Seventh Circuit Affirms Order Compelling Arbitration, Holds Arbitration Agreement Applies to Title VII Claim

In Retzios v. Epic Systems Corp., the Seventh Circuit Court of Appeals considered an appeal brought by the plaintiff, a former employee of Epic, who was fired after she refused to be vaccinated against COVID-19. The plaintiff’s employment agreement included an agreement to arbitrate “any statutory or common law legal claims … that relate to or arise out of my employment or the termination of my employment.” After she was terminated for refusing the COVID-19 vaccination, she brought an action under Title VII in the district court alleging that Epic was required to accommodate her religious objection to the vaccine. Epic filed a motion to dismiss the action and to compel arbitration based on the mandatory arbitration agreement, which was granted by the district court.

In affirming the order, the Seventh Circuit first noted that the district court should not have dismissed the action but rather should have stayed the matter pursuant to the Federal Arbitration Act, which “calls for a suit referred to arbitration to be stayed rather than dismissed, when a party requests a stay (as Epic did).” The court then rejected each of the arguments raised by the plaintiff on appeal. The court held that the plaintiff’s Title VII claims were subject to the language of the mandatory arbitration clause of the employment agreement, noting that the plaintiff’s “objection to vaccination as a condition of employment relates to that employment, and her objection to being fired arises out of that employment’s termination.”

The court also rejected the plaintiff’s contention that the employment agreement was illusory, noting that the plaintiff received “at least two kinds of compensation in exchange for the promise to arbitrate: the [award of] stock and her ongoing salary.” The court also rejected the plaintiff’s promissory estoppel claim, finding that the plaintiff had not shown any promise made by Epic on which the plaintiff detrimentally relied. The court likewise rejected the plaintiff’s contention that Epic waived its right to arbitrate when it did not request the Equal Employment Opportunity Commission or state unemployment office to dismiss their proceedings, noting that waiver addresses “conduct in litigation” and that there was no evidence of facts that would support a waiver in this action. Finally, the court granted Epic’s motion for sanctions on appeal, noting that requiring Epic to bear legal costs on the appeal would be inappropriate.

Retzios v. Epic Systems Corp., No. 24-1701 (7th Cir. Jan. 24, 2025).