In a decision that is likely to surprise many employers who have mandatory pre-dispute arbitration programs where they have obtained the unequivocal assent of their employees to arbitrate their disputes, a federal appeals court held that notwithstanding that assent, the failure of an employer to countersign the agreement where the arbitration contract specifically called for mutual signatures rendered the agreement unenforceable, and therefore permitted the case to proceed in court. Specifically, in Mertens v. Benelux Corp., No. 24‑50954 (5th Cir. Dec. 17, 2025), the U.S. Court of Appeals for the Fifth Circuit held that a non-countersigned arbitration agreement was unenforceable where the agreement expressly required signatures from both the employee and employer, and the employer never signed it, even though its failure to do so was purely an administrative error. The historically pro-arbitration Fifth Circuit found unavailing that the employer’s failure to countersign was inadvertent and that both parties’ conduct evidenced acceptance of the arbitration agreement. This decision is a cautionary tale for employers that courts will, indeed, construe language in an arbitration agreement against the drafter (typically the employer) and that failure to comply with its terms, even where both parties otherwise indicate an intent to be bound, will result in the agreement being rendered unenforceable.
Factual and Procedural Background
Mertens involved an FLSA collective action brought by waitstaff employees against Benelux Corporation, which operated a business in Austin, Texas. The Fifth Circuit addressed the arbitration agreement issues only as to representative plaintiffs, Mertens and Cadena, whose agreements were the ones containing the signature defects at issue.
Benelux distributed an arbitration agreement (the “Agreement”) which, on the last page, provided, in pertinent part, that:
By signing this arbitration agreement, Employee and the Club’s representative represent that:
- They have fully read this agreement prior to signing it;
- They have been provided a copy of this agreement and have had opportunities to ask questions regarding its content and have it reviewed by persons of their choice, including by attorneys and accountants, before they have signed it; and
- They understand the terms of this agreement and agree to be bound by them. (emphasis added).
Significantly, the mutual representations that were recited and the fact that there were two signature blocks—one for the employee and one for the employer’s representative—would prove significant in the Court’s decision. Representative plaintiffs, Mertens and Cadena, mistakenly signed both signature boxes in the document—the one designated for employees as well as the one designated for the employer. As a result of that error, Benelux’s general manager—who customarily countersigned these Agreements—did not sign in the employer box, later testifying that he mistakenly believed another company representative had already done so.
Both the magistrate judge and the district court concluded that the Agreement unambiguously required signatures from both parties to be effective.
The Fifth Circuit’s Analysis: When a Contract Requires Dual Signatures, Both Must Be Present
In reviewing the issue, the Fifth Circuit focused on the contract’s express language, homing in on the mutual intent to be bound and execution elements for contract formation. Looking at the parties’ mutual intent, the Fifth Circuit stated that, although signatures are not a requirement of mutual intent, when the express language indicates that both signatures are required, a missing signature renders the agreement unenforceable. The Court found several textual indicators in the Agreement that mutual signatures were required: (1) The Agreement repeatedly referred to representations made “by signing” by “Employee and the Club’s representative;” (2) the use of the plural—“they”—signaled mutual obligations; and (3) two signature blocks appeared at the bottom of the Agreement.
Importantly, the Court rejected Benelux’s argument that requiring both signatures could not be a condition precedent because the Agreement did not expressly state that both parties “must” or “shall” sign. The Fifth Circuit explained that Texas law does not require such magic words; rather, the Agreement’s own language—stating that both the “Employee and the Club’s representative” make certain representations “by signing”—was enough to demonstrate that mutual signatures were required.
Benelux also argued that its conduct—drafting, distributing, collecting, and seeking to enforce the Agreement—demonstrated its intent to be bound. The Fifth Circuit rejected this argument outright. The Court stated that when a contract itself specifies that signatures are required, extrinsic evidence of conduct cannot substitute for the missing execution. The Fifth Circuit was also not moved by the fact that the two representative plaintiffs clearly intended to be bound by the arbitration agreement, including signing in both boxes and initialing each page. Even though there was “offer and acceptance,” the “execution” element was missing to make the contract binding.
Why This Case Matters: The Practical Problem Many Employers Face
Mertens stands out because, as noted above, the Fifth Circuit is traditionally arbitration‑friendly. Yet the Court refused to compel arbitration because the Agreement’s own language required signatures from both parties—even though both plaintiffs admitted they signed both signature blocks.
Another notable point is that the Court did not lean on any presumption in favor of arbitration. Instead, it first addressed formation—whether a valid arbitration agreement existed. In doing so, the Court did not apply the presumption of arbitrability.
This is a harsh reminder that courts will enforce signature requirements as written, even when the failure to sign appears to be a simple administrative mistake and both parties have otherwise indicated an intent to be bound by the agreement. The decision also reflects heightened judicial scrutiny of formation and consent before courts will apply the presumption favoring arbitrability.
Practice Pointers for Employers
1. Avoid drafting arbitration agreements that expressly require both parties’ signatures.
If an agreement states that “by signing” both parties agree to be bound, a missing signature from either party may render the agreement unenforceable. Consider drafting the agreement as a unilateral agreement by removing the employer’s signature block to avoid potential ambiguity on this issue—as long as there is already clear language in the agreement of the employer’s intention to be bound. Once the agreement is signed by the employee, both parties should be bound by the agreement.
2. If signatures are required, assign responsibility and implement controls.
Designate a company representative to sign these agreements and ensure they are consistently executed. Administrative oversights or a potential mutual mistake cannot be cured after the fact.
3. Recognize that different language could lead to a different outcome.
Had the agreement indicated acceptance by continued employment or required only the employee’s signature, the result may have been different.
4. Audit your forms and onboarding processes.
This case highlights a common problem: employers rely on employee signatures and assume their silence or issuance of the form conveys acceptance. Under agreements like this one, that ass
