Massachusetts Court Rejects Defendant's Attempt to Enforce Unwritten Arbitration Agreement

Parties can agree to arbitrate disputes between them. This includes employers and employees agreeing to arbitrate employment disputes. An agreement to arbitrate amounts to a contract and will be interpreted according to its terms. As such, if the agreement doesn’t apply to certain claims, then those claims are not subject to arbitration. Likewise, if the agreement doesn’t apply to certain entities (say, for example, an affiliate of the employer) then claims against those entities are not subject to arbitration. A Massachusetts court recently provided a further limitation as to the enforceability of arbitration agreements, this time relative to unwritten agreements. Crean and Dino v. Morgan Stanley Smith Barney, LLC, Case No. 21-cv-11021-PBS (D. Mass. Jan. 23, 2023).

Plaintiffs Mark Crean and Dawn Dino brought claims against Morgan Stanley Smith Barney, LLC for breach of contract, conversion, fraud, breach of fiduciary duties, and violation of chapter 93A. Defendant moved to compel those claims to arbitration, claiming that the parties had executed a valid arbitration agreement. The problem? The defendant could not produce a written arbitration agreement. Instead, the defendant relied upon an affidavit from an employee who claimed the written agreement existed. For a variety of reasons, the Court find this affidavit unpersuasive, including that the affiant did not work for defendant when the alleged agreement was signed. Thus, the Court chose not to rely on the affidavit as it was not based on the affiant’s personal knowledge.

Employers require employees to sign arbitration agreements at a time when they are presented with a host of onboarding documents. Oftentimes, employers miss steps in that process, including actually presenting the employee with an arbitration agreement it later tries to enforce. If that’s the case, don’t just assume you must have signed an arbitration agreement. Instead, make your employer produce the written agreement and confirm it applies to your claims.

If you have any questions about arbitration agreements, or any other employment-related matter, don’t hesitate to contact us today for a free consultation.