In this age discrimination and conversion action, defendants appeal by leave granted from an order denying their motion to compel arbitration. We reverse.
The facts of the underlying lawsuit are not at issue on appeal. Essentially, plaintiff worked for defendant Coopers & Lybrand, L.L.P., for over thirty years before he was terminated. Plaintiff then filed suit alleging that his termination was the product of age discrimination and that defendants wrongfully converted his former clients. It is undisputed that plaintiff signed an arbitration agreement in which he agreed to arbitrate certain claims against defendant Coopers & Lybrand. In response to plaintiff's complaint, defendants filed a motion to compel arbitration. The trial court denied defendants' motion without explanation. We granted defendants' subsequent application for leave to appeal.
Before addressing the trial court's decision to deny defendants' motion to compel arbitration, we must address a procedural matter. Defendants did not originally file an answer to plaintiff's complaint. Instead, they filed their motion to compel arbitration, and, when their motion was denied, filed an application for leave to appeal. After defendants filed their application, plaintiff moved for entry of a default and entered a default below. Plaintiff then filed a motion to dismiss
Generally, a defendant "must serve and file an answer or take other action permitted by law or these rules within 21 days after being served...." MCR 2.108(A)(1). However,
Here, despite plaintiff's protestations, defendants' motion to compel arbitration was a motion under MCR 2.116. See MCR 2.116(C)(7).
Defendants raise only one issue on appeal. They argue that plaintiff signed a "Partners and Principals Agreement" containing a valid arbitration clause and, therefore, that the trial court erred in denying their motion to compel arbitration. We agree.
We review a trial court's grant or denial of a motion for summary disposition pursuant to MCR 2.116(C)(7) de novo to determine whether the moving party was entitled to judgment as a matter of law. Limbach v. Oakland Co. Bd. of Co. Rd. Comm'rs, 226 Mich.App. 389, 395, 573 N.W.2d 336 (1997). The Federal Arbitration Act (FAA), 9 U.S.C. §§ 1-15, governs actions in both federal and state courts arising out of contracts involving interstate commerce. Burns v. Olde Discount Corp., 212 Mich.App. 576, 580, 538 N.W.2d 686 (1995). To ascertain the arbitrability of an issue, a court must consider whether there is an arbitration provision in the parties' contract, whether the disputed issue is arguably within the arbitration clause, and whether the dispute is expressly exempt from arbitration by the terms of the contract. Id. Any doubts about the arbitrability of an issue should be resolved in favor of arbitration. Id.
Here, plaintiff signed a Partners and Principals Agreement that included the following arbitration clause:
Another clause states that the agreement "shall be governed by the laws of the State of New York."
Defendants rely on the FAA for the proposition that the arbitration clause in the Partners and Principals Agreement is enforceable. Specifically, they rely on 9 U.S.C. § 2, which states:
Plaintiff argues that the FAA does not apply, citing 9 U.S.C. § 1, which defines the term "commerce." That section provides, in part: "[N]othing herein contained shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce." Defendants respond that the Partners and Principals Agreement is not an employment contract and that, even if it is, it is not a contract of a "class of workers engaged in foreign or interstate commerce." We believe that defendants have the better argument.
State courts are bound, under the Supremacy Clause, U.S. Const., art. VI, cl. 2, to enforce the FAA's substantive provisions. Kauffman v. Chicago Corp., 187 Mich.App. 284, 286, 466 N.W.2d 726 (1991). While there is some disagreement in the federal courts regarding the scope of the exclusionary language in 9 U.S.C. § 1, it seems clear to us that it does not apply to the Partners and Principals Agreement in this case. Plaintiff simply cannot show that the agreement was a contract of employment of a "class of workers engaged in foreign or interstate commerce."
We have not found any Michigan cases addressing the scope of the exclusionary provision in 9 U.S.C. § 1. However, the Sixth Circuit Court of Appeals has adopted a narrow construction of that clause. Asplundh Tree Expert Co. v. Bates, 71 F.3d 592, 600-601 (C.A.6, 1995). After a lengthy review of other cases, the court summarized its analysis:
We find the reasoning in Asplundh persuasive, and we adopt it as our own. Thus, we conclude that the exclusionary provision in 9 U.S.C. § 1 is limited to employees directly engaged in the movement of goods in interstate commerce. Clearly, plaintiff is not such an employee, and the exclusionary provision does not apply to the Partners and Principals Agreement in this case.
Plaintiff also argues that his claims are outside the scope of the agreement to arbitrate. Plaintiff's argument can succeed only if we adopt a very narrow reading of the arbitration clause. This, we decline to do. As noted above, any doubts about the arbitrability of an issue should be resolved in favor of arbitration. Here, the parties agreed to arbitrate claims "arising out of ... the practice, business or affairs of the Firm...." Plaintiff's claims are arguably covered by this language, and, resolving any doubts in favor of arbitration, the trial court should have granted defendants' motion to compel arbitration.
Plaintiff also asserts that he did not knowingly and voluntarily agree to arbitrate these claims. His argument rests on an opinion from the Ninth Circuit Court of Appeals, Prudential Ins. Co. of America v. Lai,
Finally, plaintiff argues that the arbitration agreement violates Michigan public policy. Plaintiff relies on an opinion by Justice Cavanagh in Heurtebise v. Reliable Business Computers, Inc., 452 Mich. 405, 550 N.W.2d 243 (1996), and on two subsequent cases from this Court, Rushton v. Meijer, Inc. (On Remand), 225 Mich.App. 156, 570 N.W.2d 271 (1997), and Rembert v. Ryan's Family Steak House, Inc., 226 Mich.App. 821, 575 N.W.2d 287 (1997). However, the FAA did not apply in any of these cases. Heurtebise, supra at 419, 550 N.W.2d 243; Rushton, supra at 166, 570 N.W.2d 271; Rembert, supra at 825, 575 N.W.2d 287.
Because plaintiff's claims were subject to a valid and enforceable arbitration agreement
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