Arbitration nixed

Over the weekend President Obama signed into law a provision of the defense spending bill which prohibits military contractors from enforcing arbitration clauses in employment contracts. In significant part the amendment is in reaction to a situation so bad even the Fifth Circuit refused to compel arbitration of all claims.

Fifth Circuit rejects arbitration of claims arising out of an employee's alleged rape in Iraq

A Halliburton employee allegedly gang raped in Iraq by co-workers raised assault and battery, intentional infliction, negligent hiring/retention and false imprisonment claims against her employer. The employee's employment agreement required arbitration of claims "related to you employment and "personal injury claims arising in the workplace. The Fifth Circuit affirmed a district Court's refusal to compel arbitration of her claims for (1) assault and battery; (2) intentional infliction of emotional distress arising out of the alleged assault; (3) negligent hiring, retention, and supervision of employees involved in the alleged assault; and (4) false imprisonment.  More after the jump
The employee's Title VII claim and other claims were found to be arbitrable. The appellate court also affirmed the staying of the litigation claims until the arbitration was concluded. In reaching this result the 5th Circuit noted a court must focus on the factual allegations to determine if arbitration is required. The allegations included "(1) Jones was sexually assaulted by several Halliburton/KBR employees in her bedroom, after-hours, (2) while she was off- duty, (3) following a social gathering outside of her barracks, (4) which was some distance from where she worked, (5) at which social gathering several co-workers had been drinking (which, notably, at the time was only allowed in 'non-work' spaces)." Both the district court and the 5th Circuit agreed, “Plaintiff’s bedroom should [not] be considered the workplace, even though her housing was provided by her employer”.