|
Where a disputed issue falls within the scope of a valid arbitration agreement, the issue is arbitrable despite arguments that remedy limitations render the arbitration agreement unenforceable. Both the substantive dispute and the arbitration agreement enforceability question are issues for the arbitrator to decide.
In Faust v. Command Center, No. 4:07 CV 00039, 2007 WL 1290586 (S.D. Iowa May 03, 2007), Faust alleged sex discrimination against her former employer, Command Center. The employment contract contained an arbitration agreement. Faust alleged that the arbitration agreement was unenforceable because its limitation on the awarding of punitive damages violated public policy, contract law, and congressional intent underlying Title VII.
The Court, citing Supreme Court precedent, held that claims may be arbitrated provided they present a substantive question and the dispute falls within the scope of a valid arbitration agreement. Further, when a valid arbitration agreement exists and the claim falls within the agreement's scope, it is the role of the arbitrator in the first instance to decide whether a waiver of punitive damages violates public policy.
In order for Command Center to succeed on a motion to compel arbitration, it merely needed to show that it (1) entered into a valid arbitration agreement with Faust and (2) that Faust's claims fell within the agreement's purview. Finding that it made such a showing here, the Court ordered the parties to arbitration.
Finally, although there is conflict among the circuits, in the Eighth Circuit a punitive damages waiver does not in itself invalidate an otherwise enforceable agreement to arbitrate.
Subscribe to a free weekly update on ADR case law and
legislation
|