Rashaan Carter filed a lawsuit against his employer, SP Plus Corporation, alleging violations of state and federal minimum-wage statutes. Shortly after the suit was filed, the district court granted a stay of the litigation to compel arbitration, based on a box checked in an electronic onboarding document. However, the judge later realized she had granted the stay without giving Carter notice. Carter then submitted an affidavit stating that an HR representative, Brenjy Etienne, had filled out and signed the forms on his behalf without explaining the contents or offering him a chance to decline. The district judge lifted the stay, concluding that the record did not show a valid agreement to arbitrate. SP Plus immediately appealed, arguing the order was final and appealable, while Carter argued the court lacked jurisdiction because the matter was still pending.
Circuit Judge Easterbrook wrote for the panel, addressing two primary issues: jurisdiction and the merits of the arbitration claim. First, the court analyzed whether the district court's order was final under 9 U.S.C. §16. While the order denied the motion to stay, the judge had indicated she needed to determine if Carter personally checked the box, which could have implied a pending evidentiary hearing. However, the court found that SP Plus forfeited its right to a hearing by failing to present any evidence in the district court to contradict Carter's affidavit. Because SP Plus did not proffer evidence or request a hearing, the district court's order conclusively denied the request for arbitration, making it appealable. Second, on the merits, the court rejected SP Plus's argument that a strong federal policy favors arbitration. Citing Morgan v. Sundance, Inc., the court clarified that the federal policy is to treat arbitration agreements as enforceable like other contracts, but not more so. The court found that the district judge correctly applied ordinary contract principles and that the evidence did not show the employee agreed to arbitrate. The court noted that a party cannot rely on a 'self-serving' affidavit to disregard the employee's sworn testimony, citing Hill v. Tangherlini.
The decision affirms the denial of arbitration, meaning the litigation between Carter and SP Plus will proceed in district court. It reinforces the principle that employers cannot rely on a presumption of arbitration when the validity of consent is disputed and they fail to present evidence to the contrary. The ruling limits the ability of parties to use procedural delays to force arbitration when the underlying agreement is contested.
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