Opinion ID: 216075
Heading Depth: 2
Heading Rank: 1

Heading: Validity of Consideration

Text: The FAA represents the fundamental principle that arbitration is a matter of contract, Dialysis Access, 638 F.3d at 376 (quoting Rent-A-Center, W., Inc. v. Jackson, ___ U.S. ___, 130 S.Ct. 2772, 2776, 177 L.Ed.2d 403 (2010)) (internal quotation mark omitted), and in general, principles of state contract law control the determination of whether a valid agreement to arbitrate exists, Campbell v. Gen. Dynamics Gov't Sys. Corp., 407 F.3d 546, 552 (1st Cir.2005). Under Puerto Rico contract law, `a bilateral obligation assumed by each one of the parties to the contract, has, as its consideration, the promise offered in exchange.' Both parties must be bound based on `mutual consideration' that yields either a benefit or a detriment to each party. Adria Int'l Grp., Inc. v. Ferre Dev., Inc., 241 F.3d 103, 107 (1st Cir.2001) (citations omitted) (quoting United States v. Perez, 528 F.Supp. 206, 209 (D.P.R.1981)). Soto argues that the district court erred in holding that, in return for signing the agreement, she received valid consideration in the form of an offer of continued employment. She argues that the Ritz-Carlton never made such an offer, and that in any event, it would not constitute valid consideration under Puerto Rico law. We need not address this issue, as the arbitration clause contains two sets of bilateral obligations that independently constitute valid consideration for the agreement. The agreement expressly invokes one set of bilateral obligations. It states that in exchange for Soto's agree[ment] that [she] will not initiate any legal action whatsoever without first using each step in the company's alternative dispute resolution process, the Ritz-Carlton agrees to suspend all jurisdictional prescriptive terms and limitations to file grievances and/or lawsuits for the period that the process lasts. This waiver of defenses by the Ritz-Carlton for any claims covered by its alternative dispute resolution process constitutes valid consideration for Soto's promise to submit her discrimination claims against the Ritz-Carlton to arbitration. Further, implicit in the arbitration agreement is a second set of bilateral obligations. Both parties are required to arbitrate Soto's claims, which constitutes independent mutual consideration. See Soto v. State Indus. Prods., Inc., ___ F.3d ___, ___-___ (1st Cir.2011) (holding that bilateral obligation to arbitrate constitutes mutual consideration under Puerto Rico law). [2]