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An employee could not argue duress as a basis for invalidating an arbitration agreement within an employer-provided worker's compensation plan where the employer had a legal right to withhold compensation from the employee due to the employee's refusal to consent to the plan, according to the Fifth Circuit Court of Appeals.
In Lester v. Advanced Environmental Recycling Technologies, Inc., No. 06-51519, 2007 WL 1982195 (5th Cir. July 5, 2007), Lester sued Advanced, his employer, seeking damages for an injures sustained on the job. Advanced moved to compel arbitration pursuant to an employer-provided occupational injury benefits plan that contained a clause requiring arbitration of claims arising out of accidents at work. The district court granted the motion.
On appeal, Lester argued that he only consented to the plan under duress because Advanced withheld compensation for his injuries until he consented to the plan. Lester demanded a jury trial on the issue of whether the allegation of duress rendered the arbitration agreement unenforceable.
The Court affirmed the district court's ruling, holding that even if all Lester's factual allegations were true, Lester failed to show that he consented to the plan under duress. Specifically, the Court found that Lester failed to show that Advanced "obtained his consent by threatening to do something that it had no legal right to do," because under Texas' workers' compensation program, Advanced had no duty to compensate injured employees who did not consent to the terms of the employer-provided compensation plan. As such, any threat to withhold compensation was within Advanced's legal rights.
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