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Jury will decide if employee agreed to arbitration

An employer said an employee agreed to arbitrate employment-related claims against the company, but the employee denied signing any such agreement.

Now, a jury must decide if an agreement to arbitrate was reached.

U.S. Magistrate Judge Pamela Meade Sargent of the U.S. District Court for the Western District of Virginia said the employee didn’t offer evidence that she didn’t see or understand the arbitration clause. Rather, “she has produced evidence that she did not sign this agreement. Because of this unequivocal denial, the issue must be put to a jury.”

Sargent’s decision is Davis v. Young & Associates Inc. (VLW 021-3-449).


Toni Davis worked for the defendant, Young & Associates doing business as Shoney’s, as head supervisor of the dining room. Davis claimed she was a witness to an allegation of discrimination by another employee in September 2017; that employee filed a charge of discrimination against the defendant with the Equal Employment Opportunity Commission.

Davis said the defendant retaliated against her for being a witness in the employee’s EEOC proceeding. In January 2018, she filed her own discrimination claim against the defendant with the EEOC. Afterward, she said the defendant threatened to terminate her employment.

In March 2019, Davis was demoted to relief supervisor, and she was issued a written warning for “hostility toward managers.” Allegedly, the defendant then put credit for tips she did not receive on her paystub, which increased the amount of taxes withheld from her pay. Finally, Davis claimed the defendant encouraged other employees to treat her differently, creating a hostile work environment.

‘Lost’ paperwork

The defendant’s president, Brian Spencer, said Davis was hired using the services of Strategic Outsourcing, Inc., or SOI, and that she executed an employment agreement with SOI.

Language in the agreement included mandatory binding arbitration and provided that Davis and SOI “mutually waive any right to a jury trial.”

According to Spencer, this created a mutually binding agreement between Davis and SOI and Young & Associates was an “intended third-party beneficiary.”

Davis disputed that she signed anything agreeing to arbitrate claims. In fact, Davis claimed that as of 2019, when she was head supervisor and reviewed Shoney’s employee handbook with new hires, the assigned employee acknowledgement document was not among the papers to be signed.

Shoney’s asked Davis in 2020 to sign new employment paperwork, claiming her original signed hiring documents “had been lost.” Davis said she didn’t sign any paperwork like that in 2020 or since, including the agreement to arbitrate claims.

Davis filed a civil rights suit under Title VII against Young & Associates for retaliation.

The defendant brought a motion to compel arbitration and stay proceedings pending arbitration.

‘Unequivocal denial’

Sargent noted that the party seeking to compel arbitration bears the burden of establishing the existence of a provision to arbitrate that covers the dispute. If that hurdle is overcome, the opposing party must offer sufficient facts to put the entitlement to arbitration in dispute.

And when there’s a disagreement about the formation of an arbitration agreement, the party contesting arbitration is entitled to try the issue to a jury.

Sargent said the party pursuing a jury trial “must make an unequivocal denial that an arbitration agreement exists” and back it up with ample facts in support.

In this case, the defendant provided evidence that an arbitration provision covering the parties’ dispute did in fact exist and that Davis signed the relevant document when she was hired.

But Sargent pointed out that Davis offered enough contradictory evidence to call that into question.

“In particular, in her affidavit, Davis specifically denies that she signed the document entitled “Section 3 – Assigned Employee Acknowledgments” or any other agreement to arbitrate her disputes with her employer,” Sargent wrote. “Such an unequivocal denial is sufficient to create a dispute in fact that must be resolved by a jury.”

Sargent rejected the defendant’s argument that Davis’s affidavit wasn’t enough to establish a dispute in fact.

“While affidavits not based on personal knowledge are insufficient to establish a dispute in fact, … the Fourth Circuit has held that discovery answers made ‘to the best of … knowledge, information and belief’ are sufficient to establish issues of fact if the facts stated are within the person’s personal knowledge,” Sargent said. “Here, whether Davis signed this agreement is within her personal knowledge, and she has stated that ‘[t]o the best of [her] knowledge’ she did not sign this agreement.”