Arbitration Agreement was not Unconscionable for Employees with Overtime Claims 

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Massachusetts Lawyers Weekly reports on a case in which the arbitration agreement was upheld despite claims of unconscionability:

Where plaintiffs have asserted claims for unpaid overtime wages pursuant to state and federal law, those claims are subject to arbitration under an agreement between the plaintiffs and the defendant employer.

“… Plaintiffs worked as ‘inside sales’ employees for [defendant] Mattress Firm at all relevant times. … Specifically, Plaintiffs sold products to Mattress Firm customers at its retail stores. … As alleged, Plaintiffs worked more than forty hours a week and did not receive overtime pay. … Plaintiffs were all managers-on-duty, which is an entry-level sales position. …

“On March 23, 2016, an email from Human Resources was sent to all Mattress Firm employees. … This email contained a copy of the Mutual Arbitration Agreement (the ‘Agreement’) and requested that the employees first watch a video on ‘MFRMtv’ explaining the significance of the Agreement and thereafter either execute electronically via DocuSign or complete the opt-out process. …

“Employees had the choice of opting-out of the Agreement by requesting an ‘Opt Out form’ via the email address listed in the body of the email. D. 37-1 at 6. Employees were required to return this form no later than April 23, 2016. Id. The March 23 email also indicated that clicking the ‘Decline to Sign’ option within DocuSign ‘was not a valid option for the fulfillment of [the Agreement].’ …

“Defendants argue that, pursuant to the Agreement, Plaintiffs agreed to submit all employment matters, including the claims asserted here, to binding arbitration and to waive their right ‘to bring claims as class, collective, or representative actions.’ … Defendants have also requested a stay of the court proceedings until arbitration is complete. … For the reasons given below, the Court holds that 1) there is a valid arbitration agreement; 2) Defendants are entitled to invoke the Agreement; 3) Plaintiffs are bound by the Agreement; and 4) the asserted claims fall within the scope of the Agreement. …

“Here, the Plaintiffs have not proven substantive or procedural unconscionability. As to procedural unconscionability, as discussed above, Plaintiffs received several procedural protections, including multiple notices of the Agreement, … and a link to a video explaining the arbitration process. … Additionally, the Plaintiffs had a choice to opt out within thirty days, execute the Agreement or terminate their employment. The argument that the Agreement may be viewed as a ‘contract of adhesion’ because Defendants ‘deemed employees to have accepted irrespective of whether they viewed the Agreement or were aware of its terms,’ even if true, does not render the Agreement procedurally unconscionable. … As mentioned above, absent fraud, Plaintiffs are bound by the Agreement they signed irrespective of whether they read and understood its terms. … As to substantive unconscionability, Plaintiffs argue that the Agreement’s unconscionability stems from Defendant’s reservations of its rights to ‘unilaterally’ modify the terms of the Agreement. … The modification clause states that ‘the Agreement may be modified or terminated by the Company after thirty days written notice to [Plaintiffs]’ and that ‘[a]ny modifications or terminations shall be prospective only and shall not apply to any claims or disputes that are pending in arbitration or that have initiated by either party.’ … This modification clause is not objectively oppressive. Although the Defendants reserve the rights to modify, the modification clause requires that Defendants must provide Plaintiffs with thirty days written notice, at which point, Plaintiffs presumably would have a choice of continuing their at-will employment. This coupled with the fact that any modification would be prospective and excludes pending claims or disputes undermines Plaintiffs’ contention as to the unconscionability of the clause. … Finally, Plaintiffs’ argument that there was a ‘gross disparity in the consideration’ of the Agreement … also fails because, as discussed above, the Court concludes there was adequate consideration to support the Agreement. In sum, Plaintiffs have not met their burden of proving unconscionability — either procedural or substantive — that would invalidate the Agreement.”

Perez-Tejada, et al. v. Mattress Firm, Inc., et al. (Lawyers Weekly No. 02-120-19) (16 pages) (Casper, J.) (Civil Action No. 17-12448-DJC) (Feb. 21, 2019).

Source: Arbitration – Employees – Overtime – Massachusetts Lawyers Weekly

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