Hip-hop musician Jay-Z has successfully convinced a New York judge to temporarily halt American Arbitration Association (“AAA”) arbitration proceedings based on a lack of arbitrator diversity. In the case, Jay-Z and Iconix Brand Group entered into a $200 million merchandising agreement that required all future disputes to be resolved using AAA arbitration rules and procedures. After a disagreement arose between the parties, arbitration proceedings were initiated.
Both Jay-Z, who is African-American, and Iconix were provided with a list of more than 200 AAA-approved arbitrators experienced enough to consider “Large and Complex Cases.” Each party was tasked with selecting a number of proposed arbitrators to serve on the panel that would hear the case. Jay-Z, however, refused to make a selection from the AAA’s Large and Complex Cases roster due to the fact that he could not identify a single African-American arbitrator on the list. Instead, Jay-Z requested a list of arbitrators of color from the AAA.
The AAA provided Jay-Z with a list of six arbitrators of color, three of which were African-American. Interestingly, one of the African-American arbitrators was a partner at the law firm representing Iconix. After receiving the list, Jay-Z again refused to select proposed arbitrators citing a lack of diverse arbitrator choices.
Eventually, the AAA selected a list of 12 potential arbitrators for the parties to choose from. Although this list included the two African-Americans who were without an obvious conflict, it was apparently unclear whether the arbitrators were selected from the AAA’s Large and Complex Cases roster and qualified to consider the case. In addition to selecting the 12 potential arbitrators, the AAA warned the parties it would choose final arbitrators for them if a list of preferred arbitrators was not returned by a specific date.
Unsatisfied with the number of qualified African-American arbitrators included on the AAA’s Large and Complex Cases roster, Jay-Z sought a temporary restraining order (“TRO”) to stay the arbitral proceedings. Although neither party disputed that a valid agreement to arbitrate existed, Jay-Z claimed that portion of the agreement requiring arbitration before the AAA was void because the lack of diversity on the AAA’s Large and Complex Cases arbitrator roster violates New York’s public policy against discrimination.
In his petition to stay arbitration, Jay-Z also asked the New York court to issue a 90-day preliminary injunction “so that the parties may work with the AAA to include sufficient African-American candidates who are qualified to adjudicate complex commercial cases.” Finally, Jay-Z asked the court to issue a permanent stay in the case if the AAA is unable to cure the arbitrator diversity issue.
Despite that courts typically defer to the arbitration system, a New York judge issued a TRO in the case last week. The court will consider Jay-Z’s preliminary injunction request to stay the arbitration proceedings for 90 days on December 11th.