The Sixth Circuit has been busy with arbitration cases in the past year, as we have covered here and here, largely trending in favor of arbitration. Last week, the Circuit issued an opinion in another arbitration case, Milan Express v. Applied Underwriters, holding that the enforceability of an arbitration clause is itself a matter for arbitration.
The dispute began over premiums and fees under Milan’s workers compensation insurance with Applied Underwriters. Milan filed suit in federal court and moved to stop arbitration, while Applied Underwriters moved to compel arbitration. The district court first held that the issue of arbitrability was for the court to decide, and then held that the because the arbitration provision was invalid under Nebraska law (which governed the contract), arbitration must cease.
In vacating the district court’s order on appeal, the Sixth Circuit found that the plain language of the parties’ arbitration agreement manifested a “clear and unmistakable” intent that the arbitrator was to resolve all questions of arbitrability. The panel noted that the district court failed to take into account the Supreme Court’s holding in Rent-A-Center v. Jackson, in which the Supreme Court found very similar language to meet the “clear and unmistakable” intent requirement. Because in Milan Express the parties had “manifest[ed] intent to submit all disputes, including disputes regarding the enforceability of any provision, exclusively to arbitration,” the arbitrator was to decide issues of arbitrability, plain and simple. Absent a challenge by Milan to the validity of the arbitration clause (e.g., under claim of fraud, duress, or unconscionability), all disputes—including the arbitrability of the agreement—would go to arbitration.
Although the court remanded the case to the district court for a decision on whether to dismiss the case or to move forward on Milan’s other claims, this case is another example of the Sixth Circuit’s “thumb on the scale” clearly in favor of arbitration. After Milan Express, the Sixth Circuit leaves few litigation options for those challenging arbitration clauses if the clause encompasses “all disputes,” including enforceability. Absent ambiguous language, proof of a lack of “clear and unmistakable” intent to arbitrate, or a challenge to the actual creation of the arbitration contract, parties in the Sixth Circuit will be strictly bound by arbitration clauses.