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Ronnie E. Cheek v. United Healthcare of the Mid-Atlantic, Inc., No. 141, September Term 2002 [Arbitration: Contracts: W hether an " Employm ent Arbitration Policy" constituted a valid and enforcea ble arbitration agreement between an employer and an employee when the employer reserved the right to, w ithin its sole discre tion, alter, amend, modify, or revoke the Arbitration Policy at any time a nd witho ut notice. H eld: The A rbitration Poli cy did not constitute a valid and enforceable agreement between the employer and the em ployee. There was no consideration to support an arbitration agreeme nt because the emplo yer's ability to alter, amend, modify, or revoke the Arbitration Policy rendered its promise to arbitrate illusory, and because the employer's empl oyment of the employee did not serve as consid eration f or the A rbitration Policy.]

IN THE COURT OF APPEALS OF MARYLAND

No. 141

September Term, 2002

RONNIE E. CHEEK v. UNITED HEALTHCARE OF THE MIDATL ANT IC, IN C., ET AL.

Bell, C.J. Eldridge Raker Wilner Cathell Harrell Battaglia, JJ. Opinion by Battaglia, J. Harrell, J. disse nts Filed: November 13, 2003

The issue in this case is w hether a va lid and enf orceable a rbitration agre ement ex ists between an employer and an employee when the employer has reserved the right to, within its sole discretion, alter, amend, modify, or revoke the arbitration agreement at any time and withou t notice, e ven tho ugh it h as not e xercise d that op tion in th e prese nt case. Appellan t, Ronnie E. Cheek, filed suit in the Circuit Court for Baltimore City for breach of contract and related cau ses of action after his emp loyer, appellee United Healthca re of the M id-Atla ntic, Inc., 1 terminated his employm ent. United responde d with a motion to compel arbitratio n, whic h the C ircuit Co urt gran ted. Ch eek ap pealed , and we granted certiorari prior to any proceedings in the Court of Special Appeals. For the reasons discussed herein, we conclude that the arbitration agreement between Cheek a nd United is unenfor ceable for lack of consideratio n becaus e United's promise to arbitrate is illusory and because United's employment of Cheek cannot serve as consideration for the arbitration agreement. Consequently, we shall reverse the order of the Circuit Court compelling arbitratio n and re mand this case for fur ther pro ceedin gs. I. BACKGROUND On November 17, 2000 , United ora lly offered Cheek a position of employment as a senior sales executive, which w as confirm ed in writing the same day. The two-page letter set forth various conditions of United's offer of employment, including that Cheek accept United's "Emplo yment Arb itration Policy." Sp ecifically, the letter state d that enclo sed with

According to appellees, on March 6, 2000, U nited merg ed into Un itedHealth Group, Inc. Cheek named both companies as defend ants in the pre sent case, an d we sha ll refer to them c ollective ly as "Un ited."

1

it were "summaries of the United Group Internal Dispute and Employment Arbitration Policy which are con ditions o f your em ploymen t." 2 In a November 28, 2000, letter to United, Cheek wrote that he was "delighted to accept United Healthcare's generous offer" and that "[a]ll of the terms in your employment letter are amenable to me." He also indicated that he had submitted his resignation that morning to his current employer, Blue Cross/Blue Shield of the District of Columbia. On January 2, 2001, during Cheek's first day of employment with United, he received a copy of United's Employee Handbook, which contained summaries of United's Internal Dispute Resolution Policy and E mployment Arbitration P olicy (hereinafter, "Arbitration Policy" or "Policy"). 3 The summary of the Arbitration Policy described the scope of the Policy, the rules applicable in arbitration, how an employee initiates arbitration, and the types of relief availab le in arbitration. Specifically, the summary of the Policy stated that United "believes that the resolu tion of disag reements" between employees a nd United "are best accomplished by an internal dispute review (IDR) and, where that fails, by arbitration based
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Cheek claims that "[n]o detail of the arbitration policy" was included with United's Novem ber 17 letter. T he trial court m ade no fin ding on th is point.
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The summary of the Arbitration Policy "provides general information regarding the Arbitration Policy," and states that "[i]n the event of a conflict between [the] Summary and the Policy, the terms of the Policy shall govern in all cases." A copy of the full Arbitration Policy has not been prov ided in the record extract or in th e record. N either of the p arties to this appeal, however, has alleged that any relevant conflicts exist between the summary and the full Arb itration Policy. W e also note that in an "Acknowledgement Form for the Code of Conduct and Employment Handbook," signed by Cheek, he represented that at the time he "received the Handbook" he had "specifically received and reviewed the policies referen ced be low . . . In ternal D ispute R esolutio n/Emp loyment A rbitration Policy." -2-

on the rules of the American Arbitration Association." Accordingly, United declared in the summary of the Po licy that arbitration "is the final, exclusive and required forum for the resolution of all employment related disputes which are based on a legal claim" and that "any party to [such a dispute] may initiate the arbitration process." Particularly relevant to the disposition of this appeal, the summary of the Arbitration Policy also provided: United HealthCare reserves the right to alter, amend, mod ify, or revoke the Policy at its sole and absolute discretion at any time with or without notice. The se nior executive of Human Resources has the sole authori ty to alter, amend, modify, or revo ke th e Policy. On January 2, 2001, Cheek signed an "Acknowledgment Form for the Code of Conduct and Employment Handbook." In that Form, Cheek acknowledged that he had "specifically received and reviewed," among other things, an "Internal D ispute Resolution/Employment Arbitration Policy." The Form that Cheek signed also stated: I understand that UnitedHealth Group Employment Arbitration Policy is a binding contract between UnitedHealth Group and me to resolve all employment-related disputes which are based on a legal claim through final and binding arb itration. I agree to submit all employment-related disputes based on legal claim[sic] to arbitra tion under U nited Hea lth G roup 's po licy. Within seven months, on July 27, 2001, United informed Cheek that United was eliminating his position as of August 10, 2001, when, in fact, his employment was terminated. In response, on December 31, 2001, Cheek filed a four-count complaint against United in the C ircuit Co urt for B altimore City. In the complaint, Cheek sought damages for breach of contract, negligent misrepresentation, and violations of Maryland Code,

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