Why do courts enforce mandatory arbitration clauses? Because the contracting parties agreed to them, the courts tell us.
Not this time. A Florida intermediate appellate court held earlier this month that an arbitration clause was enforceable in a wrongful death suit against a rehabilitation center even though Jessie Holloway, the 92-year-old woman who signed the arbitration agreement, "could not possibly have understood what she was signing." Specifically:
When she entered the facility, she executed a standard resident admission and financial agreement and a separate arbitration agreement. At the time, she was 92 years old and had a fourth-grade education. She could not spell well and often had to sound out words while reading. She had memory problems and was increasingly confused.
Even though the court had no trouble accepting the trial court's finding that Ms. Holloway couldn't have understood the agreement, the court nonetheless held that "[f]or better or worse, her limited abilities are not a basis to prevent the enforceability of this contract," because "[o]ur modern economy simply could not function if a 'meeting of the minds' required individualized understanding of all aspects of the typical standardized contract."
The court is thus abandoning any pretense that arbitration must be based on consent and a knowing waiver of rights. Instead, this rule permits forced arbitration to be imposed unilaterally by the more sophisticated party to any contract. And if "[t]he agreements are sufficiently complex that many able-bodied adults would not fully understand the agreements," well, so much the better for the company imposing the terms, and so much the worse for the elderly patient who forgot to bring her lawyer when she checked in to the rehab center.
The case is Spring Lake v. Holloway, decided by Florida's Second District Court of Appeals.