Michael Coady v. Nationwide Motor Sales Corp., No. 20-2302 (4th Cir. 2022)
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Former employees of Nationwide Motor Sales Corporation sued the company and its owners (collectively, Nationwide) in district court, alleging fraudulent payment practices that reduced employees’ sales commissions and final paychecks. Nationwide produced its Employee Handbook’s provision requiring arbitration. The employees contended that the arbitration agreement is invalid because Nationwide retains the right to change, delete, or modify the policies. The district court denied Nationwide’s motion to compel arbitration, finding the Arbitration Agreement illusory due to the Modification Clause
Applying Maryland law, the Fourth Circuit affirmed the district court’s decision, reasoning that the promise to arbitrate was illusory because, on the agreement’s signature page, the employer retained the right to amend or abolish the agreement without notice to the employees. Further, in reviewing the plain meaning of the Acknowledgement Receipt “as a whole,” it is clear that the Modification Clause applies to the Arbitration Agreement.
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