Walker v. Ryan’s Family Steak Houses

Facts

Ryan’s Family Steak Houses required job applicants since 1996 or 1997 to execute a twelve-page application packet including an Arbitration Agreement with Employment Dispute Services, Inc. (EDSI), a third-party arbitration administrator. The agreement required applicants to arbitrate all employment disputes with Ryan’s in EDSI’s forum rather than in court. Applicants were typically hired on the spot after brief fifteen to twenty minute interviews during which managers hurriedly presented documents for signature without adequate explanation. Many applicants had not completed high school and were seeking low-wage positions paying approximately eleven thousand to sixteen thousand dollars annually. Managers often provided misleading information about the arbitration agreement, telling applicants it meant handling problems “up the chain of command” or “in house” rather than explaining the waiver of jury trial rights. The arbitration agreement reserved EDSI’s right to modify rules and procedures, and EDSI received over forty-two percent of its gross income from Ryan’s, creating a symbiotic financial relationship. The arbitrator selection process involved three pools: supervisors from EDSI signatory companies, non-exempt employees from signatory companies, and legal professionals, with no clear neutrality requirements or random selection protocols.