Be Sure Your Arbitration Clause Clearly States Who Will Decide Whether a Dispute Is Arbitrable

One of the prime reasons many companies require employees to arbitrate disputes is to ensure confidentiality. Indeed, absent an arbitration provision, an employee can file publicly available papers containing unfounded and scurrilous allegations that leave the employer with no recourse but to litigate or settle. Moreover, even if the employer eventually prevails, severe damage may be done by having its name dragged through the mud due to the publicity associated with the claims.

As the recent decision in Boursiquot v. United Healthcare Services of Delaware confirms, however, merely having a clause mandating that disputes be arbitrated is not be enough to ensure confidentiality. And there is no reason to leave this to chance.

In the Spring of 2016, Yvlande Boursiquot was a student beginning an unpaid internship with United Healthcare. As part of her onboarding with the company, Ms. Boursiquot was asked to sign an agreement entitled “Alternative Resolution for Conflicts Agreement,” and that Agreement included the following language:

Except as it otherwise provides, this Agreement is intended to apply to the resolution of disputes that otherwise would be resolved in a court of law or before a forum other than arbitration. This Agreement requires all such disputes to be resolved only by an arbitrator through final and binding arbitration and not by way of court or jury trial. Such disputes include without limitation disputes arising out of or relating to interpretation or application of this Agreement.

In May of 2017, Ms. Boursiquot’s internship ended, but she accepted a full-time position as an employee of United Healthcare. Significantly, Ms. Boursiquote did not sign (and was not presented with) a new agreement requiring that disputes between her and United Healthcare be arbitrated.

In 2018 and 2019, various issues arose between Ms. Boursiquot, on the one hand, and United Healthcare and other employees, on the other hand. These issues culminated with Ms. Boursiquot filing a complaint for discrimination and retaliation in the Superior Court. United Healthcare moved to dismiss that complaint, arguing that Ms. Boursiquot was bound by the 2016 agreement to arbitrate. Ms. Boursiquot countered that the 2016 agreement was inapplicable because her claims arose after she became a full-time employee, and she had not signed a new agreement to arbitrate.

After an initial hearing, the trial judge found there to be a disputed issue of fact as to whether Ms. Boursiquot was required to arbitrate her claims, and the motion to dismiss was denied. United Healthcare appealed that decision to a Single Justice of the Appeals Court, who cited a number of cases in setting out the following general principles:

Whether the parties have agreed to arbitrate is a matter to be decided finally by the court and not by the arbitrator unless there is clear and unmistakable evidence that the parties agreed to arbitrate arbitrability. In this respect, the usual presumption in favor of arbitration is reversed.

The Single Justice then went on to substantively rule as follows:

The agreement specifically provides for arbitration of disputes arising out of or relating to interpretation or application of this Agreement. The term “relating to” . . . suggests an expansive sweep and broad scope. … The agreement identifies that decision maker as an arbitrator.

While United Healthcare prevailed, the ruling appears to be a very close call. Moreover, to the extent that confidentiality was a key factor in United Healthcare desiring arbitration, that goal was not achieved. Thus, if in-house counsel want to have arbitration for reasons of confidentiality, it is critical to include in their arbitration clauses plain text stating: “All matters concerning the arbitrability of disputes must be submitted to the arbitrator and may not be decided in any other forum.” Failing to do so could completely undermine the basis for having arbitration in the first place.

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