Mandatory Arbitration Provision in Fraternity/ Sorority Membership Agreements

Kemal Catalan[1], Manley Burke LPA, Kemal.catalan@manleyburke.com

            Mandatory arbitration clauses are relatively standard in many industries, and the practice has been adopted by quite a few Greek letter organizations. Arbitration is different from mediation because the neutral arbitrator has the authority to make a decision about the dispute, including the arbitration award. Generally, arbitration clauses are enforced when a party who changes their mind tries to get a judge to rule that the party can have their day in court. Although binding in many instances, arbitration provisions with language that is too broad or ambiguous may not be enforceable.

            Arbitration is a private out-of-court process where the parties avoid lengthy and more expensive litigation by agreeing that one or several individuals can make a decision about the dispute after receiving evidence and hearing arguments. In an arbitration, the parties typically give up the right to an appeal on substantive grounds to a court.Once settled upon, an arbitrated award is confirmed by a court, and is sometimes optimized to an enforceable remedy. Whether or not mandatory arbitration is a relevant issue often arises when one party, usually a member suing the fraternity or sorority, has changed its mind about using the arbitration process. Quite often member candidates find themselves surprised that they entered into agreements mandating arbitration, and then question the enforceability of mandatory arbitration provisions.

            The climate and attitudes toward forced arbitration seems to have changed since 2009 when courts were “mostly deaf to the arguments of critics that mandatory arbitration is ‘do-it-yourself tort reform,’ systematically favoring corporate defendants.”2The typical strategy to defeating an arbitration clause is to seek a court ruling that the arbitration clause is unconscionable.

            An unconscionable provision in a contract is one that is so one-sided that it is unfair to one party and therefore unenforceable under law. It is a provision that leaves one party with no real, meaningful choice, usually due to major differences in bargaining power between the parties. To help comprehend why unconscionability is a popular strategy, consider the analogous realm of unilateral agreements in the consumer world where consumer advocates argue that, “by drafting their contracts so as to require arbitration of future disputes, business enterprises with the economic power to impose terms on their customers or employees could obtain a variety of practical advantages, and could even use arbitration provisions to effectively deprive consumers and employees of any means of dispute resolution.”3

            Like business enterprises, parties seeking to avoid arbitration take the position that the organization is making a systematic effort to impose arbitration on a disadvantaged party. Despite its popularity, claims leveraging unconscionability to invalidate arbitration clauses are difficult to win.4There are no hard and fast rules governing what makes an agreement unconscionable, but it is ultimately in a court’s discretion when making the determination.

            That does not mean that arbitration clauses are impenetrable if a party takes a different approach. This past April, a federal court for the Middle District of Pennsylvania denied a motion to enforce an arbitration clause for a fraternity, because the language in the agreement was overly broad and ambiguous.  Mandating that arbitrability be determined by arbitration should be expressly in the language of the agreement, otherwise the court will determine if a plaintiff’s claims should be arbitrated or have their day in court.5“Because it is presumed that courts will decide questions of arbitrability, a delegation provision stating to the contrary must do so ‘clearly and unmistakably.’”6In the motion to compel arbitration filed by the fraternity defendant in that case, the court stressed in its ruling that in order for an arbitration clause to be enforceable, the language in the agreement must be unambiguously delegating the question of arbitrability to the arbitrator. The burden of overcoming the presumption that the arbitrator can decide what should be arbitrated, as the court stated, is “onerous, as it requires express contractual language unambiguously delegating the question.”7Clearly expressed and unambiguous language is the key to enforceable arbitration provisions in membership agreements.

            The Middle District of Pennsylvania court further stated that a broadly worded arbitration clause standing alone is insufficient. As the court reviewed the provision and found the language to be overly broad, the court explained, “the court cannot construe these terms more broadly than what is provided for by the plain language…”8When the language is too broad, the enforcing party is unlikely to get any court, to enforce anything beyond what the agreement simply states. This is why the court stressed that specificity in the terms expressed in the language avoids a broad interpretation and favors enforceable provisions.

            People often want their day in court, and when it comes to entering into contractual agreements, people often want to be protected from the fine print buried deep within the contract’s language. Forced arbitration can be viewed by some as a deprivation of their right to hold wrongdoers accountable through their day in court. College students are no different. However, the trend of many fraternities and sororities to include arbitration clauses in their membership and candidate agreements might lead some organizations to feel confident that pre-agreed upon arbitration will keep the organization out of lengthy and expensive court battles.

            Fraternities and sororities with mandatory arbitration provisions included in membership agreements would be well advised to review the language of those provisions to reduce ambiguities and minimize broad covering language to increase the likelihood of enforceability.

[1]Dr. Kemal Catalan is a summer Law Clerk at Manley Burke. He is a third year student at University of Cincinnati College of Law and is a member of Kappa Alpha Psi Fraternity, Inc.

2Mandatory arbitration and fairness. Notre Dame Law Review, March 2009, Pg. 1247; Vol. 84; No. 3.

3Knapp, C. L., Crystal, N. M., and Prince, H. G., Problems in Contract Law, Case and Materials, 9th Edition, Wolters, Kluwer, copyright 2019 p.662

4Id. p. 663.

5Jean v. Bucknell Univ., No. 4:20-CV-01722, 2021 U.S. Dist. LEXIS 73384 (M.D. Pa. Apr. 16, 2021)

6Id.

7Id.

8Id.