Goldman Sachs Group Inc on Thursday won a U.S. court order allowing it to send a former employee's gender discrimination claim to arbitration, rather than being forced to defend against her claims in a class action lawsuit.
In ruling for Goldman, the 2nd U.S. Circuit Court of Appeals in New York reversed a lower court's 2011 ruling denying the Wall Street bank's motion to compel arbitration in the case of Lisa Parisi, a former managing director.
The case has been closely watched by employers seeking to avoid costly class action lawsuits and instead require individuals to pursue cases alone in private arbitrations.
"We see no reason to deviate from the liberal federal policy in favor of arbitration and conclude that the district court erred in denying the motion to compel arbitration," Circuit Judge Barrington Parker wrote for the three-judge panel.
Parisi and two other female former Goldman employees sued the bank in 2010, accusing it of a pattern of discrimination against female managing directors, vice presidents and associates.
Adam Klein, a lawyer for the women at Outten & Golden, said he disagreed with the decision, but said it would have "limited impact" on the underlying case.
Parisi had signed an employment agreement that contained an arbitration clause when she was promoted to managing director in 2003.
The two other plaintiffs, former vice president Christina Chen-Oster and former associate Shanna Orlich, did not sign arbitration agreements and are not affected by the ruling, Klein said.
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Parisi may now pursue her claims with the Financial Industry Regulatory Authority or the American Arbitration Association.
The case followed a series of recent U.S. Supreme Court decisions making it easier for companies to force plaintiffs seeking to pursue class-action litigation to instead go individually into arbitration.
Goldman's appeal was supported by briefs from the U.S. Chamber of Commerce and the Securities Industry and Financial Markets Association. Parisi had support from the NAACP Legal Defense and Education Fund and the National Women's Law Center.
"This whole area is really developing and there is really little circuit authority on it," Klein said.
Parisi was fired in 2008, and Goldman moved to enforce the arbitration clause in her employment agreement after the women sued in 2010.
U.S. Magistrate Judge James Francis in Manhattan ruled for Parisi in 2011, and U.S. District Judge Leonard Sand later upheld that ruling.
Writing for the 2nd Circuit, Parker said the court agreed with Goldman that private plaintiffs like Parisi had no substantive right to sue in court over a pattern or practice of discrimination under Title VII of the Civil Rights Act of 1964.
As a result, "there can be no entitlement to the ancillary class action procedural mechanism," Parker wrote.
The case is Parisi v. Goldman Sachs & Co, 2nd U.S. Circuit Court of Appeals, No. 11-5229.
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For Lisa Parisi: Paul Bland, Public Justice.