Reinsurance & Arbitration Focus

In Payne v. Savannah College of Art and Design Inc., the Eleventh Circuit Court of Appeals affirmed a district court order denying a motion to compel arbitration of plaintiff Isaac Payne’s discrimination-based claims. The court found the mandatory arbitration agreement in Payne’s underlying employment agreement was fair, and not unconscionable, and defendant Savannah College of Art and Design (SCAD) did not waive its right to arbitrate with Payne.

Payne was hired by SCAD in August 2015 as the school’s head fishing coach. Among the documents that Payne signed as part of the new hire process was a “staff handbook acknowledgment,” which provided that Payne agreed to “comply with the policies contained in the handbook, including the Alternative Dispute Resolution Policy and Agreement.” The staff handbook also stated the school’s alternative dispute resolution policy and agreement was binding on the parties. The agreement included a dispute resolution process including arbitration in the event either party brought a claim. Payne did not dispute he signed the staff handbook acknowledgment.

After he was terminated from his position, Payne brought discrimination and retaliation claims against SCAD in federal court, alleging he was fired for reporting “race-based abuse and threats by white student-athletes to SCAD leadership.” SCAD filed a motion to dismiss the complaint and to compel arbitration. Payne opposed the motion, arguing the arbitration agreement was unconscionable for several reasons, including the cost-shifting provision that negatively impacted his rights, the process for selecting arbitrators limited the potential arbitrators to two white men, and the agreement included a confidentiality provision. Payne also argued SCAD waived its right to compel arbitration when it allegedly sought to settle claims with a student who raised similar complaints to SCAD leadership and had withdrawn from the team, and sought limited discovery related to that issue. The magistrate judge issued a report and recommendation that SCAD’s motion to dismiss and compel arbitration should be granted, which was adopted by the district court.

The Eleventh Circuit affirmed the district court’s order finding the fee-shifting provisions included in the arbitration agreement did not make it unconscionable. The court addressed precedent in the circuit confirming that to establish the arbitration’s fee-shifting provision was unconscionable, Payne would have to provide evidence of “(1) the amount of fees he is likely to incur and (2) his inability to pay those fees.” The court concluded Payne could not establish these facts and further rejected Payne’s arguments that the terms that controlled the arbitrator selection process were contradictory. The court also rejected Payne’s contention that SCAD waived its right to arbitrate, concluding: “We have never held that a party waives its right to arbitrate based on its actions taken in a previous legal action — especially when that party did not bring the lawsuit at bar and has repeatedly insisted that arbitration is the proper dispute resolution channel.” The court affirmed the order of the district court dismissing the action and compelling arbitration.

Payne v. Savannah College of Art & Design, Inc., No. 22-11556 (11th Cir. Aug. 31, 2023).