[ by Howard Haykin ]

Goldman Sachs faces a gender discrimination case, filed by a former employee in federal court.  The employee seeks to elevate the case into a class action.  A lawyer for Goldman, however, is urging the 3-judge panel in the 2nd U.S. Circuit Court  of Appeals in New York to send the dispute to arbitration. 

This closely-watched case is likely to impact other employers who face discrimination disputes, as well.  They'd like nothing better than to avoid discrimination class actions, like the one filed against Goldman Sachs. The plaintiff in the Goldman case is Lisa Parisi, a former Goldman Sachs managing director.

Opposing Lawyers Debate.   Robert Giuffra of Sullivan & Cromwell, representing Goldman Sachs, told a 3-judge panel that a lower court was incorrect last year in deciding not to send the Parisi case to arbitration, citing the following reason:  "When she signed the agreement and became one of the more highly paid people at Goldman, she agreed to arbitration as the forum."

Paul Bland, lawyer for Parisi, countered by saying that arbitration clauses can't prohibit employees from bringing class actions alleging a pattern or practice of discrimination at a company under Title VII of the Civil Rights Act.  "This is a substantive right," he added.

Prior Rulings/ Legal Precedent.   Recent U.S. Supreme Court decisions have favored arbitration.  For example, in April 2011, the U.S. Supreme Court ruled that a unit of AT&T Inc. could enforce a class action waiver in an arbitration agreement signed by a plaintiff bringing a proposed consumer class action.  While the AT&T case focused on consumer rights, corporations since last year have sought to extend the reach of the ruling to employment law - in efforts to avoid discrimination and wage-and-hour lawsuits. 

Details of the Goldman Case.   The Goldman case, the subject of this posting, was filed in 2010 by 3 women, including Parisi.  The lawsuit accused Goldman of gender bias and an "outdated corporate culture" favoring men over women for pay and promotions.  The lawsuit, which sought class action status, demanded punitive and other damages, as well as a change in Goldman's policies toward women.  Soon after the lawsuit was filed, Goldman asked the court to enforce Parisi's arbitration agreement and require her to proceed by herself rather than in a class action.

After U.S. Magistrate Judge James Francis denied Goldman's motion In April 2011, Goldman urged the Judge to reconsider his ruling in light of the Supreme Court's AT&T decision.  The Judge declined in a ruling released July 2011.  U.S. District Judge Leonard Sand affirmed the magistrate's ruling in November 2011. 

At Wednesday's hearing, 3 federal appeals court judges grilled both sides over the consequences if they ruled in favor of sending the case to arbitration.  Specifically, to what extent are the legal rights that Parisi would lose deemed to be procedural - which can be waived by contract - rather than substantive - which cannot.

"I'm still not clear, what do you think you're losing there?" Circuit Judge Barrington Daniels Parker asked Parisi's lawyer.

Both sides in the Goldman dispute have prominent backers in their corners.  In support of Goldman's arbitration rights are:  (i) the U.S. Chamber of Commerce;  and , (ii) SIFMA.  Each filed friend-of-the-court briefs. 

Among those supporting the former employees:  (i) NAACP Legal Defense and Education Fund;  (ii) the National Women's Law Center;  (iii) the National Employment Lawyers Association;  and, (iv) Public Citizen.

The case is Parisi v. Goldman, Sachs & Co., 2nd U.S. Circuit Court of Appeals, 11-5229.

For further details, go to:   [Reuters, 11/7/12].