Fonza Luke v. Baptist Medical Center

by Ted Frank on March 11, 2008

Stephanie Mencimer: “That’s when the surprise came: Baptist Health argued that Luke had given up her right to sue back in 1997 when the hospital presented the arbitration agreement—even though she’d refused to sign. Simply by continuing to show up for work, Baptist’s lawyers said, she’d agreed to the terms. Acting contrary to established contract law, which requires both parties to consent to a contract before it becomes binding, a federal judge accepted the hospital’s argument.” Shocking, huh? But not true. Mencimer gets both the facts and the law wrong:

  • Baptist Health’s argument didn’t come out of nowhere: it was expressly told to Luke at the time that “the program is binding on all employees” and her decision to “continue her current employment, after receiving notice of this Program, will mean that you have agreed to and are bound by the terms of this Program.”
  • Luke agreed in court that she had notice of the program, that she understood the program, and that she continued working at the hospital.
  • The court thus found that Luke consented to the agreement; in doing so, it didn’t act “contrary to established law” at all; several Alabama Supreme Court opinions recognized that continued employment is sufficient consideration to support an arbitration agreement, and that agreeing to remain employed by an employer with a mandatory arbitration program is conclusive evidence of assent. (Of course, under Erie, federal courts are bound by state supreme court interpretations of state law.)
  • The district court’s opinion was affirmed per curiam by a three-judge panel of the Eleventh Circuit that included two Clinton appointees and a Carter/GHW Bush appointee.
  • And, oh, by the way, Luke began arbitrating her case before the court even ruled, showing that she understood where the law actually was, though now she claims otherwise.

Luke, having received the benefit of an employment agreement that was able to offer her higher wages because of her agreement to arbitrate employment disputes, sought to rewrite the contract after already taking advantage of it. (Update: a commenter ironically signing him- or herself as the Multistate Bar Exam has a nice cite to the Restatement.)

{ 12 comments }

1 matthew 03.11.08 at 12:16 pm

The facts and the law have never gotten in Mencimer’s way before, I don’t know why anything would be different now.

2 yemen 03.11.08 at 2:18 pm

Ted, you make the mistake of assuming bargained for consideration – what’s your proof that the employer offered her higher wages when the arbitration policy was implemented?

Bargained-for consideration came from continued employment. I didn’t say ” the employer offered her higher wages when the arbitration policy was implemented”; I said that the wages were higher with the arbitration policy than they would have been without it. — TF

3 MBE 03.11.08 at 2:44 pm

“[C]ontract law … requires both parties to consent to a contract before it becomes binding. . . .”

This statement is:

(A) True, since every contract requires mutual consent;

(B) False, because performance can constitute acceptance;

(C) True, if the parties are merchants;

(D) False, if a promise is made to a counterparty inducing reasonably-foreseeable reliance therewith.

Answer: Choice (B) is the best response. According to the Restatement (2nd) of Contracts, “Where an offer invites an offeree to choose between acceptance by promise and acceptance by performance, the tender or beginning of the invited performance or a tender of a beginning of it is an acceptance by performance.”

4 Scote 03.11.08 at 3:16 pm

“I said that the wages were higher with the arbitration policy than they would have been without it. — TF”

Yes, you said that, but it seems to be a bald assertion without supporting evidence. Just as likely, if not more so, wages were the same as they could or would have been with out MBA and the employer kept the savings, if any, from the MBA. But, your boner for non-negotiated mandatory binding arbitration seems to turn off your normally acute critical analysis skills.

BTW, it really is rude to respond in line rather than a subsequent post like a normal human. While it may be convenient for you not to have to quote the text you are responding too it is poor form.

5 Ted 03.11.08 at 3:22 pm

I see no evidence that the marketplace for labor in Alabama is non-competitive. Thus, because MBA increases the marginal value of an employee by reducing the marginal cost of hiring, the laws of supply and demand mean that some of that increase in value will be realized by the workers—through increased hiring and/or increased wages. I discuss the impact of litigation on workers’ wages in my forthcoming law review article.

6 scote 03.11.08 at 4:11 pm

“I see no evidence that the marketplace for labor in Alabama is non-competitive. ”

Nor did you provide evidence that your statement about her wages being higher under a non-negotiated MBA was true.

While you may have a forthcoming article that argues the point, you made a an unsupported assertion in your OP about Stephanie Mencimer “taking advantage” of “higher wages,” wages not in evidence–even if their existence is posited by your apparent theory that non-negotiated MBA is always good for consumers and employees.

I see no evidence that the laws of economics and supply and demand cease to exist in Alabama or in the relevant labor market. My assertion is therefore not unsupported. It is your claim that supply and demand is irrelevant that is unsupported. — TF

7 gitarcarver 03.11.08 at 4:45 pm

I see no evidence that the laws of economics and supply and demand cease to exist in Alabama or in the relevant labor market. My assertion is therefore not unsupported. It is your claim that supply and demand is irrelevant that is unsupported.

Of course, the problem here is that the law of “supply and demand” do not necessairly mean that a company will pay more in wages if the surrounding companies are paying the same rate.

There is no evidence that Baptist Health was paying higher wages to their employees after the BA agreement, or that their wages were higher than the surrounding competiton.

You yourself maintain that BA cuts costs for a company. What you have yet to show in this case is that those cost savings were given to the employees in wage increases for existing employees or higher starting salaries for new employees.

It is not for the reader here to disprove your claim as one cannot prove a negative. It is up to you to prove your claim that the wages increased or that Baptist Health offered higher wages because of the BA agreement.

You can restate that laws of supply and demand didn’t stop in Alabama, but that does not prove your position or support your claim.

8 Ted 03.11.08 at 5:01 pm

[T]he law of “supply and demand” do not necessairly mean that a company will pay more in wages if the surrounding companies are paying the same rate.

Except that’s exactly what the law of supply and demand means. If, all else being equal, workers prefer employment without MBA to employment with MBA, then the hospital has to raise wages to compete—unless it was already offering higher wages or better conditions. (Or, if workers prefer MBA ceteris paribus, then what’s the problem? The non-MBA employers would be happy to have her.)

Again, if marginal costs/employee go up, an employer can either reduce wages or reduce employment. The converse is also true.

This is all a natural consequence of supply and demand and competitive markets. If you don’t want to accept the premise, fine–but then the problem is the lack of competitive markets (which noone has demonstrated) rather than the MBA. I’m really not going to reargue basic principles of microeconomic theory.

9 gitarcarver 03.11.08 at 5:27 pm

If, all else being equal, workers prefer employment without MBA to employment with MBA, then the hospital has to raise wages to compete—unless it was already offering higher wages or better conditions.

Not only is this wrong, it is not what you asserted.

1) Your assertion was that because of the MBA, Baptist Health was able to offer Fonza higher wages. Your statement is a factual assertion. Either the wages went up, or they did not. Trying to bring the “law of supply and demand” into this is a smokescreen for an unproven assertion.

2) You make the assumption that a worker can jump from one salary to another an take their years of service with them.

They cannot.

So the question is whether the employee who does not want MBA wants to lose their years of service in a company, and even risk going to another company at a starting rate. In other words, there are more factors to this than “supply and demand,” none of which bear any impact on the truthfulness of your assertion that the wages offered Fonze went up.

I’m really not going to reargue basic principles of microeconomic theory.

No one is asking you to. To say that is what is being asked is a diversion and a bad one at that. What is being asked is that you support your assertion with facts.

10 Ted 03.11.08 at 5:44 pm

Again, if the market is competitive, then the employer can either reduce costs, or reduce wages/benefits, or reduce employment (which in turn will reduce wages). The use of the MBA permitted the employer to offer higher wages than if it didn’t have an MBA. Luke tried to rewrite the deal after the fact after already receiving the benefit of the deal.

That’s just common sense, and it’s common sense backed up by the empirical evidence that increased litigation has reduced wages, cited in my law review article. No one has given me any reason to treat the Alabama market for hospital labor any differently than any other labor market.

11 gitarcarver 03.11.08 at 7:31 pm

The use of the MBA permitted the employer to offer higher wages than if it didn’t have an MBA.

You have yet to prove this is the case. Your continued assertion that the employer raised salaries is not proof.

Luke tried to rewrite the deal after the fact after already receiving the benefit of the deal.

Once again, an unsubstantiated claim on your part. If the benefit you are talking about is increased wages, then you should know that her wages increased and have a citation for that.

That’s just common sense

Common sense and academic integrity would be that you acknowledge that the increased savings from MBA could be put totally into profits or any of a million other potential outlays, and not soley into salaries. Common sense and academic integrity would be that you actually have a citation for your assertion that the Baptist Health increased wages.

No one has given me any reason to treat the Alabama market for hospital labor any differently than any other labor market.

Its not about the labor market, imperical evidence, supply and demand, mircoeconomics or anything else you want to throw out there.

This is whether you have direct knowledge that Baptist Health increased wages because of the MBA agreement. Its a real simple question. Either you do or you do not.

As you have not posted any citation that supports your claim(s). I’ll take this as another obfuscation of the issue and that you do not have any proof that Baptist Health raised salaries because of the MBA agreement.

12 Ted 03.12.08 at 12:11 am

Gitar, the problem here is that you are repeatedly misreading my precise “The use of the MBA permitted the employer to offer higher wages than if it didn’t have an MBA,” which is absolutely true, to mean the less precise “The employer raised wages,” or “the savings went entirely into salaries,” neither of which I ever claimed, yet leads you to make attacks on my “academic integrity,” even as you misrepresent my position. (Note, for example, my 3:22 comment, where I expressly say “some,” which you misrepresent as “entirely.”)

How should I take the fact that you refuse to address my actual argument, and instead wish to complain and insult me over arguments I never made?

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