Can Fox News Host Elude Arbitration by Personally Suing CEO?

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By Jon Steingart

July 13 — Fox News chairman and CEO Roger Ailes will probably succeed in his effort to move a sexual harassment retaliation lawsuit filed by former host Gretchen Carlson out of the public eye by pushing it into confidential arbitration, a law professor and a management-side attorney told Bloomberg BNA ( Carlson v. Ailes , D.N.J., No. 2:16-cv-04138, motion to compel arbitration 7/8/16 ).

“I think it’s likely that the court will ultimately send this case to arbitration, but the key inquiry will be the meaning of the particular arbitration clause that Carlson signed,” Charlotte Garden, a professor at Seattle University School of Law, told Bloomberg BNA in an e-mail July 11.

“If the court thinks Carlson is trying to evade her promise to arbitrate employment disputes with Fox, it will be likely to compel arbitration,” Garden said.

“Arbitration is a creature of contract,” Lawrence Peikes, a partner at Wiggin and Dana LLP in Stamford, Conn., told Bloomberg BNA July 12. “You can't circumvent the agreement by just suing an individual who is a senior level executive within the company,” he said.

On the other hand, Nancy Erika Smith, a partner at Smith Mullin P.C. in Montclair, N.J., who's representing Carlson, told Bloomberg BNA July 13 she's confident the case will stay out of arbitration. Given the facts of this case, there's “significant law on our side” that “the non-signatory should not be able to invoke the agreement,” Smith said.

“The agreement defines who is bound by the agreement,” Smith said. “Specifically, it does not identify Ailes or executives or managers. It identifies the party as the corporate entity.”

Smith declined to elaborate on the case law Carlson's argument will rely on. “Our brief will be filed Monday,” July 18, she said.

Golenbock Eiseman Assor Bell & Peskoe LLP in New York also represents Carlson.

Lawsuit Alleges Retaliation

Carlson’s lawsuit alleged that Ailes reassigned her to a less prestigious time slot and reduced her compensation after she complained about co-host Steve Doocy’s inappropriate conduct.

Doocy refused to treat her “as an intelligent and insightful female journalist rather than a blond female prop,” the complaint said. It alleged that after Carlson complained about Doocy, Ailes called her a “man hater” who “tried to show up the boys.”

Ailes constantly injected sexual and sexist language into his conversations with Carlson, the lawsuit said. It alleged that when she greeted Ailes at an event, he told others nearby “he always stays seated when a woman walks over to him so she has to ‘bend over' to say hello.”

Ailes's Attorney: Case Must Be Arbitrated

Carlson’s employment contract says any dispute “arising out of or relating” to her employment or the agreement must be resolved through arbitration, Ailes told the court in a July 8 motion to compel arbitration.

Naming Ailes as the sole defendant is “a transparent attempt to evade the Agreement and her contractual commitment to arbitrate,” the motion said.

“Gretchen Carlson had an arbitration clause in her contract, stating that any employment dispute regarding her employment at Fox News must be done via confidential arbitration,” Barry Asen, a partner at Epstein Becker & Green P.C. in New York and one of Ailes’s attorneys, said in a statement provided by a Fox News spokeswoman.

“Because Ms. Carlson’s lawsuit violated the arbitration clause, a motion was filed in federal court to have the case arbitrated. The federal court is the proper court to decide the motion because Ms. Carlson’s primary residence is in Connecticut and Mr. Ailes’ primary residence is in New York,” Asen said.

Case Removed From State Court to Federal

Carlson filed her lawsuit July 6 in New Jersey state court because Ailes is a resident of the Garden State, she said. Two days later, he invoked a process called removal, in which a defendant may transfer a case to a federal court in the same state where it was filed as long as the parties reside in different states.

In the notice of removal, Ailes said he maintains his primary residence in New York, not New Jersey. Both sides agree that Carlson is a Connecticut resident.

“If it’s true that he’s a New York resident, then we won’t dispute it,” Smith said.

Irrespective of which court the case should be in, New York City law applies because that's where Carlson worked, Smith said. It's common for a worker to file a New York law claim in a New Jersey court because there are so many commuters who live in one jurisdiction and work in another, she said.

“I litigate under the New York City Human Rights Law or the New Jersey Law Against Discrimination because they’re laws that protect employees from discrimination better than Title VII” of the 1964 Civil Rights Act, Smith said.

City Law Allows Individual Liability

Carlson may have filed her claim under the city law because it allows managers and executives to be sued as individuals, Peikes said. Federal discrimination law requires a worker to sue the company, he said. Peikes, who isn't involved in the case, represents management in New York City.

“Most circuit courts have interpreted Title VII as allowing causes of action only against employers ‘writ large' rather than individual harassers,” Garden said. “So if Carlson wanted to file a Title VII claim, she would be forced to name Fox as a defendant, and then Fox could certainly invoke the arbitration clause,” she said.

“The city law also allows her to go directly to court, unlike Title VII, which would require her to go to the Equal Employment Opportunity Commission first,” Peikes said. Another advantage of the city law is that it has no statutory cap on punitive damages, he said.

In March, New York City Mayor Bill de Blasio (D) signed into law an amendment to the Human Rights Law that provides it should be “construed liberally for the accomplishment of the uniquely broad and remedial purposes.”

As a result of these “unclear and not helpful terms,” there is an “overriding feeling” among attorneys who practice in New York City that courts will interpret the statute to be “more employee or plaintiff friendly in some way, shape or form,” Peikes said.

Arbitration Clause May Not Apply

Ailes's “retaliation against Carlson was outside the scope of his authority, employment and agency at Fox News,” Carlson said in her complaint.

“That’s a very important concept in the analysis,” Cliff Palefsky, a worker-side attorney at McGuinn, Hillsman & Palefsky in San Francisco who heads up the National Employment Lawyers Association’s advocacy on mandatory arbitration clauses in employment contracts and isn't involved in this case, said. NELA is an association of worker-side attorneys.

An arbitration clause generally doesn’t apply to claims unrelated to a worker’s employment relationship, Palefsky said. For example, it probably wouldn’t cover a car crash where one motorist works for the other, he said.

The asymmetrical relationship between Carlson and Ailes also could be a barrier to enforcing the arbitration clause, Palefsky told Bloomberg BNA July 11. “There’s nothing in that contract that requires him to arbitrate any claims against her,” he said.

“Lack of mutuality has also been a defense all across the country,” Palefsky said. It flows from the contract law principle of unconscionability, he said. A contract is unenforceable if it's so unfairly stacked against one side that it shocks the conscience, he said.

It's unfair to require Carlson to arbitrate her claims against Ailes pursuant to a contract that is silent about whether Ailes would have to arbitrate any claims he may have against her, Palefsky said. “If arbitration’s good enough for one side’s claims, it’s good enough for the other,” he said.

To contact the reporter on this story: Jon Steingart in Washington at

To contact the editor responsible for this story: Susan J. McGolrick at

For More Information

Text of the brief Ailes filed in support of his motion to compel arbitration is available at

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