News & Insights

Eleventh Circuit Enforces Employee Arbitration Agreement, Holding That The Agreement Was Not Unconscionable

The Eleventh Circuit Court of Appeals recently reversed a District Court’s decision that an employment arbitration agreement was “procedurally unconscionable”. See Lambert v. Signature Healthcare, LLC, No. 19-11900 (11th Cir. July 8, 2022).

Lambert was unemployed for six months and accepted a position with Signature Healthcare.  As a condition to her employment, she was required to sign Signature Healthcare’s arbitration agreement.  The arbitration agreement covered all claims relating to “recruitment, employment, or termination of employment,” and “any and all claims under federal, state, and local laws and common law”. The agreement allowed the signer to consult an attorney prior to signing, although employment would not be offered until the form was signed and returned.

According to Lambert, she “felt pressured to sign all of the documents in the stack of papers because of [her] financial situation and unsuccessful job search, even though [she] did not understand them.” Lambert was eventually fired from Signature Healthcare and brought claims against Signature in Florida state court under the Family and Medical Leave Act, the Fair Labor Standards Act and state law.

Signature removed the case to federal court and moved to dismiss and compel arbitration under the Federal Arbitration Act. The District Court denied the motion, holding that the arbitration agreement was unenforceable as it was unconscionable. The Court determined  the agreement was a “contract of adhesion.”

The Eleventh Circuit reversed the District Court’s decision, concluding that the arbitration agreement was conscionable. The Court held that, although Lambert lacked a meaningful choice when she signed the arbitration agreement, that issue was not, alone, dispositive.  The Court took an independent review of the record to identify “any additional factors that weigh[ed] in favor of procedural unconscionability.”   The Court held that one may not “avoid the consequences of a contract freely entered into … because in retrospect, the bargain turns out to be disadvantageous.”

The Eleventh Circuit’s decision is helpful to employers who require the signing of arbitration agreements as a condition of employment.