Britto v. Prospect Chartercare Sjhsri, LLC
909 F.3d 506
1st Cir.2018Background
- Sylvester Britto, an African-American employee, signed an offer letter and a separate arbitration agreement in June 2014 as a condition of continued at-will employment after Prospect acquired his employer.
- The offer letter reserved Prospect’s right to modify employment terms “at any time”; the arbitration agreement was signed separately and stated all employment-related claims would be submitted to binding arbitration under the FAA.
- Britto was terminated in January 2015 and sued for age and race discrimination under federal and Rhode Island law after administrative exhaustion.
- Prospect moved to compel arbitration; the district court found a valid arbitration agreement and dismissed the suit without prejudice.
- Britto argued the arbitration agreement was unenforceable for lack of consideration (illusory promise because Prospect could unilaterally change terms) and procedurally unconscionable (signed quickly, no time or counsel to review). The district court rejected these arguments.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a valid arbitration agreement exists (consideration) | Britto: Offer letter’s reservation of rights makes Prospect’s promise to arbitrate illusory; continued at-will employment is insufficient consideration | Prospect: Arbitration agreement is a standalone contract; continued employment is sufficient consideration; Oken controls | Court: Affirmed — continued employment provides independent consideration; arbitration agreement valid |
| Whether Conduragis decision precludes arbitration (collateral estoppel) | Britto: Conduragis held the same agreement unenforceable and should preclude enforcement here | Prospect: Conduragis differs on facts/analysis and relied on lower court authority; not binding | Court: Conduragis unpersuasive and has been reversed by this Court; collateral estoppel not applied |
| Whether an illusory term in one document voids the arbitration agreement when another promise exists | Britto: Even one illusory employer promise (ability to rescind arbitration) voids the contract | Prospect: Even if one promise were illusory, the separate promise of continued employment supplies consideration | Held: Court rejects Britto’s novel rule; where one valid promise exists (continued employment), agreement stands |
| Whether arbitration agreement is procedurally unconscionable | Britto: Signing in a brief meeting, no explanation, no time or counsel, was coercive | Prospect: Process was not oppressive; Britto had opportunity to review and sign | Court: Britto waived parts of the unconscionability argument; in any event he failed to show substantive unconscionability, so claim fails |
Key Cases Cited
- Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63 (2010) (arbitration is contractual and courts enforce arbitration agreements under FAA)
- Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265 (1995) (FAA places arbitration agreements on same footing as other contracts)
- Campbell v. Gen. Dynamics Gov't Sys. Corp., 407 F.3d 546 (1st Cir. 2005) (elements required to compel arbitration)
- Oken v. Nat'l Chain Co., 424 A.2d 234 (R.I. 1981) (continuation of employment is sufficient consideration for contract modification)
- E.H. Ashley & Co. v. Wells Fargo Alarm Servs., 907 F.2d 1274 (1st Cir. 1990) (Rhode Island unconscionability requires procedural and substantive showing)
- JPL Livery Servs., Inc. v. R.I. Dep't of Admin., 88 A.3d 1134 (R.I. 2014) (illusory promise gives no consideration)