Yesterday, the Sixth Circuit reversed a decision compelling arbitration in an employment dispute, Hergenreder v. Bickford Senior Living Group, LLC. A foundational principle of the FAA is consent to arbitration, and in this case, the Sixth Circuit could not find evidence of that consent. The employee had received a copy of the employment handbook, which made reference to a dispute resolution policy, but did not mention arbitration. The dispute resolution policy included an arbitration clause, but the employee never signed an acknowledgment that she had received it and agreed to be bound to it. The employer submitted an affidavit that the policy is distributed to all employees. But for the Sixth Circuit, that was too slender a reed on which to enforce an arbitration agreement.
This case provides some good pointers on the care that employers should exercise when seeking to bind employees to arbitration agreements. Many employers have an employee sign an acknowledgment form indicating that they have received an arbitration policy and agree to it. The Court commented on such forms, observing that “an acknowledgment form, signed after an employee has been given a copy of an arbitration agreement, can serve as ironclad proof that an employee was reasonably notified of an arbitration agreement.” In other words, if the employer here had actually procured the employee’s signature, the result would likely have differed.
A footnote on this case concerns appellate jurisdiction. In granting the motion to compel arbitration, the district court dismissed, rather than stayed, the case. When a district court stays a case under Section 3 of the FAA, the appellate courts lack appellate jurisdiction to review such orders until after the arbitration takes place. But when a district court dismisses the case, it triggers an automatic right to appeal. This is a little-known facet of appellate jurisdiction that carried big repercussions in this case — if the district court had stayed the case, the parties would have proceeded in arbitration rather than in court.