Keller v. About, Inc.

Background

Jackelyn Keller brought claims against her former employer, About, Inc., doing business as Dotdash, under the Family and Medical Leave Act, Title VII of the Civil Rights Act of 1964, Section 1981, the New York State Human Rights Law, the New York City Human Rights Law, the federal Equal Pay Act, and the New York State Pay Equity Law.

Keller’s three-page February 2016 Employment Agreement contained a broad arbitration provision. It required employment-related claims to be resolved through binding arbitration conducted by JAMS and stated that Dotdash would pay administrative and arbitrator fees. The provision also waived a jury trial, restricted class and collective actions, and required claims to be submitted within six months of the event giving rise to the dispute.

Dotdash moved under the Federal Arbitration Act to compel arbitration and sought sanctions. Keller did not dispute that her claims fell within the arbitration provision. Instead, she argued that the provision was unconscionable—so unfair or unreasonable that it should not be enforced—under New York law. She challenged the six-month deadline and the provision concerning recovery of damages and attorney’s fees. She also argued that the agreement prevented effective enforcement of her federal statutory rights and conflicted with JAMS’s minimum standards.

Arbitration ruling

The court held that the arbitration provision was enforceable. Under New York law, unconscionability generally requires both an unfair contracting process and unreasonably one-sided terms, although an exceptionally outrageous term may be invalid based on substantive unfairness alone.

The court found insufficient evidence of procedural unconscionability. It described Keller as an accomplished and well-educated executive and found no evidence of high-pressure tactics, unequal bargaining power, or hidden terms. The arbitration provision appeared under a bold, all-capital heading in the three-page agreement.

The court also rejected Keller’s substantive-unfairness arguments. The agreement identified many covered federal employment laws, including Title VII and the Equal Pay Act. The court concluded that New York courts had upheld reasonable six-month contractual deadlines for employment claims and that this deadline was not so outrageous as to be unenforceable by itself. The court also noted that both sides were bound to arbitrate, while Dotdash agreed to pay arbitration’s administrative and arbitrator fees.

Dotdash waived the attorney-fee provision and waived the six-month deadline as applied to Keller’s federal Equal Pay Act claim. The court evaluated the agreement as modified by those waivers. It concluded that the federal effective-vindication doctrine—a court-created exception allowing invalidation of arbitration terms that prevent enforcement of federal statutory rights—did not require overriding the agreement. The court further concluded that the doctrine did not apply to Keller’s state-law claims and did not require a different result for her other federal claims.

The court also rejected Keller’s argument concerning JAMS’s minimum standards. Because Dotdash had waived the challenged provisions as to the Equal Pay Act claims, and because the six-month deadline for the remaining claims would be enforceable in court, the court found no apparent conflict with those standards. The court stated that Keller could seek appropriate relief if JAMS refused to accept the dispute and Dotdash refused to waive any offending provision.

Sanctions ruling

Dotdash sought sanctions under 28 U.S.C. § 1927 and the court’s inherent authority. The court explained that sanctions under Section 1927 require an attorney to have unreasonably and vexatiously multiplied the proceedings, with conduct amounting to or resembling bad faith. Inherent-authority sanctions require a claim with no legal or factual basis pursued for an improper reason.

The court denied the sanctions request. It found that Keller had made legally colorable arguments challenging enforceability, that Dotdash had mooted some arguments by waiving provisions, and that other courts had accepted similar arguments. Keller’s arguments therefore were not so completely without merit as to show an improper purpose.

Disposition

The court granted Dotdash’s motion to compel arbitration and stayed the case pending arbitration. It denied Dotdash’s request for sanctions. The court directed the Clerk to terminate the motion and administratively close the case, without prejudice to either Keller or Dotdash moving by letter to reopen it within 30 days after arbitration concludes. The opinion did not decide the underlying employment claims on their merits.