The Sixth Circuit just reminded us all that a forum selection provision identifying courts where any lawsuit may be filed doesn’t necessarily negate an arbitration provision.
In White v. ACell, Inc., 2019 WL 2929933 (6th Cir. July 8, 2019), an employee had entered into two separate agreements related to his employment. One called for arbitration of “any dispute between us . . . , including but not limited to claims of employment discrimination,” but allowed the employer at its “sole option” to “forego arbitration of disputes relating to violations of” certain specified sections of that contract and “seek judicial enforcement, including injunctive relief” in “the state and federal courts of Montgomery County, Maryland.” The other provided that “any lawsuit relating to” the employment “may be filed only in the state court located within Howard County, Maryland, or the federal courts located in the United States District of Maryland.”
So, for folks keeping track at home, we have: (1) the employee promising to arbitrate everything; (2) the employer being authorized to bring a public court lawsuit in Montgomery County for certain contract breaches by the employee; and (3) a general forum selection provision saying that any lawsuit related to the employment “may be filed only” in Howard County. If it seems to you that at least (1) and (3) are in conflict, you’re not alone.
The employee, in fact, argued that all of these provisions conflicted. As a result, he claimed that there was no mutual assent to the arbitration provision.
The Sixth Circuit, however, made short work of this argument. “[C]ourts generally have interpreted [similar] contractual provisions to complement, rather than contradict, each other.” This approach squares, according to the Sixth Circuit, with the general principle of interpretation requiring that contracts be read as a whole and harmoniously, so that all provisions can be given meaning and applied.
The court then went on to say that the arbitration clause was mandatory – using the term “shall” – while the forum selection provision for public court litigation was permissive – using the term “may.”
I’m not sure I buy that argument. First the “may” is paired with “be filed only,” which seems to convert it into a mandatory requirement. Second, it seems pretty clear that under the first agreement the employer could seek judicial enforcement of certain contract terms in Montgomery County. But such enforcement would certainly constitute “any lawsuit related to” the employment, which under the terms of the second agreement “may be filed only” in Howard County. In short, at least with respect to litigation by the employer against the employee, it’s very unclear how these forum selection clauses lined up.
But that’s, as we say in the law prof biz, a red herring. The question the court was faced with wasn’t confusion over where the employer could file a lawsuit. Instead, the issue was whether the employee could file a lawsuit at all. The Sixth Circuit says there’s no confusion about that. The employee promised to arbitrate, plain and simple. To the extent that the employee might have to seek court support for the arbitration, either by compelling arbitration or in enforcing (or reviewing) an arbitration award, he would have to do so in Howard County. Whatever confusion there might be in some hypothetical case where the employer was suing the employee doesn’t undercut assent by the employee to arbitration.