Ninth Circuit Upholds Dispute Resolution Policy in Handbook As Enforceable Arbitration Agreement

Especially in California, an arbitration agreement practically has to be written in pencil. Getting an arbitration agreement to conform with all the new court decisions feels like nailing jello to a wall. Herding cats.  Hitting a moving target.  You get the picture.

So, from an administrative standpoint, it's much easier to have an arbitration agreement that can be amended from time to time and simply distributed via handbook revision, along with an acknowledgment of receipt.  There are limits on doing so, such as adequate notice of a change and the implied covenant of good faith and fair dealing that would apply to any contract. 

But some may question whether a policy in a handbook is an enforceable "agreement" to arbitrate at all.  The Ninth Circuit thought so in Ashbey v. Archstone Prop. Mgmt.  Opinion here.

Ashbey signed the following acknowledgement (at least twice) during his employment.

I acknowledge that I have received directions as to how I may access the Archstone Company Policy Manual, including the Dispute Resolution Policy. I understand that Archstone can administer, interpret, discontinue, supplement, amend or withdraw any of the employment and personnel policies and procedures set forth in this Company Policy Manual. I understand that it is my responsibility to understand the Archstone Company Policy Manual, including the Dispute Resolution Policy, and to adhere to all of the policies contained herein.

The Dispute Resolution Policy stated:

This Policy is governed by the Federal Arbitration Act, 9 U.S.C. § 1 et seq. . . . Except as it otherwise provides, this Policy is intended to apply to the resolution of disputes that otherwise would be resolved in a court of law, and therefore this Policy requires all such disputes between Employee and the Company to be resolved only by an arbitrator through final and binding arbitration and not by way of court or jury trial. . . . This Policy also applies, without limitation, to disputes arising out of the employment relationship or the termination thereof including, without limitation, disputes over . . . harassment and claims arising under the . . . Civil Rights Act of 1964 . . . and all other state statutory and common law claims. 

Ashley argued that the acknowledgment and policy were ineffective to waive his right to a jury trial on his federal Title VII claim and analogous state law claim for discrimination. He claimed that his waiver was not knowing and voluntary because the receipt did not contain the Dispute Resolution policy. The court of appeals disagreed:

the Acknowledgment here explicitly notified Ashbey the Manual contained a Dispute Resolution Policy, and it did so in two places. And Ashbey expressly agreed “to adhere” to the Manual and the Dispute Resolution Policy. That the Acknowledgment did not list the terms of the Policy is not fatal to the Policy’s enforcement. The full text of the Policy was at Ashbey’s fingertips; he acknowledged he had received directions on how to access both the Manual and the Dispute Resolution Policy contained in the Manual. Anyone who reviewed the Dispute Resolution Policy would immediately realize he was “entering into an agreement to waive a specific statutory remedy afforded him by a civil rights statute.” Nelson, 119 F.3d at 762. The Dispute Resolution Policy was not ambiguous on that point: (1) the policy stated it “is governed by the Federal Arbitration Act”; (2) the policy stated that “all . . . disputes between Employee and the Company [are] to be resolved only by an arbitrator through final and binding arbitration and not by way of court or jury trial”; and (3) the policy stated it “applies, without limitation, to disputes arising out of the employment relationship . . . including, without limitation, disputes over . . . harassment and claims arising under the . . . Civil Rights Act of 1964.”

So, the Court held that the policy was knowing and voluntary.  

In a companion, unpublished decision, the court also held that the policy contained in the handbook was enforceable as an agreement under California unconscionability law.  The court noted that policies can be enforceable as contracts, even when incorporated into the signed acknowledgment.  The court also found that the attorney's fees and other provisions were satisfactory. 

The analysis relies on California opinions and is useful for crafting these types of arbitration agreements. So, although unpublished, it will be useful.  That unpublished opinion is here.