Once again a court has been required to consider whether a federal statutory claim might limit the reach of the Federal Arbitration Act, 9 U.S.C. § 1 et. seq. (“FAA”), and prevent arbitration of an individual discrimination claim.  This twenty-two-page decision reflects the on-going struggle by plaintiffs to discover potential exceptions to the U.S. Supreme Court’s decision in AT&T Mobility LLC v. Concepcion.

On April 18 a Massachusetts district court held that a plaintiff must arbitrate gender discrimination claims despite alleging that her employer engaged in a pattern-or-practice of sex discrimination violative of Title VII of the 1964 Civil Rights Act and state law.

In Karp v. CIGNA Healthcare Inc.pdf (Case No. 11-CV-10361, D. Mass, 04/18/2012), Judge F. Dennis Saylor, IV compelled arbitration of Bretta Karp’s individual sex discrimination claim despite her arguments that she never waived her rights to a class action or class arbitration proceeding and that individual arbitration would deny her statutory rights under Title VII to bring a pattern-or-practice claim.

The Dispute Resolution Procedure

Karp, a former Provider Contract Manager, began working for CIGNA in 1997 and in early 1998 signed a receipt acknowledging that she received the Company’s 1998 Employment Dispute Arbitration Policy requiring employees to arbitrate their disputes with the company instead of going to court.  The 1998 policy did not reference class actions or class arbitration.

In 2005, CIGNA revised its Employee Handbook to reflect changes in its policies and procedures and circulated an e-mail to advise employees. The e-mail provided a link to an electronic version of the Handbook and required employees to complete an electronic receipt.  Karp checked “yes” on the Handbook receipt, which acknowledged that she reviewed the 2005 Handbook and agreed that disputes would be resolved through CIGNA’s Employment Dispute Arbitration Program.  Neither the Handbook, CIGNA’s e-mails nor the electronic receipt mentioned class arbitration or a class action waiver.  However, as noted above, the Handbook referred to the company’s Employee Dispute Arbitration Policy, Rules and Procedures which clearly provided that no class-wide arbitrations were allowed and “no class or representative actions permitted.”  And, while the court expressed concerns that the Company policies and procedures could be enforced against Karp, there was “no doubt that [CIGNA] did not agree to permit class arbitration.”  Thus based on AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1840, 1750 (2011), the court held that CIGNA “could not be compelled to submit to class arbitration.”

Is Litigation an Option?

While the District Court found Karp could not arbitrate her class claims, “it did not necessarily follow that she may litigate those claims in a judicial forum.”  Indeed, it ultimately found she could not.  The Opinion found that “by agreeing to arbitrate her individual claims, [Karp] cannot serve as a class representative in a litigated class action.”  But, Karp had contended that if she was compelled to arbitrate her claims individually, she would not be able to vindicate her statutory right under Title VII to pursue pattern-or-practice claims.  Thus, according to Karp, the arbitration clause could not be enforced because it was not a viable alternative to litigation.  The Court disagreed after considering the history, potential viability and practical impact of those claims. 

According to the Court, the pattern-or-practice “claim” under Title VII was in reality “merely a method of proof.”  The District Court would not permit “a procedural device – a burden-shifting rule contained within a method of proof – to trump the arbitration agreement and the FAA.”

Based upon that analysis, the District Court granted CIGNA’s Motion to Compel arbitration and stayed Karp’s action pending arbitration.

The Bottom Line:  Another lower court enforces U.S. Supreme Court precedent supporting arbitration.  An individual cannot assert a pattern-or-practice discrimination claim to defeat arbitration.