Goldman Sachs Group Inc. (GS:US) won a U.S. appeals court decision compelling a female former managing director who sued the firm for gender discrimination to pursue her case through arbitration rather than in court.
The New York-based panel yesterday ruled that Lisa Parisi, one of three women who sued the firm in 2010 claiming they were subjected to pay and promotion discrimination, can’t maintain her case in U.S. court. Her employment contract contained a clause requiring disputes to be resolved through arbitration.
Parisi’s lawyers argued their client had a right under federal law to press her claim Goldman Sachs has a pattern and practice of discriminating against managing directors who are women, and that such claims can only be litigated in the context of a class action, or group, case.
A lower court judge agreed, denying Goldman Sach’s request he order Parisi’s case to arbitration.
“Because we disagree that a substantive statutory right to pursue a pattern-or-practice claim exists, we reverse,” U.S. Circuit Judge Barrington Parker wrote for a unanimous three- judge panel. Joining him were Judges Gerard Lynch and Reena Raggi.
Citing U.S. Supreme Court precedent, the panel said the high court has consistently interpreted the Federal Arbitration Act as favoring the enforcement of such agreements, “even when the claims at issue are federal statutory claims,” absent some contrary congressional command.
The appeals court said Parisi may present to the arbitrators any evidence of discriminatory practices or policies at Goldman Sachs that affected her employment.
Michael DuVally, a spokesman for Goldman Sachs, in an e-mail message said the firm is pleased with the court’s decision.
“It’s an unfortunate decision, obviously, from our perspective,” Adam Klein, an attorney for Parisi, said today in a phone interview. “We thought the district court got it right.”
The net effect on the case may be limited, Klein said, because the proposed class is primarily comprised of associates and vice presidents, not managing directors like Parisi.
“Managing directors are going to have to file individual arbitrations,” he said.
The panel decision was a victory for employers, two attorneys who weren’t involved in the litigation said today in separate interviews. It also made it more difficult for Parisi to prevail, a University of California, Los Angeles, law professor said.
“The court’s ruling made her case harder to win,” the UCLA law professor, Katherine Stone, said by phone today. It is more difficult to prove discrimination against one person than it is to show a pattern and practice of discrimination against a group of similar people, she said.
“That’s what was at stake here,” Stone said. Had Parisi been allowed to pursue her claim in court as part of a class, the burden to prove there was no such pattern would have shifted to the investment firm, she said.
Parisi’s lawyer, Klein, said it seems “improbable” that an arbitrator would extend the scope of the evidence disclosure process to include employees beyond those who are immediately comparable to an individual plaintiff.
“I don’t think anyone knows the answer,” he said. Klein is a partner in New York-based Outten & Golden LLP.
“It’s fair to call it a big win for employers,” said Michael P. Roche, a partner in the Chicago-based law firm Winston & Strawn LLP. “This decision definitely strengthens the ability of employers to ensure that claims can be arbitrated,” he said.
Employers prefer arbitration over courthouse litigation because it allows them to more easily control the cost of such conflicts, he said.
It also allows them to avoid costly class actions and fight in a forum of their own choosing, said Jeffrey Bernick, a partner in the Phoenix office of the New York-based employment law firm Jackson Lewis LLP.
The case is Parisi v. Goldman Sachs & Co., U.S. Court of Appeals for the Second Circuit (Manhattan).
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