Updates from the Second Circuit and Supreme Court About Arbitration Provisions and Potential Impact on Employers

Last week, the Second Circuit weighed in again on the enforceability of an arbitration provision in Parisi v. Goldman, Sachs & Co., No. 11-5229-cv (2d Cir. Mar. 21, 2013). The provision at issue required employees to pursue any employment-related claims in arbitration rather than in the court system and did not provide for class arbitration. The Second Circuit held that the district court should have compelled arbitration, finding that there is no substantive statutory right to pursue Title VII pattern-or-practice claims. In the employment context, a Title VII pattern-or-practice claim alleges that an employer intentionally discriminated against a protected class of employees. Plaintiffs typically establish these claims via 1) statistical evidence of discrimination by the employer (e.g., salary information, demographic data, etc.) and 2) “anecdotal evidence,” or testimony from employees describing the discrimination they suffered or observed.

The Second Circuit did not disturb the district court’s finding that Title VII pattern-or-practice claims can only be pursued in the class action context. Nor did it question the “vindication of rights” doctrine, which states that an arbitration clause is unenforceable if it precludes a plaintiff from vindicating a substantive right. Instead, it found that employees do not have a substantive right to pursue these claims, as “pattern-or-practice” simply refers to the method of presenting proof in a discrimination lawsuit. The Parisi decision can be viewed in its entirety...