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Goldman Sachs seeks to enforce arbitration in gender discrimination case

Investment bank says proposed class action shouldn’t proceed because of arbitration agreement

By Ashley Post

November 8, 2012 • Reprints

Like many employers—particularly in the wake of AT&T Mobility v. Concepcion—Goldman Sachs & Co. has an arbitration clause. And yesterday the investment bank made it clear that it wants to enforce it.

In 2010, three women who formerly worked at Goldman, including former managing director Lisa Parisi, sued their ex-employer, accusing the company of gender discrimination and having an “outdated corporate culture” in which men are favored over women when it comes to pay and promotions. The women’s suit sought class action status, punitive damages and other damages, as well as a change in Goldman’s policies toward women.

Goldman told a magistrate judge that Parisi’s proposed class action shouldn’t proceed because she had signed an agreement that would require her to arbitrate her dispute. But in April 2011, the magistrate judge denied Goldman’s motion to enforce arbitration. Goldman urged the court to reconsider in light of the Supreme Court’s Concepcion decision, in which the court enforced a class action waiver and ruled that the Federal Arbitration Act preempts state law. But the magistrate judge declined Goldman’s request. A district judge affirmed the lower court’s ruling in November 2011.

Yesterday, a lawyer for Goldman Sachs told a three-judge panel of the 2nd Circuit that the lower court was incorrect in deciding not to send Parisi’s case to arbitration. But Parisi’s lawyer told the court that corporate arbitration clauses can’t prohibit employees from bringing discrimination class actions under Title VII of the Civil Rights Act.

The case will test the reach of Concepcion. Since the decision, companies have sought to apply the ruling to employment law so they can more easily avoid discrimination and wage and hour lawsuits.

Read Thomson Reuters for more about the case.

For more InsideCounsel coverage of arbitration, read:

Litigation: Drafting enforceable arbitration clauses

Using arbitration for a quicker and more cost effective resolution

GCs discuss arbitration in a post-Concepcion environment

Litigation: Arbitration v. litigation

Regulatory: Pros and cons of using arbitration for dispute resolution