Employees Must Abide by Mandatory Arbitration Agreements - U.S. Third Circuit
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Employees Must Abide by Mandatory Arbitration Agreements

Do employees waive their rights to bring a class action lawsuit when they sign mandatory arbitration agreements?

The Third Circuit Court of Appeals says yes, in a recent opinion. Employees who consent to mandatory arbitration clauses in their employment agreements must arbitrate any controversy instead of litigating it.

The Facts

Janice Quilloin worked as a nurse at a hospital run by Tenet Healthcare Corporation. She had been employed by Tenet twice and had signed the "Fair Treatment Process" document both times, which document mandated arbitration in lieu of litigation.

She sued Tenet in 2009 on behalf of a class of hospital employees. The theory was that the employees were denied pay for work they performed during meal breaks.

Tenet requested that the trial court compel arbitration, based on the "Fair Treatment Process." Quilloin claimed that the agreement was unfair and unconscionable. The trial court held in favor of Quilloin.

The Third Circuit reversed the trial court's finding and compelled arbitration, finding that Quilloin "did not lack a meaningful choice in agreeing to arbitrate."

The Decision

The Third Circuit Court of Appeals focused on several arguments advanced by Quilloin. The first of her arguments was that the agreement was substantively unconscionable. The court held that an arbitration agreement could not be substantively unconscionable where the agreement "does not alter or limit the rights and remedies available to a party in the arbitral forum."

Quilloin also asserted that the agreement was procedurally unconscionable. She claimed that she was not explained the terms of the agreement and that she had very little time in which to accept its terms and sign.

The standard for procedural unconscionability is a lack of meaningful choice in the acceptance of the provision.

In relying on Quilloin's level of education, the court held that she knew what she was signing and as a result, the court compelled arbitration.

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