Kilpatrick v. Lansing Cmty. Coll.
| Docket Number | 361300 |
| Decision Date | 22 August 2023 |
| Parties | KATERI KILPATRICK, formerly known as KATERI LEHR, Plaintiff/Counterdefendant-Appellant, v. LANSING COMMUNITY COLLEGE, Defendant/Counterplaintiff-Appellee. |
| Court | Court of Appeal of Michigan — District of US |
Ingham Circuit Court LC No. 21-000650-CZ
Before: GADOLA, P.J., and M. J. KELLY and SWARTZLE, JJ.
Arbitrators lack jurisdiction over claims to which our Legislature has granted exclusive jurisdiction to administrative agencies. Because the Wages and Fringe Benefits Act (WFBA), MCL 408.471 et seq, grants exclusive jurisdiction to the Department of Labor for all WFBA claims, the arbitrator in this case was without jurisdiction to consider plaintiff's WFBA claim. Additionally, with respect to the claims properly before the arbitrator, although the arbitrator made several errors of law, correcting them would not substantially change the award in this case. Accordingly we affirm.
Plaintiff was employed as the Director of Information Technology Project Management by defendant, and they entered into an employment agreement which stated that plaintiff was an at-will employee entitled to severance benefits if defendant terminated her employment without cause. The employment agreement also provided that arbitration was the exclusive remedy to disputes concerning her employment.
While she was employed, plaintiff gave a presentation that included her opinion about another employee being unqualified for his position. Team members within plaintiff's department complained that plaintiff's presentation was inappropriate, and defendant investigated the complaints after placing plaintiff on paid administrative leave. After interviewing plaintiff and other team members, defendant concluded that plaintiff had violated the employment agreement by engaging in threatening or intimidating behavior, disobeying instructions, and failing to participate honestly in the investigation. Defendant terminated plaintiff's employment after stating that it had cause to do so.
Plaintiff pursued arbitration, alleging that defendant did not have cause to terminate her employment; defendant breached the employment agreement by not paying her severance; and defendant violated the WFBA, the Elliott-Larsen Civil Rights Act (ELCRA), MCL 37.2101 et seq, and her constitutional right to due-process. Defendant initially moved for summary disposition of plaintiff's WFBA claim because the Department of Labor had exclusive jurisdiction over that claim. The arbitrator agreed with defendant and dismissed plaintiff's WFBA claim for lack of jurisdiction.
The arbitration proceedings continued on plaintiff's remaining claims. The arbitrator ultimately found that defendant did not have cause to terminate plaintiff's employment, and defendant had breached the agreement by failing to pay severance to plaintiff.
On plaintiff's ELCRA claim, the arbitrator found that plaintiff "failed to establish a prima facie case [for sex discrimination] because she ha[d] not shown that similarly situated male employees were treated differently." Relevant to this appeal, plaintiff had presented six employees that she alleged were similarly situated to her. The arbitrator found that three of those employees shared the same supervisor as plaintiff, but those employees had not engaged in similar conduct without differentiating or mitigating circumstances. The arbitrator did not consider the other three employees because they did not share the same supervisor as plaintiff. Of those latter employees, one employee engaged in conduct that resulted in termination with a severance payment before the conclusion of the investigation because defendant was concerned about the safety of the individuals involved; one employee engaged in extensive sexual harassment that was deemed not a violation of company policy after he cooperated honestly with the investigation; and the third employee was a "higher-level supervisor" who allegedly engaged in an isolated incident of sexual harassment that did not recur after his investigation.
The arbitrator also concluded that even if plaintiff had presented a prima facie case for discrimination, defendant presented a legitimate, nondiscriminatory, reason for terminating her employment-i.e., her presentation was inappropriate and she was dishonest in her investigation. Specifically, the arbitrator stated:
I find that [plaintiff] has failed to prove that [defendant's] stated reasons for its decision to terminate [her] were not [defendant's] honest belief in those reasons. As a result, [plaintiff] failed to establish pretext and failed to bear her burden of proof on her sex discrimination claim.
Plaintiff then filed a complaint in the trial court, seeking to affirm the arbitration award with respect to severance pay, vacate or modify the arbitrator's grant of summary disposition concerning her WFBA claim, and vacate or modify the arbitrator's decision concerning her ELCRA claim. Defendant filed a cross-claim concerning the amount of the arbitrator's award.
After conducting a hearing, the trial court held that the arbitrator correctly determined that the Department of Labor had exclusive jurisdiction over the WFBA claim, and, even though the arbitrator made some legal errors in its analyses of the ELCRA claim, it was not apparent that the arbitrator would have reached a different result by relying on correct law. The trial court rejected the other arguments and affirmed the arbitrator's decision.
Plaintiff now appeals.
This appeal involves a trial court's affirmance of an arbitration award. With respect to the trial court, this Court reviews questions of law-including subject-matter jurisdiction, statutory interpretation, and arbitrability-under a de novo standard. TSP Servs, Inc v National-Standard, LLC, 329 Mich.App. 615, 619-620; 944 N.W.2d 148 (2019); Registered Nurses, Registered Pharmacists Union v Hurley Med Ctr, 328 Mich.App. 528, 535-536; 938 N.W.2d 800 (2019); In re Estate of Vansach, 324 Mich.App. 371, 384-385; 922 N.W.2d 136 (2018).
The Uniform Arbitration Act, MCL 691.1681 et seq, applies here. Under the act, the threshold question of whether a claim is properly subject to arbitration is generally one for the court. MCL 691.1686(2); but see MCL 691.1684(1) (); Rent-A-Center, West, Inc v Jackson, 561 U.S. 63, 69 n 1; 130 S.Ct. 2772; 177 L.Ed.2d 403 (2010) ().
With respect to the arbitration award itself, however, this Court's review is much more circumscribed. An arbitrator's factual findings are not subject to review by this Court. TSP Servs, 329 Mich.App. at 620. On legal questions addressed by the arbitrator, this Court's review is not, strictly speaking, de novo, contrary to our review of a decision by a trial court or administrative agency. Instead, this Court looks to "whether the [arbitrator's] award rests upon an error of law of such materiality that it can be said the arbitrators exceeded their powers." DAIIE v Gavin, 416 Mich. 407, 433; 331 N.W.2d 418 (1982) (cleaned up). This Court will not set aside an arbitration award unless the arbitrator committed legal error, "and that, but for such error, a substantially different award must have been made." Id. ().
Plaintiff begins by asserting that both the trial court and the arbitrator erred by concluding that the Department of Labor has exclusive subject-matter jurisdiction over statutory claims arising under the WFBA." 'Subject-matter jurisdiction is the right of the court to exercise judicial power over a class of cases, not the particular case before it.'" Southfield v Shefa, LLC, 340 Mich.App. 391, 406; 986 N.W.2d 607 (2022) (quoting In re Warshefski, 331 Mich.App. 83, 88; 951 N.W.2d 90 (2020)). Subject-matter jurisdiction depends on the nature of the claim rather than on how the claim is phrased or presented. Parkwood Ltd Dividend Housing Ass'n v State Housing Dev Auth, 468 Mich. 763, 774 n 8; 664 N.W.2d 185 (2003).
Generally speaking, parties may not consent to confer subject-matter jurisdiction on a court, and by extension, they cannot confer jurisdiction on an arbitrator. McFerren v B &B Investment Group, 233 Mich.App. 505, 513; 592 N.W.2d 782 (1999). Where a statutory violation is within the exclusive jurisdiction of an administrative agency, arbitration procedures are inadequate for the resolution of the statutory rights. Bay City Sch Dist v Bay City Ed Ass'n, Inc, 425 Mich. 426, 436-437; 390 N.W.2d 159 (1986).
Thus, the question here is whether a statutory claim made under the WFBA is within the exclusive jurisdiction of the Department of Labor (with subsequent judicial review, if sought). In answering this question, this Court is not bound by the presence or absence of any so-called magic words, but instead looks to the substance and context of the statutory language. Papas v Mich. Gaming Control Bd, 257 Mich.App. 647, 657; 669 N.W.2d 326 (2003).
The WFBA provides that an "employee who believes that his or her employer has violated [the] act may file a written complaint with the department." MCL 408.481(1). If the employee disagrees with the agency's disposition of the WFBA claim, then the employee can seek review of that disposition in circuit court. MCL 408.481(9). This Court previously held in Cockels v Int'l Business Expositions, Inc, 159 Mich.App. 30, 35; 406 N.W.2d 465 (1987), that the administrative-complaint procedure is the exclusive remedy for statutory claims brought under the WFBA. Although we are not bound by Cockels itself, MCR 7.215(J)(1), this holding has been recognized...
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