6th Holds Cost-Splitting Requirement In Employment Unenforceable.

Mazera v. Varsity Ford, ___F.3d___(6th Cir. May 19, 2009), is a major employment arbitration decision. The plaintiff attempted to bring a race discrimination case and the employer moved to compel arbitration based upon a provision in the Employee Handbook.The district court held that the arbitration provision was binding, but severed the provision which required the employee to pay up to $500 in arbitration costs. On appeal, the court rejected several of plaintiffs claims including one that he only understood limited english and that there was no consideration for arbitration.   
Significantly, however, the 6th agreed that the cost splitting provision was unenforcable. In an interesting move, the case was remanded back to the lower court to determine if the employer would waive the $500.00 fee.  The court explained its reasoning in part as follows:

The analysis requires a case-by-case inquiry into whether “the potential costs of arbitration are great enough to deter [potential litigants] and similarly situated individuals from seeking to vindicate their federal statutory rights in the arbitral forum.” Id. at 663. Reviewing courts must “define the class of . . .similarly situated potential litigants by job description and socioeconomic background,” and “look to average or typical arbitration costs” weighed against “the potential costs of litigation.” Id. at 663-64.
Courts should keep in mind that “many litigants will face minimal costs in the
judicial forum, as the attorney will cover most of the fees of litigation . . . .” Id. at 664. In
short, where “the overall cost of arbitration, from the perspective of the potential litigant, is
greater than the cost of litigation in court,” and the “additional expense . . . would deter
potential litigants from bringing their statutory claims in the arbitral forum,” the costsplitting
provision is unenforceable. Id. (citation and internal quotation marks omitted).

Mitchell H. Rubinstein