Court enforces agreement to arbitrate

published in McAfee & Taft EmployerLINC | February 8, 2013

By Charlie Plumb

In a January 23, 2013 decision, the U.S. District Court for the Northern District of Oklahoma continued a recent trend in Oklahoma cases enforcing arbitration clauses included in employment agreements or relationships.

Jeana Morrison went to work for Volkswagen Tulsa in April 2011 as a sales associate. When she began her job with the dealership, Morrison signed an arbitration agreement requiring mandatory and binding arbitration of any disputes that arose between her and her employer. The arbitration agreement provided disputes would be settled through the American Arbitration Association and be covered by applicable Oklahoma arbitration law. The agreement was very broad, requiring any and all disputes involving Morrison’s employment to be arbitrated, and requiring any claim to be made within one year after a dispute arose. Under the agreement, the losing party in arbitration could be liable for filing fees, administrative costs and/or arbitrator fees.

Rather than filing an arbitration claim, Morrison tried to file a lawsuit about her employment with Volkswagen Tulsa in federal court in Tulsa. arbitrationThe lawsuit included claims of race discrimination, hostile work environment, gender discrimination, and retaliation under Title VII of the Civil Rights Act of 1964. Morrison also claimed Volkswagen Tulsa had violated wage and hour laws. When Volkswagen Tulsa asked the court to stay the federal lawsuit and require Morrison to submit all her claims to arbitration under the arbitration agreement, Morrison objected.

Morrison argued the arbitration agreement should not be enforced for a number of reasons. First, the agreement’s requirement that the losing party pay filing fees, administrative final fees and potentially one-half of the arbitrator’s fees imposed an extreme hardship, and Morrison said this could deter individuals from pursuing their rights. Also, Morrison argued the one-year time limitation to bring claims was significantly less than the statutory time limit she would have under Title VII. She believed this served as another reason the agreement should be ignored and she should be permitted to proceed in federal court. Significantly, Volkswagen Tulsa had already agreed it would bear all the costs associated with Morrison’s arbitration.

The court stayed Morrison’s federal lawsuit and required her to proceed with arbitration of all her claims against Volkswagen Tulsa under the arbitration agreement. The court noted that the Federal Arbitration Act favors disputes being resolved through arbitration agreements, including employment claims. This favorable treatment should be applied to Title VII claims, the court reasoned. The court also recognized a number of recent Oklahoma and Tenth Circuit Court of Appeals cases enforcing employment agreements like the one to which Morrison was a party. The court was willing to simply strike the one-year time limitation, and Volkswagen Tulsa’s agreement to assume all costs meant the fee aspect of the arbitration agreement was no longer an issue.

This January 23, 2013, decision stopping Morrison’s federal court lawsuit and requiring her to submit all her employment claims to arbitration continues a recent trend in Oklahoma and the Tenth Circuit to enforce arbitration agreements between employees and employers when it comes to employment disputes.