The Fifth Circuit Court of Appeals upheld a district court ruling that an arbitration agreement was binding on all employees who continued their employment, including those employees who refused to sign a receipt of notice. Ordinarily, there is no appeal from an order compelling arbitration, but in this case, the Court permitted an appeal because the order was a final appealable order, which took the case outside of the rule that there is no interlocutory appeal from an order compelling arbitration.
In Omni Hotels Management Corp. v. Bayer, No. 06-30372, 2007 WL 1493878 (5th Cir. May 21, 2007), Omni Hotels was sued in state court by several current and former employees seeking damages for exposure to toxic mold.
Omni Hotels subsequently filed a declaratory judgment action in federal court, seeking an order compelling arbitration and enjoining the state court action. Omni Hotels sought arbitration pursuant to a mandatory arbitration program that was implemented during the employment relationship.
To implement its arbitration program, Omni Hotels distributed a copy of the arbitration agreement to each of its employees. Continued employment constituted assent to the arbitration agreement. Nevertheless, some employees refused to sign a receipt indicating that they had been given a copy of the agreement.
The district court granted a declaratory judgment in favor of Omni Hotels, ruling that the employees who assented to the arbitration agreement through continued employment were required to arbitrate and thus could not participate in the state court action. The employees appealed.
In opposing the appeal, Omni Hotel argued that there was no appellate jurisdiction because the Federal Arbitration Act does not permit an interlocutory appeal from an order compelling arbitration. In rejecting this argument, the Court explained that the order compelling arbitration was a final appealable order – rather than an interlocutory order – because the district court granted the sole remedy sought by Omni Hotels.
Thus turning to the merits of the appeal, the Court affirmed the order compelling arbitration. Specifically, the Court upheld the district court's ruling that the employees who continued their employment were bound by the arbitration agreement even if they refused to sign a receipt of notice.
This case follows a long line of cases holding that employees who assent to an arbitration agreement through continued employment cannot avoid the agreement by refusing to sign an acknowledgment form or otherwise voicing some objection. See, e.g., Hardin v. First Cash Financial Services, Inc., 465 F.3d 470 (10th Cir. 2006); Berkley v. Dillard's Inc., 450 F.3d 775 (8th Cir. 2006).
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