Court Reverses Decision to Drop Thousands from Sterling Case

MajorsNov 22, 2019

Court Reverses Decision to Drop Thousands from Sterling Case

A federal appeals court handed the women suing Sterling Jewelers for gender discrimination a victory earlier this month, the latest development in the nearly 12-year-old legal battle.

New York—A federal appeals court handed the women suing Sterling Jewelers Inc. for gender discrimination a victory earlier this month, marking the latest move in a see-saw legal battle that’s nearly 12 years old.

A group of women, all current and former employees of Sterling, a subsidiary of Signet Jewelers Ltd., filed suit against the jeweler in 2008, alleging they were paid less than men and passed over for promotions.

At the time of their hiring, the women signed an agreement that they would resolve any workplace disputes not in court but via the company’s in-house arbitration system, The Resolve Program.

(For 20 years, all Sterling employees were bound to litigate disputes through Resolve. The company dropped the program in 2018.)

Since the case, Jock vs. Sterling Jewelers Inc., was filed, the two sides have traded appeals over the issue of whether or not Kathleen A. Roberts, a retired federal judge, has the authority as an arbitrator to certify the case as a class action encompassing thousands of employees, not just the dozen women who originally filed suit and the couple hundred who affirmatively opted into the arbitration proceeding.

The last ruling came nearly two years ago, in January 2018, when U.S. District Judge Jed Rakoff said Roberts overstepped her bounds in certifying a class of 70,000 women in arbitration and cut down the number of claimants to 254.

The women, through their attorney Joseph Sellers, appealed Rakoff’s decision in 2018 and were handed a victory earlier this month.

The Second Circuit Court of Appeals’ three-panel judge ruled Nov. 18 that in signing the Resolve agreement, employees granted an arbitrator the power to make determinations about legal questions, like class certification.

“We hold,” the judges wrote, “that the arbitrator was within her authority in purporting to bind the absent class members to class proceedings because by signing the operative arbitration agreement, the absent class members, no less than the parties, bargained for the arbitrator’s construction of their agreement with respect to class arbitrability.”

Sellers said Wednesday that the decision is an important and positive step for the women in the Sterling Jewelers case, and confirms the lawfulness of class certification decisions issued by other arbitrators for decades.

Signet and Sterling spokesman David Bouffard said Thursday the company is “looking at its options” for an appeal.

“We are disappointed with the Second Circuit’s ruling,” the retailer said in

a statement shared with National Jeweler. “While we are still reviewing their decision, we believe the ruling misinterpreted the law and a recent Supreme Court decision, and will likely appeal.

The company said the claims were investigated thoroughly and are “without merit.”

The Supreme Court case Sterling is referring to is the recently resolved Lamps Plus Inc. vs. Varela, in which the court held that “an ambiguous agreement can[not] provide the necessary ‘contractual basis’ for compelling class arbitration.”

The retailer pointed to Lamps Plus in this most recent appeal, but the judges shot it down as an argument, stating in their decision that the two cases are different.

They also noted Lamps Plus “leaves undisturbed the proposition, affirmed in Stolt-Nielsen, that an arbitration agreement may be interpreted to include implicit consent to class procedures.

“Our reasoning in Jock I is, moreover, fully consistent with the Supreme Court’s decision in the more analogous case of Oxford Health.”

Sterling’s most realistic options for appeal are to request an en banc review in the Second Circuit Court of Appeals or to ask the U.S. Supreme Court to take up the case.

En banc reviews in the Second Circuit—which are rare—involve a review by however many of the circuit’s 27 judges are available at the time, rather than just a three-judge panel.
Michelle Graffis the editor-in-chief at National Jeweler, directing the publication’s coverage both online and in print.

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