different results. Information here can change or be amended without notice.
Readers should not act upon this information without legal advice. If you have
any questions about anything you have read, you should consult with or retain
an employment attorney.
