Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.
In Aponte Valentín v. Pfizer Pharmaceuticals, CC-2018-748,1 the Puerto Rico Supreme Court reinforced the strong public policy favoring arbitration agreements in Puerto Rico, validating continued employment as implicit consent for such agreements.
The defendant in the case implemented a compulsory arbitration program for its employees pursuant to the Federal Arbitration Act (FAA). The company notified its employees of the terms of the arbitration program by email, including links with access to the Mutual Arbitration Agreement and Class Action Waiver (Agreement), a list of questions and answers, a training module and an electronic acknowledgment of receipt. The Agreement provided that, as a condition of continued employment, all work-related claims (with some limited exceptions) had to be resolved through arbitration. The Agreement further stated that if an employee commenced work or continued to work for a period of 60 days after receiving the Agreement, the job acceptance or continued employment would be considered as consent to the Agreement.
The plaintiffs in the case received the emails with the Agreement and they all continued working 60 days after receiving them. They were later terminated from employment for reasons unrelated to the Agreement, and filed suit in court, alleging that they were terminated without just cause in violation of PR Act No. 80-1976. Defendant moved to dismiss and compel arbitration.
Plaintiffs opposed the motion, arguing that there was no valid arbitration agreement signed by them and that they never consented to arbitrate any claims. The lower court granted the request for dismissal, finding that while the arbitration agreement must be in writing, the parties’ physical signature was not required and that the mere permanence in the employment evidenced the plaintiffs’ tacit consent to the Agreement. Plaintiffs appealed. The court of appeals reversed the lower court’s decision, finding that there was a controversy regarding whether the plaintiffs had in fact consented to the Agreement. Thus, the court of appeals sent the case back to the lower court to hold an evidentiary hearing regarding the issue of consent.
Defendant then filed a writ of certiorari before the Puerto Rico Supreme Court, which the Court issued. In a 5-3 decision, the Supreme Court reversed the appeals court’s decision and reinstated the lower court’s dismissal of the case. In doing so, the Supreme Court recognized that the FAA applies in the employment context, that its provisions are triggered when there is an interstate transaction implicated and that it preempts state laws on the subject. The Court further emphasized that in Puerto Rico there is a strong public policy in favor or arbitration as an alternate dispute resolution method, as long as there is a valid arbitration agreement.
To determine whether a valid arbitration agreement exists pursuant to the FAA, courts must look at state contract law. In Puerto Rico, contract law is based on the parties’ autonomy and liberty to agree on terms and conditions of their choosing as long as they are not against the laws or the moral or public order. For an agreement to be valid, there must be consent and consideration. The Court highlighted that Puerto Rico recognizes implicit or tacit consent for contracts, and stated that the fundamental element of implied consent is the person’s conduct and not the words used to express it. The Court further emphasized that the fact that a contract is a typical adhesion contract does not make it invalid. Finally, the court noted that principles of good faith apply and that individuals may not go against their own acts.
Applying the contract law requirement to the controversy of the case, which centered on the consent requirement, the Puerto Rico Supreme Court held that the FAA requires only that arbitration agreements be in writing, that sending the agreement through electronic means satisfies this requirement and that the parties’ physical signatures are not required to validate the Agreement. Importantly, the Court noted that the Agreement was clear in that it was deemed accepted if the employee continued to work for the company for 60 days after the receipt of the Agreement. Thus, written approval was not required.
Next, the Court tackled the issue of whether continued employment was a valid way to implicitly consent to the Agreement. The Court held that, in light of the Agreement’s language, the plaintiffs’ continued employment for a term of 60 days after receiving the Agreement constituted an implicit declaration of their consent, making the Agreement valid.
In reaching its decision, the Court noted that the plaintiffs were not deprived of their rights in light of the Agreement but, rather, the effect was to substitute the judicial forum with the arbitration forum for the resolution of the covered employment claims.
This case, therefore, represents further certainty for employers that have adopted or are planning to adopt arbitration agreements in connection with employment claims, especially those covered by the FAA.
1 The Opinion was issued on November 10, 2021. The plaintiffs in the case still have time to move for reconsideration of the Supreme Court’s decision.