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An arbitration clause at Sunoco Inc. that calls for workers to submit disputes to “binding arbitration” is unenforceable because it uses ambiguous language that could be read to mean that arbitration is merely an option, a federal judge has ruled. In his 14-page opinion in Hudyka v. Sunoco Inc., U.S. District Judge Timothy J. Savage refused to compel arbitration of an age-discrimination suit after finding that the company’s arbitration clause did not make it clear that arbitration was mandatory. “The language describing the arbitration process is permissive and not imperative, suggesting that the employee has the option of resolving claims by arbitration or by resort to the courts,” Savage wrote. Savage noted that company documents describing the arbitration clause used words such as “can” rather than “must,” and repeatedly described arbitration as an “option.” The ruling is a victory for attorneys David W. Wolf and Joseph F. Schwartz, whose client, Daniel Hudyka, claims he was fired on trumped-up charges of poor performance and replaced by someone 20 years his junior. Sunoco’s lawyers – Daniel V. Johns and Farrah I. Gold of Ballard Spahr Andrews & Ingersoll – argued that the case should be dismissed and sent to arbitration because Hudyka agreed to a binding arbitration provision that was implemented three months before he was fired. But Savage found that the language used by Sunoco in documents that described the arbitration agreement were ambiguous due to its use of “permissive” language. Workers first learned of the program, Savage noted, when a Sunoco vice president presented sent out a companywide e-mail that announced the adoption of the “Employee Resolution in Action” program. The e-mail told workers that “the majority of the problems will be resolved through the first and second phases of the program, which are called the Open Door phase and the Internal Conference phase.” It went on say that if no resolution was reached in those phases, “an employee has the option to proceed to phase three, mediation, and phase four, binding arbitration,” according to court papers. A later e-mail to workers said “ERA . . . provides a variety of options for resolving work-related concerns.” Sunoco workers later received a 27-page “ERA Program booklet” that said any worker who continued his or her employment with the company was agreeing to “all provisions of the ERA Program.” Savage focused on the section of the booklet that outlined the arbitration provision and said: “If the issue involves a legally protected right . . . and has not been resolved through the first three phases, you or the company can request arbitration.” Another section of the booklet said: “If you file a lawsuit, Sunoco attorneys will go before a judge, inform him or her of the Sunoco ERA Program, and ask that the case be dismissed and sent back to the ERA Program.” Hudyka claims that he never received the April 2004 e-mail or a copy of the booklet explaining the ERA Program. He also claims that Sunoco never requested that he attend any “overview sessions” discussing the ERA Program, and that he never signed an arbitration agreement. Savage noted that Sunoco offered no evidence to prove that Hudyka received and read the booklet or attended an overview session. But even if he had, Savage said, the binding arbitration provision would be unenforceable due to its ambiguous language. “The terms of the purported arbitration agreement are ambiguous and inconsistent. They are insufficient to establish that an employee understood that arbitration was mandatory and, accordingly, that by continuing his employment with Sunoco that he was bound to submit his claims to arbitration,” Savage wrote. Savage emphasized that the ERA booklet told workers that if their disputes were not resolved in the first three phases of the program, a worker “can request arbitration.” And while another section of the booklet said such ongoing disputes would be “submitted to final and binding arbitration rather than through the courts or to a jury,” Savage found that the mandatory language used there conflicted with the language of the e-mail that announced the program by saying that workers would have “the option” to proceed to phases three and four – mediation and arbitration. That conflicting language, Savage said, “renders the requirement ambiguous. Indeed, it informs the employee that arbitration is an option.” Sunoco’s lawyers argued that the ERA Program booklet explained that workers were giving up the right to a jury trial by agreeing to arbitrate. Savage disagreed, saying “neither the booklet nor the two e-mails expressly state that an employee is giving up his right to a jury trial.” Sunoco also cited an answer in the “Frequently Asked Questions” section of its booklet as proof that workers were told they could no longer go to court. But Savage found that, too, was lacking in clarity. “The [FAQ] response is to the specific question whether an employee could ‘sue Sunoco.’ Instead of unequivocally answering ‘no,’ Sunoco responded that it would merely ask a judge to dismiss the case and send it back to the ERA Program,” Savage wrote. “This confusion is compounded by the answer to the question asking how an employee may seek relief if he believes his ‘legally protected rights have been violated.’ The answer gives the employee an option, stating that ‘we hope that you choose to participate in the ERA Program, however, you may consult an attorney.’” When an arbitration provision is ambiguous, Savage said, Pennsylvania courts have held that “its meaning is construed against the drafter.” As a result, Savage said, Sunoco’s arbitration clause is unenforceable because “an employee could read the arbitration language as offering a permissive alternative to litigation.” Sunoco’s lawyer, Johns, could not be reached for comment. (Copies of the 14-page opinion in Hudyka v. Sunoco Inc. , PICS No. 07-0150, are available from The Legal Intelligencer . Please call the Pennsylvania Instant Case Service at 800-276-PICS to order or for information. Some cases are not available until 1 p.m.)

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