Court of Appeal Won't Enforce Botched Arbitration Agreement

Few lawyers, and even fewer non-lawyers, pay attention to legal-sounding mumbo jumbo in releases and employment agreements.  Until they matter.

Employer American Management Services had a broad arbitration provision that applicant Brandon Grey signed (called an issue resolution agreement or "IRA").  But Grey's offer letter contained a narrower arbitration clause, which the employee duly signed as well. That offer letter said it was "integrated," meaning that its provisions superseded all prior agreements.  Yep, the integration clause killed the prior, broader, arbitration provision in the IRA.

The contract contains an integration clause. It provides, in part: ?This Agreement is the entire agreement between the parties in connection with Employee‟s employment with [AMS], and supersedes all prior and contemporaneous discussions and understandings.
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 Construing the clause as a whole, we interpret it to mean the contract is the final expression of the parties‟ agreement with respect to Grey‟s employment and it supersedes the IRA. * * *

Well, Grey arbitrated his claims and lost.  Then he petitioned the court vacate the arbitration award, presumably on the ground that he had not agreed to arbitrate.  Grey had sued for discrimination, harassment based on sexual orientation, and other claims not based on a breach of his employment contract per se.  Grey claimed the language of the offer letter was narrow and he was not required to arbitrate such claims.  The court of appeal agreed:

The scope of the arbitration clause in the employment contract only applies to claims arising from a breach of that contract and does not encompass all claims an employee may have against AMS. All of Grey‟s claims are for statutory violations, and none arises from a breach of the employment contract. We agree with both parties that Grey is not required to arbitrate his claims under these terms. 

 So, Grey gets another bite at the apple, but in court this time. 

The case is Grey v. American Management Services and the opinion is here.