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Treat arbitration like any other litigation

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in Discrimination and Harassment,Human Resources

Employers sometimes assume that because a case is in arbitration, they don’t have to take the case as seriously as they would during courtroom proceedings. That can be a big mistake.

Recent case: Margaret Quinn, vice president of operations for Nafta Traders, was the only female manager at the company. By all accounts, her supervisor was less than willing to treat professional women well. He frequently used terms like “bitch,” referred to women’s breasts as “knockers” and took male subordinates and even clients to strip clubs on business.

Quinn had signed an arbitration agreement when she took the job, which required her to submit any employment-related claims to arbitration. She was terminated during what she was told was a reduction in force. However, she was the only person terminated and escorted off the premises the same day. When several men were later terminated, they received advance notice and were allowed to work until their termination dates.

When Quinn sued, an arbitrator agreed that she had been a victim of sexual harassment and discrimination—and ordered Nafta Traders to pay $30,000 in back pay and another $29,000 in special damages. He also awarded $30,000 for emotional damage and another $100,000 for attorneys’ fees.

The case made its way to the Texas Supreme Court and back down again. The company argued that the arbitrator made numerous mistakes, including awarding damages for emotional damage, which were not covered by the arbitration agreement. The Supreme Court refused to reverse the arbitration decision because the company hadn’t raised any of the issues with the arbitrator. (Quinn v. Nafta Traders, No. 05-07-00340, Court of Appeals of Texas, 5th District, 2012)

Bottom line: Contest all relevant legal issues during arbitration. Otherwise, you will lose the chance to do so later if the arbitrator’s decision favors the employee.

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