In a new decision, the U.S. Court of Appeals for the Ninth Circuit announced a standard for when an employee has waived her rights to judicial remedies—and sent the plaintiff’s employment dispute to arbitration.
When Shannon Zoller became an investment banker with GCA Advisors, she signed an agreement that set her compensation and benefits and provided that all disputes arising from her employment would be resolved through binding arbitration. A second document that she signed specified the arbitration procedures.
Zoller also signed a Form U4, as required by the Financial Industry Regulatory Authority (FINRA). It contained an arbitration provision under which she agreed to “arbitrate any dispute, claim or controversy that may arise between [her] and [GCA] … that is required to be arbitrated under the rules, constitutions, or by-laws” of the self-regulatory organizations, including FINRA.
In 2016, GCA fired Zoller. She filed a complaint in California federal court alleging a host of employment-related claims. Zoller and GCA filed a joint stipulation to arbitrate some of her claims, but she refused to arbitrate her statutory claims, specifically those based on the federal Equal Pay Act and Civil Rights Act, as well as the state Fair Pay Act and Fair Employment and Housing Act.
GCA moved to compel arbitration. A U.S. District Court denied the motion, holding that Zoller did not knowingly waive her right to pursue the statutory claims in court. GCA appealed.
The Ninth Circuit reversed the denial and remanded the case with instructions to send Zoller’s statutory claims to arbitration.
“The Supreme Court has held that, while not all statutory claims may be appropriate for arbitration, if a party agreed to arbitration, the party will be held to that agreement unless the party could prove a congressional intent to preclude a waiver of judicial remedies for the statutory rights at issue,” the panel wrote, citing to the Court’s 1991 decision in Gilmer v. Interstate/Johnson Lane Corp.
The Ninth Circuit extended the Gilmer holding to Title VII claims in 1992 and, in subsequent case law, adopted a “knowing waiver” requirement.
“[T]he knowing waiver requirement ‘applies only to a comparatively small class of claims arising under Title VII or similar laws—and derives from a recognition of the importance of the federal policy of protecting the victims of discrimination,’” the panel wrote.
Assuming without deciding that the knowing waiver requirement remains good law and is applicable to the relevant statutes “despite the district court’s failure to utilize the proper analysis to establish that the standard applies to these statutory claims,” the panel held that the arbitration agreement’s clear language encompassing employment disputes—and evidence that Zoller knowingly waived her right to a judicial forum—resolved the appeal.
“Both the employment agreement and the confidentiality, non-solicitation and arbitration agreement included explicit language regarding employment disputes so that Zoller’s statutory claims are clearly encompassed by the agreement,” the panel said.
In addition, Zoller had full access to the various documents with arbitration provisions and was given the opportunity to consult with legal counsel before signing, distinguishing her facts from case law where plaintiffs saw only parts of their agreements.
“Furthermore, Zoller’s alleged subjective misunderstanding of the documents is not dispositive because our analysis rests on the explicit terms of the agreement,” the panel added. “It is clear from the terms of these arbitration provisions that employment discrimination and civil rights claims arising from her employment are encompassed.”
The panel reversed the denial of GCA’s motion to compel arbitration of Zoller’s statutory employment discrimination and civil rights claims, and remanded to the district court with directions to send them to arbitration and dismiss the case.
To read the opinion in Zoller v. GCA Advisors, LLC, click here.
Why it matters: The Ninth Circuit’s decision established a clear standard with regard to the arbitration of statutory employment claims: While not all such claims may be appropriate for arbitration, if a party agreed to arbitrate, she will be held to that agreement unless she can prove a congressional intent to preclude a waiver of judicial remedies for the statutory rights at issue. Further, with regard to Title VII claims, there must be at least a “knowing agreement” to arbitrate employment disputes before an employee may be deemed to have waived judicial remedies. In Zoller’s case, she failed to carry the burden to show congressional intent to preclude a waiver of judicial remedies, and the evidence showed that she knowingly waived her right to a judicial forum.