Court Upholds Class Arbitration in Sterling Jewelers Case

The U.S. Supreme Court ruled that a group of women who contend they were denied equal pay and promotion by Sterling Jewelers Inc. can seek arbitration as a class in their gender discrimination claims against the national jeweler. The order, Sterling Jewelers vs. Jock et. al., leaves in place an earlier decision by a federal appeals court.

“The Supreme Court’s ruling denying review has cleared the way for women who have worked at Sterling Jewelers stores to have the chance to pursue their claims together, rather than forcing each of them to proceed alone,” said plaintiffs’ lead counsel Joseph M. Sellers, of Cohen Milstein Sellers & Toll. “We look forward to bringing these claims to a successful resolution through class arbitration.”

signet smCo-counsel Sam J. Smith, of Burr & Smith, said, “This decision leaves in place a strong opinion by the Court of Appeals for the Second Circuit that upheld an arbitrator’s determination that Sterling is required to allow its employees to pursue class arbitration claims where it forced its employees to use an arbitration procedure to resolve discrimination claims and promised the employees that they could obtain any type of relief that is available in a court.”

The female employees sued Sterling Jewelers in 2008, contending that they were paid less than male co-workers and denied equal opportunity for promotion. The case was referred to the American Arbitration Association because Sterling’s alternative dispute resolution program requires that such claims go to arbitration. The Equal Employment Opportunity Commission (EEOC) previously had determined there was reasonable cause to believe that Sterling had subjected female employees to a pattern of discrimination in their pay and promotion practices.

Sterling denied the women’s claims and argued that its arbitration program, called RESOLVE, barred them from pursuing their claims as a class action, but in 2009, the arbitrator ruled that the program allowed the women to pursue their claims collectively in arbitration. Sterling appealed to the U.S. District Court for the Southern District of New York, which initially upheld the arbitrator’s ruling, but later reversed after the Supreme Court issued an opinion in Stolt-Nielsen vs. AnimalFeeds International, clarifying the applicable law to interpreting arbitration agreements.

The case was appealed to the U.S. Court of Appeals Second Circuit located in New York, which ruled in the plaintiffs’ favor in July 2011. “In sum, we hold that the arbitrator did not exceed her authority in determining that the agreement permitted the plaintiffs to proceed with their effort to certify a class in the arbitration proceedings,” the Court stated.

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