The question of whether and when an employer can compel an employee who is suing it to arbitrate her case rather than proceed in court depends upon the terms of the agreement between the parties. In Mason v. Athletic & Therapeutic Inst. of Naperville, 2017 U.S. Dist. LEXIS 173046 (S.D. Ind. Oct. 19, 2017), a federal district court told the former employee of an Indiana sports therapy clinic that arbitration is the proper forum for her allegations that the clinic violated the Family and Medical Leave Act (FMLA) rights, as well as other federal anti-discrimination laws.
Norette Mason had worked for ATI for over six years when she was fired. She claimed that her termination violated the FMLA, the Age Discrimination in Employment Act (ADEA) and the Americans with Disabilities Act (ADA). After getting her right to sue notice from the EEOC, she sued ATI in federal court. ATI moved to dismiss and compel arbitration based on the Arbitration Agreement Mason signed after she was hired.
That Agreement provided that “any claim, dispute, and/or controversy that either [Ms. Mason] or ATI may have against the other shall be submitted to and determined exclusively by binding arbitration under the Federal Arbitration Act, in conformity with the procedures of the Illinois Revised Statues Chapter 710, ILCS §5 et seq.” The Agreement defined “claim, dispute[,] and/or controversy” as “any claims of discrimination and harassment, whether they be based on the Illinois Human Rights Act, Title VII of the Civil Rights Act of 1964, as amended, as well as all other state or federal laws or regulations.”
The Agreement provided a four step process for “Pre-Arbitration Dispute Resolution” not unlike those found in a union contract, starting with an attempt to resolve a concern informally, and ending with a decision from the ATI vice president. Under the section titled “Instituting Arbitration,” Ms. Mason had to submit an arbitration request to ATI’s vice president “within 90 days after the date of the written decision in STEP 4, or within 90 days of the expiration of the deadline for such decision, except where federal and/or state law prescribe a longer period of time which to file a complaint.” The Agreement also provided that “[i]f the Arbitrator finds for [Mason], the Arbitrator, in his or her discretion, may award appropriate relief, including costs, in accordance with applicable law. The Arbitrator is authorized to award attorneys’ fees in accordance with applicable law.”
Mason opposed ATI’s demand that she be held to the agreement she signed. She claimed that, even though the laws she alleged were violated fell within the Agreement’s coverage, the Agreement itself was not enforceable because (1) it limited her time to initiate pre-arbitration dispute resolution; and (2) it failed to mandate an award of attorneys’ fees to the prevailing party.
The court rejected both of Mason’s arguments. First, said the court, “[i]t is well-established that ‘[b]y agreeing to arbitrate a statutory claim, a party does not forgo the substantive rights afforded by the statute; it only submits to their resolution in an arbitral, rather than a judicial, forum.’ Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 26 (1991) . . .” The court held that “Ms. Mason’s claim with respect to the imposed time limits under the Arbitration Agreement falls squarely in line with the arbitrator’s authority to decide ‘procedural preconditions.’ Nothing in the Arbitration Agreement precludes her from asserting her claims in that forum and any procedural deficiencies relating to her timeliness under the Arbitration Agreement must be decided by the arbitrator.
Second, the court noted that each of Mason’s claims (FMLA, ADEA and ADA) require the award of attorneys’ fees to a prevailing plaintiff, and held that “[t]he arbitration agreement is enforceable, even though it doesn’t specifically provide for the award of attorneys’ fees as required by the FMLA, because it says that the arbitrator may award attorneys’ fees in accordance with the law . . . .” The Seventh Circuit, said the court, “has cautioned against an assumption that the arbitrator will not follow the law in issuing the proper amount of damages. Livingston v. Assocs. Fin., Inc., 339 F.3d 553, 558 (7th Cir. 2003) (rejecting argument for denial of arbitration based on “concern that the arbitrator’s discretion to award attorneys’ fees was not in accord with [statutory] restrictions on such awards to defendants.”). If an arbitrator does so, a party may bring that concern to court for review. Mason’s objection here was premature.
While the employer prevailed here, consider what it got: it won the right, after litigating in court the issue of whether proper forum was court or arbitrable, to litigate the case before an arbitrator, with (as the Supreme Court held in Gilmer) all of the trappings of court litigation except the formality of being before a person in a black robe and possibly a jury. This may or may not ultimately be a benefit to the employer, since the review of an arbitrator’s award by a court is far more constrained than the review of a lower court decision on appeal.
The use of alternative dispute resolution, especially arbitration agreements in a non-union setting, is no longer viewed as a panacea to addressing employment claims. An employer considering whether to ask its employees to sign such agreements should go into it with eyes wide open, and with a complete understanding of what this sort of ADR does — and what does not — do.