Ninth Circuit: Lack of Mention of Statutory Claims Does Not Necessarily Exempt Them from Arbitration

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By: Lily Crespo Esq.

Quick takeway: The Ninth Circuit’s decision underlines that parties must knowingly and explicitly waive their right to judicial determination of certain statutory claims, including Title VII cases.

What happened: The U.S. Court of Appeals for the Ninth Circuit reversed a district court order denying a motion that would have compelled a former corporate attorney, who is now an investment banker, to pursue her employment and civil rights claims in arbitration. The court found that a lawsuit brought by Shannon Zoller against her former employer global investment bank GCA Advisors is “easily distinguishable” from the court’s past decisions that found that plaintiffs did not knowingly waive their right to bring claims in court rather than arbitration.

Background: When Shannon Zoller became an investment banker with GCA Advisors, LLC, she signed an employment contract that included an arbitration agreement. GCA later fired her, and she brought an action alleging various contract claims, as well as statutory claims. The parties stipulated to arbitrate some of Zoller’s claims, but the district court denied GCA’s motion to compel arbitration of the statutory employment discrimination and civil rights claims because it held that Zoller did not knowingly waive her right to pursue these claims in court.

Legal framework for the case: The panel stated that, under Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991), while not all statutory claims may be appropriate for arbitration, if a party agreed to arbitrate, the party will be held to that agreement unless the party can prove a congressional intent to preclude a waiver of judicial remedies for the statutory rights at issue. Zoller, therefore, carried the burden to show such an intention. Prudential Ins. Co. of Am. v. Lai, 42 F.3d 1299 (9th Cir. 1994), extended Gilmer to Title VII claims and held that there must be at least a knowing agreement to arbitrate employment disputes before an employee may be deemed to have waived judicial remedies.

The panel assumed, without deciding, that this knowing waiver requirement remained good law and was applicable to the statutes at issue. The panel concluded that the arbitration agreement included clear language encompassing employment disputes, and the evidence showed that Zoller knowingly waived her right to a judicial forum to resolve her statutory claims. Accordingly, the panel said that GCA would be allowed to compel arbitration of these claims.

What this decision means for employers: The drafting of arbitration agreements must be undertaken carefully and with knowledge of how courts in the ninth circuit will analyze whether parties have waived their rights to judicial determination of certain statutory claims. Analysis of cases like this will eventually rest on the explicit terms of the agreement.

The case is Zoller v. GCA Advisors (9th Cir 04/14/2021)

As you consider these and other issues, we recommend you speak with your school lawyer or contact Bea, Kevin, Megan, Beth, and Lily by email or at 406-542-1300 to discuss these issues.

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