A challenging legal case in the Eleventh Circuit Court has brought arbitration agreements and unconscionability under the spotlight once more. The recent decision in Payne v. Savannah College of Art and Design Inc. saw the Eleventh Circuit Court of Appeals affirm a district court order that denied a motion to compel arbitration of plaintiff Isaac Payne’s discrimination-based claims.
The presiding court deemed that the mandatory arbitration agreement, a stipulation of Payne’s underlying employment agreement, was neither unfair nor unconscionable. The defendant, Savannah College of Art and Design (SCAD), was ruled to have not waived its right to arbitrate with Payne.
Arbitration agreements, a common feature of many employment contracts, typically specify that any disputes between parties pertaining to the employment relationship should bypass traditional litigation in court. Instead, they should be settled in an arbitration, a less formal and generally less costly method of dispute resolution. These agreements can be particularly advantageous for the employer, often limiting the potential for expensive and highly-publicized court cases. Yet, they are also subject to intense scrutiny and controversy, especially in cases hinging on the claims of discrimination, like that of Isaac Payne.
In Payne’s situation, his argument that the arbitration agreement was unconscionable – essentially too extreme to be enforceable – was ultimately rejected. The court’s decision represents another landmark instance in a long series of legal opinions that have largely favored the enforcement of arbitration agreements.
Implications of this case extend considerably beyond the parties involved. Given the wide prevalence of arbitration agreements within employment contracts, the case stands to affect a multitude of corporations, employers, and employees. Therefore, law professionals worldwide should keep a keen eye on how national and international jurisdictions interpret and apply such court decisions.
For further detail and case-specific analysis, visit the case commentary on JDSupra.