Overview
You are on a jury and given a situation and answer a couple questions and reply to a student:
Booter’s and ADR
Booters Restaurant used an alternative dispute resolution program. Employees of Booters had to sign an “agreement to arbitrate employment-related disputes” to be eligible for raises, transfers, and promotions. Under the agreement, both Booters 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.
In a separate policy document not shared with employees until after they had signed the agreement, Booters set forth the rules and procedures of its arbitration program:
The employee had to provide notice of the specifics of the claim, but Booters 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 facts or witnesses and a brief summary of the facts known to each.
While the employee and Booters 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, Booters alone selected the arbitrators that were put on the list.
Only Booters had the right to widen the scope of arbitration to include award any matter, whereas the employee was limited to the matters raised in his or her notice.
Only Booters had the right to record the arbitration.
Only Booters could cancel the agreement to arbitrate or change the arbitration rules.
Daniela Targ had worked as a bartender at the Booters restaurant for about five years before Booters adopted its arbitration policy. Daniela was given a copy of the agreement to arbitrate to review for five days and then sign. Approximately two years later, a Booters 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, Booters filed an action in federal district court to compel arbitration of Targ’s claims.
Should Daniela be forced to settle her claim through arbitration? Why?
Assume your company’s arbitration policy was exactly like Booters’. Name one aspect would you retain, and which one might you change? Why? Be specific.
It is acceptable to use the Power Point slides for the required text reference.
In October, 2019, California companies can no longer require employees to sign an agreement forcing harassment, discrimination and wage claims into arbitration as a condition of employment instead of being able to sue.
- California’s legislation was careful not to conflict with the Federal Arbitration Act and U.S. Supreme Court case law that allows companies to enforce mandatory arbitration agreements. The new state law says it’s illegal to require mandatory arbitration as a condition for employment, but doesn’t invalidate existing agreements. It also protects employees from retaliation and allows them to go to the state Labor Commissioner’s Office.
Student's answer:
- Daniela should not be forced to settle her claim through arbitration due to the original contract lacking the voluntary consent, therefore making it legally voidable. Although Daniela’s free will was not completely overcome with unlawful pressure from her employer legally causing duress, such as threatening to fire her if she did not agree to sign the alternative dispute resolution (arbitration) contract. The requirement of employees to sign the ADR contract in order to be eligible for raises, transfers, and promotions constitutes undue influence being present during the signing of the contract making it therefore voidable. Undue influence is defined as, “persuasion that is less than actual force but more than advice and that induces a person to act according to the will or purposes of the dominating party.” The Booter’s managements’ action of taking away an employee’s ability to be promoted, transferred, or given a raise without their agreement to the ADR contract influences the employee with undue influence makes the contract voidable. There is also an argument for the contract committing misrepresentation fraud due to the omittance of information with the intent to deceive the employee. The employee’s of Booter’s were overcome with undue influence to sign the contract, and only after the contract was signed were these employee’s given a separate policy document setting forth the rules and procedures of Booter’s arbitration program. Intent to deceive is defined as, “knowledge by the misrepresenting party that material facts have been falsely represented or omitted with an intent to deceive.” Booter’s intentionally did not inform its employees of the rights they reserved to alone select the arbitrators placed on the list to choose from, for this reason Booter’s may have biased persons involved within the arbitration process for their own benefit. Employees signed the ADR contract without this knowledge under undue influence, which Booter’s may have relied on in order to avoid dealing with lawsuits pertaining to “any claim of discrimination, sexual harassment, retaliation, or wrongful discharge,” in court and instead through arbitration set in place by themselves. With the consideration of the lack of voluntary consent and misrepresentation fraud, due to the omittance of information by Booter’s, committed within the original contract it is my personal belief that Daniela should be able to bring her sexual harassment lawsuit to court and not have to find legal cure through arbitration.
If I were to own a company that upheld an arbitration policy similar to Booter’s, there are two major changes I would make to our contracting process. Firstly, I would not require signatures in order for employee’s to be eligible for a raise, promotion, or transfer, in order to avoid undue influence voiding the contract/policies in place and instead require agreement upon being hired at the restaurant. Secondly, I would provide my employees with all documents pertaining to the policies, rules, and procedures of our arbitration program prior to the employee’s signature in order to avoid a misrepresentation claim due to omittance of information. One aspect I would retain from their policy is the agreement is the employee agreement to resolve disputes arising out of employment through arbitration, while trying my best to keep all arbitrators unbiased allowing employees to settle disputes in the workplace fairly.