The current owner of Jay-Z’s Rocawear apparel brand has responded to the rap star’s claims that the American Arbitration Association lacks appropriate minority arbitrators to preside over a long-running dispute, accusing him of being a serial arbitrator who’s only now raising the issue as a litigation tactic.
In a filing in New York state court in Manhattan on Jan. 11, brand management company Iconix and attorneys from Blank Rome also argued that in the sole published opinion addressing arbitration participants’ rights to diverse pools, retired Seventh Circuit Judge Richard Posner was dismissive of the issue.
“The dubious, indeed offensive, insinuation by the Carter parties that the race of an arbitrator is inherently indicative of bias contravenes every published authority on the matter,” attorney Samuel Levy said in a filing, referencing Jay-Z’s given name, Shawn Carter.
In November, Jay-Z and his attorneys at Quinn Emanuel Urquhart & Sullivan successfully delayed an arbitration in the dispute between the parties. He sold Rocawear to Iconix in 2007, in a $200 million deal that marked the company’s largest to date. In 2016, Iconix said in a financial statement that it suffered a reduction in assets and income to its Rocawear-related assets of $169 million in 2015, and in the following year’s filing, the company announced another $34.6 million in losses related to the Rocawear brand.
According to Jay-Z, the company’s financial distress has prompted a stream of litigation against him, including a trademark lawsuit pending in the Southern District of New York, and the arbitration in question, initiated in October. In the Jan. 11 filing, Iconix revealed that the latest dispute is over a financial records production clause in a 2015 settlement agreement to an earlier tiff. Jay-Z attorney Alex Spiro has said that Iconix is specifically resisting a commitment that it provide scholarships to underprivileged youth from the original deal.
The rapper had argued that he was unable to identify a single African-American arbitrator on the “large and complex cases” roster qualified to preside over the arbitration, and that on an updated “strike list” including three African-Americans, one was an attorney at Blank Rome, leaving him two names to chose from, only one of whom was male.
At a late November hearing, a New York state judge agreed to postpone a scheduled hearing. Iconix, however, referenced her comments from the bench, in which she suggested the argument that arbitration was a “public accommodation” subject to prohibitions on discriminatory practices was an “incredible stretch.”
“If people are dissatisfied with the diversity of AAA, don’t put the AAA panel in your agreement,” Justice Saliann Scarpulla said from the bench, according to the Iconix filing. “Go somewhere else. Do something that makes a difference.”
The company also argued that the judge arrived at similar conclusion to the one that Posner had previously reached, without consulting the opinion, and suggested at the hearing that there was no evidence that an African-American arbitrator would decide a commercial dispute differently from a member of any other group.
Posner’s opinion, from 2000, dealt with an arbitration where the adverse party struck the sole female candidate. Another distinction between that case and Jay-Z’s is the latter’s reliance on the New York Constitution, state laws and a New York City ordinance, rather than federal law.
Putting the issue of that precedent aside, Iconix is asserting that signatories to an arbitration agreement are aware they may have traded away certain protections and rights in exchange for the expediency and privacy of the arbitration process.
“The Carter parties’ vision of a paternalist court undertaking an ad hoc review of arbitrator pools based upon demographic profiles would open a veritable floodgate of litigation around the country, undermining bargained-for rights to expeditious dispute resolution,” Levy said in the filing.
Iconix also contended that Jay-Z has been a “serial” AAA litigant and has never expressed alarm about the availability of diverse panel members, suggesting that his sudden “epiphany” about diversity is merely a ”charade” aimed at escaping arbitration.
In an email, Quinn Emanuel’s Spiro responded that “civil rights activists always had days before they fought back—Mr. Carter is no different.”
“It is a great thing that AAA clearly recognizes our concerns are legitimate, and we will continue working with them to improve the system going forward,” Spiro added.
Discussions over the specifics of the arbitration involving the AAA have continued since the lawsuit was filed in November.
The organization was not willing to comment about the specific matter, but it did share that it was making advances on the subject of diversity.
“With regard to procedures that relate to the AAA’s diversity efforts, the AAA is confident that those numerous and ongoing efforts will continue to improve the diversity of our roster and contribute to greater inclusivity in the alternative dispute resolution field,” a spokeswoman said in a statement. “The AAA’s commitment to diversity is longstanding and has received significant additional focus in recent years, and has not been the result of a particular case or set of cases.”
Levy, the attorney for Iconix, did not immediately respond to a request for comment.