## Facts

- Adrian D. Douglass, age 17, worked as a lot technician for an Acura dealership operated by Pflueger Hawaii, Inc.
- At an employee orientation, Douglass received an employee handbook containing an anti-harassment policy and an arbitration provision requiring “final binding arbitration” under the Federal Arbitration Act and AAA procedures.
- Douglass signed an acknowledgment stating he received and read the handbook; the acknowledgment also stated the handbook was not a contract and could be changed by the employer.
- Douglass alleged his supervisor sexually harassed and assaulted him, including an incident in which the supervisor sprayed him with an air hose, causing serious injury.
- After obtaining a right-to-sue letter from the Hawaiʻi Civil Rights Commission, Douglass sued for claims including sexual harassment, assault, and negligent training and supervision.

## Issues

1. Whether a 16- or 17-year-old lawfully employed under Hawaiʻi child labor statutes may avoid being bound to an employment agreement solely due to minority.
2. Whether the handbook arbitration provision was an enforceable agreement, including whether there was mutual assent to arbitrate and adequate consideration.
3. Whether the circuit court properly stayed the case and compelled arbitration based on the handbook and acknowledgment.

## Decision

- The Hawaiʻi Supreme Court vacated the order compelling arbitration and staying the judicial action, and remanded for further proceedings.
- A minor lawfully employed under Hawaiʻi child labor statutes generally may not disaffirm an employment contract solely because of minority in that employment context.
- The arbitration provision was not enforceable because the record did not show mutual assent to arbitrate and lacked bilateral consideration.

## Legal Principles

- Arbitration is a matter of contract; an arbitration clause is unenforceable absent evidence of mutual assent showing an unambiguous intent to submit disputes to arbitration.
- A handbook acknowledgment that merely confirms receipt, while stating the handbook is not a contract and may be unilaterally changed, is insufficient to establish agreement to arbitrate.
- Contract formation requirements apply to an asserted arbitration agreement, including mutual assent and consideration; an employer’s reserved right to unilaterally modify handbook terms can defeat consideration by making any promise to arbitrate nonbinding.
- A minor’s limited inability to disaffirm an employment contract under child labor statutes does not eliminate the need for a valid, separate agreement to arbitrate.

## Conclusion

The court held that although Hawaiʻi law treats 16- and 17-year-olds as competent to enter lawful employment contracts, the employer still had to prove a valid arbitration agreement; because the handbook materials did not demonstrate mutual assent or bilateral consideration, Douglass was not bound to arbitrate and the order compelling arbitration was vacated.


Douglass v. Pflueger Haw., Inc., 110 Haw. 520, 135 P.3d 129 (2006)