Beattie v. Autostyle Plastics, Inc.

• Decision Date: 09 July 1996
• Docket Number: Docket No. 179908
• Citation: 217 Mich.App. 572,552 N.W.2d 181
• Parties: , 69 Empl. Prac. Dec. P 44,399 Jean BEATTIE, Plaintiff-Appellant, v. AUTOSTYLE PLASTICS, INC., Defendant-Appellee.
• Court: Court of Appeal of Michigan — District of US

Page 181

552 N.W.2d 181

217 Mich.App. 572, 69 Empl. Prac. Dec. P 44,399

Jean BEATTIE, Plaintiff-Appellant, v. AUTOSTYLE PLASTICS, INC., Defendant-Appellee.

Docket No. 179908.

Court of Appeals of Michigan.

Submitted May 8, 1996, at Grand Rapids.

Decided July 9, 1996, at 9:35 a.m.

Released for Publication Sept. 4, 1996.

Rhoades, McKee, Boer, Goodrich & Titta by Bruce W. Neckers and Douglas P. Vanden Berge, Grand Rapids, for the plaintiff.

Varnum, Riddering, Schmidt & Howlett by Richard A. Kay and David A. Rhem, Grand Rapids, for the defendant.

Before SAWYER, P.J., and RICHARD ALLEN GRIFFIN and M.G. HARRISON, ^* JJ.

RICHARD ALLEN GRIFFIN, Judge.

This employment wage discrimination suit initially was brought in the circuit court and eventually was submitted to binding arbitration by agreement of the parties. The dispositive issue on appeal is whether the circuit court erred in allowing the arbitration panel to reconsider the merits of itsoriginal decision. We reverse and hold that the lower court erred in permitting the reconsideration of a final arbitration award.

I

After nearly two years of discovery, the parties stipulated the submission of plaintiff's claims to a panel of arbitrators. Among other exacting procedural requirements, the detailed "Binding Arbitration Procedure" provided:

The parties understand and acknowledge that a central purpose of resolving through arbitration the issues and disputes which would otherwise be resolved through litigation is to reduce costs and delay and to obtain a final decision. To that end, the parties agree that the decision of the arbitrators shall be final and non-appealable.

The agreement of the parties did not address the subject of rehearing or reconsideration.

In October 1993, the parties submitted lengthy arbitration statements, numerous exhibits, and supplemental briefs to the arbitration panel. Following the arbitration hearing in which the time limits and procedures set forth in the agreement were strictly enforced, defendant's attorney sent the arbitrators a letter addressing the affirmative defense that a legitimate business reason existed for the disparity between plaintiff's salary and the salary of the male employee to whom plaintiff compared herself. Plaintiff's attorney responded by sending the panel a letter, contending that the defense attorney's letter violated the arbitration agreement, which did not provide for post-hearing argument.

On November 5, 1993, the arbitration panel announced a unanimous decision for plaintiff. On November 12, 1993, defendant submitted to the arbitration panel a twelve-page motion for reconsideration, complete with exhibits. Plaintiff contested the motion on the ground that reconsideration would violate the finality clause of the parties' arbitration agreement. On November 24, 1993, the arbitration panel questioned its authority to reconsider the case ¹ and notified the parties that it would reconsider defendant's affirmative defense only if reconsideration was stipulated by the parties or ordered by the circuit court.

On December 3, 1993, after plaintiff refused to stipulate reconsideration, defendant moved in the circuit court (which had retained jurisdiction) to order the arbitration panel to reconsider its decision. Plaintiff objected on the ground that the arbitration agreement gave the arbitrators no authority to reconsider their final decision. After a hearing, the circuit court ruled that the arbitration panel could reconsider its original decision if it so chose. However, the circuit court stated that the panel could only "police the record to determine they didn't make a mistake based on an error of law, or an attribution of fact not in evidence" and limited the grounds for reconsideration to those enumerated in MCR 2.119(F)(3). ²

The arbitration panel decided not only to reconsider its original decision, but also requested additional briefing and provided each party an additional half hour of oral argument with respect to the issue whether defendant had a legitimate business reason for paying plaintiff less than a similarly situated male employee. On January 18, 1994, in a two-to-one decision, the panel reversed its original award and announced a decision for defendant.

On March 24, 1994, defendant filed a motion in the circuit court to dismiss plaintiff's lawsuit on the ground that the arbitration panel had reached a final decision. On March 29, 1994, plaintiff moved that the lower court either enter judgment in accordance with the arbitrators' original decision or set aside the binding arbitration procedure. After two hearings, the circuit court rejected plaintiff's motion to enter judgment in accordance with the panel's original decision and granted defendant's motion to dismiss plaintiff's cause of action.

II

On appeal, plaintiff argues that because the binding arbitration agreement provided that the arbitrators' decision on the merits of plaintiff's claims would be final and made no provision for reconsideration, the lower court erred in permitting the arbitration panel to reconsider its original decision. We agree.

Initially, we reject defendant's contention that plaintiff's stipulation to the arbitration agreement precludes her from raising this issue on appeal. Although the arbitration agreement provides that the "decision of the arbitrators shall be final and non-appealable," plaintiff is not appealing the "decision" of the arbitration panel. Instead, plaintiff contests the circuit court's order allowing the arbitration panel to reconsider its original decision. See, generally, Bonner v. Chicago Title Ins. Co., 194 Mich.App. 462, 487 N.W.2d 807 (1992). Nothing in the arbitration agreement precludes appeals of actions taken outside the arbitrators' authority.

An arbitration agreement is a contract by which the parties forgo their rights to proceed in civil court in lieu of submitting their dispute to a panel of arbitrators. Kaleva-Norman-Dickson School Dist. No. 6 v. Kaleva-Norman-Dickson School Teachers' Ass'n, 393 Mich. 583, 587, 227 N.W.2d 500 (1975); Horn v. Cooke, 118 Mich.App. 740, 744, 325 N.W.2d 558 (1982). The parties' agreement to submit a matter to arbitration constitutes the law of the case, and the arbitrators are bound to follow the guidelines set forth in the four corners of the document. Whitaker v. Seth E. Giem & Associates, Inc., 85 Mich.App. 511, 513, 271 N.W.2d 296 (1978). The scope of arbitration is determined by the contract, Gogebic Medical Care Facility v. AFSCME Local 992, AFL-CIO, 209 Mich.App. 693, 696-697, 531 N.W.2d 728 (1995); American Fidelity Fire Ins. Co. v. Barry, 80 Mich.App. 670, 673, 264 N.W.2d 92 (1978); E.E. Tripp Excavating Contractor, Inc. v. Jackson Co., 60 Mich.App. 221, 251-252, 230 N.W.2d 556 (1975), and "arbitrators who derive their authority from the contract calling for their services are bound to act within the terms of the submission." DAIIE v. Gavin, 416 Mich. 407, 432, 331 N.W.2d 418 (1982); see also Gordon Sel-Way, Inc. v. Spence Bros., Inc., 438 Mich. 488, 496, 475 N.W.2d 704 (1991); Stowe v. Mutual Home Builders Corp., 252 Mich. 492, 497, 233 N.W. 391 (1930). Independent of the contract, an arbitration panel has no jurisdiction over a particular dispute. Michigan Ass'n of Police v. Pontiac, 177 Mich.App. 752, 758, 442 N.W.2d 773 (1989).

Because the parties' agreement did not provide that judgment shall be entered in accordance with the arbitrators' decision, this case involves common-law arbitration, and the procedures regarding "statutory arbitration" are not applicable. See M.C.L. § 600.5001 et seq.; M.S.A. § 27A.5001 et seq.; Gordon Sel-Way, supra at 495, 475 N.W.2d 704; DAIIE, supra at 417, 331...