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Appeals court rules for PwC in dispute over arbitration


A federal appeals court has overturned a lower court ruling and held a former PricewaterhouseCoopers LLP employee must have her discrimination and retaliation claims under Title VII of the Civil Rights Act of 1964 arbitrated.

An issue in the litigation was whether a federal exemption for arbitration of Title VII claims for defense contractors was still applicable to PwC, according to Friday’s ruling by the 4th U.S. Circuit Court of Appeals in Richmond, Virginia, in Shannon Ashford v. PricewaterhouseCoopers LLP.

PwC, whose U.S. headquarters is in New York, hired Ms. Ashford in March 2015 as an associate in its Columbia, South Carolina, advisory group. To confirm her appointment, she electronically executed an employment agreement containing arbitration provisions, according to the ruling.

After being passed over for several promotions, Ms. Ashford sued PwC in South Carolina state court alleging race discrimination and retaliation under Title VII. PwC had the case removed to federal court in Columbia and moved to compel arbitration. 

The district court ruled against PwC based on an exclusion for arbitration of Title VII provisions under the 2010 Franken Amendment to the Defense Appropriations Act.

The ruling was overturned by a unanimous three-judge appeals court panel.

The Federal Arbitration Act’s policy of favoring arbitration agreements augments ‘ordinary rules of contact interpretation,”” said the ruling in citing an earlier 4th Circuit ruling.

“It applies with equal force to employment agreements providing for the arbitration of discrimination claims brought under Title VII of the Civil Rights Act,” it said.

“Under precedent from the Supreme Court and this Court, we must read the Title VII exclusion in favor of arbitration if we can reasonably do so,” the ruling said.

The Franken Amendment only applies to those engaged in certain defense contracting, it said. Although at the time that Ms. Shannon’s arbitration agreement was drafted PwC performed defense contracting work, it has stopped doing so, so the law no longer applies, the ruling said.

“While the language of the agreement at issue is admittedly not a model of clarity, we do not review it with a clean slate. The FAA and or precedent tip the scales decidedly in favor of arbitration,” the ruling said.

Ms. Ashford “merely agreed to present her Title VII claims to an arbiter rather than a judge or jury. She will still have an opportunity to present her case and obtain relief if PwC is found to have discriminated against her,” the panel said in overturning the lower court ruling, and holding that Ms.  Ashford’s Title VII claims are subject to arbitration.

PwC’s attorney Helgi C. Walker, a partner with Gibson, Dunn & Crutcher LLP in Washington, said in a statement, “We are pleased with the Court's thoughtful, well-reasoned and unanimous decision fully vindicating PwC's position on appeal. 

“As the panel correctly explained, the plaintiff did not waive any of her substantive rights under the law by agreeing to arbitration. Although we believe her claims are meritless, she remains free to pursue them before a neutral arbitrator if she so chooses.”

Ms. Ashford’s attorney, J. Charles Ormond Jr., of Ormond-Dunn Law Firm in Columbia, said in a statement, “Ms. Ashford is, of course, disappointed in the opinion. 

“This decision is another in a line of Federal Court decisions holding that arbitration clauses will be upheld in employment relationships in almost any instance. Title VII was enacted in 1964. For years such claims were decided by Federal or State Judges. 

“In 1991, Congress amended the Act to allow employees the right to a jury trial.  All employment relationships are contractual, and the Federal Arbitration Act strongly favors arbitration if parties to a contract both agree to an arbitration provision. 

“Most employment contracts are either take-it or leave-it agreements, and most are terminable at will. Employers can insert an arbitration clause in any employment agreement and avoid the statutory right to a jury trial for employees in these cases, and the language does not need to be precise to be effective.
“In this case, the document the employees of PricewaterhouseCoopers signed did contain an arbitration mandate, but it expressly excluded Title VII issues although with some limiting language.

“The District Court found that the plain language of the limiting provision within the exclusion did not mean and would not have been understood by an employee to mean what was argued by the Employer after suit was filed.”