Sunday, January 2, 2005
Cases—Arbitration clause—Term in employment agreement continues beyond end of original contract period
An arbitration agreement in a written one-year employment contract continues to apply to the employment relationship after the one year expires, according to the U.S. Court of Appeals for the Third Circuit.
Todd Bolinger was hired as an executive by VITEL in 1999. The parties signed a one-year employment agreement that contained an AAA arbitration clause. The contract provided for a one-year renewal at VITEL’s option, provided notice was given to Bolinger. VITEL never gave the notice, but near the end of the agreement promoted Bolinger to a new job. Employment continued for a year and a half after the initial contract ended, when Bolinger was terminated. Bolinger signed a release of his claims for $20,800, but later sued, claiming that it was signed under "extreme duress." VITEL moved to compel arbitration. The district court granted it.
The Third Circuit, reviewing the determination de novo, nevertheless adopted the trial court’s opinion. The trial court, applying Virgin Islands law, had found that since the parties continued performing as if the contract were still in existence, its terms continued to apply. The court was also unimpressed with the argument that arbitration would be too expensive. Bolinger v. Virgin Islands Telephone Corp., 2004 U.S. App. LEXIS 25939 (3d Cir. Dec. 15, 2004), affirming 293 F. Supp. 2d 559 (D.V.I. 2003).