In a decision rendered
earlier this month by the Kentucky Court of Appeals,
it determined
that an employee's agreement to arbitrate disputes
with his employer would be enforced. Gatliff v.
Firestone Industrial Products Company, LLC No.
2013-CA-001568-MR (Ky. App. February 6, 2015).
Gatliff charged her employer, Firestone
Industrial Products
Company, LLC, with violation of the Kentucky Civil Rights Act consequent
to her termination from employment after
completing gender
reassignment surgery
and allegations
of creating a hostile work environment. The suit was initially removed
to federal court, but then remanded to the Circuit
Court on the basis that the claimed damages were not sufficient to meet the requirements of diversity jurisdiction. Firestone then
sought to compel arbitration
of the dispute, an effort which Gatliff resisted.
According to the Court of Appeals, Gatliff had agreed to arbitrate all disputes in a series of three separate
documents. The first was signed when she applied for a full-time position with Firestone in 1998. Also in 1998, she acknowledged
receipt of a copy of the Firestone employee
dispute resolution
policy, it containing an agreement to arbitrate. She is well, in 2003, signed a document referencing the
employee dispute
resolution policy
and acknowledging
that she had
had opportunity
to review it. Objecting to the enforcement
of these agreements against
her, Gatliff asserted
that (i) no meeting of the minds occurred; (ii) no provision stated that she was waiving her right to a jury trial; (iii) no consideration existed
for the 2003 agreement
as to the revised employee dispute
policy and
(iv) the agreement is so unconscionable.
In support of the assertion that no meeting of the minds occurred, Gatliff claimed that
“she did not read the plans referred to in the acknowledgments and
the acknowledgments
did not contain a jury waiver provision." The Court of Appeals rejected this assertion. Rather, the Court found that the documents signed
by Gatliff referred to
the dispute
resolution plan
and represented
that the signatory
acknowledged having had opportunity
to review the plan, relying in part on the rule that "a signor to a contract is presumed to know the contents of the contract.” Slip.
Op. at 8 (citation omitted).
The Court of Appeals stated
that arbitration
agreements need
not contain an
explicit waiver
of the right to a jury trial as that waiver is an obvious consequence
of an agreement arbitrate. As to the argument for a lack of consideration, the court, in reliance upon Spears v.
Carhartt, Inc., 215 S.W.3d 1 (Ky. 2006), held that continued employment
is itself sufficient consideration
to support an agreement to arbitrate. In connection with, the court did not discuss the June, 2014 ruling of the Kentucky Supreme Court in
Charles
T. Creech, Inc. v. Brown, wherein it was determined
that noncompete
agreements require
consideration to
the employee
(i.e.,
something of
value) above
and beyond continued employment. Seeking to avoid the agreement on the basis that it does not require that arbitration
take place in Kentucky (see Ally Cat, LLC v. Chauvin, 274 S.W.3d 451, 455 (Ky. 2009)), the Court of Appeals relied
upon the fact that the agreements
with Firestone
provided that
they would be interpreted
under the Federal Arbitration
Act, and as the Federal Arbitration Act
imposes no requirement as to the locale of the arbitration. Likewise rejected
were assertions of
substantive unconscionability
based on the failure to agree she would be provided a free record of the proceedings and
for attorney fees
and costs. The Court’s rejection of these challenges
is likely dicta in that first the Court found that they were not timely in that they were not raised to the trial court below.
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