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“Who Arbitrates? Arbitrator Qualification Clauses in Religious Arbitration Agreements”
Michael A. Helfand
Religious arbitration is, at its core, defined by two features: (1) decisions are rendered by religious authorities who (2) adjudicate disputes in accordance with religious laws, rules, and values. Religious arbitration agreements typically reflect these two elements by including both arbitration clauses and choice of law provisions. The arbitration clause allows parties to identify religious authorities to adjudicate the dispute. And choice-of-law provisions allow the parties to select the relevant body of religious law that the arbitrators will apply when resolving the underlying dispute.
But, like parties to arbitration more generally, parties to religious arbitration sometimes incorporate additional provisions that further constrain the kind and quality of arbitrators that can serve on the arbitral tribunal. They do so through an oft-used mechanism known as arbitrator qualification clauses. Such clauses are relatively common in arbitration agreements and are often considered as one of the primary advantages of arbitration since they allow the parties to “choose the decision maker they believe is best suited to the dispute.” Accordingly, parties can use such terms to require that one of the arbitrators be a certified public accountant, for example, or that all of the arbitrators be retired judges, or any other qualifications that might ensure the arbitrators are well positioned to resolve the dispute.
In extreme cases, arbitrator qualification provisions can generate legal challenges. Perhaps the most common challenges are provisions that would appear to tilt the scales of the arbitration in favor of one of the parties. An employer might draft an arbitration agreement, to be signed by employees, where any disputes would be resolved by individuals who are supervisors within the employer’s company. In such extreme circumstances, a court might invalidate the arbitration agreement because “a third party decision maker and some decree of impartiality must exist for a dispute resolution mechanism to constitute arbitration.” In addition, this sort of lack of neutrality might also support a court’s refusal to enforce an arbitration provision on unconscionability grounds. Finally, courts can vacate an arbitration award “where there was evident partiality or corruption in the arbitrators or either of them” (9 U.S.C. 10(a)(2)).
Arbitrator qualification clauses in religious arbitration agreements, however, present an added wrinkle to judicial applications of these limiting doctrines. In religious arbitration agreements, arbitrator qualification clauses typically incorporate religious criteria; therefore, determining whether or not an arbitrator qualification clause in a religious arbitration agreement triggers partiality or unconscionability concerns often requires determining the theological meaning and impact of the criteria. But judicial interpretation of theological criteria is generally understood to be prohibited by the Establishment Clause and its requirement that courts avoid adjudicating religious questions.
This core conundrum has been front and center in recent controversy over the Church of Scientology’s use of religious arbitration agreements. Consider the case of Garcia v. Church of Scientology. Maria and Luis Garcia, former Church of Scientology members, filed suit in federal district court against the Church of Scientology, alleging fraud and breach of contract claims predicated on monies they had previously given the church. When the Church of Scientology filed a motion to compel arbitration, the Garcias claimed that the agreement — signed early on in their relationship with the church — was unconscionable, in part, because of the arbitrator selection clause required that all arbitrators “be Scientologists in good standing with the Mother Church.” As summarized by the district court, the Garcias argued that they had been “declared ‘Suppressive’ by the Church and according to Church doctrine, have no rights as Scientologists and are not eligible for the benefits of the Codes of the Church.” In turn, it would “be impossible for them to receive a fair and neutral arbitration because Scientologists in good standing are prohibited by Church doctrine from communicating with suppressive individuals.”
When both the district court and then the Eleventh Circuit rejected the claim, it wasn’t because these courts confirmed that the procedural rules and arbitrator qualification clauses did not present any questions of partiality or unconscionability. Rather, resolving such questions would have required a judicial assessment of Scientology theology. Such an inquiry, in the view of these courts, was prohibited by the First Amendment. And so, without any ability to confirm the Garcias’ claims, the courts agreed that the correct course of action was to enforce the arbitration provision, including the arbitrator qualification clause.
Garcia is not the only case implicating the Church of Scientology where the procedural fairness of Scientology arbitration is at issue. In Bixler v. Church of Scientology, the plaintiffs allege they were sexually assaulted by Daniel Masterson, himself a member of the Church of Scientology, and that the Church of Scientology sought not only to cover up these incidents, but also threatened and harassed the plaintiffs once they reported the incidents. The Church of Scientology responded by filing a motion to compel arbitration, arguing that the claims in the complaint must all be submitted for binding arbitration pursuant to an arbitration agreement executed between the plaintiffs and the church when the plaintiffs joined the church. When the case was before the California Court of Appeals, the court asked the parties for additional briefing on “[w]hether the compelled arbitration is sufficiently neutral to constitute an enforceable arbitration” (BL-35). In its letter, the California Court of Appeals expressly referenced the Garcia case, but also referenced another case where a court found the internal arbitral procedure for selecting arbitrators to be insufficiently neutral.
But instead of addressing the question of neutrality, the California court of appeals issued an opinion on constitutional grounds. In the opinion, the court declined to compel arbitration, arguing that “Individuals have a First Amendment right to leave a religion,” and “once petitioners had terminated their affiliation with the Church, they were not bound to its dispute resolution procedures to resolve the claims at issue.” The opinion is the first of its kind – and quite controversial. As of today, its precedential impact is undetermined, both because it is unpublished and because appeals remain quite possible. Moreover, the opinion itself appears to limit its application to instances where the “alleged tortious conduct occur[ed] after their separation from the Church.” But leaving the wisdom of Bixler to the side, it is clear that the court avoided the arbitrator qualification question.
Do parties have another option when contesting arbitrator qualification provisions in religious arbitration agreements? One possibility is instead of contesting the underlying fairness of such provisions, parties might instead argue that enforcing the provision itself constitutes a violation of the Establishment Clause’s religious question doctrine. As an example, consider In Matter of Ismailoff, where a New York surrogate court refused to enforce an arbitrator qualification clause that required selection of “three persons of the Orthodox Jewish faith.” The court concluded that enforcing such a provision would violate the Establishment Clause because it would require a judicial determination as to whether the arbitrators were “orthodox.” Doing so would entail impermissibly resolving an “issue concerning religious doctrine or practice.”
One can imagine making a similar argument regarding the arbitrator qualification provision in Church of Scientology arbitration agreements. Determining whether someone is a “Scientologist in good standing with the Mother Church” might very well require delving into religious questions. Therefore, if the parties disagreed over who qualified as a Scientologist in good standing with the Mother Church, a court ought to refuse enforcing the provision and, in turn, strike it from the arbitration agreement. Moreover, if a court determined that the arbitrator qualification provision was “integral” to the agreement, it might even invalidate the entire arbitration agreement.
Still, courts have shown a reluctance to go down this path. The Garcia litigation is a case in point. When the parties disputed who qualified as a Scientologist in good standing, the district court — instead of invalidating the provision — invoked its authority under 9 U.S.C. §5 to designate arbitrators, and then requested that the Church of Scientology provide a list of 500 Scientologists in good standing. One might have thought that for a court, pursuant to the terms of an arbitration agreement, to grant one party unilateral authority to generate the list of potential arbitrators would itself render the arbitration agreement substantively unconscionable. But the district court clearly thought otherwise and thereby obviated the need to interpret the theology behind the arbitrator qualification clause in the Church of Scientology arbitration agreement. Whether other strategies exist to invalidate such arbitrator qualification clauses remains to be seen. ♦
Michael A. Helfand is the Brenden Mann Foundation Chair for Law and Religion, Vice Dean for Faculty and Research, and Co-Director of the Herbert and Elinor Nootbaar Institute for Law, Religion and Ethics at Pepperdine Caruso School of Law; he also serves as Visiting Professor and Oscar M. Ruebhausen Distinguished Fellow at Yale Law School as well as Senior Research Fellows at the Shalom Hartman Institute.
Helfand, Michael A. “Who Arbitrates? Arbitrator Qualification Clauses in Religious Arbitration Agreements.” Canopy Forum, March 16, 2022. https://canopyforum.org/2022/03/16/who-arbitrates-arbitrator-qualification-clauses-in-religious-arbitration-agreements/.