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Federal appeals court rules statutory claims are subject to arbitration agreement

NORTHERN CALIFORNIA RECORD

Sunday, December 22, 2024

Federal appeals court rules statutory claims are subject to arbitration agreement

Federal Court
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Lenz

A recent Ninth Circuit Court of Appeals ruling presents a broad interpretation of arbitration agreements when an employee knowingly waives the right to a judicial forum to resolve statutory claims.

The appellate decision in Zoller v. GCA Advisers could mean enactment of more arbitration agreements in California and other Ninth Circuit states, Thomas Lenz, a lecturer at USC Gould School of Law, told the Northern California Record.

“It seems to be a pretty broad ruling, and it’s surprising because I would expect perhaps a little more homing in to the details on these issues,” Lenz said. “But the court seems to want to establish a pretty broad, arbitration-friendly rule here that is based on the terms of the agreement itself and not whether the employee in fact understood the agreement to mean one thing or another.”

The Ninth Circuit decision cited precedent from a 1991 U.S. Supreme Court case, Gilmer v. Interstate/Johnson Lane Corp.

Gilmer looked to whether an arbitration agreement should be upheld, should be valid, whether statutory claims could be arbitrated,” Lenz said. “In that case, the court looked to whether there was any reason, some congressional intent, that a claim should not be allowed to be arbitrated. And this Zoller ruling is certainly looking at that sort of issue, in that there are several types of statutory discrimination claims raised in the lawsuit.”

In its unanimous decision, the court noted that Zoller was a corporate attorney before she was an investment banker and was given opportunity to consult with outside counsel before signing the arbitration agreement.

“We reverse the district court’s denial of GCA’s motion to compel arbitration of Zoller’s statutory employment discrimination and civil rights claims because employment disputes are encompassed by the arbitration provisions, and she knowingly waived her right to a judicial forum,” the court wrote.

The case could impact what claims are brought in employment dispute litigation.

“The court felt the agreement was plain on its face as to an agreement to arbitrate, and there was no reason not to arbitrate any of the claims that were raised,” said Lenz, who is also a partner handling labor and employment law at Atkinson, Andelson, Loya, Ruud & Romo. 

“It will make trial courts spend more time on what is objectively intended by the arbitration terms.”

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