Apr 16, 2008

Signing an Arbitration Agreement Can't Be a Prerequisite to Investigation, California Court Says

In a recent case, a California trial court denied an employer's motion to compel a former employee to arbitrate his racial discrimination and harassment claims, even though he'd signed a form agreeing to arbitrate. The denial was affirmed by an appellate court.

The plaintiff, Sam Metters, complained of the discrimination and harassment to his employer, Ralphs Grocery Company. On two occasions, Ralphs sent Metters a letter and "Notice of Dispute & Request for Resolution" form. The form included a voluntary mediation and mandatory arbitration clause, and left a blank for the employee to sign.

According to Metters, the employee relations manager at Ralphs instructed him to sign and return the form. He understood that he had to do so to have his claims investigated, and he signed. When he later sued the company, Ralphs tried to enforce the agreement.

But the court wasn't buying it. Even though the employee had signed, the document didn't look like a contract, so he hadn't really consented. The appellate court noted other problems with the process too -- the employee said he wasn't given a copy of the company's "Mediation & Binding Arbitration Policy," which was referred to in the arbitration clause.

Perhaps most importantly, the employer's actions suggested that the employee had to fill out the form to have his complaint investigated. The employee said he'd tried to contact the company on several occasions, and it hadn't produced results. Between this inaction, the letters he received, and the conversation he had with the employee relations manager, the plaintiff believed he didn't have another choice.

To find out more about arbitration agreements (and the types of provisions that might render them illegal), see Nolo's article Signing an Arbitration Agreement With Your Employer.

Alayna Schroeder