Law and Arbitration Offices of Donald T Ryce

A Waiver Too Far 

The Eleventh Circuit ruled in Goldsmith v. Bagby Elevator,  2008 WL 150585, that an employee may bring a Title VII claim of retaliatory discharge for refusing to sign an arbitration agreement that would have covered a pending charge with the Equal Employment Opportunity Commission (EEOC).  He offered to sign an amended agreement that would not have covered the pending EEOC charge, but the employer insisted on its original version.  In an earlier Eleventh Circuit case, Weeks v. Harden Manufacturing Corp, 291 F.3d 1307 (11th Cir 2002), the court had held that an employee's refusal to sign an arbitration agreement did not constitute protected activity supporting a claim of retaliation.  The Goldsmith court distinguished Weeks, noting that Weeks did not involve a pending EEOC charge and that "Goldsmith was terminated immediately after and because he refused to relinquish his right to a jury trial for his pending charge,” thus demonstrating a causal relationship between his protected filing of the EEOC charge and his termination.  This case is a warning to employers not to attempt to use a proposed pre-dispute arbitration agreement as a vehicle to terminate an employee’s rights with respect to already-filed EEOC charges.

It is quite likely that efforts to force pending administrative or court proceedings into arbitration, if the case involves any employment statute which include a retaliation prohibition will result in a similar holding.

Don't Read It And Weep

The usual basis in Florida for alleging that an arbitration agreement is unenforceable is that it is procedurally and substantively unconscionable.  Both kinds of unconscionability must be shown to invalidate the agreement.  Procedural unconscionability relates to the manner in which a contract is made and involves consideration of issues such as the relative bargaining power of the parties and their ability to know and understand the disputed contract terms. Orkin Exterminating Co. v. Petsch, 872 So.2d 259, 265 (Fla. 2d DCA 2004).  Substantive unconscionability requires an assessment of whether the contract terms are “so ‘outrageously unfair’ as to ‘shock the judicial conscience.’ ” Id.

Two recent cases decided by the same Florida appellate court demonstrate the difference between a losing attack and a winning attack on the validity of an arbitration agreement.  In Lopez v. Ernie Haire Ford, Inc., 2008 WL 313472, *1  (Fla.2d DCA 2008), the court, following a long line of Florida cases, found that a party’s failure to read the contract before signing it, standing alone, is not grounds for finding procedural unconscionability.  Therefore, the court did not even address the substantive arbitrability issue.

However, in Woebse v. Health Care and Retirement Corp. of America,  2008 WL 313588, *2  (Fla. 2d DCA 2008), the daughter of a patient purportedly subject to an arbitration agreement, was presented the admission papers during a meeting that lasted only five minutes.  She was given a 37-page document in which the arbitration clause was buried.  She was not given the opportunity to read the document but was merely directed where to sign. The document was not explained to her other than to state that it was hospital’s policy to enforce a DNR (Do Not Resuscitate) order, and the arbitration agreement was not called to her attention.  She was not given a copy after the agreement was signed so that she could review it.  The court concluded that procedural arbitrability was shown in relation to the arbitration agreement.  The court also found substantive unconscionability because punitive damages were not permitted and thus the patient’s statutory rights under Florida law were not vindicated.

Thus, parties intending to fight an arbitration agreement must be prepared to do more than argue that they didn’t read it and therefore did not know what they were agreeing to.  They must show it was the other party’s fault that they didn’t know what they were signing.