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July 30, 2015 Articles

In Determining Arbitrability, Conjugation and Context Count

By Sara Sheinkin Kula

In Russell v. Citigroup, Inc., 748 F.3d 677 (6th Cir. 2014), the Sixth Circuit held that an employee who signed an arbitration agreement was not required to arbitrate a claim that arose before the agreement was executed. In reaching this determination, the court relied on the specific language in the agreement and the context in which the agreement was signed.

The Facts
Keith Russell worked for Citicorp Credit Services from 2004 to 2009. In January 2012, Russell filed a class action lawsuit against Citicorp for unpaid wages. While his case was still pending, Russell reapplied, and was hired, to work at Citicorp. At the time of his rehire, in January 2013, Russell signed what Citicorp was then using as its standard arbitration agreement.

Neither Russell's nor Citicorp's attorneys in the class action suit were aware that Russell had signed an arbitration agreement upon his rehire. When Citicorp's counsel found out, they sought to compel arbitration of Russell's pending class action claims. Russell argued, however, that the new arbitration agreement did not mandate arbitration of his previously filed claims. Both the district court and Sixth Circuit agreed.

The Analysis

The conjugation. The Sixth Circuit's analysis in this matter reads like a grammar tutorial. Citicorp's agreement stated that arbitration would cover disputes that "arise" between the employee and employer. As the court explains, "arise" is present-tense language, and the choice to use "arise" instead of "arose" (past tense) or "have arisen" (present perfect) suggests that the contract was, in fact, meant to cover disputes that arise in the future—not disputes that arose in the past.

Other language used in the agreement reinforced the court's conclusion. For instance, the agreement's preamble stated that "Citi . . . looks forward to good relations with, and among, all of its employees," that "disagreements may arise," and that "resolution of such disagreements will be best accomplished . . . by external arbitration." Russell, 748 F.3d at 679–80 (emphasis added). All of this language pointed to a determination that "the parties signed this agreement to head off future lawsuits, not to cut off existing ones." Russell, 748 F.3d at 680.

The context. The court found that the parties' expectations reinforced its understanding of the agreement's language. Russell claimed that his expectation was that the contract would apply to future lawsuits—a position supported by his failure to consult with counsel before signing. Even Citicorp could offer no evidence that it had expected the contract to govern the pending lawsuit. In fact, Citicorp's own failure to consult with legal counsel before the agreement was signed or conduct the communication about the agreement through counsel suggested that Citicorp likely did not expect the contract to govern Russell's pending action.

The Federal Arbitration Act. Citicorp gave the court several other arguments to consider, all of which were unsuccessful. One of those arguments was that the Federal Arbitration Act required the court to resolve any doubts concerning the scope of arbitrability in favor of arbitration. This, however, would require the court to have doubts, which it did not. The content and context of the agreement left no doubt that the agreement was not intended to reach previously filed claims. Giving effect to the intent of the parties, the court affirmed the district court's decision refusing to compel arbitration of Russell's pending class action claims.

The Lesson
Notably, nothing in the Russell decision suggests that the court would not apply an arbitration agreement to a pending claim if the agreement clearly set forth its retroactive intent. The court's holding is specific to the language in Citicorp's agreement. The decision reminds us that arbitration is a choice and that the parties control what their arbitration agreement will cover. Parties must be careful to choose the right language to express their true intent, and cannot count on a court to expand the language they've selected. Or, in other words, choose your conjugation carefully!

Keywords: litigation, ADR, arbitration, retroactive, conjugation, context, motion to compel

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