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Former news anchor’s settlement terms with Fox compel arbitration of her defamation suit against O’Reilly

By Joy P. Waltemath, J.D.

Although Bill O’Reilly was not a party to the settlement agreement between a former Fox News anchor and Fox, which settled numerous sexual harassment claims against O’Reilly and Fox, including the plaintiff’s here, O’Reilly was able to compel arbitration of her defamation lawsuit against him under the terms of her settlement agreement. A federal district court in New York held that as a signatory to the settlement agreement, the former anchor was estopped from avoiding arbitration with O’Reilly because the signatories to the agreement (herself and Fox) had a sufficient relationship to the rights created under the settlement agreement, to each other, and to O’Reilly. As to whether the parties’ settlement encompassed this particular defamation dispute, that question was itself for the arbitrator (Dhue v. O’Reilly, October 10, 2018, Batts, D.).

Alleged defamatory comments. After the New York Times published an article, “Bill O’Reilly Thrives at Fox News, Even as Harassment Settlements Add Up,” which cited “numerous” sexual harassment claims against O’Reilly brought by former Fox employees, O’Reilly’s employment was terminated. According to the former anchor’s complaint, since then O’Reilly “has falsely made public statements regarding the allegations of sexual harassment against him” on live television, at public events, and in statements to the press, which were “knowingly made” and made with “the intent to harm [Plaintiff’s] reputation.” O’Reilly sought to compel arbitration per the arbitration clause in the anchor’s settlement agreement with Fox.

Arbitration compelled. Although the former anchor claimed that O’Reilly was not a party to that agreement, and her defamation action was not a “similar dispute” sufficient to estop her from denying her obligation to arbitrate, the court disagreed. And it also determined that whether the defamation dispute was outside of the scope of the arbitration clause in the settlement agreement was itself a decision for the arbitrator.

Arbitrability for the arbitrator. Citing “settled law in this Circuit,” the district court noted that when parties explicitly incorporate rules that empower an arbitrator to decide issues of arbitrability, that shows they have intended to delegate those issues to the arbitrator. Here, the arbitration clause in the settlement agreement clearly vested the “question of arbitrability” in the arbitrator by stating that “any dispute arising from” the agreement must first be submitted to confidential mediation and, if that failed to arbitration by a judge at JAMS under JAMS Comprehensive Arbitration Rules. Those rules make it clear that “The Arbitrator has the authority to determine jurisdiction and arbitrability issues as a preliminary matter.” Whether the former anchor had agreed to arbitrate this dispute was a question involving the “validity, interpretation, or scope” of the agreement for the arbitrator to decide.

Nonsignatory to agreement. Even though it was undisputed that O’Reilly is not a party to the settlement agreement—and the former anchor claims he could not avail himself of the arbitration clause—he successfully argued that as a signatory to the contract, she was estopped from denying an obligation to arbitrate. The court agreed because O’Reilly, as well as the parties to the settlement agreement, had “a sufficient relationship to each other and to the rights created under the agreement,” and the arbitration clause did not exclude non-parties from availing themselves of it.

Sufficient relationship to be “estopped from avoiding arbitration.” The FAA embodies a national policy favoring arbitration, but it “does not require parties to arbitrate when they have not agreed to do so.” That means a non-signatory generally may not seek to compel a signatory to a contract to arbitrate. However, Circuit precedent recognizes that a signatory to an arbitration clause is estopped from avoiding arbitration with a non-signatory when the non-signatory and signatory “have a sufficient relationship to each other and to the rights created under the agreement.” Clearly, said the court, O’Reilly had a demonstrable relationship to the settlement agreement: It arose from and was directly related to alleged sexual harassment, gender discrimination, tortious interference, blacklisting, and retaliation claims against both Fox and O’Reilly. It also explicitly released both Fox and O’Reilly, the non-signatory, from liability under these claims.

The only exception would be an arbitration clause stating that arbitration can be commenced only at the request of a party to the agreement or that it binds only the parties to the agreement to the outcome of arbitration. That was not the case here. The broad terms of the arbitration clause combined with O’Reilly’s relationship to the parties and the settlement agreement itself estopped the anchor from denying her obligation to arbitrate the question of arbitrability.