It was up to an arbitrator and not a judge to determine whether a mandatory arbitration agreement signed by an unpaid intern governed a sex discrimination/retaliation claim that arose after she became a paid employee, the Massachusetts Appeals Court ruled.
A Superior Court judge had denied the defendant employer’s motion to compel arbitration, finding that it was the court’s responsibility to determine whether the agreement reserved to an arbitrator the question of its own applicability and interpretation.
But the Appeals Court reversed.
“The agreement specifically provides for arbitration of ‘disputes arising out of or relating to interpretation or application of this Agreement,’” Judge Joseph M. Ditkoff wrote for the panel, going on to quote language from the Supreme Judicial Court’s 2015 decision in Machado v. System4 LLC. “The term “‘relating to’… suggests an ‘expansive sweep’ and ‘broad scope.’” … The plaintiff disputes that the agreement applies to her paid employment, presenting a quintessential question of interpretation and application for ‘a decision maker [who] must analyze the [arbitration] agreement in assessing the merits’ of that claim. The agreement identifies that decision maker as an arbitrator.”
The court went on to find that the employee’s contention that the arbitration provision was unconscionable was a question for the arbitrator as well.
The 14-page decision is Boursiquot v. United Healthcare Services of Delaware, Inc., et al.
Reminder to employees
Defense counsel Daniel J. Blake of Boston said the case illustrates for practitioners that, if they want issues of arbitrability, including those related to contract formation, to be decided by an arbitrator, they specifically need to say so in their agreement using a “delegation provision” like the one in Boursiquot.
“Otherwise, a plaintiff could argue, as the plaintiff did here, facts they claim make it unconscionable for him or her to have to go to arbitration,” Blake said. “This decision is limited to the issue of who decides whether that argument has merit. If you delegate the gateway issue of arbitrability to an arbitrator, the court will enforce it where there’s clear and unmistakable evidence that the parties have delegated that issue.”
Matthew J. Fogelman of Newton Center, who represents the plaintiff, said that while he and his client disagree with the Appeals Court, its decision has nothing to do with the strength of the underlying claims or the substance of the case.
“This issue is more of a procedural, logistical type of issue about who is to decide where the case will ultimately wind up,” Fogelman said. “Whether it’s in arbitration or in court, we look forward to presenting our case and getting justice for our client.”
David E. Belfort, a plaintiffs’-side employment attorney in Cambridge, said the decision does not cover new ground as to arbitrability generally being a decision reserved for the courts unless the parties’ agreement provides otherwise.
But he found it surprising that the court so readily found the arbitration agreement valid when the plaintiff appeared to have a viable argument that her change in circumstances from unpaid intern to employee rendered the agreement inapplicable.
“From a broad policy perspective, it is remarkable that courts readily defer arbitrability determinations to private arbitrators, who not only have a financial interest in the outcome but act under a cloak of confidentiality that often permanently shields their decisions,” he said.
Boston employment lawyer Philip J. Gordon agreed.
“If you’re an arbitrator deciding arbitrability, you have two very heavy incentives weighing on you,” he said. “One is if you decide the case isn’t arbitrable, there goes your job for that particular case. And then nobody comes back to you as their arbitrator of choice for future arbitrations. You get hit twice even if you act conscientiously.”
Gordon did say he was happy to see the Appeals Court recognize that regular contract laws and rules apply to arbitration agreements, which means that defenses such as unconscionability can be raised.
Still, he noted, in a case like Boursiquot, such issues will be decided by an arbitrator in secret with no realistic possibility of review.
Charles F. Rodman of Newton said the decision serves as a reminder to employees that if an employer provides the right to opt out of an arbitration clause, as the employer did here, they should take it.
“Most employees sign one or more documents upon commencing a new employment relationship, and yet most have no idea what those documents mean and how they might apply to them in the future,” Rodman said. “Even my executive clients admit to being handed a stack of papers on day 1 that they end up leaving, unread, in the bottom drawer of their office desk [with] no recollection of what they were handed — and worse, what they signed.”
Meanwhile, Boston business litigator David Himelfarb said the decision provides a helpful roadmap to all practitioners on how to draft arbitration provisions.
“Given that arbitration provisions are receiving a lot of attention right now from the numerous lawsuits involving ride-sharing services, Boursiquot is a good reminder that arbitration clauses should be drafted to reflect the parties’ agreement on who decides whether the dispute is subject to arbitration in the first instance,” he said.
In 2016, plaintiff Yvelande Boursiquot, who was working on a master’s degree in social work, obtained an unpaid internship at Fuller Hospital, a behavior health center in South Attleboro owned and operated by defendant Universal Health Services (captioned by the court as “United Healthcare Services”).
During orientation, she was instructed to sign a number of documents, including an arbitration agreement. When the plaintiff asked if all the paperwork applied to her as an intern, she apparently was told just to sign everything and any inapplicable documentation would be removed from her file.
The arbitration agreement contained a delegation provision stating that it was intended to apply to disputes that would otherwise be resolved in court and included disputes “arising out of or relating to interpretation or application” of the agreement.
The agreement also stated that the employee had the right to opt out within 30 days, which the plaintiff did not do.
In May 2017, the plaintiff’s internship ended and she accepted an offer of full-time employment, at which time she filled out additional paperwork but did not execute a new arbitration agreement.
According to the plaintiff, a doctor started making negative comments about her pregnancy and about minority patients. When she filed a formal complaint, she allegedly was told she would be suspended without pay unless she withdrew it. She also apparently was instructed not to document the doctor’s behavior.
Two months later, the plaintiff was terminated, allegedly for her internal complaints about understaffing and for tardiness due to her son’s medical appointments.
In March 2019, the plaintiff sued the defendant in Superior Court alleging gender bias and retaliation. The defendant moved to compel arbitration. Judge Angel Kelley denied the motion, reserving the question of arbitrability to herself, and the defendant appealed.
The Appeals Court found that per the delegation provision, the question of arbitrability was for the arbitrator to decide.
In reaching its decision, the court relied on Momot v. Mastro, a 2011 decision from the 9th U.S. Circuit Court of Appeals, which, in addressing an arbitration agreement with similar language, also found that it was up to the arbitrator to determine the agreement’s applicability.
“To be sure, the agreement in Momot, unlike the agreement here, assigned to an arbitrator the question of the agreement’s validity,” Ditkoff conceded while noting that a number of other courts have followed Momot.
“The issue in Momot, however, like the issue here, was the applicability and interpretation of the arbitration agreement,” he continued, remanding the case for entry of an order to compel arbitration. “Accordingly, Momot is on point.”