Thursday, March 26, 2009

arbitration - express, unequivocal mutual agreement

Kirleis v. Dickie, McCamey & Chilcote, PC - Third Circuit - March 24, 2009

Attorney-shareholder of law firm sued for sex discrimination. The firm moved to compel arbitration under the terms of the corporate bylaws. The 3d Circuit upheld the district court's refusal to grant the firm's motion.

Plaintiff alleged--and the firm did not challenge--that she was never informed of the presence of the arbitration provision in the by-Laws, she never signed any agreement or document which refers to or incorporates the arbitration provision in the by-Laws. and she never agreed to arbitrate my claims against the firm.

Pennsylvania law about contract formation/arbitration requires that "[b]efore a party to a lawsuit can be ordered to arbitrate . . . there should be an express, unequivocal agreement to that effect," Par-Knit Mills, 636 F.2d at 54. No such agreement was shown in this case. The court held that plaintiff's status as a shareholder did not put her on constructive notice of the provision. "Under Pennsylvania law, explicit agreement is essential to the formation of an enforceable arbitration contract...."A mutual manifestation of intent to be bound is an essential element of a contract.". Thus, the firm's argument that Kirleis impliedly agreed to
arbitrate her claims must fail under Pennsylvania law. See also, Quiles v.
Financial Exchange Co.
, 879 A.2d 281 (Pa. Super. Ct. 2005)