Grey v. American Management Services: Court of Appeal Holds That Employment Agreement Did Not Compel Arbitration of Discrimination Claims

Just a short note on this arbitration decision, which I missed earlier this year. In Grey v. American Management Services (3/28/12) 204 Cal.App.4th 803, the Court of Appeal reversed a judgment entered on an arbitration award, holding that the trial court should not have compelled the employee/plaintiff to arbitrate his claims for sexual orientation discrimination.

When he applied for a position, the plaintiff had signed an "issue resolution agreement" (IRA), which included an arbitration clause. On being hired, he signed an employment contract, which included a more limited arbitration clause and an integration clause.

The Court first construed the employment agreement's integration clause "to mean that the parties intended the contract to be the final and exclusive embodiment of their agreement." Id. at 807-809. As an integrated agreement, it superseded the earlier IRA.

The Court then held that the employment agreement's limited arbitration clause did not require the plaintiff to arbitrate his discrimination claims, because it applied only to disputes "arising out of the alleged breach of any other provision of this Agreement."

The scope of the arbitration clause in the employment contract only applies to claims arising from a breach of that contract and does not encompass all claims an employee may have against AMS. All of Grey's claims are for statutory violations, and none arises from a breach of the employment contract. We agree with both parties that Grey is not required to arbitrate his claims under these terms.

Id. at 810. The opinion is available here.