Snider v. Prod. Chem. Mfg. Inc

• Decision Date: 29 April 2010
• Docket Number: SC S056494).,(CC 0502-01434,CA A131621
• Parties: Garland SNIDER, Respondent on Review,v.PRODUCTION CHEMICAL MANUFACTURING, INC., a California corporation, Petitioner on Review.
• Court: Oregon Supreme Court

348 Or. 257

230 P.3d 1

Garland SNIDER, Respondent on Review,v.PRODUCTION CHEMICAL MANUFACTURING, INC., a California corporation, Petitioner on Review.

(CC 0502-01434; CA A131621; SC S056494).

Supreme Court of Oregon En Banc.

Argued and Submitted May 18, 2009.

Decided April 29, 2010.

On review from the Court of Appeals.^*

Timothy R. Volpert, Davis Wright Tremaine LLP, Portland, argued the cause and filed the brief for petitioner on review. With him on the brief was Marlin Ard, Sisters.

Richard A. Carlson, Drakulich & Carlson PC, Lake Oswego, argued the cause and filed the brief for respondent on review.

Scott A. Shorr, Stoll Stoll Berne Lokting & Shlachter PC, Portland, filed the brief for amicus curiae Oregon Trial Lawyers Association.

KISTLER, J.

ORS 36.730 provides that an appeal “may be taken” from an interlocutory order denying a petition to compel arbitration. In this case, defendant did not take an appeal pursuant to that statute. Instead, defendant appealed from the general judgment and, as part of that appeal, assigned error to the trial court's order denying its petition to compel arbitration. The Court of Appeals held that it did not have jurisdiction to consider defendant's assignment of error. Snider v. Production Chemical Manufacturing, Inc., 221 Or.App. 593, 600, 191 P.3d 691 (2008). We allowed defendant's petition for review to consider the effect of not taking an interlocutory appeal pursuant to ORS 36.730 ¹ and now affirm the Court of Appeals decision.

Plaintiff worked for defendant as its national sales manager. The parties entered into a four-year employment agreement in 1999, which they renewed in 2003. Section 9.02 of that agreement provided:

“Any controversy between [defendant] and [plaintiff] involving the construction or application of any of the terms, provisions, or conditions of this agreement shall on the written request of either party served on the other be submitted to arbitration. Arbitration shall comply with and be governed by the provisions of the California Arbitration Act.”

On January 30, 2005, defendant terminated plaintiff's employment. Approximately one week later, plaintiff filed a breach of contract action against defendant in Multnomah County Circuit Court. Over the next seven months, defendant challenged plaintiff's complaint, plaintiff filed amended complaints, defendant answered and filed affirmative defenses, and the parties engaged in discovery.

Trial was scheduled for October 6, 2005. On September 30, defendant moved to postpone the trial. The trial court granted the motion on October 3 and rescheduled the trial for mid-November. On October 7, defendant asked plaintiff to submit their dispute to arbitration. Plaintiff refused and, on October 12, defendant filed a petition to compel arbitration. Defendant's petition came approximately eight months after plaintiff had filed his complaint and approximately five weeks before the rescheduled trial date. At no point before October 7 had defendant invoked its right to arbitration under the employment agreement.

The trial court denied defendant's petition, reasoning that defendant had unduly delayed in seeking arbitration and thus waived its right to arbitrate the parties' dispute. The court entered an order denying the petition on December 23, 2005, and the case proceeded to trial on January 17, 2006. The jury returned a verdict for plaintiff. The trial court entered a general judgment in plaintiff's favor on February 13, 2006. Defendant filed a timely notice of appeal from the general judgment and, in its opening brief on appeal, assigned error to the trial court's order denying its petition to compel arbitration. Plaintiff responded that defendant had to file an interlocutory appeal pursuant to ORS 36.730 if it wanted to challenge that order. Plaintiff argued alternatively that defendant's delay in requesting arbitration waived whatever right it had to arbitrate their dispute.

In resolving defendant's assignment of error, the Court of Appeals ruled initially that ORS 36.730 applied to the parties' arbitration agreement. Snider, 221 Or.App. at 598, 191 P.3d 691.² The court then ruled that an interlocutory appeal pursuant to ORS 36.730 provided the exclusive means for appealing from a trial court order denying a petition to compel arbitration. Id. at 600, 191 P.3d 691. It followed, the court concluded, that it lacked jurisdiction to consider defendant's assignment of error. Id. On review, defendant challenges both rulings. We begin with defendant's argument that ORS 36.730 does not apply to this litigation before turning to the question whether an interlocutory appeal pursuant to that statute provided the exclusive means for appealing from an order denying a petition to compel arbitration.

In 2003, the Oregon legislature adopted the Revised Uniform Arbitration Act. Or. Laws 2003, ch. 598. Much of that act provides procedures for initiating and conducting arbitration proceedings. See Or. Laws 2003, ch. 598, §§ 9, 11, 15 (providing procedures for initiating arbitration, appointing arbitrators, and conducting the hearing). Section 28 of that act, now codified as ORS 36.730, provides that a party may appeal from an interlocutory order denying a petition to compel arbitration and an interlocutory order staying arbitration. Or. Laws 2003, ch. 598, § 28. Sections 3 and 31 of that act specify the agreements to which sections 1 to 30 of the act apply. Or. Laws 2003, ch. 598, §§ 3, 31.

Defendant argues that sections 3 and 31 of the 2003 arbitration act establish that that act (more specifically, section 28 of that act) does not apply to this litigation. Defendant reasons that, because section 28 of that act (codified as ORS 36.730) does not apply to this litigation, it could not have taken an interlocutory appeal from the trial court's order denying its motion to compel arbitration.³ It follows, defendant contends, that we need not decide whether, if ORS 36.730 applied, that statute would have provided the exclusive means for appealing from the trial court's order. In analyzing defendant's argument, we begin with section 3 and then turn to section 31.

Section 3 of the 2003 arbitration act specifies which arbitration agreements are subject to the act. It provides:

“(1) Sections 1 to 30 of this 2003 Act govern an agreement to arbitrate made on or after the effective date of this 2003 Act [January 1, 2004].

“(2) Sections 1 to 30 of this 2003 Act govern an agreement to arbitrate made before the effective date of this 2003 Act if all the parties to the agreement or to the arbitration proceeding so agree in a record.

“(3) On or after September 1, 2004, sections 1 to 30 of this 2003 Act govern an agreement to arbitrate whenever made.”

Or. Laws 2003, ch. 598, § 3. Section 3 divides arbitration agreements into two categories. The first category consists of arbitration agreements made after the effective date of the act, January 1, 2004. The 2003 arbitration act governs all those agreements. Or. Laws 2003, ch. 598, § 3(1). The second category consists of arbitration agreements made before the effective date of the 2003 arbitration act and divides into two subcategories. Between January 1 and August 31, 2004, the 2003 arbitration act will not govern arbitration agreements made before the act's effective date, unless the parties agree that the act applies. Or. Laws 2003, ch. 598, § 3(2). Beginning on September 1, 2004, the 2003 arbitration act will govern all arbitration agreements, including those made before the act's effective date. Or. Laws 2003, ch. 598, § 3(3).

In this case, the parties renewed their employment agreement, which included an agreement to arbitrate, before January 1, 2004. Section 3(1) accordingly does not apply; either section 3(2) or section 3(3) does. Defendant did not discharge plaintiff until 2005. Because the opportunity to arbitrate any dispute arising out of plaintiff's discharge did not arise until after September 1, 2004, section 3(3) of the 2003 arbitration act applies and provides that sections 1 to 30 of the act, including the section now codified as ORS 36.730, apply.

The remaining question is whether the savings clause in section 31 of the act leads to a different conclusion. Section 31 provides:

“Sections 1 to 30 of this 2003 Act do not affect an action or proceeding commenced or right accrued before the effective date of this 2003 Act. Subject to section 3 of this

2003 Act, an arbitration agreement made before the effective date of this 2003 Act, continues to be governed by [ former ] ORS 36.300 to 36.365 [ (2001) ] as though those sections were not repealed by section 5[7] of this 2003 Act.”

Defendant raises two arguments under that section. Defendant argues initially that, under the second sentence of section 31, the former arbitration statutes ( former ORS 36.300 to 36.365 (2001)) apply to its dispute with plaintiff. The second sentence, however, begins with the phrase, “[s]ubject to section 3.” That introductory phrase makes clear that the former arbitration statutes will govern agreements to arbitrate made before January 1, 2004, but will do so only until August 31, 2004, and only if the parties do not agree that the 2003 arbitration act applies. See Or. Laws 2003, ch. 598, § 3(2) (so providing). Beginning on September 1, 2004, the 2003 arbitration act governs all agreements to arbitrate without regard to when they were made. See Or. Laws 2003, ch. 598, § 3(3).

Defendant also relies on the first sentence of section 31, which provides that sections 1 to 30 of the 2003 arbitration act “do not affect an action or proceeding commenced or right accrued before [January 1, 2004].” In this case, no action or proceeding was commenced before January 1, 2004; so, that part of the first sentence does not advance defendant's position. Additionally, defendant has identified no right that accrued to it before January 1, 2004. Defendant did not file a petition to compel arbitration until October 2005, and the trial...