In Joule, Inc. v. Simmons, the Superior Court upheld an arbitration provision that significantly reduced an employee's limitations period for bringing claims and incorporated terms that were subject to the employer's unilateral modification.
Joule, Inc. hired Randi Simmons as a branch manager, and she signed an employment agreement that included an arbitration provision. Joule later terminated her employment. Simmons filed a charge of discrimination with the Massachusetts Commission Against Discrimination (MCAD), accusing Joule and certain individuals of discrimination and retaliation in violation of Massachusetts General Laws ch. 151B. The defendants responded by filing a suit challenging Simmons's right to proceed with her MCAD charge and seeking to compel arbitration.
The Superior Court stayed the plaintiffs' action pending the MCAD's resolution of Simmons's charge. On interlocutory review, the Massachusetts Supreme Judicial Court vacated the stay and allowed the plaintiffs to pursue their action while the MCAD proceeded under its statutory mandate to conduct its own investigation of the plaintiffs' alleged misconduct. The SJC directed the Superior Court to rule on the validity of the arbitration agreement, with an affirmative ruling on that issue compelling arbitration notwithstanding the pendency of the MCAD's own investigation. Joule, Inc. v. Simmons, 459 Mass. 88, 91 (2011).
On remand, Simmons argued to the Superior Court that the arbitration agreement was unenforceable due to unconscionability. The Court noted that a contract may be voided for unconscionability if it was "such that no man in his senses and not under delusion would make on the one hand, and no honest and fair man would accept on the other" or if "the sum total of its provisions drives too hard a bargain for a court of conscience to assist." The Court focused its analysis on what it perceived as Simmons's "two strongest arguments." First, the Court noted that the arbitration provision set a thirty-day limit for filing claims, drastically reducing the three-year statute of limitations period for filing Chapter 151B claims in the Superior Court. Second, the Court noted that procedural rules governing the arbitration, including the limitations period, were found in a separate document that was incorporated by reference into Simmons's employment agreement and that Joule reserved the right to unilaterally modify that document.
While the Court stated that the issue was "a close one," it enforced the arbitration agreement. The Court found that Simmons failed to cite to any cases finding an arbitration agreement unconscionable due to the shortening of the limitations period. Further, it stated that while Joule's ability to unilaterally modify terms of the agreement somewhat compromised the agreement's "bilateralality," Simmons failed to allege that Joule had amended substantive terms between the time she signed the agreement and the parties' dispute arose.
Joule reaffirms that employers can rely on Massachusetts courts to enforce unambiguous arbitration agreements, even if they contain arguably onerous terms. Yet, because this Superior Court decision "was a close one," employers should be circumspect when drafting arbitration provisions that seek to limit employees' substantive rights or that compromise the bilateral nature of such agreements.