Preventing Employees from Evading Arbitral Commitments by Suing Fellow Employees Individually
The issue addressed by NELF in this interlocutory appeal under the Massachusetts Arbitration Act, G. L. c. 251, § 18(a)(1), was whether an employee who enters into an agreement with her corporate employer to arbitrate all disputes “arising out of or in connection with this Agreement or its negotiations” has agreed also to arbitrate these same claims against fellow employees, even though those employees were not specifically named in or were signatories of the arbitration agreement.
NELF and co-amicus Associated Industries of Massachusetts argued in support of the defendants, that an employee should not be able evade her commitment to arbitrate employment claims by suing in court agents of the corporation who were not specifically named in the agreement. NELF argued that the proper interpretation of the arbitration agreement would require arbitration of the type of claim identified in the agreement, no matter who in the corporate structure was allegedly responsible for the conduct at issue.
Despite extensive briefing by all parties on the issue that NELF addressed, the SJC ultimately did not reach it. Rather, in a holding that will effect arbitration provisions in employment agreements throughout Massachusetts, the Court invalidated the entire arbitration provision insofar as it purported to cover discrimination claims. Noting that the plaintiff’s complaint contained employment discrimination claims under Mass. G.L. c. 151B, the Court ruled that such claims may not be arbitrated pursuant to a pre-dispute arbitration agreement unless the agreement expressly, clearly and unmistakably indicates the employee’s intention to limit or waive her rights or remedies under c. 151B. Thus, the fact that the agreement at issue was fairly read to require arbitration of “all disputes” arising out of the plaintiff’s employment was not good enough to encompass the plaintiff’s claims under c. 151B, even though, but for her employment, those claims would not exist. The SJC therefore ruled that, despite her agreement to arbitrate, the plaintiff’s claims had to be adjudicated in court.
The issue addressed by NELF in this interlocutory appeal under the Massachusetts Arbitration Act, G. L. c. 251, § 18(a)(1), was whether an employee who enters into an agreement with her corporate employer to arbitrate all disputes “arising out of or in connection with this Agreement or its negotiations” has agreed also to arbitrate these same claims against fellow employees, even though those employees were not specifically named in or were signatories of the arbitration agreement.
NELF and co-amicus Associated Industries of Massachusetts argued in support of the defendants, that an employee should not be able evade her commitment to arbitrate employment claims by suing in court agents of the corporation who were not specifically named in the agreement. NELF argued that the proper interpretation of the arbitration agreement would require arbitration of the type of claim identified in the agreement, no matter who in the corporate structure was allegedly responsible for the conduct at issue.
Despite extensive briefing by all parties on the issue that NELF addressed, the SJC ultimately did not reach it. Rather, in a holding that will effect arbitration provisions in employment agreements throughout Massachusetts, the Court invalidated the entire arbitration provision insofar as it purported to cover discrimination claims. Noting that the plaintiff’s complaint contained employment discrimination claims under Mass. G.L. c. 151B, the Court ruled that such claims may not be arbitrated pursuant to a pre-dispute arbitration agreement unless the agreement expressly, clearly and unmistakably indicates the employee’s intention to limit or waive her rights or remedies under c. 151B. Thus, the fact that the agreement at issue was fairly read to require arbitration of “all disputes” arising out of the plaintiff’s employment was not good enough to encompass the plaintiff’s claims under c. 151B, even though, but for her employment, those claims would not exist. The SJC therefore ruled that, despite her agreement to arbitrate, the plaintiff’s claims had to be adjudicated in court.
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