Labor & Employment Law Daily Wrap Up, ARBITRATION—7th Cir.: Vaccine objector who previously signed arbitration agreement must arbitrate claims, pay sanctions, (Jan 27, 2025)

By Jason Albright, J.D.

“Many decisions in this circuit award sanctions when litigants present objectively groundless objections to arbitration…”

A religious objector to her employer’s COVID-19 vaccine mandate must arbitrate her Title VII claims under an agreement she signed when she accepted an award of stock in 2020, and her employer is entitled to reimbursement for the legal expenses it incurred on appeal, the Seventh Circuit found. She agreed to arbitrate “any statutory or common law legal claims … that relate to or arise out of my employment or the termination of my employment,” and her objection to vaccination as a condition of employment relates to her employment. In addition, requiring the employer “to bear the legal costs of this unnecessary, nay pointless, appeal would be inappropriate” (Retzios v. Epic Systems Corp., No. 24-1701 (7th Cir. Jan. 24, 2025)).

Fired after refusing vaccination. Epic Systems, according to the Seventh Circuit, fired the employee after she refused to be vaccinated against COVID-19.

Lawsuit. She sued under Title VII, asserting that the statute required Epic to accommodate her religious objection to vaccination, and Epic asked the district court to send the dispute to arbitration, which it did. The judge then dismissed the suit, and she appealed to the Seventh Circuit.

Dismissal improper. The appeals court initially observed that the district court judge should not have dismissed the suit. Citing Smith v. Spizzirri, 601 U.S. 472 (2024), the Seventh Circuit observed that the Federal Arbitration Act calls for a suit referred to arbitration to be stayed rather than dismissed, when a party requests a stay, as Epic did. Had the court entered a stay, that order would not have been appealable. Because it dismissed the action, however, there was jurisdiction in the court of appeals to proceed.

Agreed to arbitrate. The Seventh Circuit nonetheless found that the dispute was appropriately submitted to arbitration. In 2020, when accepting an award of stock, the former employee had agreed to arbitrate with Epic “any statutory or common law legal claims … that relate to or arise out of my employment or the termination of my employment.” She argued that the agreement does not mention COVID-19 or vaccination, but the appeals court was unpersuaded. “This clause covers any statutory or common law claim that relates to her employment,” the court observed. “It is unnecessary to supply a list (which inevitably would be incomplete) of potential disputes that might come within the word ‘any.’”

Groundless objections to arbitration and sanctions. Finally, the Seventh Circuit noted that “[m]any decisions in this circuit award sanctions when litigants present objectively groundless objections to arbitration—either before the arbitrator has a crack at the dispute, or when the loser tries to upset the award.” Indeed, “Arbitration will not work if legal contests are its bookends: a suit to compel or prevent arbitration, the arbitration itself, and a suit to enforce or set aside the award. Arbitration then becomes more costly than litigation.”

Here, the appeals court noted that the former employee and Epic bore their own legal costs in the district court, and they will bear their own costs again if she pursues arbitration. And if she prevails, Title VII will expose Epic to an award of legal fees. “Requiring Epic also to bear the legal costs of this unnecessary, nay pointless, appeal,” said the Seventh Circuit, “would be inappropriate.” Epic’s motion for sanctions was thus granted, and the court directed the former employee to reimburse it for the legal expenses it incurred on appeal.

The case is No. 24-1701.

Judge: Easterbrook, F.

Attorneys: Susan Stanisic Barron (Law Offices of Susan S. Barron) for Caroline T. Retzios. Michael Chropowicz (Michael Best & Friedrich) for Epic Systems Corp.

Companies: Epic Systems Corp.

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