NEW ORLEANS – The U.S. Court of Appeals for the Fifth Circuit has revered a district court’s ruling against enforcing arbitration in a worker’s injury claim.
John Lizalde, a meat cutter with Vista Quality Markets, sued his employer for negligence and claimed discrimination and retaliation under the Employee Retirement Income Security Act (ERISA) after he was allegedly involved in an on-the-job slip and fall accident.
Lizalde, upon beginning employment with Vista, signed a document complying with the terms of Vista’s arbitration agreement and employment injury benefit plan.
According to the arbitration agreement, Vista and its employees must submit all on-the-job injury claims to an arbiter to assess the case. Vista can only cancel this arbitration agreement when dealing with claims that have been filed 10 days after notice is delivered to an employee. Vista can cancel the plan, which is part of the arbitration agreement, at its own discretion.
Lizalde argued in district court that the arbitration agreement he signed was not legally binding.
The district court agreed with Lizalde, reading the arbitration agreement and benefit plan as a single contract and therefore stating that the unconstrained cancellation provision in the benefit plan also applied to the stand-alone arbitration agreement. The court held that the power to cancel in an unconstrained manner renders the arbitration agreement unenforceable according to Texas law.
The appeals court sided with Vista, holding that even if the two provisions were read as a single contract, the contract’s language clearly defines the arbitration agreement as having its own cancellation provision separate from that of the benefit plan.
The Fifth Circuit held that the arbitration agreement’s termination provision is not unenforceable because it provides advance notice to the employee and does not apply to claims made prior to termination. The case was returned to the district court for the entry of an order compelling arbitration.
Case No. 13-50015.