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Under Nebraska law, an adhesion contract calling for arbitration of claims is not unenforceable per se, and parties to such a contract need not sign it to render it valid and enforceable, according to a federal district court in Nebraska.
In Chilson v. Retalix USA, Inc., No. 8:07CV101, 2007 WL 2904185 (D. Neb. Oct. 2, 2007), Retalix executed employment documents, including an agreement to arbitrate, with IDS employee Chilson after Retalix took over IDS.
Chilson later brought an employment-related claim against Retalix, and Retalix sought to stay the court proceedings and compel arbitration. Chilson opposed the motion, claiming that the agreement was unconscionable and that the absence of Retalix’s signature on the agreement rendered it invalid.
Retalix countered that Chilson was given ample time to consider the agreement and seek advice of counsel, was asked if he had questions about the agreement and did not ask any, and acknowledged that he understood the document. Retalix also maintained that the terms of the arbitration agreement were not hidden, and that neither party’s signature upon the agreement was necessary to enforce it because both parties assented to its terms by Chilson continuing employment with Retalix after his assent.
The Court stayed Chilson’s court claims and compelled arbitration. The Court first rejected Chilson’s allegation that the agreement was unconscionable. While the Court acknowledged that the agreement was an adhesion contract and was procedurally unconscionable by definition, the Court did not find the contract substantively unconscionable because it did not limit the mutual obligation of Retalix to arbitrate its claims.
Finally, the Court noted that Nebraska law only required an arbitration agreement to be in writing, and did not require either party to sign the agreement for it to be effective. Therefore, Chilson’s claim that both parties did not sign the agreement did not defeat its enforcement by the Court.
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