Altobelli v. Hartmann
499 Mich. 284
Mich.2016Background
- Dean Altobelli, a senior principal at Miller Canfield (a professional LLC), signed the Firm’s Operating Agreement, which contains a mandatory arbitration clause covering "any dispute . . . between the Firm . . . and any current or former Principal."
- Altobelli sought a leave to coach at the University of Alabama while retaining equity; Firm leadership (CEO, head of litigation, five managing directors) treated his departure as a voluntary withdrawal and terminated his equity.
- Altobelli pursued the Operating Agreement’s internal settlement/mediation process, filed an AAA demand for arbitration, then sued seven individual principals in circuit court (not the Firm), alleging torts and shareholder-oppression–type claims.
- Defendants moved to compel arbitration and for summary disposition; the circuit court denied arbitration and granted partial summary disposition for Altobelli on the withdrawal issue.
- The Court of Appeals affirmed denial of arbitration (holding the clause covered disputes between the Firm and a principal but not suits against individuals in their personal capacities) and reversed the summary disposition ruling.
- The Michigan Supreme Court unanimously held the arbitration clause covers disputes between a former principal and individual principals when those individuals acted as agents of the Firm, and therefore the dispute must be arbitrated; it reversed the Court of Appeals on the arbitration issue and vacated the remainder for the arbitrators to decide.
Issues
| Issue | Altobelli's Argument | Defendants' Argument | Held |
|---|---|---|---|
| Whether the Operating Agreement’s arbitration clause requires arbitration of claims against individually named principals | Altobelli argued the clause applies only to disputes naming the Firm and does not preclude suing individuals personally | Defendants argued the Firm acts through agents and the clause encompasses disputes with individual principals acting for the Firm | Held: Clause applies when individual principals acted as agents of the Firm; claims must be arbitrated |
| Whether agency principles apply so that individuals are included within "the Firm" for arbitration purposes | Altobelli contended individual capacity claims can avoid arbitration despite agency status | Defendants contended corporate/LLC agency law means the Firm acts through principals/managers, so individuals are within "the Firm" | Held: Agency principles govern; managers, CEO and other principals with delegated authority are agents of the Firm and included in "the Firm" |
| Whether the court should decide the substantive merits (e.g., voluntary withdrawal) now | Altobelli urged the court to resolve merits via summary disposition (he had moved for partial summary disposition) | Defendants argued merits belong to arbitrators under the arbitration clause | Held: Court must not reach substantive merits; arbitrators decide those issues |
| Whether the arbitration clause’s selection mechanism demonstrates intended exclusion of individuals | Altobelli argued selection language (Firm appoints an arbitrator) shows the Firm and principals are distinct and individuals are excluded | Defendants argued the Firm cannot act except through people and the selection mechanism presumes agents will act for the Firm | Held: Selection mechanism does not show exclusion; it assumes agents will act for the Firm and is consistent with treating individuals as within "the Firm" |
Key Cases Cited
- Kaleva-Norman-Dickson Sch Dist No 6 v. Kaleva-Norman-Dickson Sch Teachers’ Ass’n, 393 Mich 583 (Mich. 1975) (arbitration is a matter of contract; courts must not decide merits of arbitrable disputes)
- Attorney General v. Nat’l Cash Register Co., 182 Mich 99 (Mich. 1914) (a corporation acts only through its officers and agents; their acts within scope are acts of the corporation)
- Fraser Trebilcock Davis & Dunlap PC v. Boyce Trust 2350, 497 Mich 265 (Mich. 2014) (a firm cannot act on its own; agency principle applied to law firm context)
- Miller-Davis Co. v. Ahrens Constr., Inc., 495 Mich 161 (Mich. 2014) (contract interpretation principles; ascertain parties’ intent from plain language)
- Arnold v. Arnold Corp.-Printed Communications for Business, 920 F.2d 1269 (6th Cir. 1990) (permitting plaintiffs to name corporate officers individually should not permit avoidance of arbitration obligations)
- Grand Wireless, Inc. v. Verizon Wireless, Inc., 748 F.3d 1 (1st Cir. 2014) (courts applying agency principles hold arbitration agreements extend to employees/officers to prevent circumvention)