Jottings By An Employer's Lawyer

Tuesday, October 14, 2003

8th Cir. Rebukes District Court For "Outmoded Judicial Hostility" To Arbitration

Reversing a Minnesota district court decision which struck down an arbitration agreement where a group of Ameriquest account executives brought a suit for overtime, the 8th Circuit found the court's analysis reflected a view of arbitration that had been consistently rejected by the Supreme Court. Bailey v. Ameriquest (8th Cir. 10/14/03) [pdf]. The district court's decision, decided in January, 2002 has been cited frequently by those opposing arbitration agreements. Here the account executives had a litany of complaints:
The account executives argue that the Arbitration Agreement is unenforceable because its one-year statute of limitations unlawfully limits the damages they may recover under the FLSA; because the agreement's cost-sharing provision may impose significantly greater costs than a judicial forum; because the California venue provision may increase costs and discourage the assertion of FLSA claims; and because the agreement does not expressly provide for collective action, as the FLSA does, see 29 U.S.C. § 216(b).
Although not denying that those could be problems, the Circuit Court focused on the power of the arbitrator to deal with such problems, noting that an arbitrator is not bound by a contractual limitation if it conflicts with a statute. The Court also emphasized that where the parties have clearly left the issue of arbitrability to the arbitrator, that choice must be respected.

Although it makes it look as if this were an easy decision, it should be noted that the case was argued on November 22, 2002.


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