## Facts

- Vidalina Soto worked for State Industrial Products and related entities (“State Chemical”) beginning in 1992.
- State Chemical implemented an Alternative Dispute Resolution (ADR) program requiring employment-related disputes to proceed through internal negotiation, mediation, and arbitration.
- In 1996, Soto signed English-language acknowledgments stating she received and read the ADR program and attended a meeting where it was described; one acknowledgment stated employees employed before January 1, 1996 retained a right to go to court at the conclusion of the ADR program.
- In 2001, Soto signed an additional at-will/ADR agreement stating ADR was the exclusive method for resolving employment-related disputes and that consideration was provided by mutual obligations.
- Another ADR document stated the program was effective January 1, 1996 and that continued employment constituted acceptance and consideration.
- In March 2009, Soto sued State Chemical in federal court alleging disability discrimination under the ADA and related Puerto Rico law.
- State Chemical moved to dismiss and enforce arbitration under the Federal Arbitration Act (FAA).
- Soto asserted the arbitration agreement was unenforceable due to lack of consideration, invalid consent (coercion and English-language barrier), and unconscionable arbitration costs.

## Issues

1. Whether the arbitration agreement was supported by valid consideration, including continued employment and mutual promises to arbitrate.
2. Whether Soto’s assent was void due to coercion or inability to understand the English-language documents.
3. Whether the arbitration cost provisions were unconscionable or so prohibitive as to render the arbitration agreement unenforceable.
4. Whether a motion styled as a motion to dismiss based on an arbitration clause could be treated as a request to compel arbitration.

## Decision

- The First Circuit affirmed the district court’s dismissal without prejudice and enforcement of arbitration.
- The court held the agreement was supported by adequate consideration, including continued employment and the parties’ mutual obligation to arbitrate covered disputes.
- The court rejected challenges to consent based on alleged intimidation and limited English proficiency, relying on Soto’s signed acknowledgments and the absence of legally sufficient duress.
- The court held the arbitration cost provisions were not shown to be prohibitively expensive or unconscionable.
- The court treated the motion to dismiss as effectively seeking to compel arbitration where the intent to invoke arbitration was clear.

## Legal Principles

- Under the FAA, courts enforce arbitration agreements according to their terms unless a generally applicable contract defense (e.g., lack of consideration, duress, unconscionability) is proven.
- In the employment context, continued at-will employment may constitute consideration for an arbitration agreement, particularly when paired with express terms stating continued employment is acceptance.
- A bilateral obligation to arbitrate can provide independent consideration and is not illusory when it restricts both parties’ options for resolving covered disputes.
- Fear of job loss from refusing to accept an arbitration condition of at-will employment, without additional unlawful conduct, does not establish duress sufficient to void consent under applicable local contract law.
- A signatory is generally bound by written acknowledgments of receipt and understanding; limited language proficiency does not negate assent absent fraud or a stronger invalidating circumstance.
- A party resisting arbitration on cost grounds must make a concrete showing that likely arbitration expenses are prohibitively high and would prevent effective pursuit of statutory claims.
- Courts may treat a dismissal motion premised on an arbitration clause as a request to compel arbitration when the substance of the request is apparent.

## Conclusion

The First Circuit enforced State Chemical’s employment ADR/arbitration agreement and required Soto to arbitrate her ADA and related claims, concluding that consideration and consent were adequate and that the cost provisions were not shown to be prohibitive or unconscionable.


Soto v. State Indus. Prods., Inc., 642 F.3d 67 (1st Cir. 2011)