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An employer's response to an EEOC inquiry prompted by a former employee's claims and its failure to attempt to compel the EEOC to arbitrate those claims does not constitute a waiver of the right to arbitrate once the former employee brings the claims to court, according to a federal district court in Nevada.
In Lyman v. Mor Furniture For Less, Inc., No. 306-CV-0666-ECR, 2007 WL 2300683 (D. Nev. Aug. 7, 2007), Lyman was employed by Mor under an agreement which included an arbitration provision. The provision clearly stated that any arbitration would be administered by JAMS rules.
Lyman later brought sexual harassment and discrimination claims against Mor. Lyman submitted her claims to the Equal Employment Opportunity Commission (EEOC), but the EEOC declined to pursue the claims.
Lyman then brought a court complaint against Mor. Mor responded by filing a motion to compel arbitration. Lyman opposed the motion, alleging that Mor had waived its right to compel because it participated in the EEOC proceedings, instead of compelling arbitration with the EEOC. Lyman also argued that the arbitration agreement was unconscionable and therefore unenforceable.
The Court first held that Mor did not waive its right to arbitrate by failing to attempt to compel arbitration with the EEOC. The Court observed that Lyman presented no authority holding that participating in the EEOC inquiry could supersede an agreement to arbitrate. Likewise, the Court found no authority for the proposition that responding to the EEOC was an admission by Mor that Lyman's complaint fell under any exception to the agreement to arbitrate. Instead, the Court agreed with Mor that the EEOC was not a party to the arbitration agreement, and, therefore, its failure to compel arbitration with the EEOC could not constitute waiver.
Then, the Court refused to find the arbitration agreement procedurally unconscionable. While the Court agreed with Lyman that the arbitration provision was not presented as a jury waiver in the agreement, the Court found the agreement clearly required all disputes be settled by binding arbitration under JAMS rules. This, according to the Court, made it clear that Lyman was giving up her right to a judicial forum. Furthermore, the Court noted that the arbitration provision was conspicuous, in bold letters and located just above Lyman's signature.
Finally, the Court found no substantive unconscionability. Lyman's claim that the JAMS rules could not be judicially noticed was rejected, since the rules were easily ascertainable through internet access. The Court also found the failure to specify arbitration costs in the agreement was not substantively unconscionable, since silence as to fees in an agreement cannot render the agreement invalid. The Court noted that the actual cost to Lyman under the controlling rules left Lyman and Mor "in a better economic position than they would be if they had litigated" the case in court.
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