Samantha Lichon v. Michael Morse ( 2021 )

Michigan Supreme Court
Lansing, Michigan
Chief Justice: Justices:
Syllabus Bridget M. McCormack Brian K. Zahra
David F. Viviano
Richard H. Bernstein
Elizabeth T. Clement
Megan K. Cavanagh
Elizabeth M. Welch
This syllabus constitutes no part of the opinion of the Court but has been Reporter of Decisions:
prepared by the Reporter of Decisions for the convenience of the reader. Kathryn L. Loomis
LICHON v MORSE
SMITS v MORSE
Docket Nos. 159492 and 159493. Argued October 8, 2020 (Calendar No. 2). Decided
July 20, 2021.
In Docket No. 159492, Samantha Lichon brought an action in the Oakland Circuit Court
against Michael Morse and Michael J. Morse, PC (the firm), alleging workplace sexual harassment
in violation of the Elliott-Larsen Civil Rights Act (ELCRA), MCL 37.2101 et seq.; negligent and
intentional infliction of emotional distress; negligence, gross negligence, and wanton and willful
misconduct; and civil conspiracy. Lichon also alleged sexual assault against Morse. Lichon
worked as a receptionist at the firm from September 2015 until her termination in April 2017.
Lichon alleged that throughout her employment with the firm, she was sexually harassed by Morse
and that she was sexually assaulted by Morse on multiple occasions. According to Lichon, Morse
repeatedly groped her breasts without permission and touched her while making sexual comments.
Although Lichon reported the incidents to the firm’s human resources department, no action was
taken and Morse’s conduct continued. After she was terminated, Lichon was contacted by an
attorney from the firm who pressured her not to file any action against Morse or the firm. Lichon
filed her action in May 2017, and defendants moved to dismiss and compel arbitration on the basis
that Lichon was required to arbitrate her claims pursuant to the firm’s Mandatory Dispute
Resolution Procedure agreement (MDRPA), which she had signed upon being hired at the firm.
The trial court, Shalina Kumar, J., granted defendants’ motion, finding that the arbitration
agreement was valid and enforceable and that all of Lichon’s claims fell under the agreement.
Lichon appealed in the Court of Appeals.
In Docket No. 159493, Jordan Smits filed an action in the Wayne Circuit Court against the
same defendants in May 2017, alleging workplace harassment in violation of the ELCRA;
negligent and intentional infliction of emotional distress; and negligence, gross negligence, and
wanton and willful misconduct. Smits later filed a second complaint against Morse individually,
alleging sexual assault and battery, negligent and intentional infliction of emotional distress; and
negligence, gross negligence, and willful and wanton misconduct. Smits was employed as a
paralegal at the firm. In December 2015, she attended the firm’s Christmas party. At the party,
according to Smits, Morse approached her from behind and grabbed her breasts. Smits reported
the assault to human resources, but no action was taken. Smits later resigned and declined to
accept two weeks’ severance pay in exchange for signing a nondisclosure agreement. Defendants
moved to dismiss and compel arbitration, citing the MDRPA, which Smits had signed when she
began working for the firm. The trial court, Daniel A. Hathaway, J., granted defendants’ motion,
concluding that the arbitration agreement was valid and enforceable and that Smits’s claims were
related to her employment and therefore subject to arbitration. Smits appealed in the Court of
Appeals. The Court of Appeals, JANSEN, P.J., and BECKERING, J., (O’BRIEN, J., dissenting),
consolidated all three cases and affirmed the trial court’s dismissal of Smits’s complaint against
Morse individually but reversed the circuit court rulings in the other two cases. 327 Mich App
375 (2019). The Court of Appeals majority concluded that plaintiffs’ claims of sexual assault were
not subject to arbitration because sexual assault was not “related to” plaintiffs’ employment.
Further, the Court of Appeals stated that the fact that the alleged assaults would not have occurred
but for plaintiffs’ employment with the firm did not provide a sufficient nexus between the terms
of the arbitration agreement and the alleged sexual assaults. The Supreme Court granted
defendants’ application for leave to appeal. 504 Mich 962 (2019).
In an opinion by Justice CAVANAGH, joined by Chief Justice MCCORMACK and Justices
BERNSTEIN and CLEMENT, the Supreme Court held:
The threshold question of whether a dispute is subject to arbitration is for a court to
determine. Michigan public policy generally favors arbitration, but arbitration is a matter of
contract, and a party cannot be required to arbitrate an issue that the party did not agree to submit
to arbitration. The MDRPA expressly limited its application to matters relative to employment.
Therefore, whether the MDRPA prevented plaintiffs from litigating their claims against defendants
depended on whether their claims were relative to their employment. Defendants noted certain
facts that supported connections between plaintiffs’ claims and their employment, including that
the alleged assaults occurred at work or work-related functions. But those facts did not necessarily
make plaintiffs’ claims relative to employment; rather, the facts had to be evaluated under a
standard that distinguished claims relative to employment from claims not relative to employment.
Other jurisdictions evaluate motions to compel arbitration by asking whether the plaintiff’s claim
can be maintained without reference to the contract or relationship at issue. This analysis prevents
the absurdity of an arbitration clause that bars the parties from litigating any matter, regardless of
how unrelated to the substance of the agreement, and it ensures that the mere existence of a contract
does not mean that every dispute between the parties is arbitrable. Neither the circuit courts nor
the Court of Appeals considered this standard when evaluating defendants’ motions to compel
arbitration. Rather than apply this newly adopted approach in the first instance, the Michigan
Supreme Court vacated the judgment of the Court of Appeals and remanded the cases to the circuit
courts so that those courts could analyze defendants’ motions to compel arbitration by determining
which of plaintiffs’ claims could be maintained without reference to the contract or employment
relationship.
Court of Appeals judgment vacated and cases remanded to the circuit courts.
Justice VIVIANO, joined by Justice ZAHRA, dissenting, asserted that a proper interpretation
of the language of the contract showed that plaintiffs’ claims against the firm were arbitrable and
that their claims against Morse were arbitrable if he was able to invoke the arbitration clause,
despite not being a signatory to the contract. The general scope of arbitrability was established in
the contract: the agreement was to apply to “all concerns [employees] have over the Firm’s Policies
and Procedures relative to . . . employment.” The agreement specifically included disputes over
violations of state employment law, and both plaintiffs had alleged violations of the ELCRA,
which prohibits sexual assaults that create a hostile work environment. Accordingly, plaintiffs’
claims arising under the ELCRA were arbitrable under the agreement. Regarding plaintiffs’ other
claims, under the agreement, any “concern” an employee had about how the firm’s policies were
applied to him or her was arbitrable, and the agreement did not limit arbitration on the basis of the
legal cause of action. Under the contract, a “concern” that was subject to arbitration was one that
arose from how the firm’s policies and procedures were applied or interpreted relative to the
plaintiff’s employment. This interpretation of the contract excluded only an employee’s concerns
over the application of policies or procedures not related to that employee, such as concerns
regarding their application to another employee. Given that the firm’s policies specifically
proscribed sexual harassment and unwanted sexual contact, plaintiffs’ allegations involved
concerns with how the firm’s policies were applied to them relative to their employment and were
therefore arbitrable under the agreement. However, given that Morse did not sign the agreement
in his individual capacity, Justice VIVIANO would have remanded the cases for a determination of
whether Morse could compel arbitration as a nonsignatory to the contract.
Justice WELCH did not participate in the disposition of this case because the Court
considered it before she assumed office.
Michigan Supreme Court
Lansing, Michigan
Chief Justice: Justices:
OPINION Bridget M. McCormack Brian K. Zahra
David F. Viviano
Richard H. Bernstein
Elizabeth T. Clement
Megan K. Cavanagh
Elizabeth M. Welch
FILED July 20, 2021
STATE OF MICHIGAN
SUPREME COURT
SAMANTHA LICHON,
Plaintiff-Appellee,
v No. 159492
MICHAEL MORSE and MICHAEL J.
MORSE, PC,
Defendants-Appellants.
JORDAN SMITS,
Plaintiff-Appellee,
v No. 159493
MICHAEL MORSE and MICHAEL J.
MORSE, PC,
Defendants-Appellants.
BEFORE THE ENTIRE BENCH (except WELCH, J.)
CAVANAGH, J.
In these cases, the Court must determine whether plaintiffs’ claims fall within the
scope of arbitration agreements limited to matters that are “relative to” plaintiffs’
employment. Whether plaintiffs’ allegations of sexual assault, and the multiple claims
stemming from those allegations, are relative to plaintiffs’ employment is resolved by
asking whether the claims can be maintained without reference to the contract or
relationship at issue. Because the lower courts did not have the benefit of this framing, we
vacate the decision of the Court of Appeals and remand these cases to the circuit courts for
reconsideration of whether plaintiffs’ claims are subject to arbitration. Because plaintiffs
also did not have the benefit of this framing when filing their claims, plaintiffs may seek
to amend their complaints before the circuit courts make this determination.
I. FACTS AND PROCEDURAL HISTORY
Plaintiffs Samantha Lichon and Jordan Smits both worked for defendant Michael J.
Morse, PC, doing business as the Mike Morse Law Firm (the Morse firm). Upon their hire,
each plaintiff signed the Morse firm’s “Mandatory Dispute Resolution Procedure”
agreement (MDRPA). Defendant Michael Morse was the sole shareholder of the firm and
exercised significant control over its operations, serving as its president, secretary,
treasurer, and director. Both plaintiffs sued Morse and the Morse firm, alleging that Morse
sexually assaulted them.
Lichon started working at the Morse firm as a receptionist in September 2015.
Lichon alleges that “[t]hroughout the course of her employment,” she was “continuously
and periodically sexually harassed” by Morse. Morse “sexually assaulted” her “when he
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groped her breasts without invitation, permission, or inducement on multiple occasions.”
Morse “touched his groin to her rear while audibly stating sexual comments, including but
not limited to, ‘you make me so hard’ and ‘I want to take you into my office,’ ” on multiple
occasions, without invitation, permission, or inducement. Lichon complained to her
superiors at the Morse firm and to the human resources department, but no action was
taken, and the sexual harassment and sexual assaults continued. On March 29, 2017,
Lichon was placed on “Final Warning Status” for poor performance, and she was fired on
April 7, 2017. On May 15, 2017, Lichon was contacted by Derek Brackon, an attorney at
the Morse firm, who asked Lichon if she was going to sue Morse and “pressured and/or
coerced and/or intimidated and/or attempted to persuade” her not to take any action against
Morse or the Morse firm.
Lichon filed suit against both defendants alleging workplace sexual harassment in
violation of the Elliott-Larsen Civil Rights Act (ELCRA), MCL 37.2101 et seq.; negligent
and intentional infliction of emotional distress; and negligence, gross negligence, and
wanton and willful misconduct. She also alleged sexual assault against Morse. Lichon
filed an amended complaint adding an allegation of civil conspiracy based on defendants’
efforts to intimidate her to not file a lawsuit.
In lieu of filing an answer, defendants moved to dismiss and compel arbitration
under MCR 2.116(C)(7), arguing that the MDRPA required Lichon to arbitrate her claims.
Lichon responded that the MDRPA’s scope was limited to matters which “arise out of her
employment,” and because her claims were related to the sexual assault they did not “arise
out of her employment” at the Morse firm. She also argued that the MDRPA was
unenforceable as a matter of law because it is unconscionable, illusory, and contrary to
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public policy. The trial court granted defendants’ motion, finding that the MDRPA was “a
valid and enforceable arbitration agreement” and that Lichon’s claims were “inextricably
intertwined and therefore all f[e]ll within the arbitration agreement and the workplace
policies.” Lichon appealed in the Court of Appeals.
Smits worked at the Morse firm as a paralegal, and in December 2015, she attended
an office Christmas party. She alleged that Morse sexually assaulted her at the party.
Morse approached her from behind and grabbed her breasts. She immediately grabbed his
arms and yanked them away from her. Multiple guests witnessed the assault. When Smits
reported the assault to the firm’s human resources department, the firm’s representative
told Smits that the “number one priority [was] to protect Morse’s reputation.” When Smits
expressed her concerns to an attorney employed at the Morse firm who witnessed the
assault, he said, “[W]hat was I supposed to do, you know how Michael is.” Smits resigned
by e-mail in February 2016. She was offered two weeks of severance pay if she would
sign a nondisclosure agreement, but she declined. An employee of the Morse firm warned
her to be careful because Morse “knows a lot of people in the legal community,” and he
“could make it difficult for [Smits] to get a job.”
Smits first filed suit on May 30, 2017. She alleged workplace sexual harassment in
violation of the ELCRA; negligent and intentional infliction of emotional distress; and
negligence, gross negligence, and wanton and willful misconduct against both defendants.
Smits also alleged sexual assault against Morse. In lieu of an answer, defendants moved
to dismiss and compel arbitration under MCR 2.116(C)(7). 1 Like Lichon, Smits argued
1
Defendants alternatively argued that Smits’s claims were barred by the statute of
limitations. Smits signed an “Acknowledgement Form” in the Morse firm’s Employee
4
that her claims of sexual assault were not related to her employment, so they were not
governed by the MDRPA. She also argued that the arbitration provision was unenforceable
because it is procedurally and substantively unconscionable and illusory, that defendants
forfeited enforcement of the MDRPA by failing to adhere to its process, and finally, that
Morse could not invoke the MDRPA because he is not a party to the agreement. The trial
court granted defendants’ motion, finding that the MDRPA is “a valid and enforceable
agreement, supported by consideration and mutuality of obligation,” and that Smits’s
claims were related to her employment and therefore subject to arbitration. Smits appealed
in the Court of Appeals.
On July 25, 2017, Smits filed a second complaint against only Morse, alleging
sexual assault and battery; negligent and intentional infliction of emotional distress; and
negligence, gross negligence, and willful and wanton misconduct. The trial court granted
a motion to dismiss under MCR 2.116(C)(7), concluding that the action was precluded by
res judicata and compulsory joinder. Smits appealed in the Court of Appeals.
Before discussing the Court of Appeals’ analysis, it’s important to set out the
relevant texts. The MDRPA signed by both plaintiffs states in pertinent part:
This Mandatory Dispute Resolution Procedure shall apply to all concerns
you have over the application or interpretation of the Firm’s Policies and
Procedures relative to your employment, including, but not limited to, any
Policy Manual, which states in relevant part:
I agree that any claim or lawsuit relating to my employment with
Michael J. Morse, P.C. must be filed no more than six (6) months after the
date of employment action that is the subject of the claim or lawsuit unless a
shorter period is provided by law. I waive any statute of limitations to the
contrary.
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disagreements regarding discipline, termination, discrimination or violation
of other state or federal employment or labor laws. This includes any claim
over the denial of hire. This Procedure includes any claim against another
employee of the Firm for violation of the Firm’s Policies, discriminatory
conduct or violation of other state or federal employment or labor laws.
Similarly, should the Firm have any claims against you arising out of the
employment relationship, the Firm also agrees to submit them to final and
binding arbitration pursuant to this Procedure.
* * *
The only exceptions to the scope of this Mandatory Dispute
Resolution Procedure shall be for questions that may arise under the Firm’s
insurance or benefit programs (such as retirement, medical insurance, group
life insurance, short-term or long-term disability or other similar programs).
These programs are administered separately and may contain their own
separate appeal procedures. In addition, this Procedure does not apply to
claims for unemployment compensation, workers’ compensation or claims
protected by the National Labor Relations Act. While this Procedure does
not prohibit the right of an employee to file a charge with the Equal
Employment Opportunity Commission (“EEOC”) or a state civil rights
agency, it would apply to any claims for damages you might claim under
federal or state civil rights laws. In addition, either Party shall have the right
to seek equitable relief in a court of law pending the outcome of the
arbitration proceeding.
The Court of Appeals summarized the process required by the MDRPA:
[F]irst, within one year an employee must file with a direct supervisor a
“request for review of your concern stating your disagreement or concern
and the action you request the Firm to take.” The supervisor will date the
request, provide the employee with a copy, and then “generally schedule a
meeting with [the employee] to hear [the employee’s] concerns and will
provide [the employee] with a written decision within” 15 business days.
Second, if the dispute is not resolved to the employee’s satisfaction, a written
request for review must be filed directly with Morse within 15 days. Morse,
or his “designated representative,” will issue a written decision within 15
days. If the employee is still not satisfied, the final recourse is to submit a
written request for arbitration to the firm within 15 days, and the employee
“must deposit with the Firm $500.00 or Five (5) Days’ pay, whichever is
less.” [Lichon v Morse, 327 Mich App 375, 382-383; 933 NW2d 506 (2019)
(emphasis omitted).]
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Smits also signed an “Agreement for At-Will Employment and Agreement for Resolution
of Disputes,” which provided in relevant part:
IV. ARBITRATION OF DISPUTES:
As a condition of my employment, I agree that any dispute or concern
relating to my employment or termination of employment, including but not
limited to claims arising under state or federal civil rights statutes, must be
resolved pursuant to the Firm’s [MDRPA] which culminates in final and
binding arbitration. I have been provided with a copy of the Firm’s
[MDRPA] and agree to be bound by this Dispute Procedure.
The Morse firm’s employee manual has an “Anti-Discrimination, Harassment,
and Retaliation Policy,” which defines sexual harassment broadly and purports to include
physical harassment that creates a hostile or offensive work environment within that
definition. The manual provides that “[t]his policy covers all employees.” The policy
specifically states as follows:
Anti-Discrimination, Harassment, and Retaliation Policy
Sexual harassment, whether verbal, written, physical or
environmental, is unacceptable and will not be tolerated. Sexual harassment
is defined as unwelcome or unwanted conduct of a sexual nature (verbal,
written, physical or environment[al]) when:
1. Submission to or rejection of this conduct is used as a factor in
decisions affecting hiring, evaluation, promotion or other aspects of
employment; and/or
2. Conduct substantially interferes with an individual’s
employment or creates an intimidating, hostile or offensive work
environment.
The Court of Appeals consolidated all three cases and affirmed the trial court with
regard to Smits’s complaint against Morse individually, but reversed the trial court
decisions in the other two cases in a published, split decision. Lichon, 327 Mich App at
7
379-380. The majority noted that the parties had agreed as to the existence of the MDRPA
and its terms but disagreed as to whether sexual assault by a supervisor or employer was
covered. So, the majority reasoned, this was the “sole issue” to be decided on appeal. The
majority then held that sexual assault was not “related to” employment:
Despite the fact that the sexual assaults may not have happened but
for plaintiffs’ employment with the Morse firm, we conclude that claims of
sexual assault cannot be related to employment. The fact that the sexual
assaults would not have occurred but for Lichon’s and Smits’s employment
with the Morse firm does not provide a sufficient nexus between the terms
of the MDRPA and the sexual assaults allegedly perpetrated by Morse. To
be clear, Lichon’s and Smits’s claims of sexual assault are unrelated to their
positions as, respectively, a receptionist and paralegal. Furthermore, under
no circumstances could sexual assault be a foreseeable consequence of
employment in a law firm. Accordingly, the circuit courts erroneously
granted defendants’ motions to dismiss these actions and compel arbitration
of plaintiffs’ claims. Both Lichon and Smits shall be permitted to litigate
their claims in the courts of this state because the claims fall outside the
purview of the MDRPA. [Id. at 393-394.]
The majority agreed with plaintiffs that because sexual assault at the hands of an employer
or supervisor cannot be related to employment and because the MDRPA limits the scope
of arbitration to claims that are “related to” employment, the MDRPA is inapplicable. The
majority did not reach plaintiffs’ argument that the MDRPA is unconscionable or illusory
or their argument that Morse could not enforce the MDRPA as a nonsignatory.
The Court of Appeals dissent reasoned that plaintiffs’ claims “arguably” fell within
the language of the MDRPA. Id. at 400 (O’BRIEN J., dissenting). The dissent agreed that
sexual assault is not related to employment, but thought the dispositive question was
broader. Rather than focusing on the language of the MDRPA limiting its scope to matters
“relative to your employment,” the dissent looked to other language in the agreement
stating that the parties agreed to arbitrate “ ‘any claim against another employee of the Firm
8
for violation of the Firm’s Policies, discriminatory conduct or violation of other state or
federal employment or labor laws.’ ” Id. at 403. Thus, the dissent concluded, plaintiffs
had “agreed to arbitrate ‘any claim against another employee of the Firm
for . . . discriminatory conduct.’ ” Id.
Defendants sought leave to appeal here, and we granted leave to appeal, ordering
the parties to address generally whether the claims set forth in the plaintiffs’ complaints
are subject to arbitration. Lichon v Morse, 504 Mich 962 (2019).
II. STANDARD OF REVIEW
This Court reviews de novo circuit court decisions on motions for summary
disposition brought under MCR 2.116(C)(7). Altobelli v Hartmann, 499 Mich 284, 294-
295; 884 NW2d 537 (2016). Under MCR 2.116(C)(7), summary disposition is appropriate
when claims are subject to “an agreement to arbitrate or to litigate in a different forum.”
“Whether a particular issue is subject to arbitration is also reviewed de novo, as is the
interpretation of contractual language.” Id. at 295 (citations omitted).
III. ANALYSIS
The Court of Appeals majority’s analysis started from the proposition that “[t]he
sole issue for us to decide is whether the MDRPA encompasses the subject matter of the
dispute at issue in this case.” Lichon, 327 Mich App at 392 (quotation marks and citation
omitted). The MDRPA expressly limits its application to matters “relative
to . . . employment.” So, whether the MDRPA encompasses the subject matter of the
dispute turns on whether the claims are relative to employment. The MDRPA is not alone
in limiting its scope to matters which are “relative to employment” or “related to
9
employment,” and other courts have put considerable thought into whether various claims
are relative to employment. Generally, we think this question can be resolved by asking
whether the claim can be maintained without implicating the employment relationship.
A. PRINCIPLES OF CONTRACTUAL INTERPRETATION
Because “[a]rbitration is a matter of contract,” Kaleva-Norman-Dickson Sch Dist
No. 6 v Kaleva-Norman-Dickson Sch Teachers’ Assoc, 393 Mich 583, 587; 227 NW2d 500
(1975), “when interpreting an arbitration agreement, we apply the same legal principles
that govern contract interpretation,” Altobelli, 499 Mich at 295. Our goal in interpreting a
contract is to “ascertain the intent of the parties at the time they entered into the agreement.”
Id.
Here, the question is whether plaintiffs’ claims are governed by the MDRPA. This
threshold question of whether a dispute is subject to arbitration is for a court to determine.
Kaleva, 393 Mich at 591. As we have said, “[a] party cannot be required to arbitrate an
issue which [it] has not agreed to submit to arbitration.” Id. at 587.
As a general matter, Michigan’s public policy favors arbitration. Altobelli, 499
Mich at 295. But this general position favoring arbitration does not go so far as to override
foundational principles of contractual interpretation. In Kaleva, in the context of collective
bargaining agreements, we held that it was appropriate to apply United States Supreme
Court precedent regarding the National Labor Relations Act (NLRA), 29 USC 151 et seq.,
to contracts entered into under the state’s public employment relations act (PERA), MCL
423.201 et seq. Kaleva, 393 Mich at 590-591. That holding seems to have expanded in
application in the lower courts beyond collective bargaining agreements to a more general
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rule that parties are bound to arbitration if the disputed issue is “arguably” within the
arbitration clause. See, e.g., Rooyakker & Sitz, PLLC v Plante & Moran, PLLC, 276 Mich
App 146, 163; 742 NW2d 409 (2007); Fromm v MEEMIC Ins Co, 264 Mich App 302, 305-
306; 690 NW2d 528 (2004). This is not a rule we have adopted outside of the context of
collective bargaining agreements, and we decline to do so now. Our general practice of
looking to federal precedent discussing the NLRA to interpret the PERA is simply
inapplicable here because the PERA is not at issue. In no way does this signal a judicial
hostility to arbitration; rather, we simply recognize that agreements to arbitrate should be
read like any other contract. Altobelli, 499 Mich at 295.
B. WHETHER THESE CLAIMS ARE COVERED BY THE MDRPA
To answer whether the MDRPA governs plaintiffs’ claims in these cases, we look
first to the words of the agreement. The MDRPA applies to “all concerns you have over
the application or interpretation of the Firm’s Policies and Procedures relative to your
employment.” Thus, the MDRPA limits its scope from the outset to matters “relative
to . . . employment.” 2
2
The dissent asserts that our analysis fails to give consideration to the complete sentence—
i.e., that we have “lop[ped] off” the first part of the phrase, “all concerns you have over the
application or interpretation of the Firm’s Policies and Procedures,” in order to “isolate the
second half, ‘relative to your employment.’ ” We disagree. Our analysis gives effect to
every part of the sentence. Under the MDRPA, plaintiffs must have “concerns;” they
indisputably do. Those concerns must be over the application or interpretation of the Morse
firm’s policies and procedures; plaintiffs’ concerns meet this requirement because, as the
dissent points out, the firm’s policies and procedures proscribe unwanted sexual contact,
harassment, and abuse. Next, those concerns must be “relative to . . . employment.” This
is the disputed issue. To be arbitrable, the concerns must both involve the application or
interpretation of the Morse firm’s policies and procedures and be relative to employment.
Either fact, standing alone, is insufficient. It is the dissent that “lops off” the phrase
11
Defendants accurately recite facts supporting connections between plaintiffs’ claims
and their employment. For example, the alleged assaults took place at work or at work-
related functions, and Morse held a position of power over the plaintiffs. But not every
factual connection between a plaintiff’s claim and her job makes the claim relative to or
related to employment—those facts need to be evaluated under a standard that
distinguishes claims “relative to” employment from claims not “relative to” employment.
As the United States Court of Appeals for the Eleventh Circuit observed, in evaluating
what it means for a claim to be “related to” employment:
“[R]elated to” marks a boundary by indicating some direct relationship;
otherwise, the term would stretch to the horizon and beyond. As the Supreme
Court has explained in the [Employment Retirement Income Security Act,
29 USC 1001 et seq.,] pre-emption context, “related to” is limiting language
and “[i]f ‘relate to’ were taken to extend to the furthest stretch of its
indeterminacy,” it would have no limiting purpose because “really,
universally, relations stop nowhere.” NY State Conference of Blue Cross &
Blue Shield Plans v Travelers Ins Co, 514 US 645, 655; 115 S Ct 1671, 1677;
131 L Ed 2d 695 (1995) (quotation marks omitted). [Doe v Princess Cruise
Lines, Ltd, 657 F3d 1204, 1218-1219 (CA 11, 2011).]
The same principle applies here. If litigating parties have an employment or other
contractual relationship, one party will likely be able to find some factual connection,
however remote, between their dispute and the relationship. But we require more than the
“relative to . . . employment,” choosing instead to read the limitation as only excluding “an
employee’s concerns about how the policies or procedures were interpreted or applied to
another employee or how they were interpreted or applied in general, unrelated to any
particular employee.” Perhaps if the modifying phrase was “relative to you,” rather than
“relative to your employment,” this would be a reasonable interpretation. Still, it would be
an odd construction given that it is unclear how one employee might seek to arbitrate the
concerns of another employee, or to arbitrate the meaning of the firm’s policies in the
abstract. But this is not the phrase we are asked to interpret.
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barest factual connection for a claim to be relative to employment or another pertinent
contractual relationship.
In determining whether a claim is relative to employment, we adopt the approach of
a number of other jurisdictions that “ask if [the] action could be maintained without
reference to the contract or relationship at issue.” Academy of Med of Cincinnati v Aetna
Health, Inc, 108 Ohio St 3d 185, 186; 842 NE2d 488 (Ohio 2006), citing Fazio v Lehman
Bros, Inc, 340 F3d 386 (CA 6, 2003). Accord Jones v Halliburton, 583 F3d 228 (CA 5,
2009); Doe, 657 F3d at 1219-1220; United States v My Left Foot Children’s Therapy, LLC,
871 F3d 791, 799 (CA 9, 2017). This analysis “functions as a tool to determine a key
question of arbitrability—whether the parties agreed to arbitrate the question at issue.”
Academy of Med of Cincinnati, 108 Ohio St 3d at 191. Such an analysis “prevents the
absurdity of an arbitration clause barring a party to the agreement from litigating any matter
against the other party, regardless of how unrelated to the subject of the agreement,” and
ensures that the mere “existence of a contract between the parties does not mean that every
dispute between the parties is arbitrable.” Id. 3
The Eleventh Circuit applied this test in Doe. In that case, the plaintiff worked on
a cruise ship as a bar server. Doe, 657 F3d at 1208. Her employment agreement contained
an arbitration provision. Id. at 1214-1215. It stated, in part, that she agreed to arbitrate
3
We agree with the dissent that “ ‘[r]elative’ means ‘a thing having a relation to or
connection with or necessary dependence on another thing.’ ” (Citation omitted.)
However, that circular observation is not very helpful given that “really, universally,
relations stop nowhere.” NY State Conference of Blue Cross & Blue Shield Plans, 514 US
at 655 (quotation marks and citation omitted). We disagree with the dissent that its reading
of the phrase is “more concrete.”
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“ ‘any and all disputes . . . [or] claims . . . relating to or in any way arising out of or
connected with the Crew Agreement.’ ” Id. (emphasis omitted). A “dispute” arose when
the plaintiff was drugged and raped by coworkers. Id. at 1209. When she reported the rape
to her supervisors, they didn’t let her seek medical treatment and forced her to continue
working and to submit to repeated questioning. Id. at 1209-1210. She was eventually
provided some treatment on the ship, but she was not permitted to leave the ship to seek
further necessary treatment until three weeks after the assault. Id. Ultimately, the
plaintiff’s blood and rape kit samples as well as her medical records were incinerated. Id.
at 1210.
The plaintiff sued Princess Cruise Lines, asserting ten claims. The first five claims
arose from her status as a “seaman,” 4 while the other claims were common-law tort claims. 5
4
These claims were:
(1) a “Jones Act negligence” claim, alleging that Princess Cruise Lines
breached its “duty to provide a safe place to work such that [Doe] could
perform the job obligations in a reasonably safe manner and live aboard the
vessel free from sexual violence and/or sexual harassment”; (2) an
unseaworthiness claim, alleging that the cruise line breached its “non-
delegable duty to provide [Doe] with a seaworthy vessel upon which to work
and live free from sexual battery and/or sexual harassment”; (3) a Jones Act
claim, alleging that the cruise line breached its duty under that act to provide
Doe with prompt, adequate, and complete medical treatment for “injuries
sustained while in the service of the vessel”; (4) a maintenance and cure
claim, alleging that the cruise line “purposefully refused to arrange for and
pay [for] timely and complete medical cure” despite its obligation to do so
under “the General Maritime Law”; and (5) a Seaman’s Wage Act claim that
the cruise line breached its “duty to timely pay all of [Doe’s] wages as a
seaman.” [Doe, 657 F3d at 1211-1212 (alterations in original).]
5
These claims were:
14
The defendant sought to compel arbitration on the entire complaint, and the district court
denied the motion in its entirety. Id. at 1212. The defendant appealed, arguing that all the
claims arose out of or were connected to the plaintiff’s employment and, as a result, were
subject to arbitration. Id. at 1213. The appellate court held that some of the claims were
subject to arbitration, and some were not. Id. at 1219.
The court concluded that the five common-law tort claims were not subject to
arbitration because they did not depend on the employment relationship. Id. Those claims
were based on allegations that, inter alia, the officers of the cruise ship had not allowed the
plaintiff to go ashore for medical treatment, the evidence of the rape had been destroyed,
and, of course, that the plaintiff was drugged and raped. Id. The court noted that none of
those allegations had anything to do with the plaintiff’s employment agreement or her work
duties. Id. Further, “[t]he cruise line could have engaged in that tortious conduct even in
the absence of any contractual or employment relationship with [the plaintiff],” so those
(6) a false imprisonment claim, alleging that the cruise line had “purposefully
and intentionally restrained [Doe] against her will on the cruise ship and did
not permit her to leave the cruise ship to go ashore for medical treatment” in
Seattle; (7) an intentional infliction of emotional distress claim, alleging
“separate and independent torts committed by” the cruise line, its agents, and
its employees related to Doe’s rape and the way that they handled the
situation and treated her after learning of the rape; (8) a spoliation of evidence
claim, alleging that the cruise line breached its duty to preserve evidence after
one of its crew members sexually assaulted and battered Doe; (9) an invasion
of privacy claim, alleging that the cruise line, th[r]ough its agents, breached
its duty to protect Doe’s confidentiality and privacy as a rape victim by
repeatedly disclosing her real name in an effort to intimidate and embarrass
her; and (10) a fraudulent misrepresentation claim, alleging that officers of
the cruise line who were on the ship repeatedly and falsely told Doe after she
had been drugged and raped that she could not disembark the ship to get
medical treatment and counseling by doctors of her own choosing. [Id. at
1212 (first alteration in original).]
15
claims were not “an immediate, foreseeable result of the performance of the parties’
contractual duties.” Id. (quotation marks and citation omitted). The fact that the plaintiff
would likely not have been on the ship but for her employment did not mean that all her
claims arose from her employment. Id. The court illustrated the point by noting that if a
passenger on the ship had been subjected to the same treatment as the plaintiff, he or she
could have brought the same claims. Id. at 1220.
By contrast, the court concluded that the plaintiff’s other claims were subject to
arbitration because they depended on the employment relationship. Two of those claims
were based specifically on the Jones Act, 46 USC 30104, and alleged that the defendant
had breached statutory duties owed to the plaintiff. Id. But the defendant owed those
duties to the plaintiff only because of her status as a seaman. Id. Another claim subject to
arbitration was based on an assertion of “unseaworthiness,” which also depended on the
plaintiff’s status as a seaman. Id. A fourth claim subject to arbitration asked for
“maintenance and cure,” which is a maritime law remedy available to seamen. Id. at 1221.
The final claim subject to arbitration was brought under the Seaman’s Wage Act, 46 USC
10313, and also depended on the plaintiff’s status as a seaman. Id. None of these claims
could have been brought if not for the employment relationship. Id. at 1220-1221.
Like the plaintiff in Doe, plaintiffs here have brought several claims. Whether the
claims are subject to arbitration depends on whether they are covered by the MDRPA,
which, in turn, depends on whether the claims are relative to plaintiffs’ employment. We
hold that a court answers that question by considering whether the claims could be
maintained without reference to the contract or relationship at issue. To borrow the
illustration from Doe, if Morse had groped or propositioned opposing counsel or a client
16
while at the Morse firm’s office, or if Morse had grabbed the breasts of a server or other
patron of the restaurant during the firm’s Christmas party, could those individuals bring
the same claims as plaintiffs?
Neither the Court of Appeals nor the circuit courts considered this standard when
evaluating defendants’ motions to compel arbitration. Rather than apply this standard in
the first instance, we vacate the decision of the Court of Appeals and remand these matters
to the circuit courts. Further, just as the lower courts did not have the benefit of this framing
when evaluating defendants’ motions, neither did plaintiffs have the benefit of this framing
when formulating their complaints. In this regard, we remind the circuit courts that, under
MCR 2.118(A)(2), “[l]eave [to amend pleadings] shall be freely given when justice so
requires.”
Defendants argue that the claims do not need to be relative to employment to be
covered by the MDRPA, because they are otherwise expressly covered by the MDRPA
given that it applies to “any claim against another employee of the Firm for violation of the
Firm’s Policies” and because the firm’s policies prohibit sexual harassment, including
physical contact. The dissent also focuses on this language. As a textual matter, we do not
read the language relied on by the dissent and defendants as additional words of inclusion
covering matters beyond those relative to employment. Rather, this language merely
specifies some matters relative to employment which are included. The paragraph reads,
in full:
This Mandatory Dispute Resolution Procedure shall apply to all
concerns you have over the application or interpretation of the Firm’s
Policies and Procedures relative to your employment, including, but not
limited to, any disagreements regarding discipline, termination,
discrimination or violation of other state or federal employment or labor
17
laws. This includes any claim over the denial of hire. This Procedure
includes any claim against another employee of the Firm for violation of the
Firm’s Policies, discriminatory conduct or violation of other state or federal
employment or labor laws. Similarly, should the Firm have any claims
against you arising out of the employment relationship, the Firm also agrees
to submit them to final and binding arbitration pursuant to this Procedure.
The first sentence clearly limits the scope of the MDRPA to matters “relative
to . . . employment.” The next two sentences begin, “[t]his includes” and “[t]his Procedure
includes.” But the procedure is limited to matters “relative to . . . employment.” These
sentences specify some matters “relative to employment” that are covered. Finally, the
Morse firm’s reciprocal obligation in the last sentence contains the same limitation,
defining the firm’s obligation to arbitrate as limited to claims “arising out of the
employment relationship . . . .” Read in context, the MDRPA clearly limits its scope to
matters relative to employment. 6
In light of this resolution, we do not reach plaintiffs’ argument that the MDRPA is
unconscionable or illusory, nor do we address plaintiffs’ argument that Morse could not
enforce the MDRPA because he did not sign it. The circuit court in Smits’s case had
6
The argument advanced by defendants and the dissent in this regard also wades into the
territory of “the absurdity of an arbitration clause barring a party to the agreement from
litigating any matter against the other party, regardless of how unrelated to the subject of
the agreement.” Academy of Med of Cincinnati, 108 Ohio St 3d at 191. Taking this
argument to its logical conclusion, plaintiffs would be bound to arbitrate any sexual assault
Morse might inflict on them because sexual assault is prohibited by the firm’s policies.
One wonders, under this interpretation, could defendants compel arbitration of any claim
merely by proscribing such conduct in its policy manual? Could a plaintiff be compelled
to arbitrate a wrongful death claim merely because defendants’ policy manual stated, “We
do not tolerate intentional or negligent killing at the Firm”? Though we do not reach
plaintiffs’ argument that the MDRPA is unconscionable, plaintiffs would seem to be in a
much stronger position with regard to that argument if their employment agreement bound
them to arbitrate concerns unrelated to their employment.
18
considered whether her claims were barred by the contractual-limitations period in the
employee manual. Like the MDRPA, that period applies only to matters “relating
to . . . employment,” so its scope is similarly limited. Therefore, on remand, the circuit
court should consider whether the contractual-limitations period applies only to claims
arbitrable under the MDRPA.
IV. CONCLUSION
We vacate the judgment of the Court of Appeals and remand these cases to their
respective circuit courts where the courts may analyze defendants’ motions to compel
arbitration by analyzing which of plaintiffs’ claims can be maintained without reference to
the contract or relationship at issue. Plaintiffs may seek to amend their complaints in light
of this new direction.
Megan K. Cavanagh
Bridget M. McCormack
Richard H. Bernstein
Elizabeth T. Clement
19
STATE OF MICHIGAN
SUPREME COURT
SAMANTHA LICHON,
Plaintiff-Appellee,
v No. 159492
MICHAEL MORSE and MICHAEL J.
MORSE, PC,
Defendants-Appellants.
JORDAN SMITS,
Plaintiff-Appellee,
v No. 159493
MICHAEL MORSE and MICHAEL J.
MORSE, PC,
Defendants-Appellants.
VIVIANO, J. (dissenting).
The task before the Court in these cases is a common one. We must interpret
contractual language to determine the parties’ intent; specifically, we must determine
whether the parties meant to assign plaintiffs’ present claims to arbitration. Instead of
examining the relevant text and context, the majority plucks a standard from out-of-state
caselaw and imposes it upon the parties here. A proper interpretation of the contract’s
language shows that plaintiffs’ claims against defendant Michael J. Morse, PC, doing
business as the Mike Morse Law Firm (the Firm) are arbitrable under the contract. I would
therefore reverse the Court of Appeals’ decision to the contrary. The claims against
defendant Michael Morse individually are also arbitrable under the contract if he can
invoke the arbitration clause. Because the Court of Appeals below did not determine
whether Morse has the authority to enforce the agreement, which he did not sign, I would
remand on that issue.
Arbitration agreements are contracts, and so “when interpreting an arbitration
agreement, we apply the same legal principles that govern contract interpretation.”
Altobelli v Hartmann, 499 Mich 284, 295; 884 NW2d 537 (2016). Accordingly, the
Court’s “task is to ascertain the intent of the parties at the time they entered into the
agreement, which [is] determine[d] by examining the language of the agreement according
to its plain and ordinary meaning.” Id. This requires reading individual clauses in light of
the contract as a whole, “since a contract should be construed so as to give full meaning
and effect to all its provisions.” 21 Williston, Contracts (4th ed), § 57:20, p 220. Although
we have indicated that public policy supports arbitration, the contract here is clear and
therefore any policy favoring arbitration does not inform my interpretation. See Altobelli,
499 Mich at 295. 1
1
I agree with the majority to the extent it limits the application of the principle that a party
is bound to arbitration if the dispute is “arguably” within the arbitration clause. See
Rooyakker & Sitz, PLLC v Plante & Moran, PLLC, 276 Mich App 146, 163; 742 NW2d
409 (2007). The policy in support of arbitration flows from statutes permitting parties to
arbitrate. See Detroit v AW Kutsche & Co, 309 Mich 700, 703; 16 NW2d 128 (1944). But
such legislation simply compels courts to “place arbitration agreements on an equal footing
with other contracts . . . and enforce them according to their terms.” AT&T Mobility LLC
v Concepcion, 563 US 333, 339; 131 S Ct 1740; 179 L Ed 2d 742 (2011). Consequently,
2
While the majority frames the question of arbitration as depending on whether the
plaintiffs’ claims are “related to employment,” that is not how the contract puts it:
This Mandatory Dispute Resolution Procedure shall apply to all
concerns you have over the application or interpretation of the Firm’s
Policies and Procedures relative to your employment, including, but not
limited to, any disagreements regarding discipline, termination,
discrimination or violation of other state or federal employment or labor
laws. This includes any claim over the denial of hire. This Procedure
includes any claim against another employee of the Firm for violation of the
Firm’s Policies, discriminatory conduct or violation of other state or federal
employment or labor laws. Similarly, should the Firm have any claims
against you arising out of the employment relationship, the Firm also agrees
to submit them to final and binding arbitration pursuant to this Procedure.
[Emphasis added.][2]
The general scope of arbitrability is established at the outset: the arbitration agreement
“shall apply to all concerns you have over . . . the Firm’s Policies and Procedures relative
to your employment . . . .” Following this are specific examples of arbitrable disputes
falling within the agreement as well as the Firm’s commitment to arbitrate “any claims”
against its employees “arising out of the employment relationship . . . .”
The issue is whether this language covers plaintiffs’ present claims, making them
arbitrable. As an initial matter, the agreement specifically includes “disagreements”
regarding the violation of state employment laws. Both plaintiffs here have alleged
violations of the Elliott-Larsen Civil Rights Act, MCL 37.2101 to MCL 37.2804. We have
interpreted that statute to prohibit sexual assaults that create a hostile work environment.
this pro-arbitration policy should not mislead courts into distorting a contract’s ordinary
meaning in an effort to render it applicable to the dispute at issue.
2
A second paragraph in the agreement details specific exclusions to arbitration that are not
at issue here.
3
See Radtke v Everett, 442 Mich 368, 394-395; 501 NW2d 155 (1993). Plaintiffs here have
alleged that they were sexually assaulted in a manner that affected their work. Those
claims, therefore, fit within the arbitration agreement.
To be arbitrable, the rest of the claims—all based on the common law—would need
to involve “concerns . . . over the application or interpretation of the Firm’s Policies and
Procedures relative to your employment.” 3 In other words, if an employee has a “concern”
about how the Firm’s policies were applied to him or her, that concern goes to arbitration.
A “concern” is relevantly defined as a “matter for consideration.” Merriam-Webster.com
Dictionary, Concern (accessed
April 22, 2021) [https://perma.cc/2J7R-77US]. As used in the agreement, “concerns”
encompasses various “claims,” such as those arising from “the denial of hire” or those
lodged against another employee. But nothing limits the key sentence here—regarding
concerns about the policies and procedures—to any particular type of legal cause of action,
such that a tort claim for sexual assault or intentional infliction of emotional distress would
be excluded from the agreement. If the claim involves the “concern,” it must be arbitrated.
This conclusion flows from the language of the contract and also is consistent with the
view of other courts that determining whether a claim is arbitrable depends on the
underlying facts rather than the particular legal cause presented. See, e.g., Gregory v
Electro-Mechanical Corp, 83 F3d 382, 384 (CA 11, 1996) (“Whether a claim falls within
3
Against both defendants, plaintiffs assert claims of negligent and intentional infliction of
emotional distress and negligence, gross negligence, and wanton and willful misconduct.
Against Morse, in his individual capacity, plaintiffs also assert a claim of sexual assault.
4
the scope of an arbitration agreement turns on the factual allegations in the complaint rather
than the legal causes of action asserted.”). 4
Next, the “concerns” must involve the “application or interpretation of the Firm’s
Policies and Procedures relative to your employment.” The majority lops off the critical
first part of this phrase so that it can isolate the second half, “relative to your employment.”
And in analyzing the latter phrase, the majority makes no pretense of applying normal
interpretive methods but instead reaches for out-of-state caselaw that similarly fails to offer
much in the way of textual interpretation. 5 Even so, the majority may have come close to
4
See also Doe v Hallmark Partners, LP, 227 So 3d 1052, 1056 (Miss, 2017) (“To answer
whether [the plaintiff] agreed to arbitrate her assault- and rape-based tort claims, this Court
must ‘focus on factual allegations in the complaint rather than the legal causes of action
asserted.’ ”) (citation omitted); 21 Williston, Contracts (4th ed), § 57:21, p 231 (“In
ascertaining whether a particular claim falls within the scope of an arbitration agreement,
the court should focus on the factual allegations in the complaint rather than the legal
causes of action asserted; if the allegations underlying the claim touch matters covered by
the arbitration agreement, then the claim must be arbitrated, whatever legal labels are
attached to it.”).
5
For instance, in Doe v Princess Cruise Lines, Ltd, the court appears to have adopted the
gist of its interpretation not from an examination of the ordinary meaning of the arbitration
clause at issue but rather from caselaw discussing the need to place limits on the term
“related to” as it appeared in a federal retirement statute. Doe v Princess Cruise Lines, Ltd,
657 F3d 1204, 1218-1219 (CA 11, 2011), citing NY State Conference of Blue Cross & Blue
Shield Plans v Travelers Ins Co, 514 US 645, 655; 115 S Ct 1671; 131 L Ed 2d 695 (1995).
The Ohio case the majority relies on simply cited a case from the United States Court of
Appeals for the Sixth Circuit for the same standard, calling it a “test” without suggesting
that it reflected the meaning of the contractual language. Academy of Med of Cincinnati v
Aetna Health, Inc, 108 Ohio St 3d 185, 186, 190-191; 842 NE2d 488 (Ohio, 2006), citing
Fazio v Lehman Bros, Inc, 340 F3d 386 (CA 6, 2003). Fazio, in turn, took the test from a
decision of the United States Court of Appeals for the Fifth Circuit, again failing to ask
whether the test accurately captured the meaning of the contract’s text. See Fazio, 340 F3d
at 395, citing Ford v NYLCare Health Plans of the Gulf Coast, Inc, 141 F3d 243, 250-251
(CA 5, 1998). Finally, in Ford, the Fifth Circuit applied Texas law, and its decision, like
5
capturing the ordinary meaning of “relative to your employment,” to the extent that the
majority holds that this phrase requires asking whether the claim “can be maintained
without reference” to the plaintiff’s employment. In the present context, “relative” means
“a thing having a relation to or connection with or necessary dependence on another thing.”
Merriam-Webster.com Dictionary, Relative (accessed April 22, 2021) [https://perma.cc/7C5S-B3BP].
Thus, if a “concern” must be “relative” to “employment,” the concern must have some
connection to employment. And so if the concern can be made “without reference” to
employment, perhaps we could conclude that the concern is not “relative
to . . . employment.” 6
the other decisions, did not describe how the formulation of the test is the proper product
of contract interpretation.
6
It is noteworthy, however, that courts frequently characterize arbitration clauses using
this basic phrase, i.e., “relating to,” as “broad.” See, e.g., Hallmark Partners, 227 So 3d at
1056 (“Narrow arbitration language governs disputes that ‘arise out of’ the contract, while
broad clauses cover disputes that ‘relate to’ or ‘are connected with’ the contract.”). But the
majority’s failure to apply its new standard in this case—something we often do in cases
that develop a new standard—leaves doubt about how broad or narrow the standard is.
From the majority’s examples, the standard would seem to severely limit the scope of
arbitrable disputes. The majority asks whether a client of the Firm or a server at a restaurant
could bring the same sexual-assault claims as the plaintiffs in these circumstances. If so,
then the claims do not relate to employment. The answer clearly appears to be that those
individuals could bring the same claims. Thus, the result of the majority’s hypotheticals is
that only those disputes arising from a core aspect of the employment relationship, such as
a dispute over the terms of the employment agreement, must be arbitrated. But if the parties
wanted to accomplish this, they could have used the language they included later in the
agreement under which the Firm agreed to arbitrate “any claims” against its employees
“arising out of the employment relationship . . . .” That language has been construed as
narrower than the type of language at issue here involving disputes that “relate to”
employment. See, e.g., United States ex rel Welch v My Left Foot Children’s Therapy,
LLC, 871 F3d 791, 798 (CA 9, 2017) (“As we have held, the words arising out of are
6
But the arbitration agreement’s scope is not defined by the “concerns” that are
“relative to . . . employment.” Instead, the arbitrable “concerns” involve “the application
or interpretation of the Firm’s Policies and Procedures relative to your employment . . . .”
Accordingly, a “concern” that must go to arbitration is one that regards how the policies
and procedures were applied or interpreted “relative to [a plaintiff’s] employment.” From
this perspective, the phrase “relative to [a plaintiff’s] employment” simply excludes from
the scope of arbitration a plaintiff’s concerns with the interpretation or application of the
policies and procedures that are not related to that plaintiff. This would exclude an
employee’s concerns about how the policies or procedures were interpreted or applied to
another employee or how they were interpreted or applied in general, unrelated to any
particular employee. 7
Under the proper interpretation of the contract, then, the arbitrability of plaintiffs’
common-law claims turns upon whether the Firm’s policies and procedures cover the
‘relatively narrow as arbitration clauses go’ . . . . [T]he phrase ‘relate to’ is broader than
the phrases “arising out of’ or ‘arising under’ . . . .”) (citations omitted); Hallmark
Partners, 227 So 3d at 1056 (“Narrow arbitration language governs disputes that ‘arise out
of’ the contract, while broad clauses cover disputes that ‘relate to’ or ‘are connected with’
the contract.”).
7
The majority elides the agreement’s reference to “the Firm’s Policies and Procedures” by
dividing the relevant contractual language into three parts: “[1] all concerns you have [2]
over the application or interpretation of the Firm’s Policies and Procedures [3] relative to
your employment . . . .” The first two requirements are satisfied, according to the majority,
and only the third remains to be decided on remand, i.e., whether the concerns were relative
to plaintiffs’ employment. But the third part cannot be construed to simply relate back to
“concerns” irrespective of the Firm’s policies and procedures, as the majority suggests.
The “concerns” themselves are about how the Firm’s policies and procedures were applied
“relative to [plaintiffs’] employment . . . .” Only by artificially separating the policies-and-
procedures language can the majority create its freestanding “relative to your employment”
requirement.
7
alleged conduct (sexual assault and harassment) and whether plaintiffs’ allegations concern
the application or interpretation of those policies or procedures. Therefore, the application
of the contract to this case requires an examination of the policies and procedures, which
contain much that encompasses the factual allegations here. The Employee Policy Manual
specifically proscribes sexual harassment, which it defines as “unwelcome or unwanted
conduct of a sexual nature (verbal, written, physical or environment[al]) when” either
(1) the “[s]ubmission to or rejection of this conduct is used as a factor in decisions affecting
hiring, evaluation, promotion or other aspects of employment,” or (2) the “[c]onduct
substantially interferes with an individual’s employment or creates an intimidating, hostile
or offensive work environment.” “This policy covers all employees,” the manual
continues, and “[t]he Firm will not tolerate, condone or allow any incident of
discrimination, harassment or retaliation. The Firm encourages reporting of all such
incidents, regardless of who the offender may be.” If the employee cannot confront the
harasser, he or she “must report any perceived discrimination, harassment, or retaliation to
their [sic] supervisor or Human Resources.” An investigation will follow and “[p]rompt
corrective action will be taken,” including by disciplining or firing the offender.
Another portion of the manual establishes standards of conduct, the breach of which
can lead to discipline. Included among these are “[s]exual or other unlawful or unwelcome
harassment.” The Firm also “strongly discourage[s]” dating between employees and
prohibits an employee from dating a supervisor—if a relationship with a supervisor occurs,
one of the employees is subject to transfer or termination. In yet another section, the
manual states that coworkers must be treated “with courtesy and respect at all times.”
Further, “[t]he Firm does not allow behavior in the workplace at any time that threatens,
8
intimidates, bullies, or coerces another employee” or that harasses another employee on
the basis of sex. This prohibition extends to any proscribed acts “that might occur on our
premises at any time, at work-related functions, or outside work if it affects the workplace.”
Again, violations are to be reported, with investigations and discipline to follow. The
manual puts the Firm’s Compliance Officer in charge of investigating and resolving all
complaints alleging that a policy has been violated.
In sum, the manual specifically proscribes unwanted sexual contact and a great deal
of behavior that might surround that contact, such as verbal harassment or an abusive work
environment. The manual also establishes a general requirement of respect for coworkers,
and it puts in place a procedure for complaints concerning violations of the Firm’s policies.
The question is whether plaintiffs’ allegations involve concerns with how the Firm’s
policies were interpreted or applied to them. I believe that the facts laid out in the complaint
meet this requirement. Both plaintiffs allege that Morse engaged in behavior that would
directly violate the manual. Plaintiff Samantha Lichon contends that Morse sexually
harassed her at work, both verbally and physically. “At all relevant times,” her complaint
states, she was an employee of Morse and the Firm. Also “[a]t all relevant times,” Morse
was an agent of the Firm and was “acting within the course and scope of his employment.”
She further states that she made multiple reports of this behavior to her superiors and to the
human resources department, but that no action was taken and the harassment continued.
This conduct created an intimidating and hostile work environment that “substantially
interfered with [her] employment.”
With regard to her claims against the Firm for negligent and intentional infliction of
emotional distress, Lichon alleges that the Firm failed to remedy the situation after her
9
formal complaints, failed to supervise Morse, failed to maintain safe premises, failed to
have safeguards against sexual assaults, failed to provide a safe work environment, and
assisted Morse in seeking to cover up the assault. The last contention refers to Lichon’s
allegation that, a few months after she was fired, an employee of the Firm intimidated her
in an attempt to dissuade her from filing suit against defendants. This gives rise to her
claim of civil conspiracy against defendants for trying to prevent her lawsuit.
At the core of all the legal claims are Lichon’s allegations of sexual harassment and
the Firm’s related failure to abide by its policies and procedures. She contends, in essence,
that Morse engaged in conduct violating the Firm’s policies and that the Firm failed to
redress these violations in accordance with the manual. The claims thus represent Lichon’s
concerns with how the Firm’s policies and procedures were interpreted or applied relative
to her employment. The claims therefore fall within the substantive scope of the arbitration
clause.
The analysis is the same for plaintiff Jordan Smits’s allegations. Both of her
complaints concern events that occurred at the Firm’s 2015 Christmas party. Smits
contends that Morse sexually assaulted her in front of other employees by grabbing her
breasts at that employee-only party. Smits claims to have reported the assault to the Firm’s
human resources department, which did nothing in response. After resigning and refusing
to sign a nondisclosure agreement, Smits says she received a call from an employee of the
Firm warning her that Morse “could make it difficult” for Smits “to get a job.” She further
states that the Firm was aware of Morse’s similar behavior with other female employees
and therefore knew of his propensity for such acts. The Firm also failed to remedy the
10
situation, properly supervise Morse, provide a safe workplace, and conduct company
events in a safe manner.
As with Lichon, all of Smits’s legal claims surround the assault, the lack of response
to Smits’s internal complaints concerning the assault, and the attempted cover-up. Like
Lichon’s allegations, Smits’s factual contentions similarly represent her concerns
regarding how the Firm’s policies and procedures were interpreted or applied relative to
her employment. Therefore, like Lichon’s claims, Smits’s claims are within the substantive
scope of the arbitration clause.
This analysis suffices to determine that the claims are arbitrable under the contract.
The Firm, as a signatory of the agreement, can therefore seek to compel arbitration pursuant
to the contract. But Morse, in his individual capacity, did not sign the agreement. Thus,
the next question is whether he can invoke the agreement. Because this was not decided
below, I would remand the case to determine whether Morse can compel arbitration despite
being a nonsignatory. 8 If Morse has such authority, then under the analysis above, the
8
It is possible that the plain language of the arbitration clause covers these claims against
Morse. It states, “This Procedure [i.e., the arbitration clause] includes any claim against
another employee of the Firm for violation of the Firm’s Policies, discriminatory conduct
or violation of other state or federal employment or labor laws.” But interpreting the
arbitration clause to cover the claims against Morse would require a finding that Morse is
an employee of the Firm. As the Court of Appeals majority noted below, the Firm’s
regulatory filings show that “Morse is the president, secretary, treasurer, director, and sole
shareholder of the Morse firm.” Lichon v Morse, 327 Mich App 375, 396; 933 NW2d 506
(2019). It is not clear, however, whether he would also be considered an employee for
purposes of the arbitration clause. Alternatively, various courts have recognized that
nonsignatories can enforce arbitration agreements in certain circumstances, such as “when
the issues in dispute are intertwined with the agreement that the signatory signed, or if there
is a close relationship between the entities involved and between the alleged wrongs and
the contract . . . .” Application of Equitable Estoppel to Compel Arbitration By or Against
Nonsignatory—State Cases, 22 ALR6th 387, 403, § 2; see also GE Energy Power
11
substance of the claims made against him falls within the contract, and those claims, like
the claims against the Firm, are subject to arbitration. 9
In reaching a different conclusion, the majority upends the parties’ allocation of
certain disputes to arbitration and others to litigation. The parties specified the range of
arbitrable subjects by linking arbitration to the matters contained in the Firm’s policies and
procedures. This made the scope of arbitration more concrete than it would be under the
open-ended standard fashioned by the majority today. The application of the majority’s
standard will rely heavily on a court’s belief about what “relates” to employment. The
majority’s failure to apply the standard here also yields no insights. Results will vary, and
the stability the parties sought by invoking the policies and procedures will be lost.
In some cases, under this new standard, employees will be forced to litigate certain
“concerns” they clearly intended to arbitrate—those involving a dispute about how a
provision in the policies and procedures has been applied to him or her. If a court does not
Conversion France SAS, Corp v Outokumpu Stainless USA, LLC, 590 US ___, ___; 140 S
Ct 1637, 1643-1644; 207 L Ed 2d 1 (2020) (recognizing “that arbitration agreements may
be enforced by nonsignatories through assumption, piercing the corporate veil, alter ego,
incorporation by reference, third-party beneficiary theories, waiver and estoppel”) (cleaned
up). Our Court of Appeals has similarly observed that whether nonsignatories can arbitrate
depends on general common-law principles, such as agency law. See American Federation
of State, Co & Muni Employees, Council 25 v Wayne Co, 292 Mich App 68, 81; 811 NW2d
4 (2011).
9
Plaintiffs develop other arguments against enforcement of the arbitration agreement by
the Firm or Morse, including that the agreement is unconscionable and illusory and that
defendants forfeited their right to enforce arbitration. These arguments do not directly
involve the interpretation of the agreement and were not addressed by the Court of Appeals
below. My resolution of the interpretive issues before the Court here would leave plaintiffs
free to raise these other arguments on remand.
12
believe that the concern truly relates to employment—despite the fact that the subject
matter has been placed in the policies and procedures—then the dispute will be headed to
court. Conversely, in other cases, a court might conclude that a dispute relates to
employment even though the subject matter is not covered by the policies and procedures
(and therefore does not fall within the ordinary meaning of the arbitration clause, as
discussed above). The court will accordingly order arbitration of a dispute the parties
wanted to litigate.
By disregarding the text, the majority has attempted to craft a standard rather than
interpret a contract. The resulting analysis resembles common-law rulemaking that seeks
to find or formulate what the court thinks is the best rule for the circumstances. 10 But our
imperative is to enforce the agreement into which the parties freely entered. See Rory v
Continental Ins Co, 473 Mich 457, 469; 703 NW2d 23 (2005). Because the majority
opinion today departs from these foundational principles, I dissent.
David F. Viviano
Brian K. Zahra
WELCH, J., did not participate in the disposition of this case because the Court
considered it before she assumed office.
10
The majority also invites plaintiffs to amend their complaints and “remind[s]” the lower
courts of the lenient standard for amendments. The question of arbitrability here depends
on the factual allegations of the complaint and whether they fall within the arbitration
clause. By encouraging plaintiffs to amend, the majority appears to implicitly agree with
my conclusion that, as they stand now, the allegations in the complaints require arbitration.
In any event, one is left to wonder why the majority is so confident that plaintiffs have at
the ready an alternate set of facts to plead in avoidance of the arbitration clause. See Miller
v Chapman Contracting, 477 Mich 102, 105; 730 NW2d 462 (2007) (noting that although
leave to amend should be freely given, it should be denied if the amendment would be
futile).
13