Zions Management Services v. Record
2013 UT 36
| Utah | 2013Background
- Jeffrey S. Record was employed by Zions Management Services and signed an Employee Handbook containing a mandatory binding arbitration provision governed by the Federal Arbitration Act (FAA).
- The arbitration clause expressly allowed employees to file claims with administrative agencies (EEOC, OSHA, state agencies) and stated arbitration is the process for pursuing relief "beyond the agency."
- Record was terminated and filed a discrimination charge with the Utah Anti-Discrimination and Labor Division (UALD); UALD dismissed his claims and he appealed to the Labor Commission.
- Zions sought to enforce the arbitration agreement in district court; the district court ordered Record to arbitrate and directed the Labor Commission to proceed no further; Record appealed and refused to stay administrative proceedings.
- Labor Commission initially refused to accept dismissal because the district court lacked jurisdiction over administrative appeals, but later stayed its proceedings after the district court’s contempt order; Record appealed the district court’s Order Compelling Arbitration and Contempt Order to the Utah Supreme Court.
Issues
| Issue | Plaintiff's Argument (Record) | Defendant's Argument (Zions) | Held |
|---|---|---|---|
| Whether the district court’s order compelling arbitration was a final, appealable order | Order was final under Utah law because once the (invalid) stay is ignored, nothing remained pending in district court | FAA-controlled arbitration orders are final only when they dismiss claims; a stay is not final | Court held order was final under Utah law because the district court lacked jurisdiction to stay the administrative appeal, so the compelling-arbitration ruling left nothing pending in district court and was appealable |
| Whether federal or state procedural law governs finality analysis in FAA cases | State procedural rules should determine finality; FAA does not preempt local procedure here | FAA preempts state procedure for finality questions related to arbitration | Court held state procedural law governs finality because FAA contains no express preemption and applying state rules does not frustrate FAA objectives |
| Whether Record must arbitrate while he is pursuing administrative review before the Labor Commission | Arbitration is required only for seeking relief "beyond the agency"; administrative appeals are not "beyond the agency," so Record need not arbitrate now | Clause ambiguous; policies favoring arbitration should resolve any ambiguity in favor of arbitration; arbitration should be compelled now | Court held the arbitration clause unambiguous: it permits administrative remedies and does not require arbitration until a party seeks relief beyond the agency; district court erred in compelling arbitration now |
| Whether state policies favoring arbitration can override plain contract language | Plain contract language controls; courts will not rewrite an unambiguous agreement to force arbitration earlier | Federal/state policy favoring arbitration should be used to construe ambiguous clauses in favor of arbitration | Court reiterated that pro-arbitration policy applies only when clause is ambiguous; here the clause was plain and enforced as written |
Key Cases Cited
- Powell v. Cannon, 179 P.3d 799 (Utah 2008) (an order staying litigation and compelling arbitration is not final when claims remain pending)
- Volt Info. Scis., Inc. v. Bd. of Trs. of the Leland Stanford Junior Univ., 489 U.S. 468 (1989) (FAA does not preempt state procedural rules absent conflict; give due regard to federal arbitration policy)
- Green Tree Fin. Corp.-Ala. v. Randolph, 531 U.S. 79 (2000) (district court order dismissing claims and directing arbitration is final for purposes of appeal)
- Granite Rock Co. v. Int’l Bhd. of Teamsters, 130 S. Ct. 2847 (2010) (arbitration is a matter of consent and limited to disputes parties agreed to submit)
- Preston v. Ferrer, 552 U.S. 346 (2008) (distinguishing scope of judicial review versus arbitration when agreement contains no administrative-exhaustion carve-out)
- Bybee v. Abdulla, 189 P.3d 40 (Utah 2008) (presumption favoring arbitration applies only where arbitration is a bargained-for remedy evidenced by the contract)