Middle District of North Carolina Magistrate Recommends Dismissal of Complaint for Race and National Origin Discrimination Due to Arbitration Agreement

A recent federal opinion from the Middle District of North Carolina  confirms the enforceability of agreements to arbitrate in the employment context.  In Peraza v. Rent-A-Center, a Hispanic plaintiff filed a pro se suit for alleged employment discrimination on the basis of race and national origin, as well as for retaliation.  The complaint alleged that the plaintiff complained of his supervisors’ disparate treatment of Hispanic customers only to have no corrective action taken in response.  Additionally, the plaintiff alleged that his supervisors began to retaliate against him for making the complaint by writing him up for small attendance-related infractions for which non-Hispanics were not disciplined.  Finally, after the plaintiff reported the supervisors’ conduct to HR, his employment was terminated.  The plaintiff filed suit under Title VII of the Civil Rights Act of 1964.

The defendant employer promptly filed a motion to dismiss the complaint and order the case to arbitration on the basis of an arbitration agreement that the plaintiff signed during his employment.  That agreement stated that the parties “mutually consent to the resolution by arbitration of all claims or controversies, past, present or future, including without limitation, claims arising out of or related to [Plaintiff's] application for employment, assignment/employment, and/or the termination of [Plaintiff's] assignment/employment.”  The agreement specifically covered claims of employment discrimination and harassment. 

Furthermore, the agreement provided that an arbitrator must also decide “gateway issues of arbitrability.” On this point, the agreement stated that “[t]he Arbitrator, and not any federal, state, or local court or agency, shall have exclusive authority to resolve any dispute relating to the interpretation, applicability, enforceability or formation of this Agreement including, but not limited to any claim that all or any part of this Agreement is void or voidable.”  

The Magistrate Judge made short work in concluding that the arbitration agreement controls under the “liberal federal policy favoring arbitration agreements.”  The Magistrate also recognized that the parties’ agreement to arbitrate even gateway issues of arbitrability is likewise enforceable.  In fact, that very issue, the Magistrate noted, has been recently decided by the United States Supreme Court in another Rent-A-Center case, Rent-A-Center, West, Inc.  v. Jackson, 130 S. Ct. 2772 (2010).

For these reasons, the Magistrate issued a recommendation that the defendant’s motion be granted.

As explained, the plaintiff was pro se, or representing himself, in the matter.   

In opposing the motion, the plaintiff argued that the case should remain in court, in part because of language concerns.  Indeed, the response itself reflected both that the plaintiff was unrepresented and limited in his command of the English language.  Here too, the Magistrate quickly determined that such challenges must be taken to the arbitrator for resolution.

The case is a reminder of the strict harshness with which courts enforce signed arbitration agreements.  Under current case law, employers are free to require employees to enter such agreements – despite the EEOC’s express condemnation of this practice – and even threshold issues of arbitrability can be reserved for determination by the arbitrator.