In a very interesting decision by the Wisconsin Court of Appeals last week, the Court upheld an arbitration award against the large household goods store Menard’s for employment discrimination against, wait for it, its own in-house lawyer.  As reported in the Milwaukee Journal Sentinel,

Menard Inc. must reinstate a woman it fired as vice president and general counsel over a pay dispute, 3rd District judges for the state Court of Appeals said in a decision released Tuesday.

Dawn M. Sands filed a lawsuit in Eau Claire County citing the Equal Pay Act, Title VII of the Civil Rights Act and the Wisconsin Fair Employment Act. She claimed gender-based pay discrimination, asserting that similarly situated male employees were paid more.

A three-person arbitration panel found in her favor and awarded compensatory and punitive damages. The panel also ordered Menard to reinstate Sands with a specific salary and bonus. Menard balked and asked the appellate court to overturn an order by Eau Claire Circuit Judge Paul J. Lenz that had upheld the arbitration panel.

Menard argued that ordering Sands to be reinstated disregarded the law that allows clients to choose their attorneys and that the court failed to consider the hostility between the parties in requiring reinstatement.

“We conclude Menard fails to demonstrate the arbitrators manifestly disregarded the law,” Judge Michael Hoover wrote in the decision.

“Menard does not dispute that reinstatement is a remedy under the Equal Pay Act and Title VII and that neither of those acts provide an exception for in-house attorneys.”

Carol Dittmar, a lawyer for Sands, said Tuesday that her client had been awarded $1.6 million – $900,000 of it punitive damages – plus attorney fees in October 2007.

In May, Lenz will preside over a trial to decide how much Sands should receive because of Menard’s refusal to give Sands her job back.

Legal blogs, including Disputing, have duly noted the unusual decision for several reasons:

The doctrine of “manifest disregard” of the law (discussed here) remains a basis for vacating arbitration awards in  Wisconsin.

The court concluded that employment discrimination law (reinstatement) trumps the Rules of Professional Conduct (conflicts of interest).

The large amount of money awarded by the arbitrators, coupled with the judicial enforcement of the panel’s decision, overshadows the latest criticisms to mandatory arbitration in employment and consumer contracts. Namely, that binding arbitration is unfair to individuals.

The court, granting the arbitration panel’s  decision great deference, is in accord with the strong federal policy favoring arbitration. See latest Supreme Court case here.

As suggested by Martha Neil here, this decision could persuade other courts to follow this court’s  holding.

And I agree that the decision could be quite persuasive for all of these reasons.  Menard has announced it will appeal the decision to the Wisconsin Supreme Court, so we will see what happens.

Cross posted at Indisputably.