Federal Court Grants KM&M's Motion to Dismiss Complaint in Lawsuit Filed Against St. John's University by Former Head Coach of Women's Basketball
In January 2003, former St. John's University Head Coach of Women's Basketball Darcel Estep sued the University in federal court in New York. Estep alleged that St. John's discriminated against her on the basis of her race and gender, and that it breached her employment contract when it terminated her employment in January 2002.
St. John's moved to dismiss the Complaint for lack of subject matter jurisdiction, because Estep's employment contract expressly provided that any disputes between the parties would be subject to arbitration before the AAA in lieu of litigation. Estep asked the Court to declare the arbitration provision invalid and unenforceable, at least in part because that provision included a clause to the effect that the parties would share equally the cost of arbitration (e.g., the AAA's filing fee and other administrative fees, and the arbitrator's fee). Estep claimed that this cost-sharing provision would "substantially deter[ ] [her] from vindicating her statutory rights."
On this basis, Estep urged the Court to adopt a rule that arbitration agreements containing cost-sharing provisions are per se unconscionable (and therefore unenforceable). The Court declined to do so, finding that "[t]he cases cited by Plaintiff that apply the per se rule bear little resemblance to the facts of this action, which involves an arbitration provision in an individual executive-level employment contract that was carefully negotiated by the executive's attorney. Indeed … the parties here engaged in substantive negotiations that resulted in the careful formation of a contract which they apparently found to be mutually beneficial." Thus, the Court distinguished Estep's situation from a case "where an employee with no bargaining power is required to sign an arbitration agreement as a condition of her employment." For this reason among others, the Court refused to invalidate the parties' agreement to arbitrate, and dismissed Estep's federal Complaint.