6th Circuit: Employee Bound by Unsigned Arbitration Agreement
In Tillman v. Macy’s Inc., No. 2:11-cv-10994, 2013 WL 58227729 (6th Cir. Oct. 31, 2013) the plaintiff, Cecilia Tillman, filed suit pro se, alleging that the defendant, Macy’s, discriminated against her on the basis of her race in violation of Title VII when it terminated her employment in 2009. In response to Tillman’s complaint, Macy’s filed a motion to compel arbitration and stay the civil action pending arbitration. In its motion, Macy’s alleged that the pending action was impermissible because the parties had entered into an arbitration agreement to resolve such disputes.
The U.S. District Court for the Eastern District of Michigan denied the motion by Macy’s to compel arbitration. The court concluded that Tillman did not assent to arbitration or knowingly waive her right to a trial by jury when she failed to opt out of the arbitration agreement because she did not sign an arbitration agreement and was not required by her employer to read the arbitration documents that it provided her. On appeal, applying Michigan contract law, the court of appeals held that Macy’s made an offer to Tillman to arbitrate disputes arising from employment through its implementation of an arbitration program that consisted of the following: a welcome notice, detailed brochures describing the dispute-resolution process, and a mandatory video screening describing the program. The court highlighted the importance of Tillman’s receipt of detailed information regarding the program, including opt-out options and her participation in the video screening, which clearly communicated that arbitration replaced her right to a jury trial. Even though she did not sign an arbitration agreement, Tillman accepted the arbitration agreement by continuing her employment and not returning the opt-out forms provided by Macy’s.
The Sixth Circuit in Tillman recognized that “opt-out schemes for accepting arbitration contain a risk greater than in opt-in systems that some employees do not know what they have agreed to.” As the Tillman case makes clear, however, such opt-out systems may not be inherently insufficient and can create binding agreements to arbitrate.