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An Alabama federal district court has compelled arbitration of a former employee's claims, noting that her participation in the first two steps of the employer's dispute resolution process manifested an intent to be bound to the final step of the process – binding resolution of claims by an outside arbitrator.
In Freeman v. Sterling Jewelers, Inc., Civ. A. No. 1:08CV154-SRW, 2008 WL 3890498 (M.D. Ala. Aug. 18, 2008), Freeman was employed by Sterling. During Freeman's employment, Sterling instituted a dispute resolution program called "RESOLVE" requiring that employment-related disputes be resolved through a three-step process, the third being arbitration.
After Sterling terminated her employment, Freeman claimed she was wrongfully terminated. Following consultation with an attorney, Freeman agreed to proceed through the first step of the RESOLVE process. After the program administrator denied her claim, Freeman appealed. During the second step of the RESOLVE process, Freeman's claim was denied by a panel of Sterling employees.
Instead of appealing the panel's decision to an outside arbitrator as required by the third step of the RESOLVE process, Freeman filed suit in state court for employment discrimination under Alabama state law and violations of the Employee Retirement Income Security Act. Freeman also alleged that co-workers engaged in a conspiracy with Sterling to intentionally interfere with her employment. Sterling, along with the third-party co-workers, moved to compel arbitration of Freeman's claims.
The Court first determined that there was an agreement to arbitrate between Sterling and Freeman. It noted that specific language in the distributed RESOLVE program brochure clearly indicated that the program was "applicable to all employees," "required," and a "mandatory and binding program." According to the Court, this language was definite enough "to constitute an actual offer" and was communicated to Freeman. Moreover, the Court found that Freeman, by continuing employment after RESOLVE's effective date, accepted the offer.
The Court also noted that Freeman had "manifested her acceptance of the offer by availing herself of the benefits of the RESOLVE program" – namely, taking advantage of the first two steps of the program. According to the Court, this conduct supported Sterling's contention that an agreement existed between the parties.
The Court next decided that Freeman's claims were within the broad scope of the RESOLVE agreement. While the program was limited to a finite list of claims, Freeman's claims were either statutory or common law claims "affecting economic terms of employment," and were well within the scope of the agreement.
Finally, the Court determined that Freeman's claims against the third-party co-workers should also be decided in arbitration. According to the Court, Freeman's own complaint characterized her claims against the co-workers as stemming from a conspiracy with Sterling and that this conspiracy was the proximate cause of her injuries. Under such circumstances, the Court held that Freeman was equitably estopped from avoiding arbitration with her former co-workers.
Accordingly, the Court compelled all of Freeman's claims to arbitration as required by the third step of the RESOLVE dispute resolution program.
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