(Note: The Carlson/Fox News/Ailes dispute certainly has received plenty of attention in the media, likely in part due to the high-profile character of the participants. The issues the dispute raises with regard to the role of arbitration, however, are not unique. Below, Arbitrator and NAA member James M. Darby summarizes some of the arbitration-related issues which have been identified in recent news reports).
While the sexual harassment/retaliation lawsuit by former Fox News Host Gretchen Carlson against Fox News CEO Roger Ailes is grabbing national attention among the general public, those in the arbitration community are paying particular notice. This is because a dispute has arisen as to whether Carlson’s suit against Ailes will be litigated in a public courtroom or a private arbitration conference room. Two recent articles in the BNA Labor Report (subscription required) and The New York Times highlight some of the arbitration-related issues this litigation has generated.
As noted in these articles, Carlson, as part of her employment agreement with Fox News, agreed to arbitrate any claim “arising out of or relating to her employment.” On July 8, 2016, Ailes’ legal team filed a Motion to Compel Arbitration in federal district court attempting to have Carlson’s suit litigated in a confidential arbitration proceeding, rather than federal court. This Motion raises several issues concerning the enforceability of employment arbitration clauses that have yet to be uniformly or definitively resolved by the courts:
- Is Carlson’s suit against Ailes in his individual capacity subject to the arbitration clause? Carlson’s arbitration agreement is between Carlson and Fox News. Neither Ailes nor any other Fox executive is party to the agreement. Ailes will contend he is a party to the arbitration clause as an “agent” of the corporation.
- Since the Agreement does not similarly bind Ailes to bring potential claims against Carlson to arbitration, does the agreement lack “mutuality”? Ailes will rely on basic contract law principles that Carlson should be bound by what she signed, even if it is arguably one-sided.
- When Ailes was allegedly harassing Carlson, was he acting within the scope of his authority? Look for the Carlson legal team to argue that her claim alleges conduct that falls outside of Ailes’ scope of authority, opening the door for the federal court to conclude that her suit is really not “arising or relating to her employment” – therefore, not covered by the arbitration agreement.
- Does this secrecy provision overly benefit the employer in such a way that renders the arbitration clause unfair and unenforceable? Carlson’s arbitration agreement contains strict confidentiality language prohibiting her from disclosing any of the allegations, evidence, or testimony. The federal court could still uphold the arbitration agreement but strike down the secrecy provision as overly beneficial to Ailes and contrary to public anti-discrimination policy.
- If the case goes to arbitration, what discrimination law applies? Federal, state or local? The arbitration agreement and/or employment agreement may dictate what law the arbitrator(s) is to follow. Carlson will contend that since the alleged harassment occurred in New York City, the local NYC Human Rights Law (which provides for uncapped punitive damages and attorney’s fees) should apply. Ailes may argue that since he and Carlson reside in different states, the federal “diversity jurisdiction” principle applies and less generous federal (or possibly state) discrimination law should control.
These issues addressing the enforcement of Carlson’s arbitration clause will no doubt be fine-tuned further after Carlson’s lawyers file their response to Ailes’ Motion to Compel Arbitration.