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Acceptance by continuing to work
November 14, 2007 by Ross Runkel at LawMemo
Lots of blog buzz about Seawright v. American General (6th Cir 11/13/2007), which held that Seawright accepted her employer's offer of an arbitration agreement by continuing to work.
The case discusses some basics of contract law: offer, acceptance, consideration, unconscionability.
Offer: A couple of blogs have suggested that the employer's offer was made by mailing the new arbitration program to employees. Well, partly true. In fact, the employer announced the program in a bulletin, mailed a letter, and held informational meetings. Seawright signed a form indicating that she attended a meeting and received a copy of the new program. So, it seems to me that there is no significant issue as to whether the employer made an offer that was received by Seawright.
Acceptance: The offer said, "Seeking, accepting, or continuing employment ... means that you agree to resolve employment claims ... through this process instead of through the court system." The offer was made in 1999 and Seawright continued working for six more years.
The court held that under Tennessee law her continuing to work was an expression of assent to the offer. Therefore, she accepted the offer.
The dissent argued that there was no proof that Seawright assented. She didn't sign an arbitration agreement, and "no Tennessee court has decided whether continuing employment is effective as a waiver of constitutional rights."
The dissenting judge (Hon. Boyce F. Martin, Jr.) deserves an award for his Homer Simpson footnote:
Homer Simpson talking to God: “Here’s the deal: you freeze everything as it is, and I won’t ask for anything more. If that is OK, please give me absolutely no sign. [no response] OK, deal. In gratitude, I present you this offering of cookies and milk. If you want me to eat them for you, please give me no sign. [no response] Thy will be done.” The Simpsons: And Maggie Makes Three (Fox television broadcast, Jan. 22, 1995).
My view: The dissent reflects a continuing (growing?) distaste for cases in which an employer requires agreement to arbitration as a condition of employment. My view is that this represents a failure of judges to follow the command of the Federal Arbitration Act that requires courts to enforce arbitration agreements under the same standards that they enforce all other contracts.
No signature: Seaworth did not sign an arbitration agreement. This was a big deal for the dissenting judge. However, the FAA does not require a signature. It requires only that the agreement be in writing, which it was.
Consideration: Consideration was present because both Seaworth and the employer agreed to arbitrate. Their mutual promises were consideration for each other.
Illusory promise: Seaworth argued that the employer's promise was illusory because the employer retained the unilateral right to change or terminate the arbitration program. However, the employer had to give 90 days notice beforehand. Thus, the agreement was totally binding for at least 90 days, and thus was not "illusory."
More on this case from other sources:
- Workplace Prof Blog - Sixth Circuit Enforces Arbitration Agreement Mailed to Employees
- Daily Developments in EEO Law
- Wall Street Journal's Law Blog - Footnote Of the Day: Homer’s Unilateral Contract With God
- Ohio Employers Law Blog - Mmmmmmmm, arbitration clauses
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Editor: Ross Runkel, Professor of Law Emeritus. email Ross@LawMemo.Com, Phone 503-399-8028. Copyright LawMemo, Inc.
