By Sheri A. Wattles-Miller, J.D.
A former Domino’s employee who signed a form employment agreement wants the Supreme Court to settle whether a set of rules govern arbitration proceedings without “clear and unmistakable evidence” of the parties’ intent.
A former Domino’s delivery driver has asked the Supreme Court to overturn a decision from the U.S. Court of Appeals Cincinnati holding that an arbitrator must decide the arbitrability of his claims that the franchisor and its affiliates used no-hire clauses in franchise agreements in an antitrust conspiracy to not compete for labor. According to the petition, the Court must settle whether a set of rules, specifically, the American Arbitration Association (AAA) rules, would govern arbitration proceedings without “clear and unmistakable evidence” of the parties’ intent to have an arbitrator decide questions of arbitrability. At issue was whether incorporation of the AAA rules into an agreement was enough to determine that the parties agreed to delegate questions of arbitrability to the arbitrator. In this case, the form agreement that the delivery driver signed stated that the AAA would administer the arbitration and the arbitration would be conducted in accordance with the then-current AAA rules. Otherwise, the agreement did not contain an express delegation clause or address whether an arbitrator would decide disputes over whether a claim was subject to arbitration (Piersing v. Domino’s Pizza Franchising LLC, Dkt. 20-695).
The Sixth Circuit found that the driver, who was actually employed by a Domino’s franchisee, was required to allow an arbitrator to decide the arbitrability of his claims that Domino’s and its affiliates used no-hire clauses in franchise agreements in an antitrust conspiracy to not compete for labor. According to the appellate court, the employee agreed to allow an arbitrator to decide questions of arbitrability based on the inclusion of language stating that the arbitration would be conducted in accordance with AAA rules.
Need for guidance in application of First Option case. The delivery driver argued that the Supreme Court should grant certiorari because the circuit courts of appeal have come to a flawed conclusion that is not based on the most recent Supreme Court case on the subject, First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995). In First Options, the court said that there must be “clear and unmistakable evidence” of the parties’ intent to have arbitrability decided by an arbitrator for a court to find that they agreed to “upend” the usual rule that courts decide arbitrability questions. The driver claimed that First Options required that when there is silence or ambiguity in contractual language, the court would decide arbitrability. Any other rule, according to First Option, might force unwilling parties to arbitrate a matter they reasonably would have thought a judge, not an arbitrator, would decide.
All but one circuit court of appeals had addressed this question, the driver noted, and all had held that if the rules in an agreement contained a delegation clause, which the AAA rules did, the parties agreed to delegate arbitrability questions to the arbitrator. Conversely, several state high courts had ruled that merely referencing a set of arbitral rules was insufficient to find that the parties agreed to delegate arbitrability to the arbitrator.
Employees and consumers unlikely to understand rules. The driver noted that many companies include references to arbitration rules in form agreements and other contexts where ordinary individuals are unlikely to understand the implications of the provision. It would require a great deal of research for the ordinary person to locate and understand the rules. Moreover, as a practical matter, the driver noted, many employees and consumers could enter into arbitration agreements they might not understand, even if it had occurred to them to do the research to understand the arbitration rules.
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