The Third Circuit Court of Appeals upheld an arbitration agreement written in English against a Spanish-speaking employee who claimed that the agreement was unenforceable because he did not understand the English language.

In Morales v. Sun Constructors, Inc., No. 07-3806, 2008 WL 3974059 (3d Cir. Aug. 28, 2008), Sun Constructors ("Sun") hired Morales, a Spanish-speaking welder, after Morales passed a written exam in English. Sun asked Jose Hodge, a bilingual applicant, to help Morales understand the employment contract. The contract was written in English, and over half of the contract consisted of an arbitration agreement. Morales signed the contract.

Over a year later, Sun fired Morales for violating safety standards. Morales sued for wrongful termination, and Sun moved to stay litigation pending arbitration. The trial court denied the motion, holding that mutual assent to the arbitration agreement did not exist because Morales did not understand English. Sun appealed.

On appeal, the Court held that "[a]ccording to the objective theory of contract formation, what is essential is not assent, but rather what the person to whom a manifestation is made is justified as regarding as assent. Thus, if an offeree, in ignorance of the terms of an offer, so acts or expresses itself as to justify the other party in inferring assent, . . . a contract will be formed in spite of the offeree's ignorance of the terms of the offer."

Accordingly, the Court held: "In the absence of fraud, the fact that an offeree cannot read, write, speak, or understand the English language is immaterial to whether an English language agreement the offeree executes is enforceable." Morales did not claim that Sun engaged in fraud, and did not claim that Sun misrepresented the contents of the agreement. Thus, the Court held that Morales's signature and initials on every page of the contract manifested his assent to the arbitration agreement.

Sun also argued that the trial court improperly applied a heightened standard of "knowing consent" to the arbitration agreement. The Court held that although it was unclear whether the trial court did indeed apply such a standard, applying a heightened "knowing and voluntary" standard to arbitration agreements would be inconsistent with the Federal Arbitration Act. Consequently, the Court upheld the arbitration agreement and ordered a stay of litigation.

One judge dissented, arguing that Sun "assigned" Hodge to translate the contract for Morales, and since Hodge failed to inform Morales of the arbitration agreement, it was essentially Sun's negligence that caused Morales to be unaware of the arbitration agreement. The majority disagreed with the dissent's characterization of the circumstances of the case, holding that Sun did not "assign" Hodge to translate. Furthermore, the majority noted that Morales did not ask Hodge for an explanation of the contract: "It was Morales's obligation to ensure he understood the [a]greement before signing." As a result, the Court held that Morales assented to the contract.