The Texas Supreme Court issued an opinion this morning holding that advising an at-will employee that his employment will be terminated if he does not sign a mutual waiver to resolve disputes without a jury is not unlawful coercion sufficient to sset aside the agreement. If you read this blog frequently, you know I am a big proponent of using agreements to waive jury trials instead of arbitration agreements. You can read my reasoning in the posts assembled here.
In In re Frank Kent Motor Company, the high-end luxury car dealer required its at-will employees to agree, as a condition of employment and continued employment, to enter mutual agreements to waive the right to jury trial and instead resolve claims before a judge sitting without a jury. Steven Valdez, a 28-year employees of Frank Kent, was presented with the agreement and originally failed to sign it. When approached about his failure to sign the Agreement, Valdez expressed his desire not to sign the Agreement. According to the opinion, Valdez’s manager told him he would no longer have a job if he didn’t sign the Agreement. Valdez then signed the Agreement. A year later, Valdez’s employment ended. He sued in court for age discrimination and demanded a jury trial. Frank Kent filed a motion to strike the jury demand. The trial court refused to strike the jury demand. The court of appeals denied Frank Kent’s request for mandamus relief. However, the Supreme Court conditionally granted the mandamus relief meaning that Valdez will not get a jury trial.
The Supreme Court of Texas reasoned that because Valdez was an at-will employee and could resign or be terminated at any time and for any reason, it was not coercion for an employer to require the at-will employee to agree to waive resolution of disputes by jury trial as a condition of employment or continued employment. Stated another way, Justice Lehrmann succinctly stated that "an employer’s threat to exercise its legal right cannot amount to coercion that invalidates a contract." Because the Court upheld the jury waiver, the case will be remanded to the trial court for further proceedings including the possibility of a trial before a judge.
You can download a full copy of the Court’s opinion here.
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