Rembert v. RYAN'S STEAK HOUSES, INC.
| Decision Date | 09 April 1999 |
| Docket Number | Docket No. 196542. |
| Citation | 235 Mich. App. 118,596 N.W.2d 208 |
| Parties | John REMBERT, Plaintiff-Appellant, v. RYAN'S FAMILY STEAK HOUSES, INC., a foreign corporation and Michael Jean, jointly and severally, Defendants-Appellees. |
| Court | Court of Appeal of Michigan — District of US |
Stark and Gordon (by Sheldon J. Stark and Carol A. Laughbaum ),Royal Oak, and (Kenneth Ivan Brown, of Counsel), Columbia, Maryland, for the plaintiff.
Bodman, Longley & Dahling LLP (by Diane L. Akers, David A. Shand, and Paul R. Bernard ), Detroit, for the defendants.
Jeffrey S. Reuble and Miller, Canfield, Paddock and Stone, P.L.C. (by Charles S. Mishkind ), Grand Rapids, amicus curiae for Meijer, Inc.
Jackson, Lewis, Schnitzler & Krupman (by Stephen X. Munger and by J. Steve Warren, Atlanta, Georgia, and Stephen F. Fisher ), Greenville, South Carolina, amicus curiae for Employment Dispute Services, Inc.
Clark Hill P.L.C. (by Duane L. Tarnacki and J. Walker Henry ), Detroit, amicus curiae for Michigan Manufacturers Association. Dykema Gosssett PLLC (by Laurence D. Connor and Rosemary G. Schikora), Detroit, and Richard L. Hurford, Taylor, amici curiae for Masco Corporation, Masco Tech, and TriMas.
Patrick L. Rose, Lansing, Thomas Donnellan, Flint, Sheldon J. Stark, Royal Oak, and Michael J. Steinberg, Detroit, amicus curiae for American Civil Liberties Union Fund of Michigan.
Amberg, McNenly, Zuschlag, Firestone and Lee, P.C. (by Joseph H. Firestone ), Southfield, amicus curiae for Michigan Education Association.
Sacks, Waldman, O'Hare, Helveston, Bogas & McIntosh, P.C. (by John R. Runyan, Jr., Mary Katherine Norton, and Elizabeth A. Cabot ), Detroit, amici curiae for Michigan State AFL-CIO, International Union UAW, and Wolverine Bar Association.
Kelman, Loria, Simpson, Will, Harvey & Thompson (by Janet M. Tooley ), Detroit, amicus curiae for Michigan Trial Lawyers Association.
Frank J. Kelley, Attorney General, Thomas L. Casey, Solicitor General, and Robert L. Willis, Jr., Assistant Attorney General, amicus curiae for Michigan Department of Civil Rights.
Before GAGE, P.J., and MICHAEL J. KELLY, HOOD, MCDONALD, MARK J. CAVANAGH, SAAD, and O'CONNELL, JJ.
This conflicts panel was convened to decide if a predispute1 agreement to arbitrate statutory employment discrimination claims arising under the Michigan Civil Rights Act2 (CRA) and the Persons With Disabilities Civil Rights Act3 (PWDCRA) is valid and enforceable. In Rushton v. Meijer, Inc. (On Remand), 225 Mich.App. 156, 570 N.W.2d 271 (1997), this Court held that this kind of predispute agreement is invalid as a matter of public policy. Contrary to Rushton's holding, the overwhelming majority of federal and other state courts have held that these agreements are enforceable, provided that the arbitration procedures are fair and the agreement waives no substantive rights and remedies. We join the majority of courts and hold that as long as no rights or remedies accorded by the statute are waived, and as long as the procedure is fair, employers may contract with their employees to arbitrate statutory civil rights claims.
Our holding breaks no new ground, but rather is consistent with our state's public policy, and federal public policy, both of which increasingly and overwhelmingly favor arbitration as an inexpensive and expeditious alternative to litigation. Specifically, our holding furthers the objectives of the Michigan arbitration act (MAA),4 which is a strong and unequivocal legislative expression of Michigan's proarbitration public policy. In accordance with the MAA's endorsement of arbitration, and the CRA's and the PWDCRA's silence regarding the matter, we will not interfere with private parties' contractual undertakings to arbitrate these claims.5
Our opinion is also consistent with the traditional principles of freedom of contract in the employment context.6 Clearly, employers are free to condition employment on employer-drafted wage and benefit structures and work rules as long as they comply with applicable statutory and common-law mandates. Similarly, we hold that employers are also free to require arbitration of claims as a condition of employment, provided that the agreement complies with our holding here.
While our decision upholds the principle of freedom of contract and advances the public policy that strongly favors arbitration, it does so subject to two conditions generally accepted in the common law: that the agreement waives no substantive rights, and that the agreement affords fair procedures. These conditions are rooted in two critically important bases: (1) our Supreme Court's decision in Renny v. Port Huron Hosp., 427 Mich. 415, 398 N.W.2d 327 (1986), which held that agreements to arbitrate employment claims must have fair procedures, and (2) Michigan and federal decisions (which generally have been held to be persuasive authority in Michigan employment discrimination cases) that uniformly hold that these arbitration agreements may not waive any substantive rights or remedies provided by the statute and must provide for fair procedures. With regard to procedural fairness, we will also detail below the specific procedural safeguards that we believe are mandated by Renny`s requirement of fair procedures.
Additionally, as we discuss below, contracts providing for compulsory arbitration of discrimination claims must, of course, meet the general rules regarding the validity of contracts. Although other contractual issues raised in this case are beyond the scope of this conflicts panel, we do hold, as a matter of law, that an arbitration agreement that does not diminish the rights and remedies guaranteed by the relevant employment discrimination statute and that is fair procedurally is not an unenforceable contract of adhesion.
After discussing the facts, we will analyze the issues in the following sequence. We begin by discussing the prevailing public policy favoring arbitration that is evidenced in both Michigan and federal law. We then address how this proarbitration policy developed to include claims arising under public interest statutes and trace that development to judicial approval of predispute agreements to arbitrate statutory civil rights claims. Thereafter, we examine the necessary conditions for enforcement of these agreements: (1) a valid arbitration contract, (2) the absence of statutory prohibition against arbitrating particular statutory claims, and (3) the requirements of procedural fairness. Finally, we set forth the specific requirements for procedural fairness and define the standard of review.
Defendant Ryan's Family Steak Houses, Inc., hired plaintiff as a bread maker in October 1993. At the time he was hired, plaintiff signed an arbitration agreement with Employment Dispute Services, Inc. (EDS). The arbitration agreement provided, in pertinent part:
Your potential Employer ("signatory company" or "Company") has entered into an agreement with Employment Dispute Services, Inc. (EDS) to arbitrate and resolve any and all employment-related disputes between the Company's employees (and job applicants) and the Company. The following Agreement between You and EDS is a "selection of forum" agreement by which you agree that employment-related disputes between You and the Company shall be resolved through arbitration. Any arbitration matter shall be heard and decided under the provisions and the authority of the Federal Arbitration Act, 9 U.S.C. sec. 1, as applicable.
The purpose of this agreement is to provide You and the Company a forum in which claims or disputes with the Company and any other signatories may be resolved by arbitration rather than litigation. This Agreement does not restrict you from filing a claim or charge with any state or federal agency, for example, Equal Employment Opportunity Commission, state unemployment agency, state workers' compensation commission, where applicable. Rather, the Agreement applies only to State or Federal court proceedings.
While an employee with Ryan's Family Steak Houses, Inc., plaintiff sued defendants in the circuit court for race discrimination under the CRA and handicap discrimination under the PWDCRA (then known as the Michigan Handicappers' Civil Rights Act). Plaintiff alleged that he suffers from epilepsy and cognitive defects resulting from a head injury. Plaintiff made a variety of allegations relating to discrimination in the terms of his employment. Plaintiff subsequently resigned his employment and amended his complaint to include a charge of constructive discharge. Plaintiff also raised a common-law claim of intentional infliction of emotional distress.
Defendants moved for summary disposition pursuant to MCR 2.116(C)(7) (agreement to arbitrate) based on the signed arbitration agreement. After ruling that plaintiff had failed to establish that he was incompetent to understand the agreement he had signed, the trial court granted defendants' motion.7 Plaintiff appealed. Meanwhile, a majority of a panel of this Court decided in Rushton, supra, that agreements to arbitrate employment-related discrimination claims were unenforceable as a matter of public policy. A panel of this Court therefore reversed the trial court's order in this case because it was obligated to follow Rushton under MCR 7.215(H)(1). Rembert v. Ryan's Family Steak House, Inc., 226 Mich.App. 821, 575 N.W.2d 287 (1997) (Rembert I). The Rembert I panel opined that it reversed the trial court's order only because it was obligated to follow Rushton and that it would have held otherwise if free to do so. The Court thereby invoked the conflicts panel provision under MCR 7.215(H). Pursuant to MCR 7.215(H), Rembert I was vacated, 226 Mich.App. 821-822, 575 N.W.2d 287, and this special conflicts panel was convened to resolve the conflict.
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