There are a few pockets in the state where lawyers representing employees still vigorously fight the arbitration agreements their clients signed with employers agreeing to arbitrate all disputes. One of the pockets is in El Paso, Texas as evidenced by the number of opinions out of the court of appeals addressing the enforceability of an arbitration agreement between employers and employees.
An example of one of these challenges is found in the recent opinion of Mendivil v. Zanios Foods, Inc. In Mendivil, the plaintiff-employee challenged the arbitration agreement he signed with his employer when he wanted to sue in court under a workers’ compensation retaliation theory. Mendivil challenged the agreement on a variety of grounds including the fact his employer did not promise to arbitrate its disputes with Mendivil; he had to arbitrate his claims in New Mexico rather than El Paso; he had give notice of intent to arbitrate within thirty days of the incident and respond to all correspondence from his employer within ten days or waive arbitration; and he had to pay for one-half of the arbitration fees. In legalese, Mendivil claimed the agreement was illusory and not supported by adequate consideration (because the employer made no return promises) and was legally unconscionable (because it made him arbitrate far away, bear one-half of the arbitration expenses and make requests for arbitration on short time tables).
The court of appeals considered Mendivil’s challenge to the trial court’s order to arbitrate. The appeals court was persuaded that the agreement was unsupported by adequate consideration because the employer made no promises to Mendivil and that alone was sufficient to warrant reversal of the trial court’s arbitration order.
The takeaway from this case is twofold. First, an employer that desires to enforce an arbitration programs with its workforce must make sure the agreement is supported by valuable consideration. This is usually accomplished by having the employer make the return promise to arbitrate all of its disputes it has with employees. The mutual promises to arbitrate claims will almost always suffice as adequate consideration to support the arbitration agreement. Second, arbitration is meant to be a meaningful alternative to a judicial forum. Where a party uses the arbitration agreement to impose onerous conditions far more restrictive than would be found in a judicial forum, the court will view the enforceability of the agreement more skeptically. Remember, pigs get fat but hogs get slaughtered.
You can download a full copy of the Court’s opinion in Mendivil v. Zanios Foods, Inc. here.
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