Opinion ID: 19304
Heading Depth: 2
Heading Rank: 2

Heading: Private Arbitration Panel Forum Fees

Text: 35 Williams alternatively contends that the arbitrators' order that he pay $3,150 as his one-half share of the forum fees is contrary to public policy. In support of this argument, Williams relies on the D.C. Circuit's interpretation of Gilmer v. Interstate\Johnson Lane Corp., 500 U.S. 20 (1991), as holding implicitly that as a matter of law ADEA claimants may not be forced to pay any part of arbitrators' fees and expenses. Cole, 105 F.3d at 1483-86; accord Shankle v. B-G Maintenance Management of Colorado, Inc., 163 F.3d 1230, 1235 (10th Cir. 1999). In our opinion, however, Gilmer does not so clearly imply that no part of arbitral forum fees may ever be assessed against federal anti-discrimination claimants, although it plainly indicates that an arbitral cost allocation scheme may not be used to prevent effective vindication of federal statutory claims. Gilmer, 500 U.S. at 28. 36 The Supreme Court in Gilmer made it clear that a party agreeing to arbitrate a federal statutory claim does not forgo the substantive rights afforded by the statute, and that claims under federal statutes are appropriate for arbitration so long as the prospective litigant effectively may vindicate his or her statutory cause of action in the arbitral forum, and the statute will continue to serve both its remedial and deterrent function. Gilmer, 500 U.S. at 26, 28. Gilmer, and the cases upon which it relies, make clear that whether a federal statutory claim can be subjected to compulsory arbitration depends upon whether the particular arbitral forum involved provides an adequate substitute for a judicial forum in protecting the particular statutory right at issue. See Shearson/American Express, 482 U.S. at 229; McDonald v. City of West Branch, 466 U.S. 284, 290, 104 S. Ct. 1799, 80 L.Ed.2d 302 (1984). In arguing that arbitration is inconsistent with the ADEA, Gilmer . . . raise[d] a host of challenges to the adequacy of arbitration procedures. Gilmer, 500 U.S. at 30. The Court rejected each of Gilmer's arguments in whole or in substantial part because of the particular characteristics of the NYSE arbitral forum. The NYSE arbitration rules and judicial review provided adequate protections against biased panels. Id. The NYSE discovery provisions, which allowed document production, information requests, depositions, and subpoenas would be adequate to allow ADEA claimants a fair opportunity to present claims. Id. at 31. Although some arbitrators often will not issue written opinions, the NYSE rules require that all arbitration awards be inwriting. Id. Although arbitration procedures do not provide for class actions, the NYSE rules do not restrict the types of relief, allowing arbitrators to fashion equitable relief, and do provide for collective proceedings. Id. at 32. The Court in Gilmer did not consider the question of whether an arbitration forum that requires an ADEA claimant to pay all or part of the arbitrators' compensation can be an adequate substitute for a judicial forum. Evidently, Gilmer did not include a complaint about forum fees in his host of challenges. 5 In concluding its disposition of Gilmer's challenges to the adequacy of arbitration procedures, however, the Gilmer Court pointed to some of the basic principles governing the enforceability of arbitration contracts and procedures: (1) arbitration agreements are enforceable 'save upon such grounds as exist at law or in equity for the revocation of any contract.' Gilmer, 500 U.S. at 33 (citing 9 U.S.C. 2); (2) courts should remain attuned to well-supported claims that the agreement to arbitrate resulted from the sort of fraud or overwhelming economic power that would provide grounds 'for the revocation of any contract,' id. (citing Mitsubishi, 473 U.S. at 627); and (3) claimed procedural inadequacies [and] claim[s] of unequal bargaining power [are] best left for resolution in specific cases. Id. 37 Under the NASD regulations in effect at the inception of this case, a party who files an arbitration claim is required to pay a non-refundable filing fee and a hearing session deposit unless such fee or deposit is specifically waived by the Director of Arbitration. NASD CODE OF ARBITRATION PROCEDURE 10205(a) (Aug. 1996). NASD regulations also direct arbitrators to determine the amount chargeable to the parties as forum fees and [] determine who shall pay such forum fees. NASD CODE OF ARBITRATION PROCEDURE, supra, 10205(c). 38 Pursuant to these regulations, Williams paid a non-refundable filing fee of $500 and a hearing session deposit of $1,500 prior to the arbitration hearing. The forum fees were calculated at the rate of $1,500 for each hearing session and $300 for each pre-hearing conference, for a total cost of $6,300. The arbitration panel assessed the costs of the forum fees equally between the two sides and, after subtracting Williams' $1,500 deposit, determined that he owed $1,650 for forum fees. 39 While this case was pending, the SEC on June 29, 1998 approved a proposed rule change offered by the NASD that abolishes mandatory NASD arbitration of statutory employment discrimination claims. See Self Regulatory Organizations; National Association of Securities Dealers, Inc.; Order Granting Approval to Proposed Rule Change Relating to the Arbitration of Employment Discrimination Claims, 63 Fed. Reg. 35299, 35303 (1998). The rule change became effective on January 1, 1999. Id.; see Desiderio v. National Association of Securities Dealers, Inc., 191 F.3d 198, 201 (2d Cir. 1999). 40 In the present case, Williams has not demonstrated that the arbitrators' order that he pay one-half of the forum fees prevented him from having a full opportunity to vindicate his claims effectively or prevented the arbitration proceedings from affording him an adequate substitute for a federal judicial forum. The evidence in this case does not indicate that Williams is unable to pay one-half of the forum fees or that they are prohibitively expensive for him. Cf. Shankle, 163 F.3d at 1230 (plaintiff could not afford such a fee); Cole, 105 F.3d at 1484 (feesprohibitively expensive for an employee like Cole). In the arbitration hearing on October 16, 1996 Williams testified that he was making more money than he did at Cigna and his income so far this year is excess of six figures. There is no evidence that the prospect of incurring forum fees hampered or discouraged Williams in the prosecution of his claim. Because of NASD's rule change abolishing mandatory arbitration of statutory employment discrimination claims, such causes of action arising after January 1, 1999 may be filed in the appropriate state or federal court. Consequently, the present case clearly does not call upon us to address the serious question of whether the legislative intent of employees' anti-discrimination statutes in general is undermined by the effects of mandatory arbitration and arbitrators' fees.