Ninth Circuit Holds That Neiman Marcus Unlawfully Interfered with Employee’s ADA-Protected Rights by Imposing Rights-Stripping Mandatory Arbitration Agreement

On January 26, 2021, after more than 13 years of litigation, a panel of the Ninth Circuit Court of Appeals ruled that Neiman Marcus unlawfully interfered with former cosmetics salesperson Tayler Bayer’s rights under Section 503(b) of the Americans with Disabilities Act (ADA), by forcing Bayer to choose between keeping his job or becoming bound by a mandatory rights-stripping arbitration agreement. In June 2007, Bayer requested accommodation at work for his emphysema. Neiman Marcus denied his request and Bayer filed a charge with the EEOC. Shortly after that, Neiman Marcus rolled out a new mandatory arbitration policy that required all employees who continued working past July 15, 2007 to be bound by its restrictive terms. Among other things, the agreement applied to all pending claims, and required the employee to agree to a shortened statute of limitations and other restrictions on statutory rights.

Represented by Altshuler Berzon LLP and co-counsel at McGuinn, Hillsman & Palefsky, Bayer filed a series of claims against the company challenging its attempts to strip him of his statutory rights, including a claim under the infrequently litigated Section 503(b) of the ADA, which prohibits employers from coercing, intimidating, threatening, or interfering with an employee in the exercise or enjoyment of ADA-protected rights.

After years of litigation, two previous appeals, and a one-day trial, the Ninth Circuit ruled in Bayer’s favor, finding that Neiman Marcus unlawfully interfered with Bayer’s statutory rights by forcing him “to choose between ending his employment … or, he was told, being bound by the [mandatory arbitration] agreement thereafter.” The Ninth Circuit rejected Neiman Marcus’s argument (which the district court below had accepted) that the company could not have violated Section 503(b) because it rolled out its mandatory arbitration policy to all its at-will employees, and did not specifically target Bayer. The Ninth Circuit ruled that by rolling out a mandatory arbitration policy that targets ADA-protected rights, the company had violated the anti-interference provision, even if the company did not target any particular individual employee.

Although the Court’s decision is unpublished, it should provide persuasive authority in support of other employees opposing rights-stripping mandatory arbitration agreements and other employer policies, including those bringing claims under not only the ADA, but also other statutes with similar anti-interference language, including the National Labor Relations Action, Family and Medical Leave Act, and Fair Housing Act.

The Court’s decision is available here.