September 24, 2020

Arbitration Costs Mounting For Ex-EY Partner Who Claims She Was Sexually Harassed

A declaratory judgment complaint filed on July 17 is asking a Manhattan federal court to invalidate the arbitration agreement that has prevented former EY partner Karen Ward, who alleges she was a victim of sexual harassment and pay discrimination, from taking the firm to court.

Karen Ward

According to the complaint, to have Ward’s sexual harassment claims heard by a judge or jury in the Southern District of New York, she would have to pay a $450 filing fee. However, the arbitration process has proven to be very expensive for Ward, as she has had to pay nearly $200,000 in costs so far.

“Forcing victims of sexual misconduct and discrimination to arbitrate their claims in a secret forum behind closed doors perpetuates sexual harassment and discrimination, and serves only to protect companies and perpetrators of such heinous conduct. It is even worse when those victims, who would be required to pay only a few hundred dollars to have their claims heard by a jury, are required to pay hundreds of thousands of dollars simply to have their claims heard in arbitration,” Ward’s attorney, Michael Willemin of Wigdor LLP, told Going Concern in a statement. “We trust that the court in this case will invalidate Ms. Ward’s arbitration agreement and permit her to seek real justice in court.”

As a condition of her employment, Ward signed an arbitration provision that took away her right to sue EY in court. After she filed her harassment and discrimination complaint with the Equal Employment Opportunity Commission last September, Ward wrote an open letter to then-EY CEO and Chairman Mark Weinberger asking him to end forced arbitration for victims of sexual misconduct and discrimination at EY, as well as to release her from the arbitration agreement. The firm denied her request, forcing her to file her claims in arbitration.

Because of the expensive nature of arbitration proceedings, Ward filed a motion in February asking the tribunal of three arbitrators to require EY to pay all arbitration costs. EY countered that the two parties should split the costs. In early March, the tribunal sided with EY, forcing Ward to pay half the costs.

The complaint states:

[S]ince that time, Ms. Ward has been billed nearly $200,000 in arbitration costs, most recently receiving invoices on July 10, 2019 for the payment of an additional $137,250 in costs, for a grand total (to date) of approximately $185,000.

Thus, instead of having to pay only $450 to have her claims heard, Ms. Ward will be required to spend at least $185,000. This is a percentage increase of 41,000. Moreover, the final total will likely be much higher, as the Arbitration is still in the discovery phase. …

Ms. Ward requests a declaratory judgment that the Arbitration Agreement is unenforceable because, as a result of the decision of the Tribunal requiring the parties to split the costs of the arbitration. Put simply, under the relevant law, a claimant is not required to arbitrate his or her claims when the cost simply to have the claims heard is hundreds of thousands of dollars more than the costs that would be incurred to pursue his or her claims in court.

The complaint also states that the U.S. Supreme Court “has made clear that federal statutory claims can only be subject to arbitration ‘so long as the prospective litigant effectively may vindicate [his or her] federal statutory cause of action in the arbitral forum.’”

The Supreme Court also has expressly stated that “[i]t may well be that the existence of large arbitration costs could preclude a litigant . . . from effectively vindicating her federal statutory rights in the arbitral forum.”

We have contacted EY for a comment, but the firm has previously called Ward’s sexual harassment and discrimination claims “unfounded and baseless.”

The arbitration hearing is scheduled to be held in October.

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