Eleventh Circuit Upholds "Open Door" Dispute Resolution Policy and Compels Arbitration
In previous posts I've discussed cases that illustrate the judicial preference in Florida to uphold mandatory arbitration agreements. A recent decision by the Eleventh Circuit Court of Appeals, Lambert v. Austin, Ind., Case No. 07-10651 (11th Cir., October 7, 2008), illustrates the same judicial preference at the federal level.
Austin Maintenance & Construction, Inc., a general contractor, has a company-wide workplace dispute resolution program, which it calls “Open Door” policy. The Open Door policy has a three-step process for resolving workplace disputes—a conference with a supervisor higher up the chain of command, followed by mediation, and, as a last resort, arbitration. Austin requires that new employees agree to the Open Door policy as a condition of employment. In particular, Austin’s Application for Employment requires that newly-hired employees agree “to be bound by and accept as a condition of employment the terms of Open Door.” In addition, at orientation, Austin provides newly hired employees with a pamphlet which states that employees “agree to waive [their] right to a trial in a court of law, and [] agree instead to resolve all legal claims against Austin through Open Door.” The pamphlet also states that Austin also “waives its right to trial in a court of law and agrees to resolve such disputes through Open Door.”
William Lambert was hired by Austin in 2001. In 2005, Austin terminated Lambert’s employment because, according to Austin, Lambert threatened a supervisor during a meeting five days
earlier. Lambert claimed that he was terminated because of race and age, and in retaliation for his prior complaints of race discrimination, and brought suit in federal court. Austin moved the district court to stay proceedings and compel arbitration pursuant to the Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1 et seq., based upon the Open Door policy. The district court denied the motion to compel arbitration. On appeal, the Eleventh Circuit reversed.
In its decision, the court notes that in federal court, the validity of an arbitration agreement is governed by the Federal Arbitration Act.
Under the FAA, a written agreement to arbitrate is "valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. Accordingly, the FAA requires a court to either stay or dismiss a lawsuit and to compel arbitration upon a showing that (a) the plaintiff entered into a written arbitration agreement that is enforceable “under ordinary state-law” contract principles and (b) the claims before the court fall within the scope of that agreement.
The court found that the Open Door policy was a valid and enforceable agreement under state law. Turning to the second question -- whether Lambert's claims fell within the scope of the agreement -- the court noted “[t]he FAA creates a presumption in favor of arbitrability; so, parties must clearly express their intent to exclude categories of claims from their arbitration agreement.” The court found no such intent. Instead, the court found that the language of the Open Door policy expresses "a broad, all-inclusive desire to arbitrate disputes, especially disputes based on age and race discrimination."
Clients occasionally ask me whether they should adopt a mandatory arbitration policy such as Austin's. It's a difficult question to answer, but I generally disfavor mandatory arbitration. One supposed advantage to arbitration is that it's faster and therefore less expensive. That may be true if the employee doesn't challenge the arbitration agreement in court, as Lambert did. If the employee challenges the agreement, you may find yourself in court before you even get to arbitration. An arbitrator's decision may also be less favorable to an employer than what it might achieve in court, as Long John Silver's learned recently. Also, it's difficult to get cases in arbitration dismissed on pretrial motions. Arbitrators like to hear cases on the merits with live witnesses. Federal judges have busy caseloads and are not reluctant to dismiss cases that clearly lack merit. So my personal preference is to duke it out in court rather than in front of an arbitrator. But I welcome your comments on this issue.
An employee who was exposed to pornography involving a co-worker on three separate occasions stated a claim for a sexually hostile work environment under Title VII, according to the Eleventh Circuit Court of Appeals in an "unpublished" opinion released last week, 