Employment Lawsuit Avoids Sanctions Despite Arbitration Clause in Employment Agreement

Plaintiff was employed by Defendant for 22 years. He became involved in a dispute with Robert Mercer, who was Co-CEO of the Company. The dispute concerned the political views of Mercer. Plaintiff was suspended, then terminated. Despite have an employment agreement with the Defendant which required him to submit any dispute “relating to” his employment to arbitration, plaintiff filed suit in federal court.

Defendant moved to compel arbitration and moved for Rule 11 sanctions. Defendant argued that there was no basis for the case to be filed in federal court and that the lawsuit was filed in court to generate adverse publicity for the Company.

Federal law supporting arbitration clauses in employment agreements is exceptionally strong. Despite that long-standing federal law, the district court denied the motion for sanctions. The court discounted the claim of an improper purpose by finding it speculative. The court held that the sanctions motion was premature because the dispositive motion (to compel arbitration) had not been decided).

via MAGERMAN v. Mercer, Dist. Court, ED Pennsylvania 2018 – Google Scholar

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