Court Upholds Enforceability Of Arbitration Provision When Company Waives Conflicting Provision

In American Family Life Assurance Company v. Baker, a Second Circuit panel affirmed the Southern District’s decision to compel arbitration of ERISA claims, when the employer was forced to unravel conflicting contract provisions that on their face served to collectively preclude the employees from asserting their claims altogether. One contractual provision purported to mandate arbitration of “any dispute,” while another provision “limit[ed] the scope of any arbitration to claims for breach of contract, fraud, or willfully tortious conduct.” Arguing that the two provisions, read together, precluded them from “vindicat[ing] their statutory rights in any forum,” the employees argued that the arbitration provisions should be voided, thereby enabling them to pursue their ERISA claims in court.

The employer responded by representing to the court that it would waive the second arbitration provision, thereby enabling the employees to arbitrate their ERISA claims. Based upon this waiver, the lower court held–and the Second Circuit affirmed–that the dispute was arbitrable. The Second Circuit alternatively noted that, even had the company not waived the second arbitration provision, it was severable.

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