N. D. of Texas Compels Arbitration in an Age and Race Employment Dispute

The Northern District of Texas has ordered binding arbitration in an age and race dispute with an at-will employee where an arbitration policy was implemented several years after employment began and the employee continued working after receiving notice of the policy.

In Robertson v. U-Haul Co. of Texas, No. 3:10-CV-2058-D, (N. D. Tex., February 7, 2011), John Robertson sued U-Haul Co. of Texas (“U-Haul”) “for age and race discrimination under the Age Discrimination in Employment Act of 1967 (“ADEA”), 29 U.S.C. § 621 et seq., and Title VII of the Civil Rights Act of 1964 (“Title VII”), 42 U.S.C. § 2000e et seq.” Robertson began working for U-Haul in 1998. Eight years later, U-Haul adopted an arbitration policy for employment related disputes that also included termination (the “Arbitration Policy”). The Arbitration Policy provided for “mandatory, binding arbitration of disputes, for all employees,” and specifically applied “to disputes or claims brought under the ADEA and Title VII.” The policy also contained a provision which stated that an employee’s continued employment constituted an agreement to be bound by the terms of the Arbitration Policy and advised current employees to review the policy with a legal advisor. When the Arbitration Policy was implemented, U-Haul requested that all employees sign a copy and Robertson refused.

In February 2008, Scott Graydon, U-Haul’s President, sent Roberson a letter,

explaining that the Arbitration Policy was a condition of Robertson’s continued employment at U-Haul and that the Arbitration Policy bound Robertson, although he had, until then, declined to sign it. Robertson signed Graydon’s letter in confirmation of receipt. U-Haul terminated Robertson’s employment on September 26, 2009.

In 2010, Robertson filed a demand for arbitration with the American Arbitration Association (“AAA”). Robertson’s arbitration claim was dismissed for failure to pay a filing fee. Robertson then filed suit in Texas State Court. U-Haul removed the case to the Northern District of Texas and filed a motion to abate the proceedings and to compel arbitration.

The court began its opinion by stating there was no dispute regarding whether Robertson’s claims fell “within the scope of the Arbitration Policy.” Additionally, Robertson made no argument that his claims were not arbitrable. According to the court,

The parties instead dispute whether the Arbitration Policy is valid. Under the FAA, arbitration agreements that are valid under general principles of state contract law and involve interstate commerce are “valid, irrevocable, and enforceable.” 9 U.S.C. § 2. The parties do not dispute that the contract involves interstate commerce. The dispositive question is whether the Arbitration Policy is valid under Texas law.

The district court began its inquiry by reviewing the applicable Texas law,

“The enforceability of an arbitration agreement is a question of law.” In re Dillard Dep’t Stores, Inc., 198 S.W.3d 778, 781 (Tex. 2006) (per curiam) (citing J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 227 (Tex. 2003)). “An employer may enforce an arbitration agreement entered into during an at-will employment relationship if the employer establishes that the employee received notice of its arbitration policy and accepted it.” Id. (citing In re Halliburton Co., 80 S.W.3d 566, 568 (Tex. 2002)). “Notice is effective if it unequivocally communicates to the employee definite changes in the employment terms.” Id. (citing In re Halliburton Co., 80 S.W.3d at 568). “If the employee receives notice and continues working with knowledge of the modified employment terms, the employee accepts them as a matter of law.” Id. (citing Hathaway v. Gen. Mills, Inc., 711 S.W.2d 227, 229 (Tex. 1986)).

Next, the Northern District held that the Arbitration Policy was “enforceable and applicable to Robertson’s claims,” because “Robertson received proper notice of the Arbitration Policy,” and U-Haul “established that Robertson continued working for U-Haul with knowledge of the modified employment terms.”

According to the court,

Robertson continued to work for U-Haul until 2009, more than three years after U-Haul notified him that it had modified the terms of his at-will employment. His continued employment constituted acceptance of U-Haul’s Arbitration Policy, and he is bound to arbitrate his current claims because they fall within the scope of the Arbitration Policy.

The Northern District of Texas granted U-Haul’s motion to abate and ordered the dispute to binding arbitration.

Technorati Tags: law, ADR, arbitration