Labor & Employment Law Daily Agreement requiring employee, but not employer, to arbitrate is enforceable
Friday, June 7, 2019

Agreement requiring employee, but not employer, to arbitrate is enforceable

By Brandi O. Brown, J.D.

In the Third Circuit, such agreements are not deemed substantively unconscionable so long as the agreement does not alter the rights or remedies available to the employee in arbitration.

Compelling an employee to arbitrate his disability and age discrimination suit based on his signed agreement to arbitrate, a federal court in Pennsylvania ruled that the agreement—which required only the employee to arbitrate claims—was not unconscionable. The court also ruled that the Federal Arbitration Act’s transportation worker exception was inapplicable to the plaintiff, a route sales driver for the defendant. However, instead of dismissing the case, as urged by the employer, the court stayed the case pending arbitration (Davis v. Cintas Corp., May 23, 2019, Hornak, M.).

Denied accommodation, fired. According to the brief description of facts provided by the court, the employee had worked for Cintas Corporation for well over 25 years, most of that time as a service sales representative. After he experienced a personal tragedy, the employee was diagnosed with cardiac issues, anxiety, and depression. He alleged he was denied reasonable accommodations for his disabilities. He also alleged that the employer discriminated against on the basis of those disabilities, as well as his age, by firing him and replacing him with someone younger, less-qualified, and not disabled. He filed suit, alleging violations of the ADA, the ADEA, and the Pennsylvania Human Rights Act.

Employer sought to compel arbitration. Cintas moved to compel arbitration based on the arbitration provisions of the employment agreement the employee signed in 2015. The employer asserted that all of his claims fell within the scope of that agreement. The employee submitted a sworn declaration acknowledging he had been required to sign the agreement, or one like it, in order to get an annual raise and remain employed. However, he contended that he did not receive a copy of the agreement, nor was it explained to him.

After reviewing other decisions from federal courts in Pennsylvania, including one involving the same employer and the same agreement, Curtis v. Cintas Corp., the court concluded that further discovery was not warranted and that it would apply a Rule 12(b)(6) standard of review to the employer’s motion.

Valid agreement to arbitrate. The concluded that a valid agreement to arbitrate existed. It was undisputed that the employee had signed the agreement. Although he asserted that the agreement was not explained to him when he signed it, he did not assert that he did not read it, that he did not understand it, or that he was defrauded or coerced. The court determined that it was “undisputed” that he had manifested an intent to be bound by the agreement’s terms.

Although it was not clear whether the employee disputed the issue of consideration for the agreement, the court also determined that the salary increase was “plainly a tangible benefit conferred upon” the employee for his promise.

Agreement not unconscionable. Most importantly, the court concluded that the agreement to arbitrate was neither substantively nor procedurally unconscionable. With regards to substantive unconscionability, the employee relied heavily on the fact that the agreement required only the employee to arbitrate, whereas the employer retained the right to litigate its claims against employees in court. However, this was not grounds for deeming it unconscionable, the court explained. The Third Circuit applying Pennsylvania law (also applicable in this case) has already concluded that so long as nothing in the agreement limits or alters the rights available to the constrained party in the arbitral forum, “equivalent obligations are not required for a valid arbitration agreement.”

The agreement also was not procedurally unconscionable, either in form or in the manner in which it was presented. Nor was it a contract of adhesion, the court explained. While there might have been a disparity in bargaining power between the parties, and there was evidence that it was a “take it or leave it” decision, this was not sufficient to show that the agreement was not entered into willingly.

The court had no basis to conclude that the employee’s educational background was limiting or that he lacked alternative employment opportunities. The court was aware of no other dire circumstances affecting the employee, such as economic problems or his immigration status being in jeopardy. The relevant factors generally weighed against a finding of procedural unconscionability.

Moreover, even if the agreement was procedurally unconscionable, without an additional finding that it was substantively unconscionable, the court was required to conclude that it was not unconscionable as a matter of law.

Transportation worker exception inapplicable. The court also determined that the FAA’s transportation worker exception was inapplicable here. That exception was intended to be narrowly construed and the employee failed to demonstrate that he was “a member of a class of workers” who actually engaged in the movement of interstate commerce or related work. Neither his individual duties, nor the duties of the group of route sales drivers of which he was part, demonstrated that he was a worker engaged in interstate commerce. The evidence suggested that the drivers were salespeople and service providers, not transportation workers.

Indeed, a federal district court in California had reached a similar conclusion with regards to Cintas “service sales representatives,” and the factors that applied in that case overwhelmingly weighed in favor of the same conclusion here.

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