Sixth Circuit Holds Former Employee Required to Arbitrate “Gateway” Questions Concerning Arbitration Agreement’s Coverage, Enforceability, and Formation

The plaintiff sued his former employer, Charter Communications, asserting Kentucky state law claims arising out of his termination. After the case was removed to federal court in the Western District of Kentucky, Charter moved to compel arbitration and dismiss, or in the alternative, stay, the lawsuit.

Before the plaintiff’s termination, Charter had announced a dispute resolution program that would require all employees to arbitrate any employment dispute with Charter unless the employee opted out within 30 days. The plaintiff did not opt out, and as a result, the district court dismissed the plaintiff’s suit against Charter and compelled him to arbitrate his employment claims.

The plaintiff appealed to the Sixth Circuit Court of Appeals, arguing that the arbitration agreement did not cover his employment claims, that it was unconscionable, and that Charter failed to give adequate consideration in return for his agreement to arbitrate.

The Sixth Circuit affirmed the district court’s decision to compel arbitration, holding that the arbitration agreement expressly reserved these “gateway” questions concerning coverage and enforceability of the arbitration agreement for the arbitrator to resolve.

The court noted that the arbitration agreement unambiguously stated that “the arbitrator shall have the sole authority to determine whether a particular claim or controversy is arbitrable.” The court also reasoned that the plaintiff never challenged the district court’s holding delegating the enforceability question to the arbitrator and that the plaintiff’s unconscionability argument attacked the arbitration agreement as a whole, and not just the specific provisions delegating unconscionability claims to an arbitrator.

Having determined that both parties gave adequate consideration by agreeing to arbitrate with each other, the court declined to decide whether the arbitrator could decide the gateway question regarding “formation.”

While the Sixth Circuit found that the district court properly compelled the plaintiff to arbitrate his claims, the court determined that the case should have been stayed, rather than dismissed, and therefore remanded the case with instructions to enter a stay pending arbitration.

Anderson v. Charter Communications, Inc., No. 20-5894 (6th Cir. June 11, 2021).