Appellate Court Enforces Employer's Arbitration Agreement

On behalf of a large technology corporation, Fred Sommer and Meredith Abrams persuaded the United States Court of Appeals for the Fourth Circuit to overturn  the  decision of the federal district court in Maryland refusing to enforce  our client's arbitration agreement. Hill v. PeopleSoft USA, Inc., 2005 WL 1459748 (4th Cir. June 22, 2005).  PeopleSoft, like an increasing number of employers, required its employees to submit all disputes concerning their employment to arbitration, rather than pursuing them in court.  PeopleSoft filed a motion asking the district court to dismiss the lawsuit and to require the plaintiff to assert her claims in arbitration.  The  district court  denied the motion because, according to the district court, the company's employee handbook gave the company the right to modify the plaintiff's agreement to arbitrate all disputes.  Previous case law held that if an  employer reserves the right to modify an agreement to arbitrate but does not grant this same right to the employee, then the agreement to arbitrate is not enforceable.  In this case, however, the appeals court agreed that while PeopleSoft reserved the right to modify policies in its handbook, the company did not reserve this same right in connection with the agreement to arbitrate.  Rather, the appeals  court ruled that PeopleSoft's arbitration  agreement must be read as a separate and independent agreement, and that because neither party reserved the right to modify that agreement,  it was enforceable.  The appeals court also rejected the plaintiff's contention that PeopleSoft's arbitration agreement was so one-sided as to be "unconscionable" and unenforceable.  Accordingly, the Fourth Circuit ruled that the plaintiff was bound by the arbitration agreement and directed that her lawsuit be dismissed.