ContractsProf Blog

Editor: Jeremy Telman
Oklahoma City University
School of Law

Monday, November 1, 2021

Activision Blizzard and Arbitration Clauses

As regular readers know, we here at the blog often fret about arbitration clauses because they appear most often in adhesive contracts (those offered on a take-it-or-leave-it basis) where the adherent lacks bargaining power such as wrap, consumer, and employment contracts.  In the wake of #MeToo, a few states such as California and New Jersey, passed legislation banning forced arbitration for sexual harassment claims.  However, these laws have been questioned as running afoul of the FAA.  There is a bipartisan bill that was introduced in July but who knows how long that might take to become law given how busy those folks are over in D.C. with other matters.  Fortunately, in some cases, workers have themselves sought to assert some bargaining power after contract execution, by voicing their discontent to management with their terms.  On rare occasions, it even works.  Last week, Activision Blizzard’s CEO Bobby Kotick announced in a letter that the company would waive arbitration for sexual harassment and discrimination claims. Presumably, this means that they would not require employees who signed contracts containing forced arbitration clauses to submit to arbitration if they brought a sexual harassment or discrimination claim.  It doesn’t say whether the arbitration clauses would remain in their employment contracts, however, for new employees.  Also, since a waiver may be retracted, there is a possibility that the company could reinstate the policy, but given the backlash that would cause, it seems unlikely (as of now but who knows).  In any event, it’s a start and an indication that as difficult as it may be to harness the power of the collective, when efforts to mobilize are made, they can be quite effective.

https://lawprofessors.typepad.com/contractsprof_blog/2021/11/activision-blizzard-and-arbitration-clauses.html

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Comments

Nancy, as I believe you have pointed out elsewhere, SCOTUS has held that fraud or other invalidating cause in the inducement of the container agreement does not invalidate an embedded arbitration clause unless an invalidating cause gave rise separately to the arbitration agreement. If a waiver of the embedded arbitration clause is separately negotiated, would not the waiver become vulnerable to these defenses? And if the waiver is then unilaterally withdrawn, as you fear, might this not open up the arbitration agreement to these defenses on grounds that it has now been separately negotiated?

Posted by: Sidney DeLong | Nov 1, 2021 7:01:11 AM

I suppose an employee, not obligated to work for a fixed term, could assert that he or she continued working with the firm, rather than leaving at some point for another opportunity, partly in reliance on the waiver, thus making the waiver enforceable.

Posted by: Charles Calleros | Nov 1, 2021 1:07:57 PM

Sid, I don't see how the waiver is separately negotiated? I might have misunderstood your question. The company hasn't made a binding promise unless, as Charles points out, an employee could argue that there was justifiable reliance on the waiver.

Posted by: Nancy Kim | Nov 1, 2021 8:16:43 PM