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In ordering arbitration of an employment dispute, a federal district court in Ohio rejected the employee’s argument that a contractual relationship between the employer and the dispute resolution administrator created a threat of bias.
In Gilbert v. Big Sandy Furniture, Inc., No. 2:07-cv-0087, 2007 WL 2668137 (S.D. Ohio Sept. 6, 2007), Gilbert was employed by Big Sandy. When she was hired, Gilbert received an employment packet that contained an employment dispute resolution plan administered by Dispute Resolutions, Inc. (DRI). At that time, Gilbert signed an employee acknowledgement form indicating that she agreed to submit all claims arising out of her employment to binding arbitration as specified by the dispute resolution plan.
Later, Gilbert sued Big Sandy for alleged violations of the Fair Labor Standards Act and Ohio law. In response, Big Sandy filed a motion to compel arbitration. In opposing the motion, Gilbert argued that the dispute resolution plan was unenforceable because it did not provide a fair and impartial forum and because arbitration would be cost-prohibitive under the terms of the plan.
Specifically, Gilbert argued that DRI could not provide a fair and impartial forum because Big Sandy and DRI had a contract requiring DRI to arbitrate all of Big Sandy’s employee-related disputes. In addressing this argument, the Court looked to Walker v. Ryan’s Family Steak House, Inc., 400 F.3d 370 (6th Cir. 2005) for guidance. There, the court determined that Ryan’s contractual relationship with the dispute resolution administrator prevented the administrator from providing a fair and impartial forum.
The Walker court found that the arbitral forum was fundamentally unfair to claimants because Ryan’s annual fee accounted for over 42 percent of the dispute resolution administrator’s gross income. In this case, the Court concluded that the contractual relationship between Big Sandy and DRI did not pose the same threat of potential bias that existed in Walker.
Big Sandy’s business accounted for less than 1 percent of DRI’s overall business. Moreover, DRI had a sufficient procedure for ensuring satisfaction with the selected arbitrators because both parties have an opportunity to evaluate and screen potential arbitrators. Accordingly, the Court rejected the argument that DRI would fail to provide a fair forum.
Gilbert also argued that the cost-splitting provisions of the dispute resolution plan rendered it unenforceable because she could not afford to bear one-half of the financial burden incurred, as stipulated in the agreement. The Court rejected this argument because there was no information in the record pertaining to Gilbert’s background or financial resources. Additionally, the Court noted that an “inability to pay” provision in the dispute resolution plan allowed an employee to claim indigent status, in which case Big Sandy would bear the entire financial burden.
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