Cohen v. Westlake Services Inc.

Background

Jeanine P. Cohen sued Westlake entities, the Hankey Group, several Westlake employees, and unidentified defendants. She alleged that they discriminated against her because of her sex, paid her less than male counterparts, and retaliated against her by terminating her employment after she complained about discrimination. The court referred to the Westlake entities collectively as “Westlake.”

Westlake moved to compel arbitration and to stay or dismiss the action. Cohen agreed to stay the lawsuit while the parties arbitrated her claims, but asked the court to sever, meaning remove, two provisions from the arbitration agreement as unconscionable and unenforceable.

Punitive-damages provision

The agreement said that the arbitrator could not award “punitive or injunctive relief” to the employee or the company. Cohen argued that the restriction on punitive damages unlawfully waived statutory remedies. The agreement also contained a delegation provision giving the arbitrator authority to decide disputes about the agreement’s formation, interpretation, applicability, or enforceability, including whether any part was invalid.

The court held that the delegation provision clearly and unmistakably assigned enforceability questions to the arbitrator. Because Cohen challenged the punitive-damages restriction but did not specifically challenge the delegation provision, the court did not decide whether the punitive-damages restriction was enforceable. It denied Cohen’s request to have the court sever that restriction, leaving that issue for the arbitrator. The court noted that Cohen could seek federal-court review of an arbitration award through the procedures in the Federal Arbitration Act.

Injunctive-relief provisions

Westlake did not contest Cohen’s request to remove the words “or injunctive relief” from the agreement’s restriction on the arbitrator’s authority. The court therefore granted that request and severed those words.

The agreement separately excluded from arbitration Westlake’s claims for injunctive or other equitable relief involving unfair competition or unauthorized disclosure of trade secrets or confidential information. Cohen argued that this carve-out was one-sided because it allowed only Westlake to pursue such relief. Westlake’s response did not specifically address that request. The court nevertheless denied Cohen’s request to sever the carve-out, citing the delegation provision and uncertainty about whether Westlake consented to severance.

Disposition

The court granted Westlake’s motion to compel arbitration and to stay or dismiss the action. The court granted in part and denied in part Cohen’s application to sever provisions from the arbitration agreement. It ordered the parties to arbitrate their dispute and stayed the action pending arbitration. The Clerk was instructed to administratively close the case, without prejudice to any party moving by letter to reopen it within 30 days after the arbitration proceedings concluded. The opinion did not resolve the merits of Cohen’s discrimination, pay, or retaliation claims.