By Marjorie Johnson, J.D.
The district court did not err in compelling arbitration or in refusing to vacate the arbitrator’s grant of summary judgment in the employer’s favor. The parties delegated the arbitrability issue and gave the arbitrator the power to decide dispositive motions.
Because an arbitration provision “clearly and unmistakably” delegated the issue of arbitrability to the arbitrator, a district court did not err in granting an employer’s motion to compel arbitration of a discharged employee’s numerous claims, including discrimination and retaliation based on his military status and service. This was true regardless of whether the claims may have been “clearly outside the scope of the arbitration clause,” since the Supreme Court recently rejected that approach. The Sixth Circuit also affirmed the denial of the employee’s motion to vacate the arbitration award and grant of the employer’s motion for summary judgment on his breach of contract claims relating to his contractual entitlement to paid military leave (McGee v. Armstrong, October 29, 2019, Merritt, G.).
In 2002, the employee began working as the marketing director for a county board of developmental disabilities. He was supervised by the board’s superintendent and worked under renewable one-year employment agreements which contained a broad arbitration provision. When he joined the Ohio Army National Guard in 2008, his contract provided for “military leave in accordance with Board Policy,” which provided for up to 31 days of paid military leave per calendar year, not to exceed 176 hours.
Military leave overpaid in 2008. The employer thereafter declined his request for up to ten weeks of military leave but decided that, for service beyond 176 hours, he would receive differential pay. His 2008-09 contract reflected this change and when the payroll supervisor noticed that he was going to exceed 176 hours of military leave at full pay for the calendar year, she notified him. He maintained he was entitled to 31 days, not 176 hours, and the employer mistakenly continued to pay him full military leave after his 176 hours.
Clarification sought in contract. In August 2011, the employer sent the employee a proposed 2011-12 contract which he never signed. This contract used the same language as his earlier contracts and provided for 31 days of military leave, followed by differential pay. When the payroll supervisor notified him in September that he was going to exceed his 176 hours, he again insisted he was due 31 days of military leave. The employer ultimately paid him full military leave beyond 176 hours, but sought to clarify the issue for the following year by sending him a revised 2011-12 contract which contained revised language stating that he “shall be entitled to military leave in accordance with Ohio law.”
Differential pay, then discharge. The employee refused to sign the second contract but remained employed with the board. He then went on military leave from January 8 through March 28, 2012. He was paid full military leave until his 176 hours expired on February 8, and then paid differential pay until March 28. He received a pre-disciplinary hearing notice on April 2 and was notified of his termination on April 21.
Claims sent to arbitration. The employee’s lawsuit included claims of wrongful termination, breach of contract, and discrimination and retaliation based on his military status and service. The district court granted the employer’s motion to compel arbitration with respect to almost all of his claims, excluding only two breach of contract claims which it stayed pending arbitration.
The arbitrator determined that the respective claims were arbitrable and tossed them all on summary judgment. The district court subsequently denied his motion to appeal the decision and after agreeing to reopen the case to address the remaining breach of contract claims, granted summary judgment against him. He appealed all three decisions.
“Clearly and unmistakably” delegated arbitrability. The Sixth Circuit court rejected his contention that the district court erred in compelling arbitration because certain claims were not arbitrable. Significantly, two relevant provisions in the employment agreement showed that the parties “clearly and unmistakably” agreed that the arbitrator would decide questions of arbitrability.
And while the Sixth Circuit previously held that an arbitrator does not have the authority to decide arbitrability of claims “clearly outside the scope of the arbitration clause,” the U.S. Supreme Court recently rejected that approach in Henry Schein, Inc. v. Archer & White Sales, Inc. . Specifically pointing to the Sixth Circuit’s decision as one whose holding it disapproved, the Supreme Court instead held that once the parties make such an agreement, “courts must respect the parties’ decision as embodied in the contract” and refer all arbitrability questions to arbitration. And that is true even when the arguments for a particular claim’s arbitrability are “wholly groundless.” Thus, because the parties “delegate[d] the threshold arbitrability question to an arbitrator,” the district court did not err in referring the contested claims to arbitration.
Arbitrator did not exceed power. The Sixth Circuit also rejected the employee’s contention that the district court erred in denying his motion to vacate the arbitrator’s order granting summary judgment against him. Though he argued that the arbitrator “did not have the power” to do so, the parties agreed that the Employment Arbitration Rules and Mediation Procedures of the American Arbitration Association governed arbitration, and the “Dispositive Motions” section of the rules gave the arbitrator the power to enter a decision on a motion for summary judgment.
Remaining contract claims fail. The district court also properly granted summary judgment against the employee on his breach of contract claims. Only the 2011-12 contract was at issue, of which there were two versions. The first entitled him to 31 days of military leave followed by differential pay, but the second revised version stated that he was “entitled to military leave in accordance with Ohio law,” which defines “month” as 22 eight-hour workdays or 176 hours.
His argument that he was contractually entitled to 31 days of military leave was without merit. While he did not sign the modified contract, the district court properly found that it governed his pay and military leave from October 2011 until his termination. When he received the contract, he was informed that the revisions would “be implemented as outlined” even if he chose “not to sign [it].” He further acquiesced to its terms when he complied with them by sending his military earning statement to the board to receive his differential pay.
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