Timothy R. Booker v. Robert Half International, Inc.
413 F.3d 77 (2005)
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Rule of Law:
When an arbitration agreement contains an unenforceable provision, a court should sever the provision and enforce the remainder of the agreement if the contract contains a severability clause and the unenforceable provision is a discrete part that does not pervasively infect the entire arbitration clause.
Facts:
- In April 1996, Timothy R. Booker began working for Robert Half International, Inc. ('RHI').
- Before starting his employment, Booker signed an agreement that included a mandatory arbitration clause for any employment-related disputes.
- The arbitration clause stipulated that 'punitive damages may not be awarded in an arbitration proceeding required by this Agreement.'
- The agreement also contained a severability clause stating, 'If any provision is found by any court of competent jurisdiction to be unreasonable and invalid, that determination shall not affect the enforceability of other provisions.'
- Booker's employment with RHI ended in February 2001.
Procedural Posture:
- Timothy R. Booker filed a lawsuit against Robert Half International, Inc. ('RHI') in the District of Columbia Superior Court, alleging racial discrimination.
- RHI removed the case to the U.S. District Court for the District of Columbia on the basis of diversity jurisdiction.
- RHI filed a motion to dismiss Booker's complaint and compel arbitration pursuant to the employment agreement and the Federal Arbitration Act.
- The district court granted RHI's motion, severing the provision that barred punitive damages as unenforceable but compelling arbitration under the remainder of the clause.
- Booker, the appellant, appealed the district court's decision to the U.S. Court of Appeals for the D.C. Circuit.
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Issue:
Should a court decline to enforce an entire arbitration agreement when it contains an unenforceable provision that limits statutory rights, or should the court sever the unenforceable provision and compel arbitration under the remaining terms of the agreement?
Opinions:
Majority - Roberts, Circuit Judge
No, a court should sever the unenforceable provision and compel arbitration under the remaining terms of the agreement. When an arbitration agreement contains a single, discrete, unenforceable provision but is otherwise valid, severance is the proper remedy, especially when the parties have included an express severability clause in their contract. The court's reasoning is grounded in the strong federal policy favoring arbitration, as established in cases like Gilmer v. Interstate/Johnson Lane Corp. The court rejected Booker's argument that his speculation about inadequate discovery under the AAA commercial rules was sufficient to invalidate the agreement, citing PacifiCare and Green Tree for the principle that the party resisting arbitration bears the burden of showing likely interference with statutory rights, which cannot be met by 'mere speculation'. The court found that severing the punitive damages bar was consistent with the parties' contractual intent, as evidenced by the severability clause. It distinguished this case from others where entire arbitration clauses were voided, noting those cases often involved pervasive illegality or lacked a severability clause. Severing one discrete provision, the court reasoned, honors the parties' intent to arbitrate while ensuring the claimant can still effectively vindicate their statutory rights.
Analysis:
This decision reinforces the strong federal policy favoring arbitration and clarifies the default judicial response to an arbitration agreement containing an invalid provision. By favoring severance over invalidation, the court makes it more difficult for parties to escape arbitration obligations due to a single flawed term. The ruling establishes a clear precedent in the D.C. Circuit that the presence of a severability clause is a strong indicator of the parties' intent, which courts should honor. The analysis also suggests a check on employer overreach: while a single illegal provision may be severed, a contract 'pervasively infected with illegality' is less likely to be saved, creating an incentive for employers to draft fair arbitration agreements from the outset.
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