In a major victory for employers, a New York federal circuit court ruled yesterday that an employer with a mandatory arbitration agreement with Goldman Sachs can require an employee to go to arbitration on a Title VII class action because Title VII contains no substantive right to pursue a pattern-or-practice sex-bias claim.

The employee alleged in court that Goldman Sachs engaged in “a continuing pattern and practice of discrimination based on sex against female Managing Directors, Vice Presidents, and Associates.”   However, the Managing Director Agreement executed by the employee when she was promoted to that position contained an arbitration clause which read that "any dispute, controversy or claim arising out of or based upon or relating to Employment Related Matters will be finally settled by arbitration in New York City before, and in accordance with the rules . . . of, the New York Stock Exchange, Inc. (“NYSE”) or  …  the National Association of Securities Dealers (“NASD”)."

Goldman Sachs moved to compel arbitration under the  Federal Arbitration Act, claiming that “a party cannot be compelled to arbitrate on a class-wide basis where the relevant arbitration clause is silent as to the arbitration of class claims,” and that the employee’s discrimination claims must therefore be arbitrated individually.

The employee responded that under Title VII she has a substantive right to pursue a pattern-or-practice claim, which is available only to class plaintiffs, and that the arbitration clause in her agreement must therefore be invalidated because arbitration would preclude her from vindicating a statutory right.

The appeals court sided with Goldman Sachs, and found that “Because we disagree that a substantive statutory right to pursue a pattern-or-practice claim exists, we reverse.  [The employee] contends, and the [lower] court agreed, that individual arbitration would preclude her from vindicating her right to bring a substantive “pattern-or-practice” claim under Title VII. But such a right does not exist (emphasis added).”  

The Court stated that “in Title VII jurisprudence ‘pattern-or-practice’ simply refers to a method of proof and does not constitute a ‘freestanding cause of action’”

Big victory for employers!