An employee who claimed an agreement he entered to arbitrate all employment related claims was unconscionable has his challenged rejected as the Court found the arbitration agreement to be neither procedurally or substantively unconscionable.
In the case of Fox v. Computer World Services Corp., et al. (2013), when Plaintiff Phillip Fox (“Fox”) began his employment with Computer World Services Corp. and C2 Essential, Inc. (joint employers of Fox and collectively referred to as “Defendants”) he electronically signed a number of forms, one of which was an arbitration agreement. The arbitration agreement provided that the parties agreed to arbitrate, inter alia, any claims alleging violation of federal and state statutes. Approximately eighteen months after he began working for Defendants, Fox’ employment was terminated. Fox alleged that his job termination was in violation of the Age Discrimination in Employment Act, and also alleged retaliation and violations of the District of Columbia Human Rights Act. Fox refused to arbitrate his claims and instead sued Defendants in state court. Defendants removed the case to federal court and also filed a motion to dismiss and to compel arbitration.
For his part, Fox challenged the arbitration agreement and claimed it was procedurally unconscionable because it was buried within a larger series of employment documents; it was presented to him on a take it or leave it basis; and, he did not understand that by acknowledging the arbitration agreement he was agreeing to the terms within the agreement. Fox also challenged the agreement because he signed it electronically. The Court rejected each of these arguments and found that the Agreement to Arbitrate was presented in a separate document and the title of the document was in all caps and in bold font. In addition, the Court found that immediately before the signature line of the agreement was an acknowledgement, again in all caps, which stated that the signatory read and understood the terms of the agreement and was been provided the opportunity to discuss the agreement with legal counsel. Finding that Fox had a choice as to whether to enter the agreement, acknowledged that he read and understood the agreement and was given a chance to consult legal counsel, the Court found the arbitration agreement was not procedurally unconscionable.
Fox also raised a number of substantive challenges to the arbitration agreement, including challenging the agreement on the grounds that it contained a fee-sharing provision wherein all parties were required to share the fees and costs of the arbitrator in an amount and manner determined by the arbitrator. While the Court easily disposed of most of Fox’ substantive challenges to the arbitration agreement, the fee- sharing issue raised by Fox and whether forcing him to go through arbitration would be prohibitively expensive was not so easily resolved. Ultimately, the Court found that the risk that Fox might incur prohibitive costs was too speculative to invalidate the agreement. The Court relied on the fact that Defendants had waived the fee-sharing provision in the agreement, and that the agreement (although somewhat ambiguous) appeared to allow the arbitrator discretion as to how to allocate fees and costs. Therefore, Fox’ argument as to what portion of those fees he would have to bear were too speculative to deem the arbitration agreement substantively unconscionable. The Court held that the arbitration agreement was enforceable and compelled Fox to arbitrate his claims.
Written By Malik K. Cutlar
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