Sixth Circuit Holds That Duty To Arbitrate Survives Expiration Of Employment Contract, Requires Individual Arbitration
With the Supreme Court having issued a series of decisions overruling many of the roadblocks to the enforcement of arbitration agreements in the class context, we are now seeing more courts fill in the gaps as to whether and when employers may rely on such agreements.
The latest of these is the case of Huffman v. The Hilltop Companies, LLC, Case No. 13-3938 (6th Cir. Mar. 27, 2014), which concerned the question of whether the duty to arbitrate and limits to class arbitration extend beyond termination. In one respect, the decision was obvious, but in another, it represents the growing, if at time reluctant, acceptance by courts of the enforceability of arbitration agreements.
In Huffman, the plaintiffs were mortgage loan officers who were classified as independent contractors and thus not paid overtime. They brought suit under both the FLSA and the Ohio Minimum Fair Wage Standards Act and sought to proceed on a class or collective basis. The employer sought to compel arbitration of their claims on an individual basis under their independent contractor agreements, but, the district court refused to enforce them because it concluded that the arbitration clause did not survive termination of the underlying contracts. The defendant appealed, and the case explicitly or implicitly involved a number of issues.
The first was whether, as a general rule, arbitration would survive the expiration of the underlying contract. In the collective bargaining context, this issue has long since been settled that disputes arising under the contract must be arbitrated even if the underlying contract has expired. See, e.g., Litton Financial Printing Division, Litton Business Systems, Inc. v. NLRB, 501 U.S. 190 (1991). Citing the strong federal policy favoring arbitration, the Sixth Circuit held that the same considerations would apply to other types of agreements, including the independent contractor agreements at issue.
Second, the court addressed an argument raised by plaintiffs' counsel regarding the construction of the specific contract at issue. The contract identified several specific obligations that would survive the...
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