Jay-Z Adds to his Legacy by Creating Space for Diversity in Arbitration

By: Monica Carranza

The Second Circuit, which encompasses the U.S. Southern District Court of New York (“S.D.N.Y.”), is a popular location for impactful lawsuits.^[1] In April 2017, a trademark suit was brought against Brooklyn legend Shawn “Jay-Z” Carter’s brand Roc Nation, LLC (“Roc Nation”) by Iconix Brand Group, Inc., (“Iconix”) the company to which he sold his brand“Rocawear.”^[2] The dispute arose from Roc Nation’s use of its paper airplane logo on a new line of baseball caps, created in partnership with Major League Baseball.^[3] Carter responded to the complaint with a countersuit, alleging that the sale of his brand to Iconix extended to Rocawear only, not Roc Nation.^[4]

Never failing to see the bigger picture, Carter turned his trademark troubles into an opportunity to create space for arbitrators of color.^[5] Upon deciding to arbitrate, the parties agreed to employ the American Arbitration Association (“AAA”) to provide a list of neutral attorneys to oversee negotiations.^[6] From that list, neither Carter nor his attorney were able to “identify a single African-American arbitrator on the [AAA’s] ‘Large and Complex Cases’ roster’”.^[7] The AAA then presented a revised and expanded list of 200 candidates out of which only three were identifiable as African-American.^[8] Mr. Carter subsequently petitioned under section 7503(b) of the Civil Practice Law and Rules to stay arbitration until the AAA agreed to “represent Petitioners by providing African-American neutrals,” and for a temporary restraining order (“TRO”) to be issued against Iconix from proceeding with their claims.^[9] Roc Nation argued that the lack of arbitrators of color “deprives litigants of color of a meaningful opportunity to have their claims heard by a panel of arbitrators reflecting their backgrounds and experiences.”^[10]

In spite of the fact that courts usually defer to the arbitration system, a TRO was granted by the New York court, securing a win for diverse representation in arbitration.^[11] Jay-Z has since been criticized by Iconix, who called his claims of “unconscious bias” offensive, and expressed their resent at the idea that “the race of an arbitrator is inherently indicative of bias.”^[12] Iconix additionally claimed that Jay-Z has frequently dealt with the AAA in the past yet had never expressed concern regarding the diversity of the panel members before and does so now only to escape arbitration.^[13] Yet, regardless of either party’s arguments, the story’s moral remains the same: a positive step for diversity in the justice system was taken because the issue was raised and found to be discriminatory under New York City human rights law.^[14] Since the Second Circuit is such an influential district, the New York judge’s ruling that the lack of diverse arbitrators was indeed discriminatory sets a precedent to which other courts now have an opportunity to refer. Further, the AAA has pledged to take “remedial measures intended to improve the diversity of the arbitrator roster for future arbitrators.”^[15] As a result, future arbitrations, especially those that will take place in New York, should see a decrease in racial bias—unconscious or otherwise.

^[1]See Tom McCarthy, Do New York Prosecutors Pose the Greatest Threat to Donald Trump?, The Guardian, (Feb. 9, 2019) https://www.theguardian.com/us-news/2019/feb/09/new-york-southern-district-donald-trump-inauguration-prosecutors (attributing the S.D.N.Y.’s “deep experience in prosecuting the most complicated and significant cases” to its location in Manhattan—“a global intersection for business, finance, terrorist plots and organized crime.”).

^[2]Ashley Cullins, Jay-Z’s Roc Nation Asks Court to Dismiss Iconix Brand Group’s Licensing Lawsuit,The Hollywood Reporter (Mar. 6, 2018) https://www.hollywoodreporter.com/thr-esq/jay-zs-roc-nation-asks-court-dismiss-iconix-brand-groups-licensing-lawsuit-1092556.

^[3]Sopan Deb, Jay-Z Criticizes Lack of Black Arbitrators in Battle over a Logo,The New York Times(Nov. 28. 2018) https://www.nytimes.com/2018/11/28/arts/music/jay-z-roc-nation-arbitrators.html.

^[4]See generally Counterclaim to Plaintiff’s First Amended Complaint, Carter et al. v. Iconix Brand Grp. Inc., No. 17-03096 (N.Y. App. Div. filed Oct. 27, 2017).

^[5]Deb, supranote 3.

^[6]Petition to Stay Arbitration at 7,Carter et al. v. Iconix Brand Grp. Inc., No. 655894/2018 (N.Y. App. Div. Nov. 28, 2018).

^[7]Id. at 2.

^[8]Id.at 3.

^[9]Id.at 1.

^[10]Deb, supranote 3.

^[11]Beth Graham, Jay-Z Successfully Convinces NY Court to Issue TRO in AAA Arbitration Based on Lack of Arbitrator Diversity,ADR Toolbox (Dec. 14, 2018) https://www.adrtoolbox.com/2018/12/jay-z-successfully-convinces-ny-court-to-issue-tro-in-aaa-arbitration-based-on-lack-of-arbitrator-diversity.

^[12]Dan Packel, Rocawear Owner Blasts Jay-Z Claims over AAA Arbitrators’ Diversity,The American Lawyer(Jan. 16, 2019) https://www.law.com/americanlawyer/2019/01/16/rocawear-owner-blasts-jay-z-claims-over-aaa-arbitrators-diversity.

^[13]Id.

^[14]Brendan Pierson, Citing Racial Bias, Jay-Z Seeks to Halt Arbitration Against Iconix,Reuters(Nov. 28, 2018) https://www.reuters.com/article/us-people-jayz-lawsuit/citing-racial-bias-jay-z-seeks-to-halt-arbitration-against-iconix-idUSKCN1NX2JM.

^[15]Eriq Gardner, Jay-Z Scores Diversity Commitment from American Arbitration Association,The Hollywood Reporter(Dec. 10, 2018) https://www.hollywoodreporter.com/thr-esq/jay-z-withdraws-bid-stop-arbitration-getting-diversity-commitment-1167893.