|
The Tenth Circuit Court of Appeals held that a party waived its right to challenge the enforceability of an arbitration agreement by proceeding with arbitration while making no formal objection before the arbitrator, and further held that the agreement did not violate Kansas’s public policy.
In Lewis v. Circuit City Stores, Inc., No. 05-3383, 2007 WL 2460232 (10th Cir. Aug. 31, 2007), Michael Lewis injured his knee while working for Circuit City and received medical treatment, but continued to have pain and sought additional medical treatment.
After his termination, Lewis brought suit alleging retaliatory discharge. The claim proceeded to arbitration in accordance with Circuit City’s Dispute Resolution Rules and Procedures, which Lewis had signed.
Circuit City disputed the reason for Lewis’s termination, claiming that he was terminated based on his violation of its weapons policy. The arbitrator found that Circuit City had made a good faith determination that Lewis violated its weapons policy and found in its favor.
Subsequently, Lewis filed the same claim in district court, claiming that “retaliatory discharge is … inappropriate for resolution by arbitration.” Circuit City moved to dismiss. The Court decided that Lewis had not timely pleaded a proper reason for vacatur under the Federal Arbitration Act (FAA) and dismissed the motion. Lewis appealed.
The Court rejected Lewis’s argument that the arbitration agreement was not enforceable under basic contract principles. The Court held that Lewis waived the opportunity to challenge the arbitration agreement because he had not made an explicit objection to arbitration. Lewis conceded at the district court level “that he had not expressly challenged the enforceability of the agreement during arbitration.”
Although Lewis claimed to have objected to arbitration, any objection he made was legally inadequate. Moreover, the record did not support his contention that he never agreed to arbitration, as he had completed and signed two arbitration request forms.
Also, the Court disagreed with Lewis that the award was in violation of Kansas public policy because it involved arbitration of a torts claim. Lewis’s claim did not constitute violation of an explicit public policy, one of the judicially created grounds to deny enforcement of arbitral awards.
Although Kansas public policy would allow Lewis to file his claim independent of arbitration, the “arbitrator could have reasonably construed the facts of [this] case to eliminate such a conflict with established law.” See Seymour v. Blue Cross/Blue Shield, 988 F.2d 1020, 1025 (10th Cir. 1993). Additionally, the Kansas Supreme Court has previously held that the FAA preempts state law that would invalidate the arbitration of tort claims. See Skewes v. Shearson Lehman Bros., 829 P.2d 874 (Kan. 1992).
Subscribe to a free weekly update on ADR case law and
legislation
|