Quality Restaurant Concepts, LLC (perhaps better known as Applebee’s), maintains an internal dispute resolution (IDR) process and an Employment Arbitration Policy. The company’s arbitration policy covers Title VII claims, and the IDR policy set a 20-day deadline for employees to pursue claims of discrimination. Under the arbitration policy, Applebee’s employees are required to complete the IDR process before participating in arbitration. In the discrimination context, an employee believing he or she has been the subject of an unlawful employment decision is required to submit a written statement of concern within 20 days from the date of the triggering event.
Purnice Dortch, an Applebee’s employee in Tennessee, became intimately familiar with Applebee’s policy when he filed a Title VII discrimination suit against the company in June 2012. Dortch alleged that he was paid less than similarly situated white employees and denied a raise that similarly situated Caucasian employees received. Applebee’s responded by moving to compel arbitration, consistent with its policy.
Last month, a federal district court in Tennessee addressed the arbitration policy and its 20-day window provision, concluding that the 20-day time period was unconscionable under state law and, therefore, unenforceable. Dortch v. Quality Rest. Concepts LLC, No. 1:12-cv-00198 (E.D. Tenn. April 26, 2013). The court struck the 20-day time limit without invalidating the remainder of the company’s arbitration policy because of a severability provision in the arbitration policy.
No Tennessee law being on point, the court based its decision on a review of other state’s laws. The court surmised that 30 days or less tends to be insufficient for an employee to determine whether he or she has a viable claim and/or retain an attorney to aid in deciding whether to file suit. With such a short time frame, an employee could rush into the internal dispute resolution process and fail to identify, or misidentified, his or her legal claims. Far from concluding that a 20-day window is absolutely unenforceable, the court noted that the validity of such periods “must be made after considering setting, purpose, and effect of the time limitation.”
While the 20-day time frame was found to be unconscionable, the court viewed the remainder of the policy more favorably: the IDR process is less costly and less time-consuming for employees and the process does not preclude an employee from seeking legal assistance.