Correll v. DISTINCTIVE DENTAL SERVICES, PA, No. C7-98-2251.

• Decision Date: 16 March 2000
• Docket Number: No. C7-98-2251.
• Citation: 607 N.W.2d 440
• Parties: Bryan CORRELL, D.D.S., petitioner, Appellant, v. DISTINCTIVE DENTAL SERVICES, P.A., Respondent.
• Court: Minnesota Supreme Court

607 N.W.2d 440

Bryan CORRELL, D.D.S., petitioner, Appellant, v. DISTINCTIVE DENTAL SERVICES, P.A., Respondent.

No. C7-98-2251.

Supreme Court of Minnesota.

March 16, 2000.

William J. Egan, William J. Egan & Associates, PLC, Edina, for appellant.

Duane G. Johnson, Duane G. Johnson, P.A., Minneapolis, John D. Hagen, Jr., Attorney at Law, Minneapolis, for respondent.

Heard, considered and decided by the court en banc.

OPINION

RUSSELL A. ANDERSON, Justice.

In this case we are asked, in the context of a human rights claim arising out of an employment relationship, to resolve an apparent conflict between two statutes. The Minnesota Uniform Arbitration Act (arbitration act) gives binding effect to arbitration provisions in employment agreements. On the other hand, the Minnesota Human Rights Act (human rights act) provides that the administrative procedures for resolution of claims, which include hearings before an administrative law judge, are exclusive while pending. Relying on the human rights act, Bryan Correll petitioned the district court to stay arbitration of his pending human rights act claim against his past employer, Distinctive Dental Services, P.A. (DDS). The district court granted this stay but the court of appeals reversed. We reverse the court of appeals and affirm the district court's order.

Correll accepted employment as a dentist in DDS's Howard Lake, Minnesota office¹ beginning February 9, 1994. Prior to commencing his employment, Correll entered into an employment agreement which included at paragraph 12 an arbitration provision and at paragraph 17 a noncompetition provision:

12. Any controversy or claim arising out of, or relating to this Employment Agreement, or the breach thereof, shall be settled by arbitration in the City of Winsted, State of Minnesota, in accordance with the then governing rules of the American Arbitration Association. Judgment upon the award rendered by the arbitrator(s) may be entered in any court of competent jurisdiction.

* * * *

17. During the period of employment, Employee shall not engage in any other business activity, directly or indirectly, regardless of whether it is for profit, gain or otherwise that is similar to the business activity of Employer within 7 miles of the offices of Employer.

On September 9, 1994 DDS's CEO Michael Thoennes terminated Correll's employment after learning that Correll's wife accepted a position as a dentist with a competing office in Winsted, Minnesota. Though Correll and Thoennes disagree as to the details of the conversation that occurred that day, they agree that Thoennes ended Correll's employment because of his wife's new position. Thoennes' letter to Correll explaining the termination states that "there is a defacto breach of contract by you since Dr. James Neff has contracted with your wife Mary to perform dental services within the City of Winsted." In support of this conclusion Thoennes cited paragraph 17 of the employment agreement regarding noncompetition.

Correll filed a charge with the Minnesota Department of Human Rights on September 7, 1995, alleging marital status discrimination in violation of Minn.Stat. § 363.03, subd. 1(2)(b) (1998). In 1996 the department made a probable cause determination favorable to Correll and scheduled a hearing.

Shortly before the hearing was to be held, DDS sent Correll a demand for arbitration. Correll filed in district court a petition for a stay of arbitration pursuant to Minn.Stat. § 572.09(b) (1998), arguing that the human rights act precludes arbitration of this dispute. DDS served a cross-motion to compel arbitration, arguing that the arbitration act requires enforcement of the parties' agreement. DDS did not argue that the Federal Arbitration Act (the FAA) compelled arbitration of this dispute and provided no evidence that the employment agreement involved interstate commerce, a threshold requirement under the FAA. See 9 U.S.C. §§ 1-2 (1999). The district court concluded Minn. Stat. § 363.11 (1998) required that arbitration be stayed and therefore granted Correll's motion and denied DDS's cross-motion to compel arbitration.

The court of appeals reversed. See Correll, D.D.S. v. Distinctive Dental Services, P.A., 594 N.W.2d 222 (Minn.App.1999). The appeals court compared the relationship between the arbitration act and the human rights act to the relationship between the FAA and Title VII of the 1964 Civil Rights Act (Title VII), noting that Title VII claims are arbitrable. See Correll, D.D.S., 594 N.W.2d at 226. Further, the court considered that the FAA preempts the state human rights act and therefore, where the FAA applies, claims arising under the human rights act are also arbitrable. See Correll, D.D.S., 594 N.W.2d at 224. Because DDS failed to raise the issue of interstate commerce at the district court, the court of appeals did not address the outcome of this claim under the FAA. See Correll, D.D.S., 594 N.W.2d at 224-25. Nonetheless, the court concluded that distinguishing between arbitration agreements based on whether they involve interstate commerce and thus are subject to the FAA would lead to confusion. See Correll, D.D.S., 594 N.W.2d at 227. The court concluded that the human rights act does not invalidate the arbitration provision in the employment agreement and the agreement is enforceable. See Correll, D.D.S., 594 N.W.2d at 225.

I.

We begin by noting that an agreement to arbitrate a statutory claim is enforceable only if (1) the agreement encompasses the statutory issues and (2) "legal constraints external to the parties' agreement" do not preclude arbitration of the claim. See Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985). There is no dispute that the agreement encompasses a claim of discrimination arising out of the employment relationship. Thus, the issue presented by this appeal is whether an additional "legal constraint," specifically, section 363.11 of the human rights act, renders this claim exempt from resolution through arbitration. This question of statutory construction is a legal issue that we review de novo. See Hibbing Educ. Ass'n v. Public Employment Relations Bd., 369 N.W.2d 527, 529 (Minn.1985).

The legislature enacted the human rights act in 1955 "to secure for persons in this state, freedom from discrimination" in employment, housing, public accommodations, public services and education. Minn.Stat. § 363.12, subd. 1 (1998). The act protects against various forms of discrimination based on race, color, creed, religion, national origin, sex, marital status, disability, status with regard to public assistance, familial status, sexual orientation and age. See id. The act "shall be construed liberally for the accomplishment of the purposes thereof." Minn.Stat. § 363.11 (1998).

The act sets out a procedure for resolving and adjudicating claims brought under it. A claimant may bring a civil action or file a charge with the commissioner of the department. See Minn.Stat. §§ 363.06, subd. 1 (1998); 363.14, subd. 1(a) (1998). Once the department makes a finding of probable cause, the department may attempt to resolve the dispute through conciliation or issue a complaint and set the matter on for a hearing. See Minn.Stat. § 363.06, subd. 4 (1998). The contested case hearing is conducted by an administrative law judge, whose findings of fact and conclusions of law are binding on all parties to the proceeding. See Minn.Stat. § 363.071, subd. 1 (1998). The commissioner or a person aggrieved by a final decision may seek judicial review pursuant to Minn.Stat. § 14.63 (1998).

Correll argues that section 363.11 of the human rights act precludes arbitration of his claim. That section provides that the procedures contained in the human rights act are exclusive while pending:

The provisions of this chapter shall be construed liberally for the accomplishment of the purposes thereof. Nothing contained in this chapter shall be deemed to repeal any of the provisions of the civil rights laws or of any other law of this state relating to discrimination because of * * * marital status * * *; but, as to acts declared unfair by section 363.03, the procedure herein provided shall, while pending, be exclusive.

Minn.Stat. § 363.11 (1998) (emphasis added). The human rights act specifically allows arbitration in only two circumstances. First, the act permits arbitration of disputes prior to filing a charge or bringing suit under the act. See Minn.Stat. § 363.06, subd. 3 (1998). Second, the act allows arbitration of disputes prior to the department's probable cause determination where the commissioner sanctions alternative dispute resolution. See Minn. Stat. § 363.06, subd. 3b (1998). Because Correll had already filed a charge with the department, which made a probable cause determination and set the matter for hearing before the arbitration demand was made, neither of these circumstances is present in this case. Thus, on its face the act appears to preclude arbitration at this stage of the administrative proceedings.

DDS argues that the exclusive procedure provision, read in context, means only that a claimant may not proceed under other civil rights laws while his or her human rights act claim is pending. DDS emphasizes that "[g]eneral words are construed to be restricted in their meaning by preceding particular words." Minn.Stat. § 645.08(3) (1998). The clause preceding the exclusive procedure provision reads, "Nothing contained in this chapter shall be deemed to repeal any of the provisions of the civil rights laws or of any other law of this state relating to discrimination * * *." Minn.Stat. § 363.11 (1998). While we of course look to context to determine legislative intent, the canon DDS cites is limited to "words" qualified by other "words," not entire clauses restricted in their meaning by previous clauses. In addition, the exclusive procedure clause is hardly general, as it...