Magazine article Dispute Resolution Journal

Determining Consideration for an Agreement to Arbitrate

Magazine article Dispute Resolution Journal

Determining Consideration for an Agreement to Arbitrate

Article excerpt

EMPLOYMENT

A district court in the 4th Circuit is not permitted to go beyond the four corners of an arbitration agreement in determining whether there is consideration for the agreement to arbitrate.

In August 2001, PeopleSoft offered Karren Hill a position conditioned on her signing an arbitration agreement. The six-page agreement between Hill and PeopleSoft provided that the parties agreed to arbitrate "all" claims arising out of Hill's employment relationship, except for claims involving workers compensation, unemployment insurance, the administrative jurisdiction of a labor commissioner, the NLRB or the EEOC. PeopleSoft retained the right to enforce any violation of its intellectual property rights in court. The Offer Letter indicated that by accepting PeopleSoft's offer of employment, Hill agreed to be bound by the company's "Internal Dispute Solution" program, which is applicable to all employees. PeopleSoft reserved the right to "change" the IDS program "without notice." On Jan. 28, 2004, Hill sued PeopleSoft in federal district court alleging sexual harassment, hostile work environment, retaliation, and race discrimination. PeopleSoft moved to compel arbitration. Hill opposed that motion and cross-moved for summary judgment, arguing that the arbitration agreement was procedurally and substantively unconscionable and that PeopleSoft waived its right to arbitrate. The district court denied PeopleSoft's motion to compel arbitration, holding that the arbitration agreement was not supported by consideration because PeopleSorft reserved the right to change the IDS Program "without notice. …

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