# Petition for Writ of Certiorari — Reliable Business Computers v. Heurtebise > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386009_0375%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1997 - **Citation:** 520 U.S. 1142 ## Text Supreme Gaus, U.S. PiL #8 D / 9B 998 DEC | 6 19% No. — peas WE CLERK Iu The Supreme Court of the United States > October Cerm, 1996 « RELIABLE BUSINESS COMPUTERS, se Petitioner, RECEIVED | v ae Dee ‘THERESA A. HEURTEBISE, DEC 18 199% Respondent. 3 OFFICE OF THE CLERI 1 s ON PETITION FOR A WRIT OF CERTIORARI SUPREME COURT, U.S TO THE MICHIGAN SUPREME COURT PETITION FOR A WRIT OF CERTIORARI TO THE MICHIGAN SUPREME COURT CHRISTOPHER R. HOLLIDAY (P 39173) = VERCRUYSSE METZ & Murray, P.C. JULIA SHERWIN (P50992) By: DIANE M. SOUBLY (P 32005) Attorneys for Respondent Counsel of Record 3000 Cadillac Tower ROBERT M. VERCRUYSSE (P 21810) Detroit, Michigan 48226 Attorneys for Petitioner (313) 965-0050 31780 Telegraph Road, Suite 200 Bingham Farms, Michigan 48025 (810) 540-8019 AEE ES ETL AAI SEALS TE TTL ICT NER ATENOLOL TIE IESE CEBTL EATEN AEN RINDI Interstate Brief & Record Company, a division of North American Graphics, Inc. 1629 West Lafayette Boulevard, Detroit, MI 48216 (313) 962-6230 QUESTIONS PRESENTED L. WHETHER THE MICHIGAN SUPREME COURT'S DECISION IN HEURTEBISE v RELIABLE BUSINESS COMPUTERS, INC, SUPREME COURT NO. 102109 (RELEASED ON JUNE 16, 1996 AND REHEARING DENIED BY ORDER DATED SEPTEMBER 16, 1996) (THE “HEURTEBISE DECISICN”), SHOULD BE VACATED BECAUSE IT IS STATE DECISIONAL LAW WHICH IS CONFLICT PRE-EMPTED BY THE FEDERAL ARBITRATION ACT (“FAA”), 9 USC § 1 ET SEQ., UNDER THE SUPREMACY CLAUSE OF THE UNITED STATES CONSTITUTION, WHERE THAT COURT’S HOLDING WAS INCONSISTENT WITH THE NATIONAL POLICIES FAVORING THE ENFORCEMENT OF ARBITRATION AGREE- MENTS EVEN AS TO CIVIL RIGHTS CLAIMS, AS EMBODIED IN THE FAA AND IN FEDERAL DECISIONS RECOGNIZING THE QUASI-JUDICIAL CHARACTER OF THE ARBITRAL/ADR FORUM AND HOLDING THAT SUCH ARBITRATION/ADR AGREEMENTS WAIVE NO SUBSTANTIVE RIGHTS? II. WHETHER THE MICHIGAN SUPREME COURT’S HEURTEBISE DECISION REFUSING TO ENFORCE THE ARBITRATION AGREE- MENT OF THE PARTIES SHOULD BE VACATED BECAUSE IT HOLDS FORMATION OF AN ARBITRATION AGREEMENT TO DIFFERENT AND HIGHER STANDARDS THAN EMPLOYMENT CONTRACT FORMATION GENERALLY UNDER MICHIGAN LAW? Ill. WHETHER THE MICHIGAN SUPREME COURT'S HEURTEBISE DECISION REFUSING TO ENFORCE THE PARTIES’ ARBITRA- TION AGREEMENT SHOULD BE VACATED ON FEDERAL CON- STITUTIONAL GROUNDS BECAUSE IT IMPAIRS THE CONTRACT ENTERED INTO BY THE PARTIES, U.S. CONST., ART. I, § 10, AND/OR BECAUSE IT DISCRIMINATES AGAINST EMPLOYERS IN THE FORMATION OF EMPLOYMENT AGREE- MENTS IN VIOLATION OF THE EQUAL PROTECTION CLAUSE OF THE FEDERAL CONSTITUTION, U.S. CONST., AMD. XIV, § 1? ii LIST OF PARTIES Petitioner is Reliable Business Computers, Inc., a corpora- tion with no parent company or wholly owned subsidiaries. Respondent is an individual, Theresa A. Heurtebise. TABLE OF CONTENTS PAGE QUESTIONS PRESENTED .......secccrsccrovccercessorcesreesseeserevneseeese i Tn UY PIII. os cnssemesedoasoneavinonsepovessnennnrennneveséenmmnnbt ii ee FUR SED cscereccsveceveveccsovecessesorvensborovcensoovenss iv I IIIT 0c aasincccnsidniatanseninlisteerenseoosepsovnenecinctones ] as sass csacennietnvesnisinennnncnliideninnenelens l CONSTITUTIONAL AND STATUTORY PROVISIONS INVOLVED. ..........:::ccccccceeeeees ] STATEMENT OF THE CASE: A. Violation Of Law And Rules Below .............:.:::00 ] B. Arbitration Agreement Below ............::ccccecceeeeeeeees 3 ee IIE IIIT 0 seccaentsonpnonenendectonrohioneonennpesonnds 4 D. Contract Impairment And Uncertainty .................. 6 SUMMARY OF REASONS FOR GRANTING THE WRIT .... 7 REASONS FOR GRANTING THE WRIT. ..........ccccccceeeceereeeees 9 Il. UNDER THE DOCTRINE OF CONFLICT PREEMP- TION THE FAA PREEMPTS MICHIGAN'S RESTRIC- TION ON FORMATION AND ENFORCEMENT OF ARBITRATION AGREEMENTS, cccecccccccvccsecccccsccccsesssoseces ll A. The FAA Preempts State-Imposed Judicial I, i cinisteenssonantsienedetninnicnecsnenctnoniess ll B. The FAA Compels Arbitration Of Plaintiff's (SER SRE SN cnn ee eC SNE 15 ll. THE MICHIGAN DECISION MUST BE VACATED BECAUSE IT CONTRADICTS PRINCIPLES OF ARBI- TRATION AGREEMENT FORMATION UNDER MICH- IGAN STATUTORY LAW. . ........ccccccccccocossccsescccerereesooroeess 21 lll. THE HEURTEBISE DECISION CONTRADICTS MICH- IGAN COMMON-LAW PRINCIPLES OF EMPLOY- MENT CONTRACT FORMATION AND MUST BE VACATED AS CONFLICT PREEMPTED. ..........---.00c+eee00 23 iv PAGE IV. THE MICHIGAN SUPREME COURT DECISION IM- PAIRS CONTRACTS AND DENIES EMPLOYERS IAL, FEF E OIG, cncsntcicescvesisccndomesesbreebienuiatoteestors 28 CEIFSURAIIITY scsieseniccsvinsnsninprenseapnsnetdisintenninhamntieteninniants 30 TABLE OF AUTHORITIES CASES: Alford v Dean Witter Reynolds Inc, 939 F2d 229 (CA Ths. SLD sccssaccceiuniaiisnicinidsidigeibabainiaialimanniothaiiiadiliaies dita 19 Allied-Bruce Terminix Companies, Inc v Dobson, 115 Ae re ED ciccscanessitueniacanniceaass 8, 12, 13, 16, 27, 30 Allied Structural Steel Co v Spannaus, Minn., 438 US OE LE. srcesconinnvniicatestionitiatiamalenbatiamdglididaaniabbensigs 28 Batchelor v Sears, Roebuck & Co, 574 F Supp 1480 CREP SEES: SEI crcinvccitsictaniscesinintern taceisibtiinmindtiaddnsciiaaiasiulanas 27 Bender v A G Edwards & Sons, Inc, 971 F2d 698 (CA i, CTD cnnssesneecsiiiiatstiaiansebsiitniiiatissnucdisjemmeadinahedaitipdaiantees 19 Benefits Communications Corp v Klieforth, 642 A2d Re ite HU TD dcvicienireciteieascbiGpicennndacianaoalpinentinds 19 Breish v Ring Screw Works, 397 Mich 586; 248 NW2d PRG TUED: :nindciisvsinepsicacninneeiipsohltlaliicabedidgiatiedaiinatanoeniiceshions 25 Carlson v Hutzel Corporation of Michigan, 183 Mich App 508; 455 NW2d 335 (1990); DAE MI SID sis sncdistncteisbianiniehiandaticemeicascecigiadiiisbantdtea 24-25 Christy v Kelly, 198 Mich App 245; 497 NW2d 194 CRUD. sninshevicichsinhsiicesancsiidcnahsididuecidGasdeaeeatadabes se 22, 26 Corion Corp v Chen, 964 F2d 55 (CA 1, 1992) ................ 19 Crawford v West Jersey Health Systems, 847 F Supp Se ee Pe HD whit peaichetalateecleneaitidiid cvedeteecdboninin 20 DAIIE v Gavin, 416 Mich 407; 331 NW2d 418 (1982) ..... 22 | iia ie i PAGE Dancu v Coopers & Lybrand, 778 F Supp 832 (ED Pa 1991) aff'd, 972 F2d 1330 (CA 3, 1992) .......ceeeeeeees 20 Dahlman v Oakland University, 172 Mich App 502; EE Fee Pe COD secs cccsninsrsesdatnirtcnatstonitcincctesreciie 25 Degaetano v Smith Barney, Inc, 1996 WL 4426 (S.D. ity SPEED siitsitncretiesseendigatenthentenseaitameimenndasen 18, 19 Detroit United Railway v Michigan, 242 US 238 (1916) .. 28 DiCrisci v Lyndon Guar Bank of New, 807 F Supp 947 CHET PRE SED saticthacincinivsdsakiasteerscsparnninteancentinadsion 20 Didonato v AG Edwards & Sons Inc, 65 FEP Cases CEA) TRGT (ED Cab TRDE) feccccstetscivisosseinsizctcnsseivaness 19 Doctor’s Associates, Inc v Lombardi, 64 USLW 4370 CHINE scisediccistantcncitiasabestitclsenipesnanslsiadenianiad 8, 10, 11, 30 Edwards v ITT Financial Services, 65 FEP Cases COTA) Se Ce ae TD siitencccenttloraicheseivniattsnssieisen 20 EE Tripp Excavating Contractor, Inc v Jackson County, 60 Mich App 221, 236-237; 230 NW2d 556 COTY kciccceidienticetiaderneitphicabeddioedinaseepeanidiottinianciiesee 22 Ehresman v Bultynck & Co, 302 Mich App 350; 511 PTE FA LIED eritcnactrisncomsinenictnvcnsnsiabigtbabenninibiaainies 23 FJ Siller Co v City of Hart, 400 Mich 578; 255 NW2d yg, + Shee agUAlaae Ram Chee u os wun 25 Fletcher v Kidder Peabody & Co, 81 NY 2d 623, 619 NE2d 998, 601 NYS 2d 686, cert. den., 114S Ct 554, Be he le ee I CUTE citstesiortnicrncictuvinciasioomscconsocaniiens 20 Fulghum v United Parcel Service, 424 Mich 89; 378 FO Tn CED vidicctcsnsntttasnnrinsicienusiccietenmaibenanie 25 Gilmer v Interstate/Johnson Lane Securities, 500 US NEE Scerdadicicacdchinlancbaviiiianendl 2, 6, 7, 10, 15, 16, 17, 19 Gordon Sel-Way v Spence Bros, 438 Mich 488; 475 NE FW CINE D | secdssccnecsnicstpuremsistdnntnbpiennieipneannnniicaiiins 22 PAGE Harrison v Salomon Bros Inc, 156 Misc 2d 341, 593 POE 0s Ga COP CU cccicsccncsniscuspeenetonenipalianiiliniidienes 20 Hull v NCR Corp, 826 F Supp 303 (ED Mo 1993) ........... 20 In re Certified Question, 432 Mich 438; 443 NW2d 112 CIDE) sscrcnscesssncsnvesseneinicineasennisemaianailiaads 24 Kauffman v The Chicago Corp, 187 Mich App 284; 466 NW2d 726 (1991), app den, 439 Mich 944 (1992) ..... 14 Lockhart v AG Edwards & Sons, 65 FEP Cases (BNA) © GD Re TRIG) crsivtssssmntiscsornstninceannianas 19-20 Mago v Shearson Lehman Hutton, Inc, 956 F2d 932 CA TR FERGIE sence snintadinevoneepteensaciqeibaianiianeiadamiaseaamaiaaa 19 Mastrobuono v Shearson Lehman Hutton, Inc, 115 § CR ERE CIID ceressonvriniveiceitnininciemanetseaebeialiaiea 8 Metropolitan Life Ins Co v Ward, 470 US 869 (1985) ..... 28 Mitsubishi Motors Corp v Soler Chrysler-Plymouth, Inc, 473 US 614, 105 S Ct 3346, 87 L Ed 2d 444 CORTE) sasctsesesnscounthaceaviavesiihsnniloustdasiaalanieaeaiaiae ta aaaamaaie 15 Myers v Western Southern Life Ins Co, 849 F2d 259 CUA ©, FURIE. svvssshnivsinesnincascenaiuaasdaeaniieneedaniacaaaiueie 26 Nazon v Shearson Lehman Bros Inc, 832 F Supp 1540 GEE? FOR DEIPEED: ciccnsesesnsscrsssctenetnindibnensiinnieaiiapeigesioe 20 Nghiem v NEC Electronic Inc, 25 F3d 1437 CER DB FIDE) cxscccisrievenaniceeeicaamianiealdadiamntieen 17-18 Northland Ins Co v Sny, 98 Mich App 507; 296 NW2d Be CRIED | cxcensisscsnconssestatonntionennniiiehpaaniaiia tis 21 Perry v Thomas, 482 US 483, 107 S Ct 2520, 96 L Ed Be GO CREED ccexitesicscndinssaceeseaiaoninnammaaaaaa 8, 10, 15, 30 Prima Paint Corp v Flood & Conklin Manuf Co, 338 UD Se COED cccscrcrvrginscrnscesonsssnaistaaabesiedeniaiaan 10-11, 30 vii Prudential v Lai, 42 F3d 1299 (CA 9, 1994) ..........00++ T8, 19 Reid v Sears, Roebuck and Co, 790 F2d 453 (CA 6, IU ihthidasewicieitaiksitictndtndierrcsiicnimenntadidainnitautabmtonbunalac 22, 26 Renny v Port Huron Hospital, 427 Mich 415; 398 of 28 ¢ RSRLEonamennesenn eels 24, 25, 26, 28 Riley v State Farm Auto Ins Co, 420 F2d 1372 (CA 6, 1970) cert den, 339 US 928, 90 S Ct 2245 26 L Ed 2d FUND CITED vessnssnsisisshanohiptansiinienaenieuetamanaindentelinn 21 Rushton v Meijer, Inc, Michigan Supreme Court SIE FAI POU citecsintccmensocstccovbactettasiaseenientindeievainn 6 Ryoti v Paine, Webber, 142 Mich App 805 (1985) ......... 26 S+L+H SPA v Miller-St Nazianz, Inc, 988 F2d 1518 (CA 1 MIUIED “cine ocoshncicanebedsushehpenceipnpenadetdinadincnunesccacennenbalsedantiees 15 Saari v Smith Barney. Harris Upham & Co, Inc, 968 PEE GE CIEE ecteiievicsinbiicesivlansttintsaeniianidibnees 15, 17 Scanlon v P&J Enterprises, 182 Mich App 347; 451 PPE ET MEETS ‘sikiccnccebssnnepdneneduseonbnnbsonsautenbinusmanudlesunes 15 Scherk v. Alberto-Culver Co., 417 U.S. 506, 511 (1974) .... 30 Scholz v Montgomery Ward, Inc, 437 Mich 83; 468 POE te IED citwitnciieninivinecenemnnnnitits 22, 23, 26, 27 Scott v Farm Family Life Insurance Co, 827 F Supp 76 gh, SRO ETE Were ire ceeeee ole renee 20 Shearson/American Express, Inc v McMahon, 428 US 226, 107 S Ct 2332, 96 L Ed 2d 187 (1987) .......... 7, 15 Southland Corp v Keating, 465 US 1, 104 S Ct 852, 79 eo Se ee 8, 10, 12, 13, 30 Sponseller v Kimball, 246 Mich 255; 224 NW 359 SE TIEID : ciotiieisnniceisiiaesaeenshlbdiiaiegcelelduabishiuntassagniaitesliadtienae 22, 26 Sprague v General Motors, 92 F3d 1425 (CA 6, 1996) ..... 6 Toussaint v Blue Cross and Blue Shield of Michigan, RE SEE SE LIED cccterctnertensiieninesionistcanesitentneies L4 viii PAGE Vander Toorn v City of Grand Rapids, 132 Mich App 590; 348 NW2d 697 (1984), app den ...................... 25 Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior Univ., 489 US 468, 109 S.Ct. 1248, 103 L Ed 2d 488 (1989) ...........cccccccsccerceeees 10, 30 Williams v Katten, Muchin & Zavis, 837 F Supp 1430 ee Fe PITT paidaegietbdessincastieltasindiananeintaiergiuninaniapebenccseeees 20 Zeniuk v RKA Inc, 189 Mich App 33; I I eid ale nenisctiesainscencheniaessievetedndedinkans 25 UNITED STATES CONSTITUTION: I Di sbaita tetas fedatacuiatie sevshandeldtaiensestenennnipiancidoioee: 28 BEE IIT. sctisidniandiccidanicteresisctesisaciaiciidahieabieeasnipncctabbionbant 28 STATUTES AND RULES: Sr A ITE assasicsbescodcohinuissndasiinncaebbisindeuehigeecanintiendaiaeeeond passim SP RIINET TEPER (cotishicendeoiscatisinciahitentieisinidioomeneduaniebiadamaang passim SU MIITTIID sseiiccipnssctiessiiecscisdsinascaeseethdieapissdeinadiadadetereaiadtabaiete 4 Neer UII» whicsnipinninsesetacngdsasiebesiebateseismbianssaiioaiipiiacstiinia cls sad 23 IIL -siiikinsasdnsnnsinntiiusinietasebonlosghaedicicindaiatsatanaie 21 A TINGED sissieantissndnrekcicsinrcbcedssensesieeipueanbuahbiiaibe 22 SEIS sarcsnciinccescseiatcusssennpetebaniaesianpliendenie 22, 23 NII: Seconiicichis tistndasacinesiiamricettbiiiecoepicionisiaiusiiaal 16 RR a IIIITED inside endecdiainiesanaicdesdadatehbinabiibanmimmnitdaced 2 SGA IIIITED ‘ssicicninhascnsogconsvemnsmnianishionaelioationseseiememadiedatins 3 OTHER AUTHORITY: Restatement Contracts 2d, § 30, § 50(b), § 53(2) ..... 26-27 No. In The Supreme Court of the United States *> October Cerm, 1996 « ~~ RELIABLE BUSINESS COMPUTERS, Petitioner, Vv. THERESA A. HEURTEBISE, Respondent. ON PETITION FOR A WRIT OF CERTIORARI TO THE MICHIGAN SUPREME COURT PETITION FOR A WRIT OF CERTIORARI TO THE MICHIGAN SUPREME COURT ] OPINIONS BELOW The opinion of the Michigan Supreme Court is to be reported at — Mich. —_ (1996) (Docket No. 102109) and is reproduced at pp. A-2-A-34 of the separately-bound Appendix to the Petition for a Writ of Certiorari [“App.”]. The order denying petitioner Reliable Business Computer, Inc.’s (“Reliable” or the “Com- pany”) motion for rehearing is reproduced at App. p. A-1. The Court of Appeals Opinio below, reported at 207 Mich. App. 308 (1995), is reproduced at App. pp. A-35-A-37. JURISDICTION This petition is timely filed within 90 days of the Michigan Supreme Court’s September 16, 1996 Order denying Reliable’s timely filed motion for rehearing seeking to vacate the court's plenary opinion issued on June 16, 1996. This Court's jurisdic- tion is invoked pursuant to 28 U.S.C. § 1257(a). CONSTITUTIONAL AND STATUTORY PROVISIONS INVOLVED Mich. Const. 1963, Art. 1, § 14; Mich. State Fair Employment Practices Act and Elliott-Larsen Civil Rights Act; Title 9, U.S.C. §§ 1-2; US. Const., Art. 1, § 10; and US. Const., Amd. XIV, § 1, are reproduced at App. pp. A-71-A-112. STATEMENT OF THE CASE A. Violation Of Law And Rules Below This case arises from the refusal of the Michigan Supreme Court to enforce an agreement between an employer and em- ployee to arbitrate their employment disputes which might result in monetary damages. The court reached that result by singling out arbitration pro- visions for suspect status, requiring greater information or choice in the formation of an agreement to arbitrate than it had over the last fifteen years for the formation of any other im- plied-in-fact employment agreement. The court also chose to ignore the express written agreement under which Heurtebise expressly agreed to abide by present and future employer poli- cies and procedures contained in employee handbooks, in- cluding an arbitration procedure. 2 The Michigan Supreme Court violated its own court rules on motion practice and failed to follow its own precedents delin- eating employment contract formation in its rush to invalidate an arbitration agreement compelling the arbitration of civil rights claims. Four of the seven justices refused to join in Part Ill of the Opinion of the Court, which claimed, disingenuously, that Reliable had not raised the issue that the arbitration pro- vision should be enforced under clear precedents from this Court enforcing § 2 of the FAA [App. p. A-111], when in fact almost half of petitioner's principal brief on appeal addressed Gilmer v Interstate/Johnson Lane Securities, 500 US 20 (1991) and its progeny [App. pp. A-38-A-61]. The minority Opinion (Part IIf) also strained, again disingenuously, to articulate a purported separate and independent state ground under the state constitutional provisions recognizing civil rights and pre- serving jury trials in cases in which jury trials were permitted at the time of the passage of the state constitution in 1963 [App. p. A-71], even though Heurtebise never brought a gender discrimination claim under the state constitution (which did and does not recognize gender as a protected status), but in- stead brought a statutory claim under a civil rights statute passed a decade after the ratification of the state constitution [App. pp. A-86-A-110] and succeeding a civil rights statute which provided a judicial forum only to review an agency de- termination on the merits and which did not recognize gender as a protected status [App. pp. A-72-A-85]. Perhaps nothing demonstrates the Michigan Supreme Court's determination to vitiate the arbitration agreement of the parties more than its decision to violate its own court rules by allowing plaintiff to supplement the record for the first time before that court. Contrary to the requirements of Michigan Court Rule 2.116(G)(4), plaintiff did not submit any affidavit or any other fac- tual evidence on the issue of whether the agreement was know- ing and voluntary in opposition to the Company’s dispositive motion before the trial court, which the Company supported with record evidence outside the Complaint. The Supreme Court allowed plaintiff to introduce the entire employee hand- book, without an affidavit from plaintiff herself to support the allegation that she had somehow “lost” the handbook before the dispositive motion hearing — a claim made for the first 3 time in the Supreme Court, and not even raised in either lower court by way of an affidavit describing why a contrary record showing could not be made under Michigan Court Rule 2.116(H). As Reliable pointed out in its response to plaintiff's motion to supplement the record, plaintiff's counsel had a complete copy of the entire handbook at all times and could have supplied it before the trial, but did not. B. Arbitration Agreement Below In May 1989, the Company hired Heurtebise as an “at will” em- ployee to work at its Livonia, Michigan office. Prior to beginning her employment, Heurtebise received a copy of an employee handbook containing, inter alia, an arbitration procedure. Al- though the Michigan Supreme Court relegated her express writ- ten agreement to a footnote, Heurtebise in fact signed a written acknowledgment that confirmed both her receipt of the hand- book and her voluntary agreement to conform to its terms: “| acknowledge receipt of the Reliable Business Com- puters, Inc. Employee Handbook. / agree to conform to the various procedures, rules and regulations of the com- pany, as set forth therein, and as may be promulgated by the company in the future, and further understand that my employment and compensation can be terminated with, or without cause, and with or without notice at any time, at the option of either me or the company. | further understand that no employee, other than the President or his designee, in a duly executed written document, has any authority to enter into any agree- ment for employment for any specified period of time, or to make any arrangements contrary to or different from what is provided in this Handbook.” [App. p. A-62; emphasis added]. The arbitration procedure in the handbook requires all employment-related and other monetary disputes coming within its scope to be arbitrated before the American Arbitra- tion Association (“AAA”) [App. pp. A-65-A-66]. The arbitration procedure also contains a limited exception permitting either party to institute a circuit court action for equitable relief for the sole purpose of preventing immediate and irreparable harm and injury [/d.]. 4 After the Company terminated Heurtebise’s employment for violating an express employment rule, she bypassed the arbi- tration agreement altogether and filed a complaint in circuit court seeking monetary damages for alleged gender discrimi- nation in violation of the Michigan Civil Rights Act, MCL § 37.2101 et seq. Respondent's complaint alleged that she was disparately disciplined for the same offense than a male employee. [Com- plaint {4 13-15, 19]. At no time did Heurtebise request either in- ternal review of her termination or arbitration of her monetary damage claim, as required by the handbook arbitration clause. In response to the complaint, on or about December 19, 1991, the Company filed a motion to dismiss or alternatively to compel arbitration and stay proceedings, based on Heurte- bise’s express agreement to abide by any and all employer poli- cies and procedures, including the arbitration provision in the handbook requiring her to arbitrate all money damages claims sought as a result of any employment dispute under the broad arbitration clause. C. Decisions Below At the hearing on Reliable’s motion to compel arbitration, the trial court denied the motion from the bench on the ground that such an agreement to arbitrate civil rights claims violated public policy. The trial court also found that the provision af- fording a judicial forum for equitable relief rendered the arbi- tration provision ambiguous: “An ambiguity is always received in opposition to the drafter of the contract and in this particular case the Court would find that these parties did not have a meet- ing of the minds relative to an agreement to arbitrate issues arising out of the Elliott-Larsen Civil Rights Act and the motion will be denied.” Reliable sought and obtained interlocutory leave to appeal in the Court of Appeals, which was granted on September 18, 1992. In its brief to the Court of Appeals, Reliable raised and addressed the issue that agreements to arbitrate are enforce- able under § 2 of the FAA and cited federal cases from this Te oT EME NT TM TT ener iene eae 5 Court and the federal circuit courts in support of enforcement of arbitration agreements, even as to civil rights claims. On October 17, 1994, the Court of Appeals entered its opinion and decision reversing the trial court [App. pp. A-35-A-37]. The Court of Appeals correctly decided: 1) The Reliable arbitration procedure is not ambiguous: “The provision requiring arbitration is not ambiguous. The clause plainly states that claims for money dam- ages must be submitted to arbitration;” - 2) To be enforceable, an arbitration agreement does not have to be a separate document or separately signed by the parties; 3) Heurtebise expressly accepted the handbook's provisions which include arbitration: “The trial court appears to have denied defendant's motion in part because it found there was no ‘meeting of the minds’ between plaintiff and defendant which regard to the arbitration clause. The record does not support such a finding;” 4) Provisions of an employment handbook give rise to an en- forceable arbitration contract: “Even were the record devoid of plaintiff's express acceptance of the handbook’s provisions, it is well established under Michigan law that mutual assent to a term of employment is not required;” 5) Public policy in Michigan iavors arbitration of disputes: “We find no ‘public policy’ prohibition against the en- forcement of a valid arbitration agreement that pro- vides for meaningful arbitration in matters involving civil rights questions;” 6) Arbitration does not result in the loss of substantive statutory rights: “Contrary to plaintiff's suggestion, ar- bitration of plaintiff’s claims will not result in the loss of her rights under the Civil Rights Act. ... ;” and 7) The Reliable procedure provides for meaningful arbi- tration of Heurtebise’s statutory claims because it meets all requirements for elementary fairness. 6 Reliable and its amici requested that the Michigan Supreme Court affirm the Court of Appeals decision and enforce Heur- tebise’s express written agreement to abide by all employer policies and procedures including arbitration of money damage disputes under Michigan statutory arbitration law, under Michigan common-law employment contract principles, and as consistent with the FAA as construed in Gilmer, supra, and its progeny. Four of the justices concurred separately be- cause they declined to join the lengthy Part Ill of the opinion es- sentially confusing forum selection with a substantive right and inexplicably failing to reach the threshold issue of whether the arbitration agreement should be enforced under the FAA. Reli- able takes great issue with the cavalier statement in the minor- ity Part Ill that it never raised the issue of the impact of the FAA. Almost half of its principal brief on appeal addressed the issue of whether the agreement in issue should be enforced as con- sistent with the FAA and federal decisions under that statute [App. pp. A-38-A-61]. Without addressing that issue, and in a manner contrary to its own prior case law or employment con- tract formation, the justices concluded that an at-will disclaimer and a reservation of rights clause (required for summary plan descriptions of ERISA-governed benefits under recent Sixth Circuit case law, see, e.g., Sprague v General Motors, 92 F3d 1425 (CA 6, 1996)) vitiated the enforceability of any handbook pro- vision and evinced an employer intent not to be bound by the provisions, even though Heurtebise had received compensa- tion and benefits under and had performed under its terms. From that decision Reliable appeals to this Court. D. Contract Impairment And Uncertainty In a related case which the Michigan Supreme Court held in abeyance and then remanded in light of its decision for Heurtebise (Rushton v Meijer, Inc, Supreme Court Docket No. 102466) a self-authenticating affidavit submitted by the em- ployer demonstrates that employers submitting to ADR proce- dures may have their decisions reversed by arbitrators and must abide by that result [App. pp. A-67-A-70, Riddle Aff., ¥ 9]; that a significant number of employment disputes are resolved lla 7 by settlement agreements without trial (and without the costs and administrative time expended by bench and litigants alike in trial) [/d., J¥ 12-13]; and that where employers have had such procedures in place, as Meijer has had for a decade, then any decision by the Michigan Supreme Court invalidating such pro- cedures retroactively causes grave uncertainties and potential exposure for all Michigan employers who entered into settle- ment agreements under such procedures in good faith and raises the spectre of increased litigation [/d., 44 10-13]. SUMMARY OF REASONS FOR GRANTING THE WRIT As this Court recognized almost a decade ago, a jaundiced view of arbitration of statutory claims including civil rights claims no longer persists: “[W]e are well past the time when judicial suspicion of the desirability of arbitration and the competence of arbitral tribunals should inhibit enforcement of the [Arbitration] Act ‘in controversies based on statutes.” (Quoting Mitsubishi Motors Corp v Soler Chrysler- Plymouth, Inc 473 US 614, 626-27, 105 S. Ct. 3346, 3354, 87 L.Ed.2d 444 (1985)). Shearson/American Express, Inc vy McMahon, 482 US 220, 226, 107 S Ct 2332, 2337, 96 L Ed 2d 187 (1987). Notwithstanding the failure of a majority of justices of the Michigan Supreme Court to address the issue of whether the agreement shouic be en- forced as consistent with the FAA, and notwithstanding the claim of three Justices of the court that this case did not “arise under” the Federal Arbitration Act, 9 US.C. § 2 (the “FAA’), the Company spent almost half of its principal brief discussing the clear precedent established by this Court: that a forum selec- tion clause is enforceable as an arbitration agreement under the FAA and does not constitute a waiver of statutory or con- stitutional rights, even where a civil rights statute describes a judicial procedure for enforcement. Gilmer, supra. Plaintiff offered no record evidence below to demonstrate that her express written agreement to abide by all present and 8 future employer policies and procedures (including an arbitra- tion provision) was anything but knowing and voluntary. The decision of the Michigan Supreme Court invalidating Heurtebise’s agreement to abide by all employer procedures in- cluding arbitration must be preempted under the Supremacy Clause as in conflict with national policies favoring enforce- ment of arbitration agreements and favoring the resolution of individual statutory civil rights claims in the quasi-judicial forum of arbitration/ADR. In 1995, in Allied-Bruce Terminix Com- panies, Inc v Dobson, 115 S Ct 834 (1995), and Mastrobuono v Shearson Lehman Hutton, Inc, 115 S Ct 1212 (1995), as it had years earlier in Southland Corp v Keating, 465 US 1, 104 S Ct 852, 79 L Ed 2d 1 (1984) and Perry v Thomas, 482 US 483, 107 S Ct 2520, 96 L Ed 2d 426 (1987), this Court reaffirmed its earlier conclusions that state courts must apply the Federal Arbitra- tion Act, 9 USC § 1 et seg. (the “FAA’), in actions involving agreements to arbitrate where there are activities “affecting commerce” between non-diverse defendants. As this Court has repeatedly held, the FAA preempts conflicting state anti- arbitration laws requiring judicial resolution of disputes. Fur- thermore, this Court has held that Congress did not intend federal and state courts to reach different outcomes about the validity of arbitration in similar cases. Because the Michigan Supreme Court held an agreement to arbitration up to a higher standard of contract formation than it has for years required of employment contracts generally, its decision in Heurtebise v. Reliance Business Computers, Inc. is in direct conflict with all of the above-listed decisions of this Court, as well as its most recent pronouncement in Doctor's Associates, Inc. v. Lombardi, 64 USLW 4370, 4372 (1996): “Courts may not, however, invalidate arbitration agree- ments under state laws applicable, only to arbitration provisions. See Allied-Bruce 513 US., at — (slip op., at 15); Perry, 482 US., at 493, n. 9. By enacting § 2, we have several times said, Congress precluded States from sin- gling out arbitration provisions for suspect status, re- quiring instead that such provisions be placed ‘upon the same footing as other contracts.’ Scherk v. Alberto- 9 Culver Co., 417 U.S. 506, 511 (1974) (internal quotation marks omitted). Montana's § 27-5-114(4) directly con- flicts with § 2 of the FAA because the State's law condi- tions the enforceability of arbitration agreements on compliance with a special notice requirement not ap- plicable to contracts generally. The FAA thus displaces the Montana statute with respect to arbitration agree- ments covered by the Act. See 2 I. Macneil, R. Speidel, T.Stipanowich, & G. Shell, Federal Arbitration Law § 19.1.1, pp. 19:4-19:5 (under Southland and Perry, ‘state legislation requiring greater information or choice in the making of agreements to arbitrate than in other contracts is preempted’).” The court’s refusal to enforce the parties’ arbitration agree- ment impaired Reliable’s employment agreements with Heurtebise and all of its employees and discriminated against it in the formation of contracts by failing to enforce an arbitra- tion provision arising in the same manner as provisions favor- able to employees. REASONS FOR GRANTING THE WRIT In a state-law decision that should be vacated under the Supremacy Clause of the US. Constitution, given its conflict with the FAA and federal precedent, the Michigan Supreme Court refused to enforce Heurtebise’s written agreement that she would abide by employer policies and procedures, includ- ing but not limited to an arbitration provision in the employee handbook, simply because she asserted an employment dis- crimination claim under a state statute. As Reliable and its amici contended before the Michigan Supreme Court, Heurtebise’s express written agreement to abide by all policies and procedures of the employer in- cluded the arbitration provision in the employee handbook. That provision required Heurtebise to arbitrate all money damages employment related claims, without any exclusion for civil rights claims. Reliable contended below, successfully 10 before the Michigan Court of Appeals but unsuccessfully before the Michigan Supreme Court, that the agreement should be enforced as consistent with the FAA, which pre- empts any state judicial proceeding in conflict with the na- tional policy favoring arbitration/ADR of employment disputes. To find otherwise in a jurisdiction where the Sixth Circuit has also extended the reach of the FAA to employ- ment discrimination disputes (employing the analysis fol- lowed by most of the federal circuits) would contravene the principle that Congress intended that, for purposes of en- forcing arbitration agreements, federal and state courts would treat similar cases in a similar manner. Under the FAA, Heurtebise’s written agreement should be enforced, particularly where the employee handbook which she received when she was hired clearly spelled out that ail employment disputes over money damages would be sub- ject to the arbitration provision; where she is presumed by law to have read what she agreed to and to be negligent if she has failed to make any inquiry about any contents of the handbook which she did not understand; and where, after signing the written acknowledgment, plaintiff decided to become employed and continued in the Company’s employ, all the while receiving benefits under the handbook, only one provision of which she sought to repudiate: the arbitration provision. The decision of the Michigan Supreme Court singles out arbitration provisions of statutory claims as a suspect class, holds such provisions to a higher standard of contract forma- tion that employment contracts in general, and runs contrary to the Court's own prior decisions on enforcing handbook pro- visions even where an employee expressly refused to abide by and/or with the provision or claimed that [s]he had not mutu- ally assented to the provision. Such a decision violates clear precedent articulated in this Court, Doctor’s Associates, Inc v Lombardi, supra; Gilmer, supra; Volt Information Sciences, Inc v Board of Trustees of Leland Stanford Junior Univ., 489 US 468 (1989); Perry v Thomas, 482 US 483 (1987); Southland Corp v Keating, 465 US 1 (1984); Prima Paint Corp v Flood & Conklin 11 Manuf Co, 338 US 395 (1967). The FAA displaces contrary state law, whether decisional or statutory, with respect to arbitration agreements within its ambit. Doctor's Associates, 64 USLW at 4372. Thus, petitioner contends that the Michigan Supreme Court decision in Heurtebise should be vacated. Vacating that decision, to which the state supreme court de- clined to give only prospective effect as requested by Reliable and its amici, will avoid the impairment of employment contracts containing arbitration provisions under which employment dis- putes have been or could have been arbitrated by Reliable and other employers. Vacating that decision will also avert the con- stitutional violation of according less than equal protection to one party's attempts, on a record devoid of fraud, duress or adhesion, to form an employment agreement to arbitrate. UNDER THE DOCTRINE OF CONFLICT PREEMPTION THE FAA PREEMPTS MICHIGAN'S RESTRICTION ON FORMATION AND ENFORCEMENT OF ARBITRATION AGREEMENTS. Despite clear federal precedent otherwise, below and pre- sumably in response to this petition for review, Heurtebise will proceed from the non-evident premise that she is “entitled” to a judicial proceeding as a substantive statutory right under the Michigan Civil Rights Act or as an “absolute” constitutional right. Assuming arguendo that such a right to jury trial exists, such “rights” to a jury trial afforded under state law are preempted under the federal Supremacy Clause, even for statutory civil rights claims and even where arbitration/ADR is unilaterally im- posed by the employer as a condition of empi»yment. State courts must effectuate national policies under the FAA favoring arbitration of employment disputes in actions arising out of ac- tivities affecting interstate commerce. A. The FAA Preempts State-Imposed Judicial Proceedings This Court has affirmed that state courts must apply the FAA in state-court disputes, and that state courts may not 12 enforce state judicial proceedings in contravention of arbitra- tion provisions within the ambit of the FAA. State statutes and decisional law which conflict with the purposes of the FAA by providing that arbitral/ADR proceedings cannot be substituted for judicial proceedings are thus preempted. 1. In Southland Corp v Keating, 465 US at 11-16, this Court rec- ‘\ ognized two purposes of the FAA: “(1) [I]}n enacting the Federal Arbitration Act, Con- gress intended to overcome the old common law hostility toward arbitration, and the failure of state arbitration statutes to mandate enforce- ment of arbitration agreements and to foreclose state legislative attempts to undercut the enforce- ability of arbitration agreements; (2) The Federal Arbitration Act achieves the federal public policy favoring arbitration of disputes by ousting the states from jurisdiction to provide a ju- dicial forum for the resolution of claims which par- ties have expressly agreed to arbitrate, so that any state statute which frustrates the purpose of the Act violates the Federal Supremacy Clause and is there- fore preempted [in the application] under the doc- trine of conflict preemption.” [Emphasis added. ] Noting that Congress intended the FAA to unseat the deep- rooted hostility of the courts towards arbitration (as a sort of territorial response by courts seeking to extend their jurisdic- tion), this Court again recently concluded that state anti- arbitration provisions could not survive conflict preemption under the FAA. Allied-Bruce Terminix Companies, Inc v Dobson, 115 S Ct 834, 838-839 (1995). In Allied-Bruce, this Court determined that a state does not remain free to apply its anti-arbitration law or policy to frustrate the national policy of enforcing agreements to arbitrate disputes arising out of activities involving (i.e., “affecting”) commerce. As even the concurring opinion recog- a ee NE nT tne 13 nized, any contrary holding would foster pre-arbitration litiga- tion over the intent of the parties, hearings which would frus- trate the very purpose of the Act.' While the Allied-Bruce Court opined that a state could pro- tect against unfair pressure to agree to an arbitration provision through general contract law principles, it cautioned that a state could not enforce the other terms of a contract, but then invalidate the arbitration provision: “States may regulate contracts, including arbitration clauses, under general contract law principles and they may invalidate an arbitration clause ‘upon such grounds as exist at law or in equity for the revocation of any contract.’ 9 U.S.C. § 2 (emphasis added). What States may not do is decide that a contract is fair enough to enforce all its basic terms (price, service, credit), but not fair enough to enforce its arbitration clause. The Act makes any such state policy unlawful, for that kind of policy would place arbitration clauses on an unequal “footing,” directly contrary to the Act's language and Congress's intent. See Volt Information Sci- ences, Inc. [v. Board of Trustees of Leland Stanford Junior Univ. }, 489 US [468] at 474{;] 109 S.Ct. [1248] at 1253[;] [103 L Ed 2d 488] (1989).” So, here, Heurtebise in essence retained the benefits of the terms and conditions of employment delineated in the em- ployee handbook, but asked the Michigan Supreme Court to in- validate a single provision: the arbitration provision. As that Court was warned by Amici Curize American Society of Em- ployers, American Automobile Manufacturers Association, Michigan Chamber of Commerce and Greater Detroit Chamber of Commerce, any state court decision fashioning a state policy | Interestingly, Justice O’Connor, who had dissented in the Southland Corp v Keating decision on the ground that Congress did not intend the FAA to apply in state courts, joined the result in Allied-Bruce and noted in her con- currence that, because of reliancr «pon the Keating holding over the last decade by parties to arbitration a» ements, the case should not be over- ruled by the Court. 14 to vitiate an arbitration provision while enforcing other terms and conditions of the employment relationship would be pre- empted by federal law under the doctrine of conflict preemp- tion. Nevertheless, the state supreme court remanded the case to a judicial forum, allowing plaintiff to seek back and front pay damages based upon her previously paid level of compensa- tion, and/or to seek reinstatement based upon the existence of an employment agreement evidenced by the handbook whose arbitration provision she seeks to avoid. In so doing, the court allowed her to enforce all aspects of her employment agree- ment save one. Michigan appellate courts have also recognized that the FAA applies in state court proceedings and precludes, where it is ap- plicable, state judicial proceedings. Kauffman v The Chicago Corp, 187 Mich App 284; 466 NW2d 726 (1991), app den, 439 Mich 944 (1992). In Kauffman, despite her agreement to submit any employment dispute to arbitration pursuant to the rules of the New York Stock Exchange, plaintiff filed a civil action alleging wrongful discharge, defamation, and breach of employment con- tract. The Court of Appeals held that, pursuant to the national policy favoring arbitration embodied in the FAA, plaintiff's claims must be arbitrated: “The Federal Arbitration, 9 USC 1-15, governs actions in both federal and state courts arising out of contracts in- volving interstate commerce. Southland Corp v Keating, 465 US 1; 104 S Ct 852; 79 L Ed 2d 1 (1984); Scanion v P&J Enterprises, 182 Mich App 347; 451 NW2d 616 (1990). More specifically, disputes between a member of a na- tional stock exchange and its employees are within the federal act is there is a binding arbitration. Coenen v R W Pressprich & Co, 453 F2d 1209 (CA 2, 1972). States courts are bound under the supremacy clause, U.S. Constitu- tion, Article VI, at 2, to enforce the substantive provi- sions of the federal act. Scanlon, supra.” Kauffman, 187 Mich App at 288. As enforced through the Supremacy Clause, the FAA thus prohibits state legislatures and judiciaries from mandating a ju- dicial forum where the parties have agreed to an arbitral/ADR 15 forum for the resolution of disputes relating to contracts or agreements affecting interstate commerce. 2. This Court has also held that the duty imposed upon federal and state courts under the national policy favoring arbitration of disputes “is not diminished when a party bound by an agree- ment raises a claim founded on statutory rights.” Shearson/ American Express, Inc vy McMahon, 482 US at 226, 107 S Ct at 2337; Mitsubishi Motors Corp v Soler ChryslerPlymouth Inc, 473 US 614, 626-27, 105 S Ct 3346, 3354, 87 L Ed 2d 444 (1985). So, in Perry v Thomas, 482 US at 491 (1987), the Supreme Court held that a state statute providing a judicial forum for a wage or commission claim based on the sale of securities conflicted with the purposes of the FAA and was preempted. See, e.g, S+L+H SPA v Miller-St Nazianz, Inc, 988 F2d 1518 (CA 7, 1993) (holding that state Fair Dealership Law preempted insofar as it might mandate a judicial proceeding); Saari v Smith Barney, Harris Upham & Co, Inc, 968 F2d 877 (CA 9, 1992) (claim under state polygraph protection act held subject to arbitration). The Michigan Court of Appeals has also recognized that the FAA preempts state statutory judicial proceedings where the parties have agreed to arbitrate. In Scanlon v P&J Enterprises, 182 Mich App 347, 350-351; 451 NW2d 616 (1990), the Michigan Court of Appeals correctly held that, given the preemptive force of and national policy embodied in the FAA, any claim which the parties have agreed to arbitrate, including a statutory claim (there under the Michigan Franchise Investment Law), is properly submitted to an arbitral forum, rather than a judicial proceeding. B. The FAA Compels Arbitration Of Plaintiff’s Claim. Absent a legislative intent to preclude a waiver of judicial remedies for the statutory rights in issue, “discoverable in the text of the [statute], its legislative history, or an ‘inherent con- flict’ between arbitration and the [statute’s] underlying pur- poses,” an agreement to arbitrate must be enforced under the FAA. Gilmer, 500 US at 26 (quoting Mitsubishi, 473 US at 628). Here, neither the FAA nor the Michigan Civil Rights Act contain any such express exclusion of civil rights claims from arbitra- 16 tion. Plaintiff's express written agreement that she “agrees to conform” to the employer’s policies and procedures in the em- ployee handbook constitutes a sufficiently enforceable agree- ment under the FAA. 1 Section 2 of the FAA provides: “A written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof, or an agree- ment in writing to submit to arbitration an existing con- troversy arising out of such a contract, transaction, or refusal, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 USC § 2. Section 2, by its terms, contemplates agreements to submit future disputes to arbitration, such as the age discrimination dispute in Gilmer. There, the plaintiff had acknowledged, on a se- curities registration form with the New York Stock Exchange (where registration with the NYSE was required by his employ- ment), that he would submit any controversy required to be submitted to arbitration by the NYSE Rules. One of those rules so incorporated by reference was NYSE Rule 347, requiring the - arbitration of all disputes arising out of employment or the ter- mination of employment. Like plaintiff Gilmer, plaintiff here signed an acknowledgment (on a form other than her employ- ment application, i.e., on the tear-off sheet at the back of the em- ployee handbook) that she would abide by present and future policies and procedures of the employer, including an arbitration procedure containing a broad arbitration clause sweeping within its ambit all employment disputes relating to dismissal (reserv- ing only the equitable powers of the circuit court consonant with the Michigan arbitration statute, see, MCL § 600.5035). Given the broad definition of the term “involving commerce” as “affecting commerce” by this Court in Allied-Bruce, supra, 17 and given this Court’s holding in Gilmer that an acknowledg- ment on a securities registration form constituted an agree- ment to arbitrate all employment disputes within Section 2 of the FAA, this Court should find that plaintiff’s written acknow- ledgment also falls within that section. 2. Plaintiff's written agreement that she would abide by all pre- sent and future employer policies and procedures, including the arbitration provision in the employee handbook, consti- tutes an enforceable agreement to arbitrate under the FAA. Even an agreement to arbitrate discrimination claims allegedly unilaterally imposed by the employer as a condition of employ- ment is enforceable under the statute. In Gilmer, as noted above, the Supreme Court enforced an ar- bitration provision in a securities registration form which the employee was required to sign as a condition of employment, for Gilmer’s employment required him to become licensed by a national stock exchange. Following Gilmer, the Ninth Circuit rejected the argument offered by plaintiff and her amici that an employer cannot unilaterally impose, as a condition of em- ployment or a condition precedent to employment, an agree- ment to submit all claims, including statutory claims, to arbitration/ADR. The Saari Court specifically rejected the plain- tiff’s argument that the judicial proceeding described in the federal Employee Polygraph Protection Act (the “EPPA”) was exclusive, and held that the EPPA’s express prohibition against a prospective waiver of rights and procedures did not render unenforceable the employer's unilateral imposition of an arbi- tration agreement covering all claims as a condition of em- ployment, just as similar anti-waiver prohibitions in the federal anti-trust acts and in RICO did not preclude enforcement of agreements to resolve such claims in an arbitration, rather than a judicial proceeding. 968 F2d at 881-882. The federal courts recognize that such agreements to arbi- trate may appear in employee handbooks which employees acknowledge receiving, as in the case at bar. In Nghiem v NEC Electronic Inc, 25 F3d 1437 (CA 9, 1994), the Ninth Circuit re- 18 jected plaintiff's arguments that he did not knowingly and will- ingly submit his employment disputes to arbitration, where he acknowledged receipt of an employee handbook providing that all employment disputes would be subject to arbitration. There, plaintiff claimed that he had only invoked the arbitra- tion procedure because the Company told him to do so. He also claimed that he had refused to sign a modification of his employment agreement because it contained a binding arbi- tration clause. In part because he had signed written acknow- ledgments of receipt of the Company handbook providing a four-step resolution process for employee complaints, the Ninth Circuit held that his employment discrimination claims under Title VII and state law were subject to arbitration. Although plaintiff's amici cite the Ninth Circuit case of Pruden- tial v Lai, 42 F3d 1299 (CA 9, 1994), for the proposition that a pre-hire agreement to arbitrate prospective claims is not en- forceable, the Lai case is distinguishable from the Nghiem case. The handbook in Nghiem provided for arbitration of all em- ployment disputes in an employee handbook, as does the Com- pany handbook here. The U-4 form and the employment contract in Lai, as the Ninth Circuit noted, “did not even refer to employment disputes” or cover such disputes. Again, in Degaetano v Smith Barney, Inc, 1996 WL 4426 (S.D.NY. 2/5/96), plaintiff (as here) signed an agreement pro- viding that she must observe the employer policies and pro- cedures that the employer wouid from time to time establish, and she received a series of employee handbooks containing dispute resolution procedures for all employment disputes. Alleging constructive discharge due to environmental sexual harassment, plaintiff sued the employer for alleged violations j of Title Vil and the New York Human Rights law, and she sued the alleged harasser under the common law for intentional in- fliction of emotional distress. She then refused the employer's demand to submit to arbitration. As does plaintiff Heurtebise, plaintiff Degaetano claimed that she had no idea what she was signing when she signed the agreement, and that she had not therefore made a knowing and voluntary waiver of her “right” to a judicial forum. Rejecting the Lai Court’s holdings and a 19 noting that other courts similarly disfavored the Lai decision, the Smith Barney court distinguished Lai on the ground that the Lai agreement did not expressly reference employment dis- putes. Moreover, the court noted that in Smith Barney, as here, the agreement required plaintiff to acknowledge that she agreed to conform to the employer's policies and procedures, as described in the handbook. As the court noted, given plain- tiff’s signature signifying her agreement, “under ordinary state- law principles that govern the formation of contracts, ... plaintiff's claim that she did not knowingly sign the Agreement is to no avail.” /d. at 7-8. In the following post-Gilmer non-union employee cases, the courts have dismissed lawsuits and required arbitration of a wide variety of claims, including those asserting discrimina- tion arising under federal and/or state law: Benefits Commu- nications Corp v Klieforth, 642 A2d 1299 (DC Cir 1994) (noting that every federal circuit court of appeals addressing the issue has extended the Gilmer holding to employment dis- crimination claims brought under Title VII); Bender v AG Ea- wards & Sons, Inc, 971 F2d 698 (CA 11, 1992) (holding Title VII claims subject to compulsory arbitration); Alford v Dean Witter Reynolds Inc, 939 F2d 229 (CA 5, 1991) (same); Corion Corp v Chen, 964 F2d 55 (CA 1, 1992) (leaving undisturbed the lower court holding that plaintiff was entitled, under the FAA, to arbitrate his discharge based upon company policy speci- fied in the employee handbook); Mago v Shearson Lehman Hutton Inc, 956 F2d 932, 935 (CA 9, 1992) (holding Title VII claims held to be arbitrable even with regard to pro per plain- tiff); Didonato v AG Edwards & Sons Inc, 65 FEP Cases (BNA) 1207 (ND Cal 1994) (holding that broad and inclusive arbitra- tion clause in former employee’s employment application compels dismissal of her action under Title VII and state tort law for sexual harassment, and rejecting plaintiff's con- tentions that she did not realize or intend that arbitration provision would require arbitration of claims for sexual ha- rassment claims, that arbitration would deny plaintiff’s con- Stitutional right to jury trial, and that arbitration frustrates policies underlying Title VII); Lockhart v AG Edwards & Sons, I it 20 65 FEP Cases (BNA) 5, 6 (D Kan 1994) (holding Title VII claims arbitrable); Edwards v ITT Financial Services, 65 FEP Cases (BNA) 543 (ND Cal 1993) (holding that broad arbitration clause in employment agreement covering all disputes and claims between employer and employee mandates submis- sion of race discrimination claims to arbitration); Crawford v West Jersey Health Systems, 847 F Supp 1232 (D NJ 1994) (en- forcing arbitration provision as to age and sex discrimination claims brought against the company and individual defen- dants); Williams v Katten, Muchin & Zavis, 837 F Supp 1430 (ND 11] 1993) (holding sex discrimination claims arbitrable); Hull v NCR Corp, 826 F Supp 303 (ED Mo 1993) (holding that FAA ap- plied that arbitration provision contained in individual em- ployment contract was broad and to be liberally construed, that plaintiff’s Title Vil, ADEA ,and state law discrimination claims were to be arbitrated); Scott v Farm Family Life Insur- ance Co, 827 F Supp 76 (D Mass 1993) (holding federal and state sex discrimination, contract and tort claims arbitrable under the FAA); Nazon v Shearson Lehman Bros Inc, 832 F Supp 1540 (SD Fla 1993) (holding sex discrimination claims arbitrable); Fletcher v Kidder Peabody & Co, 81 NY 2d 623, 619 NE2d 998, 601 NYS 2d 686, cert. den., 114 S Ct 554, 126 L Ed 2d 455 (1993) (holding race and sex discrimination claims arbi- trable); Harrison v Salomon Bros Inc, 156 Misc 2d 341, 593 NYS 2d 439 (1992) (holding sex discrimination claims arbitrable); Dancu v Coopers & Lybrand, 778 F Supp 832 (ED Pa 1991), aff d, 972 F2d 1330 (CA 3, 1992) (agreement to arbitrate prospective disputes enforced as to ADEA claim); DiCrisci v Lyndon Guar Bank of New, 807 F Supp 947 (WD NY 1992) (enforcing arbi- tration agreement as to Title VII and state law gender dis- crimination and sexual harassment claims where, as here, arbitration provision broadly submitted any employment dis- pute (including prospective disputes) to arbitration, and even where (unlike here) arbitration provision limited remedies otherwise available under the discrimination statutes). ° eee Thus, under the FAA, unilaterally imposed agreements to arbitrate discrimination claims, even those entered into as a condition of employment, must be enforced. icles | 21 IL. THE MICHIGAN DECISION MUST BE VACATED BECAUSE IT CONTRADICTS PRINCIPLES OF ARBITRATION AGREEMENT FORMATION UNDER MICHIGAN STATUTORY LAW. Contrary to the decision of Michigan's highest court, en- forcing plaintiff's written agreement to arbitrate would have effectuated Michigan's long-standing public policy favoring the arbitration of disputes, as codified in the Michigan Arbi- tration Act, MCL § 600.5001 ef seg. (the “MAA”). The Michigan public policy in favor of arbitration reposes in an express Statute providing that private arbitration agreements are valid, enforceable, and irrevocable “save upon such grounds as exist at law or in equity for the rescission or revocation of any contract,” MCL § 600.5001. Michigan courts other than the Heurtebise court have recognized that statutory public policy and have liberally construed arbitration clauses, with all doubts resolved in favor of arbitration. Riley v State Farm Auto Ins Co, 420 F2d 1372 (CA 6, 1970), cert den, 339 US 928 (1971); Northland Ins Co v Sny, 98 Mich App 507; 296 NW2d 292 (1980). The lead opinion in the Heurtebise decision, in which all justices joined, states that the MAA requires a binding con- tract [App. A-8, fn.8], but concludes based on at-will dis- claimer language and a reservation of rights to change clause that Reliable did not intend to be bound by the handbook’s terms, thus negating any “contract.” The Heurtebise court provided no analysis for its erroneous “footnote holding” that the handbook was not an enforceable contract under the MAA. The court never even addressed the issue of whether Heurtebise'’s signed written agreement to abide by Reliable’s policies and procedures (including the arbitration provision) constituted an enforceable arbitration agreement under Michi- gan statutory arbitration law. Reliable again argues that the arbitration procedure at issue comports with the require- ments of statutory agreements to arbitrate under the MAA, 22 MCL § 600.5001(2). The express written agreement is not a collectively bargained agreement falling within the exception to that Act. Moreover, the procedure provides on its face that the decision of the arbitrator is intended to be enforceable in any court of competent jurisdiction, or, at the very least, ex- haustion is required as a condition precedent to the institu- tion of any legal proceeding. Such language is sufficient to bring the arbitration agreement within the language of Michi- gan’s arbitration statute. Gordon Sel-Way v Spence Bros, 438 Mich 488, 495; 475 NW2d 704 (1991); DAIIE v Gavin, 416 Mich 407, 417; 331 NW2d 418 (1982); E E Tripp Excavating Contractor, Inc v Jackson County, 60 Mich App 221, 236-237; 230 NW2d 556 (1975). Nor is plaintiff’s contention that she did not knowingly or voluntarily enter into any agreement to arbitrate civil rights claims persuasive, where she is presumed to have read what she has agreed to abide by under long-standing Michigan precedent. See, e.g., Scholz v Montgomery Ward, Inc, 437 Mich 83, 91-92; 468 NW2d 845 (1991); Reid v Sears, Roebuck and Co, 790 F2d 453, 461-462 (CA 6, 1986); Sponseller v Kimball, 246 Mich 255, 260; 224 NW 359 (1929). Her negligence in failing to read and/or to comprehend the agreement which she signed does not excuse her from the agreement: that she “agreed to conform” to the policies and procedures of the employer as embodied in the handbook. So in Christy v Kelly, 198 Mich App 215; 497 NW2d 194 (1992), the Court of Appeals held that, under the MAA, a trustee’s failure to read or to comprehend the agreement to arbitrate which he signed did not constitute a defense to the agreement. The Michigan Supreme Court required a “contract” to arbi- trate, even though the Michigan Legislature did not require in the MAA that there be a signed bilateral contract, but merely an “instrument in writing.” MCL § 600.5001(1). On appeal to the Michigan Supreme Court, Heurtebise unfairly attempted to construe the MAA in a manner so that any agreement to ar- bitrate prospective disputes would require a somewhat higher quantum of proof of “contract” than an agreement to arbi- trate disputes in being at the time of entry into the agree- - —— 23 ment. That the Legislature apparently used the terms “arising under,” “thereafter arising,” and “existing” (as well as the terms “agreement” and “contract”) interchangeably may be discerned from MCL § 600.5001(2). Thus, to read the word “existing” in sub-section 1 to mean “prospective,” rather than “arising,” does violence to the structure and intent of that sub-section, which merely recites that parties who are com- petent under the law may submit any dispute “arising be- tween” them to arbitration by agreeing to do so in an “instrument in writing.” Moreover, Michigan appellate courts have permitted “instruments in writing” under the MAA in- volving prospective claims with less than exists in the case at bar, where plaintiff at least signed her acknowledgment that she would abide by employer policies. In Ehresman v Bul- tynck & Co, 203 Mich App 350; 511 NW2d 724 (1994), the Michigan Court of Appeals refused to excuse from the oper- ation of arbitration agreements a plaintiff who discovered that he had not signed the agreements and argued that the statute required a signed agreement by the party resisting arbitration. To the extent that this Court feels that a written instrument in writing is required under the MAA, then plaintiff’s written acknowledgment signifying her agreement to the procedures in the handbook constitutes a writing sufficient to withstand the Michigan Statute of Frauds, where there is no additional consideration for the agreement other than continued em- ployment, but it has been signed by the party charged with the agreement or promise. Scholz, supra; MCL § 566.1. THE HEURTEBISE DECISION CONTRADICTS MICHIGAN COMMON-LAW PRINCIPLES OF EMPLOYMENT CONTRACT FORMATION AND MUST BE VACATED AS CONFLICT PREEMPTED. The Michigan Supreme Court failed to apply its own prior decisions and well-settled principles of Michigan common law under which unilaterally established arbitration/ADR proce- 24 dures are enforced, where (as here) plaintiff simply aban- doned arbitration procedures and haled the employer into court. In Toussaint v Blue Cross and Blue Shield of Michigan, 408 Mich 579, 624; 292 NW2d 880 (1980), and again in Renny v Port Huron Hospital, 427 Mich 415; 398 NW2d 327 (1986), the Michi- gan Supreme Court has announced the rule that employers may avoid the perils of jury review of allegedly wrongful dis- charge claims by providing for binding arbitration, just as the Company has done: “Additionally, the employer can avoid the perils of jury assessment by providing for an alternative method of dispute resolution. A written agreement for a defi- nite or indefinite term to discharge only for cause could, for example, provide for binding arbitration on the issues of cause and damages.” /d. at 427 Mich 432. In Toussaint, supra, this Court held that written handbook policies create binding rights without a “meeting of the minds,” a standard from which the Heurtebise court departed in order to invalidate the parties’ arbitration agreement: “We hold that employer statements of policy... can give rise to contractual rights in employees without evidence that the parties mutually agreed that the policy statements would create contractual rights in the employee, and, hence, can be unilaterally amended by the employer without notice to the employee... 408 Mich at 614-15. See also, /n re Certified Question, 432 Mich 438; 443 NW2d 112 (1989); Carlson v Hutzel Corp of Mich, 183 Mich App 508; 455 NW2d 335 (1990), lv den 437 Mich 493 (1991). Michigan appellate courts have also recognized that, even where the arbitration procedure is unilaterally established, the procedure is an aggrieved employee's sole and exclusive remedy on the merits of her or his wrongful discharge dispute with the former employer. Carlson v Hutzel Corporation of Michigan, 183 Mich App 508, 515; 455 NW2d 335 (1990), app 25 den (1991); Zeniuk v RKA Inc, 189 Mich App 33; 472 NW2d 23 (1991); Dahiman v Oakland University, 172 Mich App 502; 432 NW2d 304 (1988). At the very least, where the employer agrees to submit review of its decision to a neutral fact-finder other than a jury and other than the decision-maker itself, the employee should utilize that review process. Renny, supra; Fulghum v United Parcel Service, 424 Mich 89; 378 NW2d 472 (1986); Carlson, supra; Zeniuk, supra. Where, as here, the parties expressly agree to submit claims to an ADR procedure which ultimately results in arbi- tration, utilizes AAA procedural rules, and permits the parties to present proofs and to be represented by attorneys, then the parties may not contest ab initio in a court the merits of their dispute. See, e.g , FJ Siller Co v City of Hart, 400 Mich 578; 295 NW2d 347 (1977); Breish v Ring Screw Works, 397 Mich 586, 594, n 4; 248 NW2d 526 (1976). For almost ten years, under Michigan employment law, it was well-settled that an employee who fails to invoke and/or to exhaust an arbitration procedure unilaterally imposed by the employer is barred from litigating the merits of her or his wrongful discharge claim in civil court: the only judicial review is limited to the issue of procedural fairness. Dahiman, supra. In order to determine that issue, the court may, as a threshold issue and as a matter of law, determine whether the procedure comports with principles of elemental fairness and due process. In fact in Renny, 427 Mich at 418 authored by the same Justice who authored the Heurtebise decision, the Michi- gan Supreme Court held that “where an employee has ex- pressly consented to submit a complaint to a joint employer-employee grievance board established by the em- ployer with the knowledge that the resulting decision is final and binding, the decision shall be final unless the court finds as a matter of law that the procedures did not comport with elementary fairness.” The arbitration procedure in issue here culminates in binding arbitration by a neutral third-party arbitrator. See: Vander Toorn v City of Grand Rapids, 132 Mich App 590; 348 NW2d 697 (1984) app den. In contrasting the Port Huron Hospital procedure with arbitration procedures, 26 the Renny Court necessarily impliedly held that arbitration procedures, such as the AAA procedures expressly incorpo- rated into the ADR Procedure at issue, are presumptively fair. 427 Mich at 433-436. Under Michigan law, even public policy tort claims must be submitted to the ADR procedure, and that Heurtebise’s failure to do so bars her public policy tort claim. See, e.g., Ryoti v Paine, Webber, 142 Mich App 805; 371 NW2d 454 (1985) (public policy tort claim is arbitrable). Here, Heurtebise simply as- serts a statutory tort claim, and there is no principled reason for treating such tort claims any differently, for purposes of forum selection, than common-law tort claims, apart from the now disfavored view that arbitrators are incapable of remedi- ating employment discrimination claims. By virtue of the separate agreement signed by plaintiff to become aware of and to abide by the procedures in the em- ployee handbook, plaintiff was reasonabty informed about the arbitration policy and procedure. It is undisputed that she signed the agreement, that she received a copy of the handbook at hire and termination, and that she voiced no objection to the procedure until after her discharge. Like the plaintiff in Myers v Western Southern Life Ins Co, 849 F2d 259 (CA 6, 1988), in which the Sixth Circuit enforced a waiver of the statutory statute of limitations, plaintiff was presumed to be well-informed of the agreement. Moreover, under Michi- gan law she had a duty to read the agreement and the hand- book and to inquire about any contents which concerned her. Scholz, supra; Reid, supra; Sponseller, supra; Christy, supra. She could not simply remain silent and then claim that she did not knowingly or voluntarily assent to the procedure, particularly where she accepted the substantial benefits under the em- ployee handbook, and where the handbook in its very intro- duction invited plaintiff and all employees of the Company to ask questions about any provisions which they did not understand. The Restatement Second of Contracts also contemplates that continued performance without protest constitutes objective indicia of assent to the term or condition in issue. 27 Only where the offeror (here; the employer “unilaterally im- posing” an arbitration agreement) has expressly stated that acceptance will be in a particular manner is the acceptance of the offer limited to that manner. See Restatement Contracts, 2d, § 30, comment a. Where acceptance is invited or suggested in a particular manner, that invitation does not preclude other means of acceptance. /d., comment b. Section 50(b) of the Restatement Second also clearly recognizes acceptance by performance. Moreover, where the offer is one which can be construed to permit performance as acceptance, then per- formance does not constitute a manifestation of assent only if, within a reasonable time, the cfferee notifies the offeror of non-acceptance. Restatement Contracts, 2d § 53(2). The offeree who remains silent while continuing to perform as the offer contemplated risks being bound if it is reasonable to assume from his conduct that he accepts the offer. /d., comment b. Here, after receiving the acknowledgment form and the hand- book containing the arbitration procedure, Heurtebise con- tinued in the employ. of the Company without protest, without coming forward as she was duty-bound to do under Scholz, and without refusing any benefit of employment under the hand- book. Under those circumstances, as this Court has itself cau- tioned, an arbitration provision in a handbook should not be held unenforceable while all of the handbook provisions which benefited plaintiff are enforced. Allied-Bruce, supra. See also: Batchelor v Sears, Roebuck & Co, 574 F Supp 1480, 1484 (ED Mich 1983) (employee bound by both benefiting and bur- dening provisions in same handbook). Over time, as a result of Heurtebise’s ratification by conduct, as a matter of law, the privilege of silence should fall away, continued performance and receipt of substantial benefits should be deemed as an objective manifestation of assent, and plaintiff should be estopped from denying her agreement to the arbitration policy and procedure described in the handbook which she received simultaneously with her acknowledgment. 28 IV. THE MICHIGAN SUPREME COURT DECISION IMPAIRS CONTRACTS AND DENIES EMPLOYERS EQUAL PROTECTION. In according an agreement to arbitrate statutory civil rights claims suspect status by requiring greater elements of con- tract formation for such agreements than under its own the- ories of employment contract formation when such theories benefited employees, rather than employers, the Michigan Supreme Court engaged in impermissible impairment of con- tracts in violation of Article I, § 10 of the Federal Constitu- tion. By holding such agreements up to stricter standards of contract formation when an employer (in Heurtebise), as op- posed to an employee (as in Renny, supra), sought to enforce a handbook provision which for years the very same court had permitted to be enforced by employees with no meeting of the minds or mutual assent, the court also treated similarly situated parties, i.e., employees and employers seeking to agree upon terms and conditions of employment (including but not limited to arbitration procedures), in a disparate manner in violation of the federal constitutional guarantee of equal protection contained in the first section of the Four- teenth Amendment. Corporations like Reliable, who are employers, are also per- sons for purposes of enforcing certain constitutional guaran- tees, such as the right to enjoy the benefits of a contract without impairment and the right to equal protection under the laws. See, e.g., Metropolitan Life Ins Co v Ward, 470 US 869 (1985). Where a state, here through its highest supreme court, pro- mulgates a law which adversely affects the enforcement of an arbitration agreement, then that state has violated the con- stitutional prohibition against state action which impairs con- tract obligations enjoyed by private citizens, including corporate citizens. Allied Structural Steel Co v Spannaus, Minn., 438 US 234 (1978); Detroit United Railway v Michigan, 242 US 238 (1916). As discussed above, given the cavalier manner in which Michigan's highest court chose to sidestep the thresh- Pn en a 29 old issue of enforcement of an arbitration agreement under the FAA, and given the court's willingness to contravene its own prior decisions enforcing handbook provisions without | mutual assent and its willingness to ignore the employee's ex- | press written agreement to abide by all employer policies and | procedures, the arbitration agreement into which Reliable en- tered in order to have a less costly and more expeditious means of resolving employment disputes where former em- | ployees sought money damages was substantially impaired. Id. The Heurtebise opinion effectively vitiates, not only Reli- able's arbitration agreements with its employees, but also the : arbitration agreements of other Michigan employers who have successfully resolved employment disputes through | arbitration, particularly where the Michigan Supreme Court | refused to apply its newly announced principles of arbitration agreement formation prospectively. See App. pp. A-67-A-70, Riddle aff. Moreover, where a state treats persons essentially similar (i.e., the parties to an arbitration agreement on a record devoid of any fraud or duress or adhesion) in a disparate manner, by penalizing one but not the other for seeking to en- force handbook provisions, and by permitting the enforce- ment of handbook provisions which benefit the employee (both on remand to a finder of fact as a measure of damages or as proof of the right to be reinstated, and during employ- ment as a “promise” of certain compensation and benefits) but not those which arguably may benefit the employer (the arbitration provision), then the equal protection clause has been violated. The Michigan Supreme Court in effect accorded the arbitration provision of the employment agree- ment suspect class status, without any rational basis therefor and despite the strong national policies against doing so. In the past, without any meeting of the minds, as discussed above, the Michigan Supreme Court has enforced handbook provisions providing for compensation, benefits, and job security terms. To fail to enforce an arbitration provision in an employee handbook on the ground that there was no mutual assent or meeting of the minds subjects employers, but not 30 employees, to separate standards for contract formation -with no rational basis for such standards. Under these circumstances, Reliable and all other Mich- igan employers have been deprived of their rights to enjoy the benefits of contract and to enjoy equal protection of the laws. CONCLUSION For reasons discussed above, petitioner Reliable Business Computers, Inc., respectfully requests that this Court grant its petition for certiorari, vacate the decision of the Michigan Supreme Court and either a) remand this matter to that Court with instructions to reinstate and affirm the Michigan Court of Appeals decision; b) remand this matter to the Michigan Supreme Court for reconsideration on the issue of whether the parties’ agreement to arbitrate should be enforced under the FAA, the MAA, and/or principles of Michigan employment law relating to employment contract formation in light of Doctor’s Associates, supra, Volt, supra, Allied-Bruce, supra, Perry, supra, Prima Paint, supra, Southland Corp, and Scherk v. Alberto-Culver Co., 417 U.S. 506, 511 (1974); or c) grant plenary consideration on any or all issues raised herein. Respectfully submitted, VERCRUYSSE METZ & MURRAY By: /s/ DIANE M. SOUBLY (P32005) Counsel of Record /s/ ROBERT M. VERCRUYSSE (P21810) Attorneys for Petitioner 31780 Telegraph, Suite 200 Bingham Farms, MI 48025 (810) 540-7019 Dated: December 13, 1996 --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386009_0375%3A1. Public record. Not legal advice.