Melena v. Anheuser-Busch, Inc.

JUSTICE KILBRIDE, dissenting:

I respectfully dissent from the majority’s opinion in this matter for a number of reasons. First, the majority has failed to support adequately the key component of the element of consideration in its contract analysis. Second, the majority’s analysis fails to follow our longstanding precedent in Ryherd and conflicts with this state’s strong public policy interest in protecting workers from retaliatory discharge. Third, the language of the employer’s dispute resolution program policy statement and program guide (DRP) must be construed against the employer as its drafter. Finally, employer-mandated arbitration provisions are effectively contracts of adhesion and raise serious issues concerning employees’ actual knowledge and voluntariness when being bound by them.

I

The majority states the plaintiffs continued employment with Anheuser-Busch provided the consideration needed for its contract analysis, citing Duldulao v. Saint Mary of Nazareth Hospital Center, 115 Ill. 2d 482 (1987). 219 Ill. 2d at 152. In Duldulao, this court held that changes in an employer’s express disciplinary policy may create contractually enforceable rights in an employee if three conditions are met: (1) an adequately clear promise exists to create an employee’s reasonable belief that an offer has been presented; (2) the distribution of the policy was performed in a way that ensured the employee was aware of it and reasonably believed an offer was made; and (3) the employee’s acceptance is demonstrated by the commencement or continuation of work. Duldulao, 115 Ill. 2d at 490 . In reaching this conclusion, Duldulao adopted the reasoning of the Minnesota Supreme Court in Pine River State Bank v. Mettille, 333 N.W.2d 622 (Minn. 1983). Notably, both Duldulao and Pine River focused on the enforceability of disciplinary policy changes affecting the treatment of employees during the course of their employment.

The Duldulao court considered an employee’s right to the benefit of specific disciplinary procedures related to her employment that the employer had added to the employee handbook. Thus, the scope of the control exerted by the additional disciplinary provision in Duldulao extended only for the duration of the employment relationship. In contrast, the added dispute resolution provision here attempts to control the plaintiffs fundamental right to a jury trial even after the termination of the employment relationship. The new dispute resolution provision specifically required issues unable to be resolved by other measures to be decided by binding arbitration, waiving any right to a jury trial. Duldulao does not involve the validity of an agreement entered into during the course of employment that attempts to control the assertion of an employee’s rights after termination of that employment. Therefore, Duldulao cannot support the extension of the provision’s scope of control to conduct occurring after the termination of the employment relationship.

To fill the factual gap between Duldulao and this case, the majority broadly adds that “under Illinois law, continued employment is sufficient consideration for the enforcement of employment agreements,” citing only nonprecedential appellate case law. See 219 Ill. 2d at 152 (citing Lawrence & Allen, Inc. v. Cambridge Human Resource Group, Inc., 292 Ill. App. 3d 131 (1997), McRand, Inc. v. van Beelen, 138 Ill. App. 3d 1045, 1055 (1985), and Woodfield Group, Inc. v. DeLisle, 295 Ill. App. 3d 935, 942-43 (1998)). While these cases provide a somewhat more suitable framework for analyzing the consideration in this case due to their consideration of the validity of employer-imposed provisions attempting to limit former employees’ postemployment activities, they form an inadequate basis for summarily concluding there was sufficient consideration for the arbitration provision imposed in this case.

Initially, I note the same criticism the majority claims precludes the application of our long-standing precedent in Ryherd to this case also precludes the majority’s reliance on its cited appellate cases. Just as “Ryherd did not involve the issue of the enforceability of an agreement to arbitrate a statutory claim” (219 Ill. 2d at 154), here the cited appellate cases involve nonstatutory claims seeking to find postemployment restrictive covenants unenforceable. Lawrence, 292 Ill. App. 3d at 137 ; McRand, 138 Ill. App. 3d at 1047 ; Woodfield, 295 Ill. App. 3d at 936 . If this court’s own precedent in Ryherd is distinguishable on this basis, there can be no justification for relying on appellate court authority bearing the same “flaw.” This is particularly true in this instance because even if the appellate court’s cases were factually on point, they do not constitute binding authority on this court. Department of Transportation ex rel. People v. 151 Interstate Road Corp., 209 Ill. 2d 471, 485 (2004).

In addition, although in Lawrence, 292 Ill. App. 3d at 138 , and McRand, 138 Ill. App. 3d at 1055 , the courts found that “continued employment for a substantial period” may provide sufficient consideration to support the restrictive employment covenants at issue there, they offer no real analysis of that issue. As the McRand court noted, our appellate court has either only “signaled” support for similar findings “[wjithout discussing the issue at length” or enforced restrictive covenants imposed during an ongoing employment relationship without “directly addressing the issue of consideration.” McRand, 138 Ill. App. 3d at 1055 . Neither approach provides a satisfactory basis for the majority’s reliance.

Despite this scant foundation, however, the majority unquestioningly adopts the appellate court’s position. Indeed, it relies on that foundation to extend our prior holding in Duldulao outside the context of disputes arising during the course of an employment relationship. I believe the absence of any substantive discussion in the appellate cases merits, at a minimum, that this court undertake its own thorough examination of the issue prior to adopting a broader rule. If we then determined the extension of Duldulao was justifiable under some set of circumstances, I would remand the cause to the trial court for a further review of the sufficiency of the consideration in this particular case. In light of the lack of any actual analysis of whether the plaintiff’s continued employment constitutes sufficient consideration in the context of this case, however, I believe the majority’s contract discussion is seriously undermined.

II

The majority’s analysis makes another critical error by ignoring this court’s prior clear declaration that employees may not negotiate or bargain away their right to seek recovery for retaliatory discharge as derived from public policy. Ryherd v. General Cable Co., 124 Ill. 2d 418, 426, 433 (1988). In Ryherd, this court held that even if an arbitrator had decided the underlying factual issues in a retaliatory discharge claim, the former employee could not be barred from filing a subsequent claim in state court. Ryherd, 124 Ill. 2d at 431, 434 . We based this conclusion on the principle that “the arbitrator has no competence and, indeed, no mandate to determine whether the motives for the discharge contravene a clearly mandated public policy.” Ryherd, 124 Ill. 2d at 431 .

As in this case, the plaintiff in Ryherd alleged, in relevant part, that she was fired from her job in retaliation for filing a workers’ compensation claim. See Ryherd, 124 Ill. 2d at 423 . Thus, the rationale in Ryherd applies equally to this case. In Ryherd, this court soundly rejected the majority’s approach permitting “the ultimate determination of Illinois public policy [to be] delegated to privately appointed arbitrators. The danger of such inconsistent and unreviewable private law militates against preemption.” Ryherd, 124 Ill. 2d at 432 . Under this established precedent, employers and employees may not contract away the authority to decide fundamental public policy questions to private arbitrators. Yet, that is exactly what the majority is permitting in this case.

In support, the majority cites with approval the United States Supreme Court’s statement in Gilmer v. Inter state/Johnson Lane Corp. that “ ‘ “[s]o long as the prospective litigant effectively may vindicate [his or her] statutory cause of action in the arbitral forum, the statute will continue to serve both its remedial and deterrent function.” ’ ” (Emphasis added.) 219 Ill. 2d at 155, quoting Gilmer, 500 U.S. at 28, 114 L. Ed. 2d at 38, 111 S. Ct. at 1653, quoting Mitsubishi, 473 U.S. at 637, 87 L. Ed. 2d at 461-62, 105 S. Ct. at 3359. It fails to note, however, that the facts in this case show the dispute resolution procedures mandated in the arbitration provision provide far less procedural protection than is available for the vindication of the plaintiff’s rights through a judicial forum.

Despite the purported availability of the same remedies in the arbitration proceedings mandated by the DRP and in court proceedings (219 Ill. 2d at 155-56), the complainants enjoy significantly diminished procedural protections. For instance, according to the DRP policy statement the “legal rules of evidence” are inapplicable, with exceptions only for matters of “attorney-client privilege, attorney work product and compromise and offers to compromise.” The arbitrator will not consider affidavits except by the written agreement of both parties. The use of depositions is also quite limited, permitting only the opposing party’s expert witnesses and “up to two other individuals” to be deposed in the absence of an exception being granted by the arbitrator. Moreover, under the DRP complainants have only 21 days after the issuance of a written notice that mandatory nonbinding mediation was unsuccessful to request a binding arbitration hearing or face the loss of their right even to receive an arbitration hearing. Thus, the arbitration proceedings do not provide the types of protections ordinarily extended in civil trials, a fact most, if not virtually all, employees fail to realize when they willingly or unwilling accept mandatory binding arbitration provisions in order to keep their jobs. Given these vital procedural distinctions, I do not believe the employer’s program permits complainants to “effectively *** vindicate” their statutory rights. See Gilmer, 500 U.S. at 28, 114 L. Ed. 2d at 38, 111 S. Ct. at 1653. The arbitral forum offered by the program does not serve the deterrent and remedial functions of this state’s workers’ compensation statute.

Ill

I also believe the language in the DRP policy statement is internally conflicting and should not be construed in favor of the employer. The policy statement defines the “covered employees” as “all *** salaried and nonunion hourly employees of Anheuser-Busch Companies, Inc., or any of its U.S. subsidiaries.” Thus, at the time this program was initiated, the plaintiff was considered a “covered employee.” When her employment was terminated by Anheuser-Busch, however, she was no longer a salaried or nonunion hourly employee. Therefore, under the program’s definition, she was no longer a “covered employee” subject to the terms of the DRP. Moreover, she was also not a “former employee” entitled to request application of the program because the policy statement specifically defines “former employees” as “[e]mployees terminated prior to the [dispute resolution program’s] effective date.” Applying this language here, the DRP was not applicable to the plaintiff as either a covered employee or as a former employee. Nonetheless, the DRP policy statement attempts to bind all involuntarily terminated employees by requiring use of the specified dispute resolution procedures for all disputes related to their terminations.

Employers cannot draft conflicting provisions requiring only salaried and nonunion hourly employees to participate in the dispute resolution program and at the same time also attempt to bind individuals who are no longer salaried or hourly employees by those same procedures. Under established principles of contract interpretation, such ambiguity must be construed against the employer as the drafter of the language. Dowd & Dowd, Ltd. v. Gleason, 181 Ill. 2d 460, 479 (1998). Applying that rule of construction in this case, the DRP is only applicable to disputes arising with current employees, not to past employees’ allegations of retaliatory discharge. By their very nature, these claims arise after the termination of employment, when the individuals can no longer be considered “covered” by the dispute resolution program as salaried or hourly employees. Any other interpretation would undermine the strong support this court has previously demonstrated for the vital public interests underlying retaliatory discharge claims. See Gonzalez v. Prestress Engineering Corp., 115 Ill. 2d 1, 9 (1986); Kelsay v. Motorola, Inc., 74 Ill. 2d 172, 187 (1978).

IV

In addition, I am troubled by an employer’s unilateral imposition of a mandatory binding arbitration provision requiring employees to forfeit their constitutional rights to judicial process far in advance of any actual dispute. This places employees such as the plaintiff here in the fundamentally unfair position of being required to seek remedies exclusively in a forum mandated by employment agreements that can no longer logically bind them because they are no longer “covered employees.” Furthermore, while there may be certain types of disputes that a given employee may be willing to submit to arbitration, there are undoubtedly other types that the same employee would choose to seek vindication of the employee’s rights in a traditional judicial forum. By being economically coerced into signing a take-it-or-leave-it employer-mandated arbitration agreement just to maintain employment, the employee is often unwittingly stripped of the future ability to treat issues on a case-by-case basis. Moreover, as noted earlier in this dissent, nearly all employees lack sufficient knowledge of the differences in the procedural protections afforded to them in the two forums to make truly informed and voluntary decisions to enter into mandatory binding arbitration provisions. Common sense and experience dictate that, without that knowledge, employees accept the provisions solely in order to keep their current jobs.

Indeed, the true voluntariness of such an anticipatory employment agreement has been the subject of much criticism. See, e.g., D. Schwartz, Enforcing Small Print to Protect Big Business: Employee and Consumer Rights Claims in an Age of Compelled Arbitration, 1997 Wis. L. Rev. 33 , 76, 114-19 (1997) (noting that the drafters and proponents of the Federal Arbitration Act did not intend it to apply to contracts of adhesion such as employment contracts, that there is often a disparity of bargaining power and information between employers and employees pertaining to these agreements, and reviewing the critical differences between the use of settlements and prospective waivers such as predispute arbitration agreements); M. Eisenberg, The Limits of Cognition and the Limits of Contract, 47 Stan. L. Rev. 211 , 251-52 (1995) (concluding that employees may be exploited by arbitration provisions due to their “limited cognition” of the long-term impact of their agreement to mandatory binding arbitration over disputes that have not yet even arisen); Comment, Achieving Knowing and Voluntary Consent in Pre-Dispute Mandatory Arbitration Agreements at the Contracting Stage of Employment, 90 Cal. L. Rev. 1203 , 1225-26, 1234-35 (2002) (citing empirical studies showing that the majority of employees of all types are ignorant of their legal employment rights, the available legal processes, the procedural and remedial implications of agreeing to arbitration of future disputes, their substantive protections as employees, and that the economic pressures at work in these contracts of adhesion make truly knowing and voluntary consent unlikely).

I find these matters particularly troublesome in the context of the plaintiffs claims in this case. The plaintiff alleged she was discharged from her employment in retaliation for the exercise of her statutory rights under the Illinois workers’ compensation statute. Without a doubt, retaliatory discharge is contrary to the public policy of this state. Gonzalez v. Prestress Engineering Corp., 115 Ill. 2d 1, 9 (1986); Kelsay v. Motorola, Inc., 74 Ill. 2d 172, 187 (1978).

This court has long recognized the vital importance of the public policy protecting employees who assert their rights under the Workers’ Compensation Act. Gonzalez, 115 Ill. 2d at 9. In addition, the legislature’s intent to protect employees’ rights through third-party oversight is apparent from its statutory requirement of state approval prior to the settlement of certain types of workers’ compensation claims. 820 ILCS 305/10.1 (West 2002). Here, the DPR deprives employees of the Act’s third-party oversight protections by barring any state oversight. A refusal to recognize the serious question involving the voluntariness and the actual knowledge of employees about the ramifications of signing predispute arbitration clauses seriously undermines these intentions.

V

In sum, the majority’s analysis is internally flawed, and its approach and outcome are in direct conflict with our prior decision in Ryherd. The opinion also ignores the real-world factors militating against an employee’s truly voluntary and knowing agreement to a mandatory binding arbitration provision imposed by an employer in a contract of adhesion. When viewed in light of this court’s previous concerted efforts to uphold the strong public policy protecting employees who file Workers’ Compensation Act claims, this analysis is particularly disconcerting. For these reasons, I respectfully dissent.