In Karp v. Cigna Healthcare Inc., a U.S. District Court for the District of Massachusetts judge granted a defense motion to compel bilateral arbitration of a plaintiff's claims in a proposed $100 million gender discrimination class action.
Bretta Karp brought suit on behalf of herself and other similarly situated employees contending that her employer, Cigna Healthcare, Inc., engaged in systematic gender discrimination in violation of Title VII and Chapter 151B. In November 2005, Cigna updated its employee handbook. Karp checked "yes" on an electronic receipt for the handbook, which provided that Plaintiff "agreed" to resolve any dispute with Cigna under Cigna's Employment Dispute Arbitration Program. The receipt also stated that "I understand that any such Arbitration will be conducted pursuant to the CIGNA Employee Dispute Arbitration Rules and Procedures in effect at the time such arbitration is commenced." Neither the Handbook nor the receipt mentioned class claims. However, Cigna set forth additional detail as to the scope of arbitration – that it did not include in the Handbook – in its Arbitration Policy and Arbitration Rules and Procedures. In the Arbitration Policy, Cigna provided that no class-wide arbitrations were allowed, and in the Arbitration Rules and Procedures, Cigna provided that each party seeking resolution of its claims "must proceed individually" and "[t]here shall be no class or representative actions permitted."
Cigna moved to compel arbitration and dismiss or, in the alternative, stay the litigation. Karp agreed that she waived her right to litigate in a judicial forum her individual claims, so the only issues before the Court were whether (1) Cigna could be compelled to submit to class arbitration, and (2) Karp waived her ability to serve as a class representative by agreeing to arbitrate her individual claim.
The Court first held that Cigna could not be compelled to submit to class arbitration because it never agreed to allow class arbitration. Relying on U.S. Supreme Court precedent, the Court found that, because "the 'changes brought about by the shift from bilateral arbitration to class-action arbitration' are 'fundamental,'" a party cannot be compelled to arbitrate class claims unless something in the contract indicates, at least implicitly, that it agreed to permit class arbitration. The Court reasoned that although there was "certainly some question" about whether Cigna's policies and procedures could be enforced against plaintiff, "there is no doubt that defendant did not agree to permit class arbitration." Accordingly, the Court concluded that it could not compel Cigna to submit to class arbitration.
The Court next held that Karp was not entitled to litigate her claims on a class basis in a judicial forum. The Court found that, in order to maintain a class action, a plaintiff must have an individual claim, and by agreeing to arbitrate her individual claim, Karp waived her ability to serve as a class representative in a litigated action. In reaching this holding, the Court rejected Karp's argument that arbitration would preclude her from vindicating her statutory rights. Karp contended that she would not be able to assert her pattern or practice discrimination claim in a bilateral proceeding because it is unavailable outside of the class action context. The Court disagreed, ruling that a pattern or practice claim is "merely a method of proof" and not "a separate cause of action."
The Court's opinion in Karp is a useful precedent for employers seeking to assert an arbitration defense in an employment discrimination class action. The Court rejected Karp's attempt to end-run an arbitration agreement by asserting a claim that, according to Karp, could be litigated only on a class-wide basis. In so doing, the Court confirmed that a class action or pattern or practice claim are procedural devices – or "method of proof" – that do not allow plaintiffs to avoid bilateral arbitration.