April 24, 2017 Practice Points

Online Arbitration Agreement Not Binding on Employee

By Karl Bayer

The Court of Appeals for the Second District of Texas has ruled that a worker was not bound by her employer's arbitration policy despite the fact that it was made available to her online because she was not explicitly informed about it. Doe v. Columbia North Hills Hospital Subsidiary, et al., No. 02-16-00275-CV (Tex. App. – Fort Worth [2d Dist.], March 23, 2017).

In 2006, Columbia North Hills Hospital implemented a mandatory binding arbitration policy related to all future disputes with its employees. Following implementation, the arbitration policy was posted on the hospital's intranet and available to workers at all times. In 2012, the hospital hired a part-time technician, Jane Doe. During Doe's new employee orientation, she was informed the hospital maintained an intranet that included a copy of numerous policies related to her employment. Doe was instructed to familiarize herself with the policies included on the intranet and signed an acknowledgement stating it was her responsibility to review the contents of the hospital's orientation handbook. Doe also signed an acknowledgment stating she was aware that additional employment-related policies were available on the hospital's intranet. Doe was never specifically informed about or provided with a copy of the hospital's mandatory arbitration policy.

A few months after Doe began working for the hospital, she was sexually assaulted by a co-worker. Doe filed a sexual harassment, retaliation, and negligence lawsuit against both her attacker and the hospital. The hospital filed a motion to compel arbitration based on the company's mandatory arbitration policy and the acknowledgements Doe signed during her employee orientation. The trial court granted the hospital's motion, and the parties proceeded to arbitration where an award was issued in favor of the hospital. The trial court confirmed the award over Doe's objections.

Doe then filed an appeal. On appeal, the court stated that neither party disputed that Doe's claims were covered by the mandatory arbitration policy. Instead, Doe argued the trial court erred when it compelled her to arbitrate because she was not provided with notice of her employer's mandatory arbitration policy, and the policy was therefore unenforceable. The appellate court rejected the hospital's argument that Doe had implied notice of the arbitration policy. According to the court:

Importantly, notice may be implied only if the party sought to be charged with notice has a duty to make further inquiry. . . . A duty to make further inquiry "extends only to those matters that are fairly suggested by the facts really known." Exxon Corp., 533 S.W.2d at 847 (quoting 41 Tex. Jur. 2d, Notice, § 5 (1963)). Notice will not be implied when the circumstances may refer equally to some matter other than that with which a person is purportedly charged with having notice.

The court ruled that none of the evidence that the hospital relied upon impliedly notified Doe of its Arbitration Policy. In particular, the court held that "merely posting an arbitration policy on an intranet site is insufficient to give an employee notice." [Citations omitted.] . . . The court cited a recent decision by the Supreme Court of Alabama which distinguished between an employee who could have accessed a web page containing an arbitration agreement and an employee who actually did so, holding that the latter, but not the former, had sufficient notice of the arbitration agreement. See Moore-Dennis v. Franklin, 201 So.3d 1131, 1144 (Ala. 2016).

The court also noted that the hospital submitted no summary evidence that Doe actually accessed the intranet site. It stated that the hospital's "instructing Doe that she was responsible for familiarizing herself with [the hospital's] "policies" and Doe's acknowledging that she had received "orientation" on "Problem solving/Grievance Procedures" are closer calls but are still ultimately insufficient to demonstrate notice."

Accordingly, the employee was not required to arbitrate her dispute, and the decision confirming the award was reversed and the case remanded for further proceedings.

Keywords: alternative dispute resolution, adr, litigation, online, intranet, implied notice, arbitration agreement, orientation

Karl Bayer is the founder of Karl Bayer Dispute Resolution in Austin, Texas.


Copyright © 2017, American Bar Association. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or downloaded or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. The views expressed in this article are those of the author(s) and do not necessarily reflect the positions or policies of the American Bar Association, the Section of Litigation, this committee, or the employer(s) of the author(s).