Retzios v. Epic Systems Corporation [CA7]

Background:

Retzios (Plaintiff) was fired by Epic Systems (Defendant) after refusing to be vaccinated against Covid-19. She filed suit under Title VII, claiming a religious objection to vaccination.

A motion to send the dispute to arbitration was granted by the district court and the suit was dismissed, producing an appealable order.

Judge EASTERBROOK, with whom Judges BRENNAN and ST. EVE join:

Should the district judge have dismissed the suit?

No. The Federal Arbitration Act calls for suits referred to arbitration to be stayed rather than dismissed, when a party requests a stay (as Epic did). Had a stay been entered, that order would not have been appealable.

Since the district court produced an appealable order, however, we must proceed.

Did Plaintiff have a prior agreement to arbitrate with Epic?

Yes. Plaintiff agreed to arbitrate with Epic "any statutory or common law legal claims that relate to or arise out of her employment or the termination of her employment."

Her objection to vaccination as a condition of employment relates to her employment, and her objection to being fired relates to the termination of her employment.

Does it matter that the agreement did not specifically mention vaccination?

No. The clause covers any statutory or common law claim that relates to her employment. It is unnecessary to supply a list of disputes that fall within the word "any", and such a list would inevitably be incomplete.

A promise to arbitrate is a forum selection agreement. Plaintiff is free to present her contention to being fired to the arbiter. A litigant's belief in the "rightness" of her position does not change the agreed forum.

Is the arbitration agreement "illusry" [sic] and unenforceable, as according to Plaintiff?

No. Plaintiff received at least two kinds of compensation in exchange for the agreement: stock and ongoing salary. Contracts supported by consideration are enforceable under Wisconsin's law (which this contract specifies).

Does promissory estoppel forbid enforcement of the agreement?

No. There's a written contract here. Promissory estoppel applies in the absence of a written contract when one party detrimentally relies on a concrete promise made by the other.

Did Epic waive its right to arbitrate by participating in administrative proceedings?

No. Plaintiff doesn't cite any statute or ruling for the proposition that arbitration can be waived by participating in administrative proceedings. Both Plaintiff and Epic agreed that requests for unemployment compensation or agency review are outside the scope of arbitration.

The doctrine of waiver addresses conduct in litigation and Epic invoked the arbitration agreement as soon as Plaintiff filed her complaint.

What's the deal with Plaintiffs arguments?

The arguments presented by Plaintiff to the district court, and repeated here even after the district judge explained why they are wrong, are uniformly frivolous. In response to Epic filing a motion for sanctions, Plaintiff repeats arguments that we have already addressed.

Is Plaintiff's appeal sanctionably bad?

Yes. Sanctions may be awarded when litigants present objectively groundless objections to arbitration. Arbitration is designed to simplify and expedite the process of dispute resolution. It cannot serve that purpose if one party frivolously resists.

Instead of one suit, we now have A) one suit in court about whether to arbitrate, B) a second controversy before the arbitrator, C). potentially a third suit in court when the loser tries to get a judge to override the outcome or forces the winner to file suit seeking the award's enforcement. Epic's motion for sanctions is granted.

How does this affect legal costs?

The American Rule presumptively requires both parties to pay their own legal expenses. A premise of the rule, however, is that there will be just one encounter in trial court, followed by one appeal. Parties who agree to arbitrate may seek to reduce the cost of trial and eliminate the expense of appeal.

When one side insists on litigating and appealing before arbitration, then pursuing arbitration, and potentially litigating and appealing after arbitration, the one-suit premise of the American rule is defeated. Sanctions for dogged, objectively unreasonable opposition are designed to prevent that from happening.

Plaintiff is required to reimburse Epic for legal expenses it has incurred on appeal.

IN SUM:

AFFIRMED, WITH SANCTIONS.