By Roger Parloff
July 11, 2016

When Fox News chief Roger Ailes asked a court on Friday to dismiss former Fox TV host Gretchen Carlson’s sexual harassment suit against him and force it into secret arbitration, he put on display a hornet’s nest of increasingly common and controversial employment practices.

The notion that the powerful head of a media company—whose cable TV stations regularly air sordid accusations about politicians, business leaders, and entertainment personalities—could sweep the allegations against himself out of a public courtroom and under the rug of strictly confidential arbitration has struck some as unfair and hypocritical.

“I think it’s bizarre and wrong,” says Carlson’s lawyer Nancy Erika Smith in an interview, “not just in this case, but in every context.”

Ironically, Ailes’ motion was filed just one day after the Equal Employment Opportunity Commission issued a general policy statement that, among other things, blasted mandatory arbitration clauses for cases like Carlson’s as undermining the public policy objectives of anti-discrimination laws.

“By taking discrimination claims out of public view,” the agency wrote, “forced arbitration can prevent employees from learning about similar concerns shared by others in their workplace and can impede the development of the law. It can also weaken an employer’s incentive to proactively comply with the law, when the organizations are not held publicly accountable for violations of anti-discrimination laws.”

Ailes’ counsel Barry Asen, of Epstein Becker & Green, responds, “The EEOC quote is at odds with federal and state laws favoring arbitration and decades of court decisions—including at the US Supreme Court—compelling arbitration of employment-related claims, including for sex harassment.”

In a statement he continues: “The purpose of arbitration is to provide a fair and less costly alternative to litigation in courts. Countless employees throughout the country, and throughout the media industry, agree to have their employment-related claims arbitrated for those reasons. Employment-related matters are treated as private matters by employers, and arbitration preserves that privacy…. Here, Ms. Carlson voluntarily entered into an agreement with Fox to arbitrate all claims and disputes related to her employment. She can’t now avoid that agreement because she now wants to soil Mr. Ailes’s reputation in the media.”

To be sure, Gretchen Carlson is an imperfect poster-girl for a general assault on arbitration clauses since she was not an unsophisticated, rank-and-file worker when she signed with Fox News in 2005. She was already an on-air news personality at CBS News (and a former Miss America, 1989) who likely had competent legal advice and some bargaining leverage.

Still, arbitration need not be shrouded in secrecy to the degree that Fox News required in its contract with Carlson, according to legal experts. Hers provides not only that “all filings, evidence and testimony connected with the arbitration” must be held in “strict confidence,” but also that “all allegations and events leading up to the arbitration” must be, too. (See page 12 of Exhibit A of this document.) On its face, the contract seems to say that Carlson can’t even tell the world what she claims happened to her.

“That’s not an arbitration clause,” says San Francisco lawyer Cliff Palefsky. “That’s a straight-out gag order.”

“In my mind,” continues Palefsky, who has headed the National Employment Lawyers Association task force on mandatory arbitration since 1988, “that violates public policy.”

In Ailes’ filings, his lawyers suggest that Carlson has already materially breached her contract by publicly filing her claim in court.

To date, nearly every maneuver that has occurred in Carlson’s suit has been either an attempt by her lawyers to keep her case in a public courtroom or an effort by Ailes’ to send it behind closed doors.

Here’s what’s happened. Last Wednesday, Carlson sued Ailes in New Jersey Superior Court in Hackensack, N.J. She alleged, among other things, that Ailes fired her for her having rebuffed his sexual advances. She accused Ailes of having told her last September, for instance, “I think you and I should have had a sexual relationship a long time ago and then you’d be good and better and I’d be good and better…. Sometimes problems are easier to solve” that way.

Ailes responded to the suit with a statement calling her allegations “false,” and her suit “retaliatory” for the company’s decision not to renew her contract, which ended June 23. Ailes alleged that Carlson’s “disappointingly low ratings” at The Real Story With Gretchen Carlson “were dragging down the afternoon lineup.”

As I noted in an article published on Friday, Carlson sued only Ailes—not Fox News or parent company 21st Century Fox—which struck some employment discrimination lawyers as odd since Ailes, as Fox News’s founder, CEO, and chairman, was Fox News for all practical purposes. In that article, I speculated about why she might have done that, but I was probably mistaken. The most likely reason she didn’t name Fox News is that her contract contained the arbitration and secrecy clauses. She hoped not to trigger those by merely suing Ailes, with whom she had no contract.

Late Friday, Ailes’ lawyers “removed” the case to federal court in Newark and asked that court to dismiss it as an illegitimate attempt to circumvent her mandatory arbitration contract with Fox News. (A defendant has an absolute right to transfer a case to federal court in this fashion, and the federal judge then decides whether whether the removal was proper or not. If not, the judge sends the case back to state court.)

Carlson’s lawyers responded in a statement issued at the time: “Gretchen never agreed to arbitrate anything with Mr. Ailes and the contract on which he relies does not mention him and is not signed by him.”

Nevertheless, according to Thomas Doherty, a management-side employment lawyer with McCarter & English, Ailes’ lawyers have some legal support for their claim that Carlson is still bound by the arbitration provision. “Otherwise,” Doherty writes in an email, “it would make it very easy to do an end run around the arbitration clause by just suing individual employees instead of the employer.”

Plaintiffs-side employment attorney Lynne Bernabei, of Bernabei & Kabat in Washington, D.C., agreed with Doherty’s assessment. “I suspect she’ll lose in federal court … and be sent to arbitration,” she wrote in an email.

The fact that the case was filed in New Jersey in the first place, Doherty adds, was probably a strategic decision relating to the anticipated battle over the arbitration clause. Filing there appeared odd at first because Carlson resides in Connecticut, and her employment—and all the incidents alleged in the complaint—occurred in New York City. In that complaint, Carlson’s lawyers (Smith and co-counsel Martin Hyman of Golenbock Eiseman in New York City) argued that jurisdiction was proper in New Jersey because, they allege, Ailes owns a home in Creskill, N.J.

But New Jersey was likely chosen because its state courts “have become increasingly hostile to enforcing arbitration clauses in recent years,” Doherty says. “Her legal team may have believed they would fare better [here] when opposing a motion to compel arbitration.” (Less than a month ago, the New Jersey supreme court struck down a portion of an arbitration clause as “unconscionable” in a different discrimination case being handled by Carlson’s lawyer Smith. The specific provision involved in that case was different, however.)

Though U.S. District Judge Jose Linares of Newark would have to send the case back to the superior court if Ailes truly resided there, his lawyers say he doesn’t. Regardless of whether he has a house in Creskill—his lawyers have neither confirmed nor denied that—they say his “domicile” (what he regards as his legal home base) is New York State, where, Ailes has affirmed, he maintains residences in both New York City and Garrison, works, votes, registers his car, and so on.

Carlson’s reply to Ailes’ motion to dismiss is due in mid-July and the federal court is scheduled to hold a hearing on August 1.

So, the legal landscape looks challenging for Carlson. From a public policy perspective, this is particularly troubling, according to Palefsky, since there have been suggestions that Ailes might be a serial offender. Smith, Carlson’s attorney, has told New York Magazine that more than a dozen women have approached her since she filed Carlson’s complaint, relating similar stories going back decades. Six of those women—two by name—related their stories to New York Magazine. (Ailes’ attorney, Asen, responded to New York, “The latest allegations, all 30 to 50 years old, are false.” Meanwhile, three female Fox News hosts—Jeanine Pirro, Greta Van Susteren, and Maria Bartiromo—have all come forward with expressions of public support for Ailes.)

Palefsky notes that when clothing manufacturer American Apparel was run by Dov Charney—the founder and former CEO who was ousted in December 2014 after being hit with sexual harassment and misconduct allegations—it required employees to sign arbitration agreements with extremely broad confidentiality clauses. In some instances a clause said that an employee would have to pay $1 million in the event of a breach.

The Ellen Pao case, Palefsky continues, also illustrates why plaintiffs should have the right to bring discrimination cases publicly. In 2012, Pao sued Silicon Valley venture capital firm Kleiner Perkin Caufield & Byers alleging gender discrimination. Though the firm tried to remove the case to arbitration, the California courts allowed the matter to stay in court—where the firm ultimately prevailed.

“Pao lost,” Palefsky acknowledges, “but the debate that her case engendered did more to change conduct than 100 separate private arbitrations.”

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