Labor & Employment Law Daily Wrap Up, ARBITRATION—5th Cir.: Men’s club operator cannot enforce employment arbitration agreement it failed to sign, (Dec 18, 2025)

By Jason Albright, J.D.

“Specific conditional language is not necessary to create a condition precedent to contract formation.”

Benelux Corporation, which operates the Palazio Men’s Club in Austin, Texas, and was named in a putative collective action brought by four servers under the FLSA, is not entitled to rely upon an employment arbitration agreement it failed to sign, the Fifth Circuit affirmed. Both signatures were necessary to make the company’s arbitration agreement enforceable under Texas law, and specific conditional language is not necessary to create a condition precedent to contract formation, the federal appeals court found. The court also declined the employer’s invitation to analyze whether the parties’ conduct demonstrated their acceptance of the agreement (Mertens v. Benelux Corp., No. 24-50954 (5th Cir. Dec. 17, 2025)).

Men’s club and FLSA lawsuit. The four original plaintiffs in the case, according to the court, were employed as waitstaff at Benelux Corporation’s Palazio Men’s Club in Austin, Texas. In 2024, they sued Benelux, claiming violations of the FLSA.

2020 arbitration agreement. It turned out that, in 2020, Benelux had distributed an arbitration agreement to employees. The last page of the agreement read as follows:

By signing this arbitration agreement, Employee and the Club’s Representative represent that:

• They have fully read this agreement prior to signing it;

• They have been provided a copy of this agreement and have had opportunities to both ask questions regarding its content and have it reviewed by persons of their choice, including by attorneys and accountants, before they have signed it; and

• They understand the terms of this agreement and agree to be bound by them.

Two signature boxes. Immediately following were two signature boxes: one for “Club,” Benelux Corporation d/b/a The Palazio, and one for “Employee.”

Server signed. The appellee, one of the servers who later brought this suit, signed the agreement in February 2020, initialing and dating each page. On the last page, she signed and dated both signature boxes.

General manager failed to sign. Benelux’s general manager usually countersigned the employee arbitration agreements. Because of “an unintentional mistake on [his] part,” however, the server’s arbitration agreement did not bear his signature. The general manager later testified that he may have been reviewing several agreements, and, seeing the “Club” signature page filled out, assumed another representative had signed on behalf of Benelux.

Lawsuit and motion to compel. After the server and her colleagues sued, Benelux moved to compel arbitration. The server countered that the arbitration agreement was not enforceable against her because Benelux did not sign it.

Did not intend to be bound, unless... The server declared she did not recall why she signed the Benelux signature block, but she expressed that she “did not intend to be bound by the Arbitration Agreement until and unless Benelux also signed the Arbitration Agreement and agreed in writing to be bound by the Arbitration Agreement’s terms.”

Motion to compel denied. A federal magistrate judge recommended denial of Benelux’s motion to compel arbitration because the arbitration agreement contains clear and express language stating that both parties needed to sign it to give it effect.

Benelux objected, and the district court adopted the magistrate’s report and recommendation, agreeing that the arbitration agreement contains clear and express language that both signatures were required, and “[b]ecause [Benelux] did not sign [the server’s] arbitration agreement, there is no valid and enforceable arbitration agreement between them and [her].”

Benelux timely appealed to the Fifth Circuit.

Both signatures required. Affirming, the Fifth Circuit applied Texas law examining similar contract language to find that Benelux’s signature was necessary to make the arbitration agreement enforceable. In CC Rest., L.P. v. Olague, 633 S.W.3d 238, 240—41 (Tex. App. 2021), the court found that it could not compel arbitration where the employer failed to sign an arbitration agreement that said of the parties, “by signing this Agreement, each is affirming that he/she/it has read and understands this arbitration provision; each is agreeing to be bound by it.” Just as the court in that case found that “each” party had to agree to be bound to render the agreement enforceable, here the word “they” in the arbitration agreement also indicates that both parties’ signatures were necessary, the Fifth Circuit reasoned.

No specific conditional language necessary. Nor was specific conditional language necessary to create a condition precedent to contract formation, the federal appeals court found. Here, Benelux ventured that the arbitration agreement’s “by signing” clause does not indicate an intent to make signatures a condition precedent, since there is no language stating that the agreement “must” or “shall” be signed by both parties, or any language indicating that the contract is not formed “unless,” “until,” or “only if,” they sign.

The court was unpersuaded. Although conditional language is highly indicative of signatures as a condition precedent, the Fifth Circuit observed, as Benelux admitted, specific conditional phrases are not required to create a condition precedent to contract formation, and indeed, courts have held in several cases that both parties’ signatures were required even when the contract or agreement did not include specific conditional language.

Conduct of the parties. Finally, the court also declined the employer’s invitation to analyze whether the parties’ conduct demonstrated their acceptance of the arbitration agreement. “We begin this analysis with the contract’s express language. Unless that language is ambiguous, we end it there too,” the appeals court observed. Finding the arbitration agreement’s language unambiguous, the Fifth Circuit concluded that both parties’ signatures were required to execute a valid arbitration agreement, it ended the inquiry there.

The case is No. 24-50954.

Judge: Graves, J., Jr.

Attorneys: Caitlin Boehne (Kaplan Law Firm) for Octavia Mertens, Angelica Herrera, Belen Cadena, and Kelly Sanchez. William King (McDowell Hetherington) for Benelux Corp. d/b/a Palazio Men's Club, Anthanases Stamatopoulos, and Michael Mealey.

Companies: Benelux Corp.; Palazio Men’s Club

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