Employment contracts; Limitations provision; Rayford v American House Roseville I, LLC; Rory v Continental Ins Co; Camelot Excavating Co, Inc v St Paul Fire & Marine Ins Co; “Adhesion contract”; Reasonableness; Retroactive effect of Rayford; The “raise or waive” rule

On remand from the Supreme Court for reconsideration in light of Rayford, the court held that “Rayford is retroactive, and its holding” warranted reversal in this case. Plaintiff entered into the employment contract at issue when he was 17 years old. There was “no indication he had the power to push back against the terms imposed by defendant.” Thus, the court concluded that the contract “qualifies as an adhesion contract subject to close judicial scrutiny.” As a preliminary matter, it recognized that “under the ‘raise or waive’ rule, plaintiff’s failure to raise this issue in the trial court renders it unpreserved and” thus waived. But given the Supreme Court’s specific directive “to reconsider this case in light of Rayford, as well as our ability to overlook preservation requirements in various situations,” it addressed the issue. It was undisputed that neither the court “nor the trial court engaged in the Camelot reasonableness analysis of the shortened limitation period in this case.” As a result, it was “appropriate to remand this case to the trial court for such consideration.” The court noted “that, notwithstanding the direct applicability of Rayford to this case, defendant” argued (1) the court “already impliedly addressed the issue when addressing plaintiff’s impossibility/impracticability argument, and (2) Rayford should only be applied prospectively because retroactive application impairs the parties’ contractual rights.” Both arguments lacked merit. First, while the court “may have considered the reasonableness of plaintiff’s efforts to comply with the limitations period, the pertinent fact remains that neither [it] nor the trial court analyzed the reasonableness of the limitations period itself. As for the retroactivity of Rayford, it has long been recognized that ‘the general rule is that judicial decisions are to be given complete retroactive effect.’” The court found that in “determining whether to give a holding retroactive or prospective effect, the ‘threshold question [is] whether the decision clearly established a new principle of law.’” It found that “Rayford did not overrule prior precedent or decide an issue of first impression. It merely corrected this Court’s overextension of Rory to the employment context and reaffirmed its reasoning in Camelot. Even to the extent that the Rory Court stated its analysis applied beyond the insurance sphere, Rayford held this was mere dicta.” The court concluded that because “Rayford did not create a new rule, the threshold question for the retroactive analysis is not satisfied. Thus, the” general rule controlled. Remanded.