Douglass v. Pflueger Hawaii, Inc.

Primary Holding

Even if an arbitration clause is an unambiguous element in an agreement, it is not enforceable if there is no evidence of mutual assent to it by the parties, since there is no unambiguous intent to submit a dispute to arbitration. Also, a minor who is allowed to enter an employment contract under state law may not later disaffirm the contract because he is a minor.

Facts

A 17-year-old named Douglass started working at Pflueger Hawaii, Inc., a car dealership. The employee handbook that the dealership gave Douglass provided that any claims arising from employment disputes between them would be decided through final binding arbitration. Douglass acknowledged that he had read the handbook, which also included provisions on harassment and discrimination. He was later injured on the job when his supervisor sprayed him on the buttocks with an air hose, inflating and dilating his lower intestinal organs. He sued Pflueger for several claims related to harassment and discrimination as well as negligent training and supervision.

The trial court granted Pflueger's motion to stay the action and compel arbitration, based on the handbook provision.

Opinions

Majority

• Moon (Author)

The common law provides that contracts for services are voidable when they are entered by minors. When they become adults, minors traditionally had the option to either ratify or void these contracts. There are some exceptions to this rule, such as when minors enter contracts for goods and services that are necessary to preserve their health. The exceptions not apply to this employment contract, however, so it usually would be voided under the common law.

Nevertheless, it is valid under the state's child labor laws, which are intended to serve the same public policy goal as the common law rule protecting minors. The state legislature determined that minors who are at least 16 may enter into employment contracts, which suggests that they have been deemed to be capable and competent. This means that the common law rule is not applicable in the narrow context of employment contracts involving individuals who are 16 or 17.

Case Commentary

Beyond the lack of mutual assent, there was no bilateral consideration for enforcing the arbitration clause, which would have made it invalid on that ground as well.