The Supreme Court’s decision in Litton v. NLIB establishes the starting point for determining whether a dispute arising post-expiration of the contract is subject to arbitration. Last week, in Huffman v. Hilltop Companies, LLC , the Sixth Circuit reversed the denial of arbitration in a post-expiration dispute building on the seminal analysis in Litton.
The Court began its analysis by noting that the arbitration clause in the agreement at issue was a prototypical “broad” clause. As a result, this placed the burden on the plaintiffs to rebut the strong presumption in favor of arbitration, particularly given the fact that any doubts regarding the parties’ intentions should be resolved in favor of arbitrability. The unique issue in this case was that the contract contained a survival clause that did not list the arbitration clause as one of the provisions that survived the expiration of the agreement. Based on the exclusion from the survival clause, the plaintiffs argued that the omission was tantamount to a clear implication that the parties did not intend the arbitration clause to have post-expiration effects. The Sixth Circuit acknowledged that this posed a “trickier question.” However, the Court construed the contract as a whole, and observed that the parties did not intend to the survival clause to serve as an exhaustive list of provisions which should survive expiration through agreement, pointing to a couple of examples. Invoking the presumption in favor of arbitration, the Sixth Circuit ordered arbitration in this case.
It appears from the Court’s analysis that this is the first circuit-level opinion ever to wrestle with the issue of post-expiration arbitrability in the face of a survival clause excludes the arbitration provision. The Court’s opinion cites a few district court decisions that considered the issue, but no circuit-level authority. The opinion comports with the weight of Sixth Circuit authority favoring arbitration generally, and its significance may be more reaching because of the limited universe of cases on this precise issue. And this provides yet another reminder to parties that greater care in drafting of agreements can avoid lots of expense and headaches down the road in litigation.