Court of Appeals to Review Whether Pre-Hire Arbitration Agreements are Enforceable

The Michigan Court of Appeals has convened a special conflict panel to review the issue of whether pre-hire arbitration agreements which require employees to submit all employment-related claims, including discrimination claims, are enforceable. In our Fall 1997 edition of this newsletter, we reported that the Court of Appeals had ruled that Michigan public policy prohibits enforcement of arbitration agreements that require employees to agree at the time of hire to arbitrate discrimination claims. Rushton v Meijer, Inc (On Rem), 225 Mich App 156 (1997), reh den, lv app pending. Court of Appeals Judge (now Michigan Supreme Court Justice) Clifford Taylor disagreed with the majority in Rushton. In a separate opinion, Judge Taylor stated that he would rule that such agreements are enforceable and do not violate public policy.

On December 2, 1997, another panel of the Court of Appeals issued a published opinion which strongly disagreed with Rushton. Rembert v Ryan's Family Steak Houses, Inc. The Rembert panel stated that it agreed with Judge Taylor's dissenting opinion in Rushton and, if it had the discretion to do so, would rule that the arbitration agreement was enforceable. However, the Rembert panel was required by the law regarding precedents to follow Rushton and ruled that the arbitration agreement at issue also was enforceable as a matter of public policy.

Thereafter, in an unusual move, the chief judge of the Court of Appeals polled all of the other judges on whether to convene a special conflict panel to resolve the dispute between the Rushton and Rembert panels. MCR 7.215(H). The judges voted to convene the special panel. The conflict panel will consist of seven judges, none of whom was on either the Rushton or the Rembert panels. Briefing will be completed soon, with oral argument likely.

Observers generally believe that no matter how the conflict panel rules, the Michigan Supreme Court ultimately will have to resolve this issue.

Bodman, Longley & Dahling LLP represents the employer in the Rembert case. Detroit partner Diane L. Akers argued the case before the Michigan Court of Appeals which resulted in the court's decision to convene a special panel to review the entire issue of the enforceability of pre-hire arbitration agreements. Ms. Akers is a member of the Firm's Litigation and Employment Law groups who focuses her practice primarily on litigation. We congratulate her on her success in bringing this important issue before a special conflict panel. We will keep you apprised or developments on this issue in future editions of this newsletter.