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Fonza Luke v. Baptist Medical Center

By Walter Olson, Ted Frank, and David Nieporent

Stephanie Mencimer: "That's when the surprise came: Baptist Health argued that Luke had given up her right to sue back in 1997 when the hospital presented the arbitration agreement?even though she'd refused to sign. Simply by continuing to show up for work, Baptist's lawyers said, she'd agreed to the terms. Acting contrary to established contract law, which requires both parties to consent to a contract before it becomes binding, a federal judge accepted the hospital's argument." Shocking, huh? But not true. Mencimer gets both the facts and the law wrong:

• Baptist Health's argument didn't come out of nowhere: it was expressly told to Luke at the time that "the program is binding on all employees" and her decision to "continue her current employment, after receiving notice of this Program, will mean that you have agreed to and are bound by the terms of this Program."
• Luke agreed in court that she had notice of the program, that she understood the program, and that she continued working at the hospital.
• The court thus found that Luke consented to the agreement; in doing so, it didn't act "contrary to established law" at all; several Alabama Supreme Court opinions recognized that continued employment is sufficient consideration to support an arbitration agreement, and that agreeing to remain employed by an employer with a mandatory arbitration program is conclusive evidence of assent. (Of course, under Erie, federal courts are bound by state supreme court interpretations of state law.)
• The district court's opinion was affirmed per curiam by a three-judge panel of the Eleventh Circuit that included two Clinton appointees and a Carter/GHW Bush appointee.
• And, oh, by the way, Luke began arbitrating her case before the court even ruled, showing that she understood where the law actually was, though now she claims otherwise.

Luke, having received the benefit of an employment agreement that was able to offer her higher wages because of her agreement to arbitrate employment disputes, sought to rewrite the contract after already taking advantage of it. (Update: a commenter ironically signing him- or herself as the Multistate Bar Exam has a nice cite to the Restatement.)

Full post as published by Overlawyered on March 11, 2008 (boomark / email).