15 February 2015

Arbitration Clauses in Employment Agreements


There is a "federal policy favoring arbitration of labor disputes." Granite Rock Co. v. Int'l Bhd. of Teamsters, 561 U.S. 287, ___, 130 S.Ct. 2847, 2857, 177 L.Ed.2d 567 (2010) (internal quotation marks omitted). When parties agree to arbitrate some matters pursuant to an arbitration clause, the "law's permissive policies in respect to arbitration counsel that any doubts concerning the scope of arbitral issues should be resolved in favor of arbitration." Id. at ___, 130 S.Ct. at 2857 (internal quotation marks omitted). Courts apply the presumption of arbitrability "only where a validly formed and enforceable arbitration agreement is ambiguous about whether it covers the dispute at hand," and "where the presumption is not rebutted." Id. at ___, 130 S.Ct. at 2858-59. Martinez v. Carnival Corp., 744 F. 3d 1240 (11th Cir. 2014).

The mere presence of an arbitration clause in a contract does not remove all questions [ ]. For example, questions about "contract formation" — whether the parties ever agreed to the contract in the first place — are "generally for courts to decide." Granite Rock Co. v. Int'l Bhd. of Teamsters, 561 U.S. 287, 130 S.Ct. 2847, 2856-57, 177 L.Ed.2d 567 (2010). Teamsters Local Union v. Unit. Parcel Serv., 748 F. 3d 281 (6th Cir. 2014).

It is presumed that courts must decide questions of arbitrability "unless the parties clearly and unmistakably provide otherwise." Howsam, 537 U.S. at 83, 123 S.Ct. 588 (internal quotation marks and citation omitted). The burden of overcoming the presumption is onerous, as it requires express contractual language unambiguously delegating the question of arbitrability to the arbitrator. See Major League Umpires Ass'n v. Am. League of Prof'l Baseball Clubs, 357 F.3d 272, 280-81 (3d Cir.2004). Silence or ambiguous contractual language is insufficient to rebut the presumption. Gen. Elec. Co. v. Deutz AG, 270 F.3d 144, 154-55 (3d Cir.2001). Opalinski v. Robert Half Intern. Inc., 761 F. 3d 326 (3rd Cir. 2014)

"[P]arties can agree to arbitrate 'gateway' questions of 'arbitrability,' such as whether the parties have agreed to arbitrate or whether their agreement covers a particular controversy." Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63, ___, 130 S.Ct. 2772, 2777, 177 L.Ed.2d 403 (2010). Thus, a court may conclude that the parties agreed to arbitrate the very issue of "arbitrability" where "there is clear and unmistakable evidence that they did so." Id. at ___, 130 S.Ct. at 2783 (internal quotation marks omitted). Because parties can agree to arbitrate the very question of arbitrabililty, they can also agree to arbitrate disputes about contract termination. Martinez v. Carnival Corp., 744 F. 3d 1240 (11th Cir. 2014).

"While ambiguities in the language of the agreement should be resolved in favor of arbitration, we do not override the clear intent of the parties, or reach a result inconsistent with the plain text of the contract, simply because the policy favoring arbitration is implicated." Nestle, 505 F.3d at 504 (quoting EEOC v. Waffle House, Inc., 534 U.S. 279, 294, 122 S.Ct. 754, 151 L.Ed.2d 755 (2002)); Masco Corp., 382 F.3d at 627 (same). Moreover, because "arbitration is a creature of contract[,]... a party may not be compelled to arbitrate any dispute he has not agreed to arbitrate." Zucker, 174 Fed.Appx. at 947. Huffman v. Hilltop Companies, LLC, 747 F. 3d 391 (6th Cir. 2014).

THIS CASEBOOK contains a selection of 28 U. S. Court of Appeals decisions that discuss and analyze issues which arise from arbitration clauses in employment agreements. The selection of decisions spans from 2012 to the date of publication.