## Facts

- A law firm implemented a new dispute-resolution program requiring negotiation/mediation and, if unresolved, binding arbitration.
- The firm did not individually distribute the program’s text; it placed the materials in an “employee handbook” folder on its computer server.
- The firm sent a firm-wide email instructing employees to review new or updated handbook materials.
- The email did not mention arbitration, describe the dispute-resolution program, or state that continued employment would constitute acceptance.
- The employee continued working after the email, was later terminated, and filed employment-related claims against the firm in separate proceedings.
- The firm sued the former employee in federal court asserting claims under the Computer Fraud and Abuse Act and Texas statutes, then moved to compel arbitration and stay the federal case based on the new program.
- The employee contested arbitration, asserting she had not received notice of any binding arbitration requirement.

## Issues

1. Whether the employer proved a valid agreement to arbitrate existed under Texas contract law, including whether the employee received express or implied notice of a binding arbitration requirement.
2. If a valid agreement existed, whether the court should compel arbitration and stay the litigation under the Federal Arbitration Act.

## Decision

- The court denied the motion to compel arbitration and denied a stay.
- The employer did not meet its burden to show the employee received express notice of any arbitration policy because the email did not reference arbitration or convey the significance of the change.
- The employer also failed to show implied notice because the generic email did not “fairly suggest” a major contractual change that would create a duty to investigate further.
- Because there was no adequate notice, the employee’s continued employment did not constitute assent to arbitrate.
- The FAA’s policy favoring arbitration did not alter the threshold contract-formation analysis governed by state law.
- A later order reaffirmed the denial, again finding insufficient notice (express or implied).

## Legal Principles

- Under the FAA, a court first determines whether the parties formed an agreement to arbitrate; contract formation is governed by applicable state law.
- Under Texas law, an employer seeking to compel arbitration must prove the existence of a valid arbitration agreement and (if reached) that the dispute falls within its scope.
- In employment settings, continued employment constitutes acceptance of an arbitration policy only after the employee receives notice of the policy.
- Notice may be express (clear communication of the arbitration requirement) or implied (where information actually conveyed triggers a duty to investigate matters fairly suggested by that information).
- A nonspecific directive to review handbook materials, without indicating the adoption of mandatory arbitration, does not create a duty to investigate sufficient to impute notice of an arbitration clause.

## Conclusion

The court refused to compel arbitration because the employer failed to show that the employee received express or implied notice of a new binding arbitration policy; without notice, continued employment did not establish assent, and the FAA could not be used to enforce a contract that was not formed.


Alexander Dubose Jefferson & Townsend LLP v. Vance, No. 1:17-CV-133-RP, 2017 WL 2241538 (W.D. Tex. May 22, 2017)