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A suit filed by seven African-American women seeking damages for employment discrimination must be resolved in arbitration because the plaintiffs entered into a valid arbitration agreement, a judge in the U.S. Eastern District of Pennsylvania has ruled. In Alberta Byrd Brennan et al. v. ACE INA Holdings Inc. et al., Judge Petrese Tucker ordered that an agreement signed by the employees was a binding contract requiring arbitration as the method of remedy. Alberta Byrd Brennan, a lawyer who lives in Wynnewood, Pa., hired Alan Epstein of Spector Gadon & Rosen in Philadelphia to file suit in May of last year against ACE INA Holdings, which bought all of CIGNA’s domestic property and casualty operations in July 1999. After the filing, more African-Americans employed by ACE came forward with stories similar to Brennan’s. The initial complaint alleged “the average time that white employees in the department remained at their salary grades before they were promoted was two years. … [H]owever, the average time that the black employees in the department remained in their salary grade before they were promoted was approximately three years.” All seven of the plaintiffs are African-American women who live in Pennsylvania, New Jersey or Delaware. Two are lawyers, and three are paralegals; all of them are (or were) claims handlers for ACE or its predecessor companies. The employees claimed that racial bias affected their earnings, promotions and job opportunities. Epstein argued that the case deserved class action status because Brennan undertook a statistical analysis of disparities between black and white workers in her department before bringing her complaint before the Equal Employment Opportunity Commission. In September 2000, Epstein attempted to amend the original complaint to assert a class action against ACE. However, the June 8 order effectively ended this pursuit. After the plaintiffs filed for class status, which would have created a class between 800 and 1,000 individuals, ACE filed a request that the court compel arbitration based on the Federal Arbitration Act. Tucker’s decision effectively thwarted the possible class action and will allow ACE to resolve the dispute in arbitration. Prior to ordering arbitration, the court had to determine: Whether ordering arbitration was appropriate. Whether the arbitration agreement between the parties was a contract of adhesion. Whether the limits imposed by the arbitration provision relating to discovery and the award of attorneys’ fees denied substantive rights to the plaintiffs. In determining if arbitration was an appropriate remedy, Tucker relied heavily on an employee handbook receipt and agreement each plaintiff signed. By signing the receipt and agreement, Tucker reasoned, the plaintiffs acknowledged that employment discrimination claims are subject to valid arbitration agreements under the FAA. Tucker wrote: “The arbitration agreement sufficiently covers all of the federal and state statutes which plaintiffs alleged defendants have violated. The Supreme Court held that employment discrimination claims are subject to valid arbitration agreements under the FAA.” Tucker also dismissed the argument that the arbitration agreement was a contract of adhesion. “The plaintiffs here are professionals well capable of bargaining for their employment. … As the 3rd Circuit held, mere inequality in bargaining power between employer and employee does not make an arbitration agreement unenforceable. “Moreover, an arbitration agreement does not meet the standard for a contract of adhesion unless one party lacks a meaningful choice and the provision is one-sided as to be oppressive.” The plaintiffs also contended the limits arbitration would impose on the discovery process and the awarding of attorneys fees would equal a denial of rights granted under Title VII. Tucker disagreed. “Although procedure might not be as extensive as in federal court, by agreeing to arbitrate, the party trades procedures and opportunities for court review for simplicity, informality and expedition of arbitration,” Tucker said. On the issue of attorneys’ fees, the plaintiffs argued that arbitration would deny Title VII rights because of the difference between the remedies available in a court (such as the awarding of attorney fees) and the remedies available in arbitration. “The rules of procedure for the arbitration policy in effect at CIGNA/ACE provide that ‘the arbitrator will have full power and authority to award any remedy that either party would have been entitled to had the employee taken the dispute to a government agency or to a court.’” Edward T. Ellis of Montgomery McCracken Walker & Rhoads in Philadelphia represented ACE.

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