Arbitrator and NAA member Lise Gelenter discusses a recent decision by the U.S. Court of Appeals for the 11th Circuit, addressing the issue of the enforceability of confidentiality provisions in arbitration decisions. 

For many employers, corporations and other entities, arbitration instead of litigation in court has the advantage of being a confidential proceeding.  But a federal appeals court’s decision appears to remove that advantage. In Larsen v. Citibank FSB, 871 F.3d 1295 (11th Cir. 2017), a three-judge panel found that although a customer had, indeed, agree to arbitrate his claims against the bank, the clause in his arbitration agreement that stated that both parties would “keep confidential any decision of an arbitrator” was not  enforceable because it was substantively unconscionable under Washington State law.  This was because the bank was a “repeat player” that would know what was decided in previous arbitration awards involving the bank and could use past arbitration awards to bolster its case.  This would put the individual customer at a disadvantage because he or she would not be able comb through arbitration awards to look for support for his or her claim and assess how viable the claim is. The Court found that the confidentiality provision could be easily severed from the rest of the agreement and held that because the remainder of the arbitration agreement was enforceable, the customer would have to arbitrate his claims.

A discussion of the case on the Jenner and Block blog can be found here.