Spanish speaker bound by mandatory arbitration clause in English.

A worker who speaks only Spanish and signed an employment contract written in English is bound by a mandatory arbitration clause within it, a divided Third Circuit panel has ruled, although the man argued that he could not understand the contract and did not know about the clause. (Morales v. Sun Constructors, Inc., 2008 WL 3974059 (3d Cir. Sept. 2, 2008).)

Juan Morales, a welder in St. Croix, U.S. Virgin Islands, was hired by Sun Contractors in 2004. At an orientation conducted in English, he was asked to sign an hourly employment agreement, and Sun asked another bilingual job applicant, Jose Hodge, to help him fill out the form. Hodge said he understands about 85 percent of what's said and written in English and testified in court that he never explained the arbitration clause--which took up more than half of the document--to Morales, who signed the contract.

Morales was fired in 2005 and filed a wrongful termination suit in federal court, but Sun argued that his case had to go to arbitration under the employment contract. The District Court of the Virgin Islands ruled that the arbitration clause was unenforceable because of lack of mutual consent. Sun appealed, and the Third Circuit reversed in a 2-1 decision.

"Morales entered into the agreement with Sun without fraud or duress, and he is bound by its arbitration clause," Judge Michael Chagares wrote for the majority. The court found that Morales had the duty to make sure he understood the contract before he signed it and should have asked to have it translated word-for-word or to take it home for translation.

The "objective theory of contract formation" does not allow courts to make exceptions, wrote Chagares. "In the absence of fraud, the fact that an offeree cannot read, write, speak, or understand the English language is immaterial to whether an English-language agreement the offeree executes is enforceable."

The Restatement (Second) of Contracts requires "mutual assent" to form a contract, but all courts that have considered the question have held that "acceptance is measured not by the parties' subjective intent, but rather by their outward expressions of assent," the appeals panel said.

In his dissent, Judge Julio Fuentes argued that that the employer intervened by asking another applicant to translate and "created a situation where lack of mutual assent could, and did, occur." It was not negligent or improper for Morales to rely on the translation Sun provided, Fuentes said, and because Morales was not told during the translation that the agreement had an arbitration clause, "I agree with the district court that Morales did not 'manifest an intention' to be bound by the arbitration clause."

Fuentes said not knowing the language was Morales's problem, but Sun also took it upon itself to translate the contract for him and "failed to convey the entire contents of the agreement." Morales had no reason to suspect or verify that the terms of the contract were incorrect or incomplete.

"There's a general rule in America that no person will be found to have given up a constitutional right unless they did so voluntarily, knowingly, and intelligently," said Paul Bland, chair of AAJ's Mandatory Arbitration Litigation Group and an attorney with Public Justice in Washington, D.C. "If a term buried in a fine-print contract like a credit card agreement limited someone's free speech rights--say your Visa bill said you could never criticize any candidate endorsed by the American Bankers Association--no court in the U.S. would enforce that clause.

"Unfortunately, what this case proves is that too many courts apply a different standard to arbitration clauses," he added. "Every day, American workers, employees, and medical patients are deemed to have supposedly 'agreed' to arbitration clauses that they never knew about, because they were buried in some document that no normal person would have read and that most people wouldn't understand. This decision is consistent with the mainstream of legal decisions about arbitration clauses, and that is the point that is actually troubling here."

Bland said the proposed Arbitration Fairness Act, if enacted by Congress, "would definitely have solved this problem, because it would ban predispute binding arbitration in all employment contracts."