In our view, the pervasively one-sided nature of the arbitration agreement’s terms demonstrates that the employer did not seek to use arbitration as a legitimate means for dispute resolution. Instead, the employer created a system that was designed to give it an unfair advantage through rules that impermissibly restricted employees’ access to arbitration and that gave the employer an undue influence over the selection of the arbitrator. We hold that it is not appropriate, in the face of such pervasive one-sidedness, to sever the unconscionable provisions from the remainder of the arbitration agreement. We further conclude that the employer, by engaging in protracted litigation of this matter before belatedly seeking to arbitrate its dispute, waived its right to compel arbitration. We will thus reverse the District Court’s order compelling the parties to arbitrate.
Diamonds International (“DI”) is one of the world’s largest jewelry retailers. Nino is a Jordanian national who, in January 2000, agreed to work for DI as a salesperson and gemologist. Because Nino did not have a United States work visa when he was hired, he was assigned to DI’s Aruba store, where he was paid $450 per week, plus commissions and housing. DI helped Nino obtain a United States work visa, after which it transferred him to its Alaska store. In September 2000, DI asked Nino to transfer to its St. Thomas location, and he agreed.
Upon his arrival at the St. Thomas store, Nino was given a copy of the company’s standard employment contract. The following are some of the procedures and deadlines contained in the contract that we find most troublesome. Article IV of the contract sets forth a grievance and arbitration procedure that the contract describes as “the sole, final, binding and exclusive remedy for any and all employment[-]related disputes.” (J.A. at 80.) The remedial process outlined in Article IV requires an aggrieved employee to satisfy a series of requirements before he is eligible to arbitrate a dispute. First, the employee must file with his manager a detailed written grievance within five days of having received notice of the action complained of; the manager is then required to respond with a decision within two days. If the employee is unsatisfied with the manager’s decision, he must re-file the grievance with the managing director within two days of having received the manager’s decision; the managing director is then required to respond with a decision within five days. If the employee is not satisfied with the managing director’s decision, he must file a written request for arbitration with the managing director within five days of having received the decision.
Judge(s): McKee, Fuentes, Nygaard
Jurisdiction: U.S. Court of Appeals, Third Circuit
Related Categories: ADR , Contracts , Employment
|Circuit Court Judge(s)|
|Plaintiff Lawyer(s)||Plaintiff Law Firm(s)|
|Terri L. Griffiths, Esq.|
|Defendant Lawyer(s)||Defendant Law Firm(s)|
|Jessica Chung||Moore Dodson & Russell PC|
|Treston Moore||Moore Dodson & Russell PC|
|Charles Russell, Jr.||Moore Dodson & Russell PC|
|Amicus Lawyer(s)||Amicus Law Firm(s)|
|Anne Occhialino||Equal Employment Opportunity Commission|