Spanish version of arbitration agreement was valid, grant of motion to compel arbitration of sex and disability bias, and reprisal claims affirmed

An employee was required to arbitrate her sex and disability discrimination and reprisal claims, despite her assertions that the Spanish version of the arbitration agreement that she signed was not valid, ruled the First Circuit Court of Appeals (Soto-Fonalledas v Ritz-Carlton San Juan Hotel Spa & Casino, May 4, 2011, Lynch, S). The appeals court determined that, as a matter of law, the claims made by the employee on the basis of the certified English translation did not require reversal of the district court’s ruling.

Background. The employee, her husband, and their conjugal partnership filed an employment discrimination suit against the Ritz-Carlton Hotel alleging sex and disability discrimination and retaliation in violation of Title VII, the ADA, and various Puerto Rico laws. The hotel moved to dismiss and compel arbitration, pursuant to the Federal Arbitration Act (FAA), on the grounds that the dispute was covered by an arbitration agreement. In response, the employee asserted that the arbitration agreement was invalid and unenforceable. Nevertheless, the district court granted the hotel’s motion and dismissed all of the claims in the complaint, without prejudice to the employee filing the claims under Puerto Rico law in Commonwealth court.

The arbitration agreement was included as part of an employment agreement between the employee and the hotel, and there was no dispute that the employee signed the Spanish version of this agreement (the hotel submitted an English version to the trial court as well). The employee, for the first time on appeal, submitted a certified English translation of the Spanish version of the agreement and argued that there was a material difference between certain language of the Spanish version of the agreement and the language of the English version upon which the district court based its decision (the English version submitted by the hotel was not a certified translation). The employee argued that the agreement was not valid because: (1) it deprived her of her Title VII and ADA remedies; (2) she did not receive consideration for the agreement; and (3) she did not receive adequate notice of which claims would be subject to arbitration.

Consideration. The district court ruled that the employee received valid consideration, in return for signing the agreement, in the form of an offer of continued employment. On appeal, the employee argued that continued employment did not constitute valid consideration under Puerto Rico law. However, the appeals court concluded it did not need to address this issue because it found two other forms of consideration in the agreement. First, in exchange for the employee’s agreement that she would not initiate any legal action without first using each step in the company’s alternative dispute resolution process, the hotel agreed to “suspend all jurisdictional prescriptive terms and limitations to file grievances and/or lawsuits” for the period that the process lasts. This waiver of defenses by the hotel, for any claims covered by its alternative dispute resolution process, constituted valid consideration. Second, implicit in the arbitration agreement was a second set of bilateral obligations — both parties were required to arbitrate the employee’s claims, which constitutes independent mutual consideration. This bilateral obligation to arbitrate constituted mutual consideration under Puerto Rico law, ruled the appeals court.

Remedies. As to remedies, the appeals court rejected the employee’s assertion that the agreement impermissibly deprived the arbitrator of power to grant all of the remedies available under Title VII and the ADA. She based her assertion on the fact that the Spanish language agreement states that if the arbitrator rules in her favor, she “may be reinstated or granted another remedy according to the rules of [the hotel],” and that the arbitrator “will be authorized to impose any remedy that the [hotel] rules allow.” She maintained that these provisions allowed the hotel to define and limit the remedies available in arbitration. But, because the employee did not point to any “rules” so limiting the remedies and the meaning of these provisions that was not otherwise clear on their face, her challenge failed.

What was meant by the contract’s references to the “rules” of the hotel was ambiguous and open to different constructions, the First Circuit determined. These include constructions under which there would be no conflict between the remedies available in arbitration and those provided by the ADA and Title VII, the appeals court pointed out. For example, the arbitrator could interpret the “rules of [the hotel]” to be the same as the remedies consistent with the laws governing the hotel. In addition, the arbitrator could read the reference to “rules” as invoking the clause of the agreement that states that the arbitration is to be governed by the rules of the American Arbitration Association (AAA). Under the AAA rules, an arbitrator may grant “’any remedy or relief that would have been available to the parties had the matter been heard in court,’” the First Circuit noted.

Notice. Finally, the appeals court ruled that the employee’s argument that she received inadequate notice, that she was agreeing to arbitrate statutory employment discrimination claims, was contradicted by the plain text of the agreement. This text identified the types of claims covered: “I will request Arbitration if I have been terminated or feel that I have been discriminated against for reason of my age, color, sex (including sexual harassment and stalking), religion, national origin, sexual orientation, marital status, age or physical or mental defect.” The court also pointed out that the text clearly identified the scope and nature of the employee’s obligation: “I agree that I will not initiate any legal action whatsoever without using in the first term each step in the Process of Open Appeal and Resolution of Incidents.”