Defending Arbitration Provisions in Employment Agreements
NELF’s concern in this case was that the Massachusetts Commission Against Discrimination (“MCAD” or “Commission”) claimed, in effect, an absolute immunity from the Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1 et seq. In this case, a terminated employee alleged unlawful sex discrimination and retaliation under G. L. c. 151B. Under that chapter, such claims must be filed initially with the MCAD for administrative investigation. If the MCAD finds probable cause and the complainant so chooses, the MCAD may then both prosecute and adjudicate the claims. A complainant always has the right, however, to remove claims from the agency for adjudication in another forum.
In this case, the complainant refused to exercise her right remove her claims from the MCAD so that they could be arbitrated pursuant to a binding arbitration agreement. Instead, she insisted on remaining in the MCAD and, without saying so expressly, obtaining an adjudication there, in violation of her agreement to arbitrate. Her argument, largely couched in terms of the MCAD’s statutory power to prosecute claims, was that the MCAD is unaffected by private arbitration agreements. After the employer brought an action in Superior Court to compel arbitration, the Commission intervened on the employee’s behalf, arguing that no private agreement can divest it of jurisdiction to prosecute claims of discrimination because it is charged by the Legislature with the public mission of eliminating discrimination. The judge refused to order arbitration and the employer appealed. The SJC granted direct appellate review and solicited amicus briefs.
Believing that if the complainant and the MCAD were to prevail, pre-dispute arbitration agreements in employment agreements encompassing discrimination claims would become voidable at the discretion of the employee and the MCAD, NELF filed an amicus brief in support of the employer. NELF argued that the arguments of the complainant and the MCAD ignore the distinction between the MCAD’s prosecutorial role and its rule as adjudicator. The U.S. Supreme Court relied on this distinction in Preston v. Ferrer, 552 U.S. 346 (2008), in which that court held that, under the FAA, state agency adjudication must yield to a private arbitration agreement. NELF argued Preston governs this case and that therefore the MCAD could not displace the arbitration agreement. This conclusion is further supported by an earlier Massachusetts discrimination case, Warfield v. Beth Israel Deaconess Medical Center, Inc., 454 Mass. 390 (2009), in which the SJC declared that an arbitration agreement waives both judicial and administrative remedies. NELF also argued that the reliance that the Commission and the complainant placed on the MCAD’s limited power to prosecute claims is doubly misguided. Not only does it fail to address the issue of adjudication specfically, but it also ignores that under c. 151B the MCAD cannot prosecute private claims unless the complainant first chooses agency adjudication, a choice the arbitration agreement here precludes. Finally, NELF argued that the position of the MCAD and the complainant contravene the strong federal and state policies favoring arbitration.
On March 10, 2011, the SJC, agreeing with NELF, quoted the holding of Preston as the rule of decision in this case and vacated the Superior Court’s decision denying the employer’s motion to compel arbitration.
NELF’s concern in this case was that the Massachusetts Commission Against Discrimination (“MCAD” or “Commission”) claimed, in effect, an absolute immunity from the Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1 et seq. In this case, a terminated employee alleged unlawful sex discrimination and retaliation under G. L. c. 151B. Under that chapter, such claims must be filed initially with the MCAD for administrative investigation. If the MCAD finds probable cause and the complainant so chooses, the MCAD may then both prosecute and adjudicate the claims. A complainant always has the right, however, to remove claims from the agency for adjudication in another forum.
In this case, the complainant refused to exercise her right remove her claims from the MCAD so that they could be arbitrated pursuant to a binding arbitration agreement. Instead, she insisted on remaining in the MCAD and, without saying so expressly, obtaining an adjudication there, in violation of her agreement to arbitrate. Her argument, largely couched in terms of the MCAD’s statutory power to prosecute claims, was that the MCAD is unaffected by private arbitration agreements. After the employer brought an action in Superior Court to compel arbitration, the Commission intervened on the employee’s behalf, arguing that no private agreement can divest it of jurisdiction to prosecute claims of discrimination because it is charged by the Legislature with the public mission of eliminating discrimination. The judge refused to order arbitration and the employer appealed. The SJC granted direct appellate review and solicited amicus briefs.
Believing that if the complainant and the MCAD were to prevail, pre-dispute arbitration agreements in employment agreements encompassing discrimination claims would become voidable at the discretion of the employee and the MCAD, NELF filed an amicus brief in support of the employer. NELF argued that the arguments of the complainant and the MCAD ignore the distinction between the MCAD’s prosecutorial role and its rule as adjudicator. The U.S. Supreme Court relied on this distinction in Preston v. Ferrer, 552 U.S. 346 (2008), in which that court held that, under the FAA, state agency adjudication must yield to a private arbitration agreement. NELF argued Preston governs this case and that therefore the MCAD could not displace the arbitration agreement. This conclusion is further supported by an earlier Massachusetts discrimination case, Warfield v. Beth Israel Deaconess Medical Center, Inc., 454 Mass. 390 (2009), in which the SJC declared that an arbitration agreement waives both judicial and administrative remedies. NELF also argued that the reliance that the Commission and the complainant placed on the MCAD’s limited power to prosecute claims is doubly misguided. Not only does it fail to address the issue of adjudication specfically, but it also ignores that under c. 151B the MCAD cannot prosecute private claims unless the complainant first chooses agency adjudication, a choice the arbitration agreement here precludes. Finally, NELF argued that the position of the MCAD and the complainant contravene the strong federal and state policies favoring arbitration.
On March 10, 2011, the SJC, agreeing with NELF, quoted the holding of Preston as the rule of decision in this case and vacated the Superior Court’s decision denying the employer’s motion to compel arbitration.
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