Douglass v. Pflueger Hawaii, Inc.
135 P.3d 129 (2006)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
Under Hawaii law, employment contracts for minors aged sixteen or seventeen are not voidable under the infancy doctrine, but an arbitration clause within an employee handbook is unenforceable if the acknowledgment form does not specifically reference the clause and the employer's unilateral right to modify the handbook renders the agreement illusory.
Facts:
- Pflueger Hawaii, Inc. hired seventeen-year-old Adrian D. Douglass as a lot technician on or about August 31, 2001.
- On September 13, 2001, at an employee orientation, Douglass received Pflueger’s Employee Handbook.
- The handbook contained an arbitration provision on page 20, stating all employment-related claims must be settled by final, binding arbitration.
- The handbook also contained disclaimers stating it was not an employment contract and that Pflueger reserved the right to change its terms at any time without notice.
- On the same day, Douglass signed a one-page "Acknowledgment" form on page 60 of the handbook, confirming receipt but making no mention of the arbitration agreement.
- On or about November 29, 2001, a coworker injured Douglass by spraying him on the buttocks with a compressed air hose, which Douglass alleged was a sexual assault.
Procedural Posture:
- Douglass filed a complaint with the Hawaii Civil Rights Commission (HCRC) on May 2, 2002.
- The HCRC issued Douglass a right-to-sue letter on September 25, 2002.
- Douglass (plaintiff) filed a complaint against Pflueger (defendant) in the Circuit Court of the First Circuit (trial court) on December 17, 2002.
- Pflueger filed an answer and the parties engaged in discovery.
- On December 1, 2003, Pflueger filed a motion to stay the court action and compel arbitration.
- The trial court granted Pflueger's motion on December 30, 2003.
- Douglass (appellant) appealed the trial court's order to the Supreme Court of Hawai'i, with Pflueger as the appellee.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Is an arbitration provision contained within an employee handbook a valid and enforceable contract when the acknowledgment form signed by the employee does not reference the provision and the handbook states that its policies do not create a contract and can be changed at any time by the employer?
Opinions:
Majority - Moon, C.J.
No, the arbitration provision is not a valid and enforceable contract. Although Hawaii's child labor laws supersede the common law infancy doctrine for sixteen- and seventeen-year-old employees, meaning Douglass cannot void the employment contract due to his minority status, the arbitration provision itself fails as a contract. Applying the three-part test from Brown v. KFC, the court found the provision failed on two grounds. First, there was no unambiguous intent or mutual assent, as the acknowledgment form Douglass signed did not mention the arbitration provision, it was located forty pages away from the signature line, and the handbook contained multiple disclaimers stating it was not a contract. Second, the agreement lacked bilateral consideration because Pflueger's reservation of the right to unilaterally change the handbook at any time rendered its promise to be bound by arbitration illusory. Therefore, the arbitration agreement is unenforceable for lack of mutual assent and consideration.
Concurring - Acoba, J.
No, the arbitration provision is not enforceable, but for different reasons. The majority erred by concluding that child labor laws abrogate the common law infancy doctrine; Douglass, as a minor, should have the right to disaffirm the entire employment contract. Even if the contract were not voidable, the arbitration clause is unenforceable due to ambiguity. The mandatory language of the arbitration clause ('shall be settled') directly conflicts with the handbook's disclaimers stating it is not a binding contract. This ambiguity must be construed against the drafter, Pflueger, rendering the arbitration clause non-mandatory. The majority's reliance on formatting indicia like whether a clause is 'boxed off' is impractical and places an undue burden on employees.
Analysis:
This decision significantly clarifies the requirements for enforcing arbitration agreements in employee handbooks in Hawaii. It establishes that a general acknowledgment of a handbook is insufficient to demonstrate mutual assent to an arbitration clause, particularly when contradicted by disclaimers. The court's holding that an employer's unilateral right to modify the handbook makes an arbitration agreement illusory provides a powerful defense for employees against forced arbitration. While the ruling limits the infancy doctrine for older minors in the employment context, the contractual analysis strengthens employee protections and serves as a warning to employers to draft arbitration agreements with clarity, specific acknowledgment, and mutuality of obligation.
Unlock the full brief for Douglass v. Pflueger Hawaii, Inc.