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An Ohio appellate court ruled that an employer cannot require an employee who signed a mandatory arbitration agreement to arbitrate her claim that her supervisor forced her to have oral sex. The court found the agreement was procedurally and substantively unconscionable.
Shannon Arnold was raped by her supervisor in the men’s bathroom at a Burger King restaurant during working hours. As a term of her employment, Arnold executed a mandatory arbitration agreement in which she agreed to submit to JAMS Inc., a national arbitration association, “any and all disputes, claims or controversies for monetary or equitable relief arising out of or relating to [Arnold’s] employment.” The agreement also stated that it covered “claims or controversies relating to events outside the scope of your employment.”
Arnold filed a complaint against Burger King and Carrols LLC, the franchise owner, on March 13, 2014. She alleged that she had been employed by Burger King from May 2012 until August 2012. She further alleged that on July 21, 2012, as she “was cleaning the restrooms as part of her duties as an employee” her supervisor forced her to give him oral sex. Arnold sued Burger King and Carrols for sexual harassment, respondent superior/negligent retention, emotional distress, assault, and intentional tort. Carrols filed a motion to compel arbitration, pursuant to the arbitration agreement. The trial court denied the motion to compel arbitration and Carrols appealed.
The appellate court noted that Ohio’s public policy encourages arbitration as a method to settle disputes. It said that arbitration agreements are “valid, irrevocable, and enforceable, except upon grounds that exist at law or in equity for the revocation of any contract.” For example, an arbitration provision may be invalid if it is unconscionable. The court noted that Arnold asserted the agreement was unconscionable, and the court found her assertion had merit.
The court said that unconscionability embodies two separate concepts (1) unfair and unreasonable contract terms, i.e., substantive unconscionability, and (2) an absence of meaningful choice on the part of one of the parties, i.e., procedural unconscionability.
Carrols drafted the arbitration agreement and presented it to Arnold as a condition for hiring her. She could either sign it or remain unemployed. There is no evidence that Arnold could alter any of its terms. Under these circumstances, the arbitration provision in the agreement was procedurally unconscionable, the court said.
appellate court also ruled that because the agreement sought to include every possible situation that might arise in an employee’s life, the clause is substantively unconscionable as the arbitrator would be resolving disputes unrelated to employment. In particular, it noted that arbitrators do not normally determine whether one employee was raped by another. The court affirmed the trial court’s decision.
Arnold v. Burger King, Ohio Ct. App., No. 101465 (April 30, 2015).
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