Florida Employment Law Blog : Florida Employment Lawyer & Attorney : Epstein Becker Green Law Firm : Immigration, Discrimination, Labor, FLSA : Serving Miami, Fort Lauderdale, Florida

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.  

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Last month I reported on a decision from the Fourth District Court of Appeals, United Healthcare of Florida v. Brown, that evinced the judicial preference in Florida to enforce arbitration agreements. Another recent decision by the Fourth District Court of Appeals further illustrates this preference.

In Santos v. General Dynamics Aviation Service Corp., Case No. 4D07-5067 (Fla. 4^th DCA, June 25, 2008), the employer had a Dispute Resolution Policy (DRP) which covered employment-related claims including employment discrimination and harassment. The DRP stated that arbitration was the “sole and exclusive forum and remedy for all Covered Claims,” and that the parties agreed to waive any right to jury trial for a covered claim. The DRP further provided that “the continuation of employment by an individual shall be deemed to be acceptance of the DRP. No signature shall be required for the Policy to be applicable.”

In September 2006, Santos filed an administrative complaint with the Palm Beach County Office of Equal Opportunity (OEO), which forwarded the complaint to the Florida Commission on Human Relations (FCHR). General Dynamics participated in the administrative process and defended itself against Santos’ claims.

The FCHR had not yet reached a determination when, in July 2007, Santos filed a complaint against General Dynamics in circuit court. Santos brought claims of employment discrimination and retaliation pursuant to the Florida Civil Rights Act (FCRA) alleging that he was “unjustly terminated . . . because of his national origin (Puerto Rican and Dominican) and because of his complaints of discrimination.”

When Santos filed his complaint in circuit court, General Dynamics filed a motion to compel arbitration and stay of judicial proceedings pursuant to the Federal Arbitration Act (FAA). General Dynamics alleged Santos' claims fell within the DRP and asked the court to compel arbitration as Santos did not voluntarily agree to submit his claims to arbitration.

The trial court granted General Dynamic's motion to compel arbitration. Santos appealed the trial court's order and argued on appeal: (1) by failing to raise the issue of arbitration during the OEO complaint process, General Dynamics waived its right to arbitration and was estopped from filing a motion to compel arbitration; (2) there was never a valid agreement between the parties to submit claims to arbitration because he never signed the policy and there was no consideration as General Dynamics imposed the DRP after he was employed; (3) claims brought under the Florida Civil Rights Act are not subject to arbitration because the legislature set up a statutory right for individuals to have their day in court; (4) the agreement did not apply to Santos because it stated that it was applicable to employees of “Gulfstream Aerospace Corporation” and “its direct and indirect subsidiaries” and did not identify General Dynamics as one of those direct or indirect subsidiaries.

In its decision, the Fourth DCA addressed only the validity of the arbitration agreement. As to Santos’ other arguments, the court simply opined that "they are not persuasive, and affirm without further discussion.”

Turning to the validity of the arbitration agreement, the court held that “the Federal Arbitration Act (FAA) applies to the agreement between General Dynamics and Santos because General Dynamics is engaged in interstate commerce and the term 'involving commerce' is to be interpreted broadly.” The court went on to cite its previous decision in BDO Seidman, LLP v. Bee, 970 So. 2d 869, 874 (Fla. 4th DCA 2007), for the proposition that an arbitration agreement does not need to be signed to satisfy the written agreement requirement of the FAA.  The court held that Santos's continued employment with General Dynamics after his receipt of the DRP demonstrated his assent to the agreement. Finally, the court held that there was sufficient consideration to support the DRP because the agreement created a mutual obligation to arbitrate. Accordingly, the court affirmed the trial court’s order granting the company’s motion to compel arbitration.

As the Santos and United Healthcare of Florida decisions illustrate, employers are likely to face little resistance from Florida courts in enforcing mandatory arbitration agreements for employment-related disputes. This is true even where the agreement is not signed by the employee.  A mandatory arbitration policy in an employee handbook can suffice to establish an enforceable policy. 

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Florida law generally favors agreements to arbitrate, and a recent decision by the Fourth District Court of Appeals illustrates this principle.  In United Healthcare of Florida v. Brown (Case No. 4D07-4539, 4th DCA, June 4, 2008) (which you can find here), the court held that an employee was bound to arbitrate her employment-related claim (the opinion does not state what her claim was), because in 2000 she had signed her employer's Internal Dispute Resolution/Employment Arbitration Policy.  The policy, which had been implemented in 1999, required the employee to "resolve all employment-related disputes which are based on a legal claim through final and binding arbitration."  Interestingly, in 2002 the employer implemented a new, but similar, arbitration policy, which the employee did not sign.  Nevertheless, the Fourth DCA, evincing the judicial preference to enforce arbitration agreements, held that, having signed a 2000 acknowledgment that incorporated the 1999 arbitration policy, the employee was estopped from denying the validity of the new agreement.

Whether mandatory arbitration of employment-related claims is a good thing for employers is a debatable issue which I will address in future posts.  In the meantime, be advised that employers cannot require employees to sign an arbitration policy that would cover a pending EEOC charge.  An employee's refusal to sign an arbitration policy under these facts is protected activity, according to a January 2008 decision by the Eleventh Circuit Court of Appeals, Goldsmith v. Bagby Elevator, Case No. 06-14440 (11th Cir., January 17, 2008).

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