Reinsurance & Arbitration Focus

In Lambert v. Signature Healthcare LLC, the Eleventh Circuit Court of Appeals reversed the district court’s denial of the defendants-appellants’ motion to dismiss and to compel arbitration under the FAA, holding that the arbitration agreement signed by the plaintiff-appellee was not “procedurally unconscionable” and was enforceable.

After a six-month job search, Claire Lambert accepted a position at Signature Healthcare. As a condition of employment, Lambert was required to sign Signature’s arbitration agreement and handbook acknowledgment. The arbitration agreement provided that it covered claims relating to “recruitment, employment, or termination of employment,” claims under the Americans with Disabilities Act and the Fair Labor Standards Act, and “any and all claims under federal, state, and local laws and common law.” Lambert was ultimately fired and brought claims against Signature in Florida state court under the FMLA, the FLSA, and state law. Signature removed the case to federal court and moved to dismiss and compel arbitration under the FAA. The district court denied the motion, concluding that the arbitration agreement was unconscionable, both procedurally and substantively, and thus unenforceable. The district court found the arbitration agreement was procedurally unconscionable because it was a “contract of adhesion” and presented on a “take it or leave it” basis. The court also found the arbitration agreement was substantively unconscionable because the handbook reserved Signature’s right to modify the terms of the arbitration agreement unilaterally.

The Eleventh Circuit reversed the order denying Signature’s motion to dismiss and to compel arbitration, concluding that the arbitration agreement was not procedurally unconscionable. After addressing the FAA and Florida law, the court found that the district court “misapprehended procedural unconscionability under Florida law” when it determined that Lambert lacked a “meaningful choice” when she signed the arbitration agreement and noted that the fact that an arbitration agreement is presented on a take-it-or-leave-it basis “is not dispositive.” The court noted that even when an arbitration agreement is a condition of employment, the circumstances surrounding the execution of the agreement should be explored by the court before concluding it is procedurally unconscionable. The court engaged in an “independent review of the record” and found they could not identify “any additional factors that weigh in favor of procedural unconscionability.” The court concluded Lambert had not shown the arbitration agreement was procedurally unconscionable and, as a result, the court need not consider whether the agreement was substantively unconscionable.

Lambert v. Signature Healthcare, LLC, No. 19-11900 (11th Cir. July 8, 2022).