On April 25, 2022, the Fourth Circuit in Coady v. Nationwide Motor Sales Corp. agreed with Joseph Greenwald and Laake’s client Michael Coady that a car dealership’s arbitration agreement was invalid.
The underlying case concerned current and former salespeople who allege that Nationwide, a Timonium, Maryland dealership, failed to pay millions of dollars in commissions owed. The Fourth Circuit held that the employees can pursue their lawsuit in federal court by applying the long-standing principle in Maryland law that an employer cannot unilaterally change an arbitration agreement at any time.
This is an important decision because the waiver and the agreement, which allowed Nationwide to modify the agreement at any time without notice, were separate, and the Court rejected Nationwide’s argument that separating them made the agreement enforceable. In this respect, the Court recognized that drafters of arbitration agreements have to actually commit to arbitration and cannot have it both ways by waiting to see whether court or arbitration works out better. The case is now expected to move forward in Court.
Read more on The Daily Record coverage here.
