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Two former employees of an educational institution are not obligated to adhere to a binding arbitration policy they had never agreed to, said an appellate court in reinstating their discrimination claims.
Michael Scott and Lamont Jones, who were assistant directors of admissions at the Art Institute of Pittsburgh, a subsidiary of Pittsburgh-based Education Management Corp., both filed complaints with the U.S. Equal Employment Opportunity Commission in August 2012 after they received harsh job evaluations, charging their employer with age discrimination among other claims, according to Monday’s ruling by the 3rd U.S. Circuit Court of Appeals in Philadelphia in Michael Scott v. Education Management Corp.
In late September and early October 2012, Education Management instituted a companywide alternative dispute policy, a multistep process for dispute resolution that culminated in binding arbitration, according to the ruling.
An Oct. 3, 2012, email informing workers of the policy said it was a term and condition of continued employment, and requested that employees acknowledge their receipt and acceptance of the new policy.
Instead, that same day, Mr. Scott and Mr. Jones’ attorney sent an email to the firm stating they believed the policy was illegal. Mr. Jones’ employment was terminated in January 2013 and Mr. Scott’s in April 2013, and both men then filed suit against Education Management.
The U.S. District Court in Pittsburgh dismissed their litigation, holding both had manifested their assent to the arbitration policy by continuing to work at Education Management after receiving it.
A unanimous three-judge panel of the 3rd Circuit disagreed. While they had continued working after the policy was introduced, “they also promptly voiced their specific objection to and rejection” of the policy, said the ruling. “Were that not enough, Pennsylvania law requires that any agreement to arbitrate be ‘clear and unmistakable’ and holds that ‘such agreements should not be extended by implication,’” said the ruling in quoting an earlier case.
The panel vacated the orders dismissing their case, and remanded it for further proceedings.
The U.S. Equal Employment Opportunity Commission has had significant success in addressing systemic discrimination, although future challenges include employers' mandatory arbitration programs and barriers to pursuing class action litigation, the agency said in a report.