Jottings By An Employer's Lawyer

Thursday, February 27, 2003

Arbitration in 5th Circuit - Signature Not Always Enough

Although not an employment case, the ironic timing of the Fifth Circuit's decision in American Heritage Life Insurance Co. v. Lang [pdf] (5th Cir. 2/26/03) less than two weeks after the New Jersey Supreme Court decision in Leodori v. Cigna, was too good to pass up. In Leodori, the New Jersey Supreme Court refused to enforce an agreement because it lacked a signature by the employee. In Lang, the person seeking to avoid arbitration had signed four separate arbitration agreements. Although different facts, the underlying legal premise was similar - was there an agreement to arbitrate? In Leodori the court required more than just knowledge and continued working by the employee. In Lang, even though he signed the agreements he was illiterate and had asked the American Heritage representative to explain each of the documents he was signing. His affidavit, which was not qualified, said that he had not been told that he was signing an arbitration agreement. The Court found the affidavit by the American Heritage representative equivocal. Under these unique circumstances, the Court held it was for the court to determine the validity of the arbitration agreements.

It appears that we may be entering a new era of arbitration jurisprudence. Even though the concept has been reaffirmed, and is if anything more frequently being used, rather than less litigation about arbitration, we are going to have more. The difference is it will now focus on contract formation, program content, integrity of the process (both actual and perceived) and standards for reviewing decisions. Undoubtedly one of the things lost, or at least diminished, will be the benefits of quicker, cheaper final determinations.


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