On May 31, 2019, in Webb v. Farmers of North America, Inc. (No. 17-3456), the Eighth Circuit dismissed an employer’s appeal challenging how the lower court had read an arbitration agreement. The employer, citing the agreement with its employee, had actually persuaded the lower court to require the employee to arbitrate his case. So why the employer’s appeal?
After the district court ordered him to arbitrate his case, the employee challenged who would arbitrate it, and the court sided with him. The Eighth Circuit then tossed the employer’s appeal, holding that it lacked jurisdiction, primarily because the case wasn’t yet final. Federal appellate courts don’t ordinarily review non-final—or, “interlocutory”—orders.
But this is an employment law blog, and those are procedural points. Webb contains a lesson for employment lawyers (any lawyer who reads or writes contracts, really) because its underlying dispute was about an arbitration agreement’s wording.
Under the agreement, the parties agreed to arbitrate their claims under “the rules” of the American Arbitration Association, a well-known arbitral body. Even so, the plaintiff contended this provision didn’t require the AAA to be the arbitrator; a non-AAA arbitrator could preside, as long as it applied the AAA’s rules. The district court agreed, finding that if the employer had meant for all the parties’ disputes to be submitted to the AAA, it could have said so. So the dispute would be arbitrated—just not necessarily before the AAA.
It’s worth emphasizing that the Eighth Circuit’s opinion in Webb doesn’t address the merits of the district court’s ruling. Its correctness will have to be reviewed, if ever, in a later appeal.
But the case highlights the importance of specifically designating who will arbitrate employee disputes, rather than assuming that a reference to a particular body’s rules is enough. If the arbitration agreement in Webb had specified that the arbitration would be administered by the AAA (or another body) under its rules, the district court would have lacked grounds to find the agreement ambiguous. Indeed, construction-industry contracts between contractors often contain this term or one similar to it. These contracts may supply useful models for designating an arbitral body. By specifying a particular arbitrator, parties can avoid having to reach agreement on mutually acceptable arbitrator, as the district court in Webb directed.