Compelling Arbitration — Who Decides?

All is not necessarily well in the pizza world that gave us “30 minutes or its Free” and it involves the question of arbitrability.

A Domino’s employee sued the Domino’s franchisor, claiming violations of antitrust laws due to an apparent anti-poaching agreement that prohibited franchisees from hiring away the workers of other Domino’s franchisees. There was an arbitration agreement that existed between the worker and the franchisee, but no agreement between the worker and the Domino’s franchisor. Despite this lack of agreement, the Domino’s franchisor attempted to compel the worker to arbitrate.

The Sixth Circuit Federal Court of Appeals, which covers Ohio, ruled a couple weeks ago that the incorporation of the AAA’s rules into the employee/franchisee agreement was sufficient to satisfy the “clear and unmistakable” evidence standard such that an arbitrator would decide whether the antitrust claim against the non-signatory Domino’s must be arbitrated.

In other words, the court punted the decision to the arbitrator to decide if the arbitrator could arbitrate the case. The court also declined to opine on whether or not it was proper for the Domino’s franchisor, as a non-party to the arbitration agreement, to argue that the arbitrator should determine the arbitrability of the agreement to which the franchisor was not a party.

Confused yet?

No doubt, we will hear more on this in the coming months. The court noted that there is a split of authority so it would not be surprising to see this issued land in SCOTUS someday. In the meantime, it’s worth the time to read the Court’s opinion.