Court Compels Arbitration, Thwarting Employee’s Attempt to Bring Class-Based, Pattern or Practice Gender Discrimination Claim

The US. District Court for the District of Massachusetts recently rejected an employee’s attempt to bring a class-based gender discrimination case against her employer, CIGNA (either through a class action or class arbitration), which would have enabled her to rely on a less stringent method of proof than the method used in an individual discrimination case. In a closely-watched opinion, the court enforced the parties’ arbitration agreement and ordered the employee to submit her individual claim of gender discrimination to arbitration, thereby subjecting her to the ordinary, more difficult method of proof.

In Karp v. CIGNA Healthcare, Inc., No. 11-10361, the employee claimed that CIGNA, through its policies, practices and procedures, engaged in systematic gender discrimination in violation of Title VII of the Civil Rights Act. Although conceding that she did agree to arbitrate individual claims of discrimination, the employee contended that she never agreed to waive her right to bring a class action discrimination claim and never consented to the employer’s refusal to engage in class arbitrations. She insisted that she was entitled to assert a class-based claim of gender discrimination either in court or arbitration relying on a pattern-or-practice theory.

Under Title VII, the Attorney General may bring a civil action against “any person or group of persons ... engaged in a pattern or practice” intended to deny the full enjoyment of rights under the Act. 42 U.S.C. § 2000e-6(a). The Supreme Court in International Brotherhood of Teamsters v. United States, 431 U.S. 324, 336, 360-63 (1977) established a method of proof for these types of “pattern or practice” cases under which an employee first must prove, typically through statistical evidence, that “discrimination was the company’s standard operating procedure - the regular rather than the unusual practice.” Once established, the employee enjoys the distinct advantage of a rebuttable presumption of individual discrimination. After the employee shows that the employer took an adverse employment action, the employer then carries the burden of proving that it took a particular action for lawful, non-discriminatory reasons. As Judge Saylor stresses in Karp, this is a lesser method of proof than in the ordinary discrimination case where the employee always carries the burden of proof that the employer intentionally discriminated her.

A growing number of courts have permitted private plaintiffs, rather than just the government, to bring pattern-or-practice class actions using the Teamsters lesser method of proof as a result of dicta from the U.S. Supreme Court in Cooper v. Federal Reserve Bank of Richmond, 467 U.S. 867, 876 n.9 (1984); a fact that the Karp court describes as a “peculiar genesis.” Despite this fact, however, no courts have permitted plaintiffs to bring such cases outside the context of class actions.

Here, the Karp court held that the employee may not proceed against CIGNA as a class, either in arbitration or the courts. It reasoned that courts can only compel parties to arbitrate a dispute that both parties have agreed to arbitrate. While both CIGNA and the employee agreed to arbitrate individual discrimination disputes, the court observed that CIGNA unambiguously refused to arbitrate such disputes when brought by a class. Further, the employee could not bring a class action suit in court because she would be unable to fulfill the prerequisite that a class representative must be eligible to litigate her own claim.

The court also rejected the employee’s argument that the arbitration agreement should be invalidated to the extent it prevented her from proceeding with her case in a class action or class arbitration on grounds that it would impermissibly prevent her from vindicating her statutory rights under Title VII. According to the court, she still may vindicate her substantive rights under Title VII in an arbitration proceeding; she simply cannot do so by relying on her preferred method of proof. The court described the difference in the methods as a “relatively minor procedural difference” and one that would be “unlikely to make a practical difference in the outcome of the case.” If CIGNA truly has discriminatory practices and policies, then the Court reasoned that the employee should have “little difficulty” proving that the employer discriminated against her consistent with those practices and policies.

This is a welcome ruling for employers and one suggesting that, if they have not already done so, employers should strongly consider adding mandatory arbitration policies because, in addition to arbitration being more speedy, cost-effective, private and manageable than traditional litigation, a well-drafted arbitration policy also may effectively limit the ability of employees to bring class action discrimination suits.