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The ADR Newsletter—Fall 1997

Annual Meeting Features Elections, Program on Negotiation, and State of the Law

    The ADR Section's annual meeting was held September 18, 1997, in Detroit, in conjunction with the annual meeting of the State Bar of Michigan. Chairperson Laurence D. Connor summarized the programs, publications, and activities of the section during the past year, and announced that the section's web site is now available at www.michbar.org. He also reported that an ADR brochure for distribution to the public was in the final stages of preparation and would be available shortly. The following officers of the section were elected for 1997-1998:

    Chairperson: James M. Alexander
    Chairperson-Elect: Michael P. Coakley
    Secretary: Amy J. Glass
    Treasurer: J. Patrick Martin

    Chairperson Alexander is a shareholder in the firm of Foster, Swift, Collins and Smith of Farmington Hills. He is chairman of the Commercial Arbitration Advisory Board for the American Arbitration Association, co-chairperson of the Legislative Committee of the Oakland County Bar Association, and served as chairman of the Republican Committee of Oakland County from 1988-1994. He focuses in government relations, commercial litigation and arbitration.

    Chairperson-Elect Coakley is a principal in the Detroit office of Miller, Canfield, Paddock and Stone, P.L.C., where he practices commercial litigation and arbitration. He is an arbitrator for the New York Stock Exchange, Inc., the National Association of Securities Dealers, the American Stock Exchange, Inc., and the Chicago Board Options Exchange.

    Secretary Glass is the president of Michigan Mediation and Arbitration Services located in Kalamazoo. She is a certified mediator for the U.S. District Court for the Western District of Michigan and the Michigan Court of Appeals, and serves on the national commercial and labor employment panels for the American Arbitration Association.

    Treasurer Martin is an attorney with Gourwitz and Barr in Southfield. He concentrates in complex business, commercial, employment and products/premises liability litigation, arbitration and facilitative mediation. He is a member of the Oakland County Bar Association's Mediation and ADR committees, and was instrumental in assisting the Court of Appeals in developing its mediation/settlement program under MCR 7.213(A).

    Elected to the council were George N. Bashara, Jr. of Detroit, and Wendy A. Jansen of Clinton Township to fill vacancies in terms ending in 1998. Also elected for terms ending in 2000 were Deborah Berecz of St. Joseph, Gary Faria of Bloomfield Hills, Dale Ann Iverson of Grand Rapids, and Kathleen R. Opperwall of East Lansing.

    After the business meeting, Professor James J. White of the University of Michigan Law School spoke on the art of negotiations. His presentation covered several aspects of negotiations, including the need for careful preparation, the fallacy of the "win-win" theory, the techniques of competitive and cooperative bargaining, the negotiator's dilemma, and problems in the ethics of negotiations. The audience appeared particularly interested in his description of the tension between the rules of professional conduct, which require truthfulness by the lawyer in dealing with others, and the goal of effective negotiations which is to gain advantage by revealing as little as possible.

    George T. Roumell, Jr., and Mary A. Bedikian then delivered their annual presentation on developments in the law of alternative dispute resolution. The principal case discussed was Rushton v. Meijer, Inc. in which the Michigan Court of Appeals held that mandatory arbitration of a civil rights claim as a condition of employment was void as contrary to public policy. See accompanying article. They also analyzed several other significant developments and distributed a written State of the Law in Alternative Dispute Resolution (1996-1997).

Michigan Court of Appeals Deals Setback to Mandatory Arbitration Programs

    In a stunning reversal of its prior stance on arbitration of civil rights claims, the Michigan Court of Appeals recently held that Michigan employers cannot require employees, as a condition of employment, to waive prospectively their right to pursue civil rights claims in a judicial forum. Provisions requiring arbitration or other mechanisms of resolving future claims for civil rights violations are void. The case is Rushton v. Meijer, Inc., Court of Appeals Docket No. 199684, Slip Op August 19, 1997, a 2-1 decision with Judge Taylor dissenting.

    In this case, the employee plaintiff worked as a part-time floor detective for Meijer. When she was hired she signed an employment form agreeing to abide by the company's policies and procedures. She acknowledged receipt of an associate handbook including Meijer's termination appeal procedure, which stated that terminated employees were required to exhaust the company's alternative dispute resolution procedure. The employee received a second document from Meijer which indicated that exhaustion of the ADR procedure is a condition precedent to litigation.

    When Meijer terminated her employment, Rushton invoked the ADR procedure claiming she had been discharged without just cause. She argued that she was the victim of gender discrimination and that Meijer had retaliated against her. Her discharge was upheld at step one of the ADR process but she chose not to pursue the next step, which was binding arbitration. Instead, she filed a lawsuit alleging wrongful discharge, gender discrimination and retaliation. (She later withdrew her retaliation claim.) Meijer's motion for summary disposition was denied by the trial court. On appeal, the Michigan Court of Appeals reversed, holding that the company was entitled to summary disposition on both the wrongful discharge and gender discrimination claims because Rushton had failed to exhaust the remedies available to her pursuant to Meijer's established ADR procedures. Rushton v Meijer, Inc., Court of Appeals Docket No. 164272, unpublished Opinion dated March 1, 1995. In that decision, the Court of Appeals relied on its decision in Heurtebise v Reliable Computers Inc., 207 Mich App 305 (1994) as controlling precedent for the proposition that private agreements to arbitrate civil rights claims are enforceable.

    Rushton appealed the grant of summary disposition to the Michigan Supreme Court. While that appeal was pending, the Supreme Court ruled in Heurtebise that the employer's handbook in that case did not create a binding contract. The majority of the Heurtebise court specifically declined to address the broader public policy issue of the validity of employers' dispute resolution agreements which require prospective civil rights claims to be decided by arbitration. After handing down Heurtebise, and in light of its decision in that case, the Supreme Court remanded Rushton to the Court of Appeals for reconsideration.

    On remand, the Court of Appeals reaffirmed its original decision regarding Rushton's wrongful discharge claim, concluding that it was properly dismissed for failure to exhaust the dispute resolution procedures. However, the court also concluded that she was free to pursue her discrimination claim in court and to disregard the arbitration forum. In so doing, it adopted the reasoning of the minority Supreme Court opinion in Heurtebise which stated in dicta that Michigan public policy did not permit employees to waive resolution of a civil rights claim in a judicial forum as a condition of employment. 452 Mich at 414. The court also rejected Meijer's contention that plaintiff's alleged state law right to a judicial forum for resolution of her discrimination claim was superseded by the Federal Arbitration Act, 9 USC 1.

    Meijer has moved for a rehearing on the civil rights claim issue. It has been joined by other interested groups such as the Michigan Manufacturers Association and major Michigan employers with dispute resolution programs, who seek to file briefs amicus curiae in support of Meijer's position. Whatever the final resolution in the Court of Appeals, the case will almost certainly be appealed to the Michigan Supreme Court.

    The Rushton decision raises several interesting questions. First, in light of the principles of judicial restraint, it is not clear why the Court of Appeals decided to address the issue of arbitration of prospective civil rights claims. Once it had determined that, unlike Heurtebise, Meijer's arbitration agreement was a mutually-enforceable contract, the court had satisfied the order of remand from the Michigan Supreme Court which directed review in light of the contract principles enunciated in Heurtebise. By adopting a stance on the issue of arbitration of civil rights claims as a condition of employment, the court ventured into controversial territory it could have easily avoided.

    Second, the court's decision raises a question about a possible violation of Administrative Order 1994-4 (now Rule 7.215H) which requires a panel of the Court of Appeals to adhere to a rule of law established by a prior decision of the court that has not been reversed or modified by the Supreme Court. The Court of Appeals published decision in Heurtebise clearly established a rule of law that discrimination claims are subject to mandatory arbitration. While the Supreme Court reversed Heurtebise on other grounds, it did not directly modify or reverse the Court of Appeals ruling on the public policy issue.

    Finally, the Rushton court gave short shrift to Meijer's argument that the Federal Arbitration Act preempts state law on the question of whether such claims are subject to arbitration agreements. Relying on a 40-year-old United States Supreme Court decision, the Court of Appeals held that Rushton's employment relationship did not evidence a contract involving "commerce" within the meaning of the act. That conclusion appears questionable in light of recent Supreme Court decisions holding that the Federal Arbitration Act was meant to extend to the limits of Congress' power under the Commerce Clause.

    Because of the substantial questions raised by this decision, and the clamor that will come from major employer groups throughout the state, it appears likely that the Michigan Supreme Court will feel bound to review this decision and squarely confront the issue of the legality of prospective agreements to arbitrate civil rights claims. The case could go even further if the United States Supreme Court is persuaded that Michigan may be thwarting the purposes of the Federal Arbitration Act.

     

 

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