Tuesday, October 12, 2010

Say what you mean to say, Part 2

A staple in employment contracts in Michigan has been the arbitration clause which establishes a dispute resolution procedure for all claims arising out of the agreement.  Courts in Michigan have generally honored and enforced such agreements.

In Cullen v. Klein, e-journal No. 46849 (Mich. App. 2010), a panel reminded employers that the waiver of statutory employment discrimination rights requires specific language.  The parties were pediatric surgeons who entered into identical employment contracts and stock purchase agreements which contained the same arbitration agreement.  One doctor could not use the computer to input billing and clinical data because of a medical condition which allegedly caused severe and debilitating headaches when he used the computer for significant periods of time.  He was told he had to comply with the computer usage and was ultimately terminated.  He filed suit, and the defendants filed a motion to compel arbitration.  The circuit court denied the motion.  The court of appeals affirmed the decision in part and reversed in part.

The doctor had filed a six count complaint alleging a violation of the state disability civil rights act; minority shareholder oppression; defamation; intentional infliction of emotional distress; tortious interference with a business relationship; and civil conspiracy. The arbitration clause provided that any dispute or controversy arising out of or related to the agreement or to the interpretation of the agreement or a breach except claims that can only be resolved in court by injunctive relief shall be referred to and resolved by arbitration in Detroit, Michigan.

The court of appeals held five of the six claims were subject to the arbitration agreement since they fell within its broad language and since it was clear the parties intended to arbitrate claims flowing from the business and professional relationships.  The claim under the Persons with Disabilities Civil Rights Act was not covered by the agreement and was not subject to arbitration.

The court stated that in Rembert v. Ryan's Family Steak Houses, Inc, 235 Mich App 118, 596 N.W. 2d 208 (1999), a conflict panel of the court held that pre dispute arbitration procedures which waive statutory employment discrimination claims are valid as long as the employees do not waive any rights or remedies under the statute, and the arbitral process is fair. The procedure must  provide clear notice; right to counsel; reasonable discovery; a fair hearing; and a neutral arbitrator.  The language in question made no mention of or reference to statutory discrimination claims.  Neither of the two agreements referenced plaintiff's employment related civil rights.  As a result, the court concluded that the language did not constitute a clear wavier of his right to bring statutory civil rights claims in circuit court.

The court in Cullen reinforced the fact that if an employer wants to have statutory employment discrimination claims covered in an arbitration agreement, it must say so, and let the employee know what rights are being waived.  The more vague the language, the more likely that no wavier will be found.  Reference to the specific statute by name is really the only way to be sure that an employee will not have the lack of a clear waiver as a defense to arbitration.  Once again, employers need to say what they mean to say.

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