By: Rob Harris
The Michigan Court of Appeals’ recent decision in S.P. v. Lakelands Golf and Country Club raised a number of arbitration-related issues pertaining to a golf club employee who alleged she suffered a workplace sexual assault by an individual who, based on who you believe, was asserted to be either a “member-owner” or a “former member” of the club. Following the assault, the plaintiff left the employment, claiming she was constructively discharged. The legal issues generally were standard fare for established precedent pertaining to arbitration–largely concerning the manner in which the employment-related claims would be arbitrated pursuant to an employment handbook provision.
However, one cannot read the opinion without sensing that the Court of Appeals, at the expense of fairly well-established arbitration precedent, was determined to ensure that the plaintiff would be able to bring claims for assault and battery to a jury, not an arbitrator.
Not only was the Court of Appeals faced with arguments by the club and the (former) member that the assault and battery claims should be arbitrated, but the the employment handbook provision incorporated the American Arbitration Association’s Employment Rules. Those rules provide that “[t]he arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope, or validity of the arbitration agreement.”
Ample recent authority, from both federal and many state courts, holds that incorporating the AAA rules empowers the arbitrator–not the court–to determine whether a dispute is arbitrable. Thus, under this authority, the Court of Appeals could and perhaps should have deferred this “gateway” issue to the arbitrator, i.e. relying on the arbitrator to decide whether the assault and battery claims should be determined in arbitration or in court. While there was no reason to think that an arbitrator would rule in favor of arbitration over court, the Court of Appeals eliminated this risk altogether by determining that the Court, not the arbitrator, should determine arbitrability. In doing so, the court elected to disregard this ample precedent from the federal and other state courts, noting that defendant “has presented this Court with no published authority indicating that, under Michigan’s uniform arbitration act, the mere agreement to conduct arbitrations in accordance with the AAA rules is sufficient to indicate a clear and unmistakable agreement that ‘gateway’ questions of arbitrability should be submitted to the arbitrator rather than the courts.”
While the desire to enable the plaintiff to present her claims for assault and battery to a jury is understandable, there is no reason to believe that an arbitrator, just as easily as the court, would interpret the handbook’s arbitration provision to permit this to occur. By displacing the arbitrator’s role in this process, the Court of Appeals rejected the parties’ agreement to follow AAA’s Rules, and perhaps holding Michigan back from the evolutionary arbitration movement in the federal courts and other states.