Gretchen Carlson’s Attorney Challenges ‘Secret World of Arbitration’

Former Fox News anchor alleges sexual harassment but was supposed to keep case secret

By Allen Smith, J.D. Jul 25, 2016

​Strict confidentialiity provisions in mandatory arbitration agreements are controversial.

The secrecy provisions of mandatory arbitration agreements serve to silence discussion of issues that need to be aired in public, according to an attorney representing Gretchen Carlson, a former anchor at the Fox News Channel who is suing media mogul Roger Ailes for sexual harassment.

Following her accusations and accusations from other women, Ailes stepped down from his job as CEO at Fox News on July 21.

Carlson has defied the strict confidentiality provisions of her mandatory arbitration agreement, and members of Carlson's legal team have vowed to keep speaking out. Nancy Erika Smith, an attorney with Smith Mullin in Montclair, N.J., and Martin Hyman, an attorney with Golenbock Eiseman Assor Bell & Peskoe in New York City, promised, "We will have more to say in coming days as events unfold."

For Neil Mullin, also an attorney with Smith Mullin, speaking out is the principled response. "Matters of great public importance are thrust into secrecy" because of arbitration agreements, Mullin said. This wasn't always the case. Before arbitration agreements became widespread, "whistle-blowers used to have public trials. Now it's all secret."

This secrecy isn't good for workers or society, Mullin said. He noted he was in arbitration in a separate case over a product that caused the deaths of 16 people. He wanted to make that information available to a government agency to prevent more deaths, but the arbitrator said that would breach the confidentiality provisions of the arbitration agreement.

HR is put between a rock and a hard place with these confidentiality provisions, Mullin asserted, noting that HR professionals often must sign mandatory agreements as well. "If they blow the whistle, they're forced into the secret world of arbitration."

Plaintiffs do poorly in arbitration; they don't succeed as often as they do in jury trials among their peers, Mullin added. While he admitted that arbitration can protect the bottom line for companies, Mullin said, "There are things in life more important than quarterly net profit."

Arbitration should be as public as trials are, he maintained. While the Supreme Court has consistently upheld mandatory arbitration, Mullin said it hasn't addressed whether arbitration has to be confidential. "There's no legal authority for them to be secret. It's not been challenged in the courts yet, and should be," he added. When asked if he would challenge the secrecy of arbitration in Carlson's lawsuit, he said the issue was raised in one of her briefs, but declined to discuss her case further.

Confidentiality's Benefits

Not everyone agrees with Mullin about the supposed evils of confidential arbitration.

Aimee Delaney, an attorney with Hinshaw & Culbertson in Chicago, said, "Both sides often have an interest in keeping a business or employment dispute confidential, as both sides risk reputational harm." She added that confidentiality may prevent case law from being held against either side.

Delaney noted that one problem with confidentiality provisions is that whichever side prevails can't advertise that fact—"and that goes for the company as well." But she said that the risks of not having confidentiality requirements outweigh this potential drawback.

Confidentiality may also be in the employees' best interest, as they might not want their entire history of corrective action made available to third parties, including subsequent employers, noted Christine Walters, SHRM-SCP, J.D., sole proprietor of consultancy FiveL Company in Westminster, Md. "Witnesses may often just not want to be identified and want their privacy protected for fear of retaliation from co-workers for supporting or opposing a current or former employee."

Robin Kallor, an attorney with FordHarrison in Hartford, Conn., said, "While not standard, confidentiality provisions are sometimes included in arbitration provisions where the parties involved are higher profile, in an effort to protect trade secret information and to keep business disputes private, thereby avoiding trial by public opinion."
She added, "Additionally, where there is sensitive information, as there is in sexual harassment litigation, confidentiality prevents discussion of these sensitive issues in public."

ences for Going Public

Carlson has already gone public with her sexual harassment allegations. She has argued that her contract, including the confidentiality clause, applies only to a lawsuit against Fox News, The New York Times reports. If her argument fails, what are the consequences of any further violation of confidentiality provisions?

"The penalties will usually be detailed in the agreement itself," Walters said. "Sometimes it's a flat dollar amount, sometimes it may require repayment of monies that were received as part of a settlement. 

"If the agreement is silent, then the party alleging the breach may have to show damages in order to receive an award. Many agreements do include language that is rather boilerplate and indicates money is not an adequate remedy and the charging party alleging the other has breached the agreement has the right to equitable relief, including an injunction," she said. "But just because you put that language in the agreement does not mean you'll get it."

Damages incurred from a breach of confidentiality often are hard to prove, Delaney said. Nevertheless, the agreement may call for the payment of liquidated damages or allow for the recovery of attorney fees, she added.


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