A recent New York trial court decision demonstrates the importance of carefully drafting employment contracts. In the high-profile case, Judge Arlene P. Bluth sided with the employee in rejecting the employer’s attempt to force an employment claim into arbitration. On the surface, the case is notable because the defending party was the Trump for President campaign organization, but the court’s ruling on the arbitration agreement should draw employers’ attention everywhere.
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Facts
Jessica Denson went to work as a phone bank administrator for the Trump presidential campaign in August 2016. In March 2018, she filed a lawsuit against her former employer, Donald J. Trump for President, Inc., claiming her supervisors created a horrible workplace through conduct such as engaging in hostile tirades, cyberbullying, and harassment, tracking her whereabouts, and trying to “find dirt on her.”
In response, the Trump organization asked to move the case into mandatory arbitration, based on an employment agreement Denson had signed. The relevant arbitration clause stated as follows:
Without limiting the Company’s or any other Trump Person’s right to commence a lawsuit in a court of competent jurisdiction in the State of New York, any dispute arising under or relating to this agreement may, at the sole discretion of each Trump Person, be submitted to binding arbitration in the State of New York pursuant to the rules for commercial arbitrations of the American Arbitration Association, and you hereby agree to and will not contest such submissions. Judgment upon the award rendered by an arbitrator may be entered in any court having jurisdiction.
The agreement listed and prohibited five acts by the employee: disclosing confidential information, disparaging the Trump campaign, providing services to a competitor, soliciting campaign employees to work for a competitor, and providing campaign intellectual property to a competitor.
Court’s Decision
The court ruled that the arbitration provision didn’t apply to Denson’s claims. Of note, she wasn’t represented by an attorney.
The court explained that the Trump campaign’s arbitration clause confined arbitration to “any dispute arising under or relating to this agreement.” It did not, by contrast, require arbitration for “any dispute between the parties” or “any dispute arising out of [Denson’s] employment.” Furthermore, the agreement was titled “Agreement,” not “Employment Agreement,” and didn’t contain Denson’s job responsibilities, terms of employment, salary, benefits, or ability to pursue her own claims. Based on the agreement’s language and the noted exclusions, the court held that it empowered the campaign to file a lawsuit or initiate arbitration against Denson only for violating the enumerated prohibitions.
The court went on to remark that the arbitration clause could have been written to require any disputes arising out of Denson’s employment to go to arbitration. What the Trump organization drafted and implemented, however, was “much narrower” and strictly limited what claims could go to arbitration. Consequently, the court rejected the employer’s request to force arbitration, and the case remained in the trial court. Denson v. Donald J. Trump for President, Inc., No. 101616/2017 (N.Y. Sup. Ct. N.Y. Cty., Aug. 7, 2018).
Bottom Line
Denson’s case highlights the crucial need to have your employment agreements, including any arbitration provisions, reviewed for proper wording and compliance with the law. The U.S. Supreme Court has repeatedly upheld arbitration provisions in the employment context, so it’s critical that they be drafted properly to provide the greatest possible coverage for your organization.
Jeremy Lange is an attorney with Axley Brynelson, LLP in Madison, Wisconsin, and a contributor to Wisconsin Employment Law Letter. He may be contacted at jlange@axley.com.