Over the last few decades, in cases like Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc. (1985), the Supreme Court has created a strong presumption that statutory claims are generally covered by the Federal Arbitration Act and subject to arbitration. (But if you look closely at Mitsubishi, the Supreme Court majority was misleadingly selective in quoting the FAA, conveniently leaving out key language from the statute that limits the FAA’s coverage to disputes arising out of a contract. The statute was designed, on a very limited scale, to cover contractual disputes, not statutory claims.)
A federal court in Minnesota recently found that a federal statutory employment claim could not be arbitrated. In McLeod v. General Mills, Inc., No. 15-494 (Oct. 23, 2015) (click here for a copy of the decision), General Mills terminated hundreds of employees as part of a restructuring plan. As part of a severance package, the employees signed a general, broad release of all claims against the company, including age discrimination claims, as well as an arbitration agreement.
Some former employees subsequently filed suit in federal court, alleging that General Mills had improperly terminated their employment in violation of the Age Discrimination in Employment Act (ADEA). The complaint also included allegations that the general release was not enforceable because the releases were not signed “knowingly and voluntarily” pursuant to the Older Workers Benefit Protection Act (OWBPA). Pursuant to OWBPA, a waiver of ADEA rights must comply with several requirements in order for a waiver to be valid (for example, the individual employee must be advised in writing to consult with an attorney, and there is a waiting period within which to consider the release).
Critical to the court’s holding was the following language from OWBPA: if there is a dispute regarding whether the waiver requirements have been met, “the party asserting the validity of a waiver SHALL have the burden of proving IN A COURT OF COMPETENT JURISDICTION that a waiver was knowing and voluntary.” (emphasis added). The court reasoned that this plain language of the statute embodies a congressional command that it was mandatory for courts, not arbitral tribunals, to hear such disputes. As a result, the court denied General Mills’ motion to compel arbitration so that the court could determine whether the employees had knowingly and voluntarily waived their discrimination claims.