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.
