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Court won’t enforce arbitration agreement because employee signed ‘No refused’

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Dive Brief:

  • A vocational school in Central Florida can’t compel a former employee to arbitrate her age discrimination claim because she didn’t sign the arbitration agreement, the 11th U.S. Circuit Court of Appeals held Jan. 30 in Ragland v. IEC US Holdings, Inc., d/b/s Florida Career College.
  • The employee worked as a student finance advisor, according to her complaint. Before she was hired, she signed a job application and a job offer; both referenced an arbitration agreement required as a condition of employment, according to court records. But on the signature line of the arbitration agreement, the employee wrote, “No refused,” court records said. In her lawsuit, she claimed co-workers and her supervisor repeatedly called her “old,” “elderly” and “slow” and that IEC fired her after she complained. She then sued, alleging it violated the Age Discrimination in Employment Act.
  • A federal district court found that IEC failed to prove the arbitration agreement was valid and denied its motion to compel arbitration. The 11th Circuit upheld the ruling. “IEC cannot force Ragland to arbitrate after she not only declined to sign the agreement but expressly “[r]efused” the final written agreement,” the 11th Circuit said. The employee’s signature on the application and job offer didn’t bind her to the agreement because the latter clearly specified that it was the “entire agreement” between the parties “regarding dispute resolution, and supersedes any and all prior agreements regarding these issues,” the panel explained. Nor did the employee’s continued employment show acceptance because the agreement expressly required her signature as acceptance, the panel noted.

Dive Insight

Arbitration agreements are considered contracts, and state law generally governs whether an enforceable contract exists, the 11th Circuit pointed out. Under Florida law, the party seeking enforcement has to prove the contract is valid, and this includes proving the existence of a valid offer and acceptance, the panel said. Here, per the arbitration agreement, because the employee didn’t sign it, IEC failed to prove she manifested valid acceptance, and the agreement couldn’t be enforced, the court explained.

By contrast, last year, the 5th Circuit held that under Texas law, BJ’s Restaurant could compel a former employee to arbitrate his Fair Labor Standards Act claim, even though it didn’t countersign the arbitration agreement.

The 5th Circuit reversed a lower court’s ruling that the agreement couldn’t be enforced because BJ’s failed to sign it. The appeals panel explained that pursuant to Texas law, for a signature to be a condition of enforcement, arbitration agreements must “clearly and explicitly” require one. The BJ’s agreement didn’t appear to do so because it didn’t have a signature block or any other place for the company to sign it, according to the decision.

At the federal level, on Feb. 20, the U.S. Supreme Court will hear oral arguments in Bissonnette v. LePage Bakeries Park St. LLC, a case that could affect a wide swath of businesses using commercial truck drivers to deliver products across state lines. 

The Bissonnette drivers deliver baked goods from regional warehouses to stores such as Target and Walmart, according to court documents. The case jumps off from a recent Supreme Court ruling clarifying when transportation workers fall within the Federal Arbitration Act’s exemption for “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” Unless an exemption applies, the FAA requires courts to enforce a valid arbitration agreement when the dispute falls within its scope.

In that ruling, Southwest Airlines v. Saxon, the justices unanimously held that a supervisor of ramp agents who loaded and unloaded cargo on and off planes could not be compelled to arbitrate her claims because she was actively engaged in interstate transportation and fell within the FAA’s exemption. In Bissonnette, the justices will decide if a class of workers actively engaged in interstate transportation must also be employed by a company in the transportation industry to qualify for the exemption.

Federal laws enacted in 2022 also ban both forced arbitration of sexual misconduct claims and pre-dispute NDAs for sexual assault and harassment. Additionally, the U.S. Department of Labor has emphasized that workers have the right to report illegal conduct or participate in a DOL investigation whether or not they signed arbitration agreements.

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