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Did BigLaw arbitration agreement include a 'firm always wins' clause? Battle unfolds in SCOTUS briefs

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Winston & Strawn is asking the U.S. Supreme Court to grant cert and reverse a California appellate decision that invalidated an arbitration agreement signed by a former partner who is suing the law firm for alleged gender bias.

The appeals court that ruled for former partner Constance Ramos had relied on a 2000 California Supreme Court decision that created five judge-made minimum requirements that must be met before an arbitration agreement can be enforced, according to Winston & Strawn’s May 2019 cert petition. Those requirements should be preempted by the Federal Arbitration Act, the law firm argued.

In its latest legal filing on Tuesday, Winston & Strawn battled with Ramos over her contention that the California decision tossing the arbitration clause was driven by harsh terms in the arbitration agreement, including a term she called the “firm always wins” clause, the National Law Journal reports.

The provision barred arbitrators from substituting their judgment for, or overriding the decisions of, the firm’s partnership and its leaders. The only exception to the “firm always wins” clause was when the partnership or firm leaders violated the partnership agreement itself, Ramos said.

According to Ramos, the California Supreme Court had found the arbitration provision was unconscionable because it prevented the arbitrators from awarding her remedies under state laws, including back pay, front pay, reinstatement or punitive damages.

The California appeals court had ruled it couldn’t excise the “firm always wins” provision without altering the entire arbitration agreement, so it invalidated the entire agreement, according to Ramos’ description of the decision.

Ramos argued the appeals court ruling in her case was fact-bound, and it is a poor vehicle for the Supreme Court to consider overturning the 2000 California Supreme Court decision, Armendariz v. Foundation Health Psychare Services.

Lawyers for Winston & Strawn took issue with the “firm always wins” characterization.

“She tendentiously calls it the ‘firm always wins’ clause, and mentions it 27 times,” Winston & Strawn argued. “It is more appropriately called the ‘partnership judgment’ provision, as it simply means that an arbitrator may not second-guess the partnership with respect to business matters.”

Ramos, who was an income partner at the firm, contended the law firm discriminated against her by tying her continued employment to the careers of two male equity partners who left the firm in 2015. The three lawyers joined the firm together in a lateral move from Hogan Lovells in 2014.

Ramos says the male partners were allowed to participate in a lateral partner integration program but she was excluded. The firm asked her to leave in January 2016 and retaliated against her when she refused the request, her suit said.

The suit claims Ramos was paid less than male attorneys, was required to meet more stringent performance requirements than similarly situated male attorneys and denied bonuses to which she was entitled.

The case is Winston & Strawn v. Ramos. The SCOTUSblog case page is here.

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