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Writing as the "Deal Professor" in the New York Times Dealbook, Steven Davidoff Solomon led off a story on ousted American Apparel CEO Dov Charney by asserting that "[t]he real lesson from the ouster of Dov Charney . . . is the danger of arbitration clauses." The story headlined that "Arbitration Clauses Let American Apparel Hide Misconduct," and Solomon asserted that the purpose of the firm's "aggressive" use of arbitration clauses was "to ensure that any dispute was kept quiet and protect the company from excessive damages." At several places in the article, however, Solomon acknowledged that American Apparel's contracts with its models included not only arbitration clauses but also confidentiality provisions. Indeed, it was through the confidentiality provisions that:
American Apparel required that the entire proceeding -- including the outcome -- be kept confidential. Employees were also contractually barred from disparaging or otherwise say anything bad about Mr. Charney or American Apparel. As if this were not enough, employees were required to agree not to speak to the news media without the approval of American Apparel.
Despite this acknowledgment, Solomon did not appear to consider that it might be the confidentiality provision, not the arbitration clause, that "let American Apparel hide misconduct." At no point did Solomon address whether an arbitration clause by itself would have resulted in the sorts of confidentiality obligations that American Apparel expressly imposed by the confidentiality provisions in its contracts.
Recommended Citation
Christopher R. Drahozal, Confidentiality in Consumer and Employment Arbitration, 7 Y.B. Arb. & Mediation 28 (2015).