Hooters Restaurant in Myrtle Beach, South Carolina, used an alternative dispute resolution program, a program to resolve disputes outside the traditional court system. Employees of Hooters had to sign an “agreement to arbitrate employment-related disputes” to be eligible for raises, transfers, and promotions. Under the agreement, both Hooters and the employee agreed to resolve all disputes arising out of employment, including “any claim of discrimination, sexual harassment, retaliation, or wrongful discharge, whether arising under federal or state law,” through arbitration. Arbitration is a type of alternative dispute resolution where a neutral third party makes a decision that resolves the dispute.
In a separate policy document not shared with employees until after they had signed the agreement, Hooters set forth the rules and procedures of its arbitration program:
The employee had to provide notice of the specifics of the claim, but Hooters did not need to file any type of response to these specifics or notify the employee of what kinds of defenses the company planned to raise.
Only the employee had to provide a list of all witnesses and a brief summary of the facts known to each.
While the employee and Hooters could each choose an arbitrator from a list, and the two arbitrators chosen would then select a third to create the arbitration panel that would hear the dispute, Hooters alone selected the arbitrators on the list.
Only Hooters had the right to widen the scope of arbitration to include any matter, whereas the employee was limited to the matters raised in the employee’s notice.
Only Hooters had the right to record the arbitration.
Only Hooters had the right to sue to vacate or modify an arbitration award if the arbitration panel exceeded its authority.
Only Hooters could cancel the agreement to arbitrate or change the arbitration rules.
Annette Phillips had worked as a bartender at the Hooters restaurant in Myrtle Beach for about five years before Hooters adopted its arbitration policy. Ms. Phillips was given a copy of the agreement to arbitrate to review for five days and then sign. Approximately two years later, a Hooters official grabbed and slapped her buttocks. After appealing to her manager for help and being told to “let it go,” she quit her job.
When she threatened to file a lawsuit for sexual harassment, Hooters filed an action in federal district court to compel arbitration of Phillips’ claims.

1. Should Phillips be forced to settle her claim through arbitration?
2. Assume your company’s arbitration policy was exactly like Hooters’. Which aspects would you retain and which might you change?