Federal Arbitration Case Update | Compelling and Appealing

Following are two recent federal court rulings related to arbitration.

Acknowledgement of Dispute Resolution Policy Sufficient to Compel Arbitration of Retaliation Claim Ashbey v. Archstone Property Management, Inc. United States Court of Appeals, Ninth Circuit

Michael Ashbey worked as an at-will employee at Archstone since 1996. In 2009, he acknowledged in writing that he understood and accepted the company’s dispute resolution policy, which included a requirement that any unresolved disputes go to binding arbitration.

In 2006, Ashbey’s wife, also an Archstone employee, complained that a fellow employee was sexually harassing her. In 2010, Archstone terminated Ashbey’s wife’s employment. Shortly thereafter, Archstone terminated Ashbey as well.

In 2011, Ashbey filed a complaint in state court (quickly removed to federal court) alleging unlawful retaliation.  Archstone filed a motion to compel arbitration. The district court denied the motion on the ground that Ashbey did not knowingly waive his right to a jury trial for Title VII claims. Archstone appealed.

The United States Court of Appeal for the Ninth Circuit reversed. They reviewed the evidence of Ashbey’s acceptance of the arbitration clause and concluded that “Ashbey knowingly waived his right to a judicial forum for his Title VII claim and equivalent state-law claims.”

District Court Ordered to Review Its Determination that Party Failed to Prove Existence of Agreement to Arbitrate Dillon v. BMO Harris Bank United States Court of Appeals, Fourth Circuit

James Dillon took out an online payday loan in North Carolina. He later filed a putative class action lawsuit alleging that the interest rates violated North Carolina usury law. The banks involved in processing and administrating the local aspects of the loans were named as defendants, and they responded by moving to compel arbitration of the dispute pursuant to the arbitration agreements between Dillon and the online lenders.

The district court held that the banks had failed to demonstrate the existence of an agreement to arbitrate between themselves and Dillon, given that they presented no contract that both had signed containing such an agreement. The banks gathered evidence and submitted a renewed motion to compel arbitration. The court deemed this motion something to reconsider and denied it. The banks appealed.

The United States Court of Appeal for the Fourth Circuit vacated and remanded, finding that the lower court should have considered the evidence in the renewed motion. The Court found that the FAA contemplated more than one “bite at the apple” and that the renewed motion was not a motion to reconsider. “The court’s prior ruling—that the pleadings did not establish arbitrability—did not determine whether Dillon consented to arbitration. Accordingly, the district court should have resolved the Renewed Motions on the merits.”