Is an arbitration clause enforceable if it is in an expired contract and the parties omitted it from the contract’s survival clause? Yes, said the Sixth Circuit in Huffman v. The Hilltop Companies, noting “whether the strong presumption in favor of arbitration applies postexpiration when an arbitration clause is not listed in a survival clause appears to be one of first impression among the circuit courts.”
Hoffman involved a putative class action by former independent contractors who alleged they were misclassified. The company moved to compel arbitration based on an arbitration provision in expired services agreements with each of the plaintiffs. The agreement contained a survival clause that listed half of the 24 provisions that would survive the expiration of the agreement, but not the arbitration clause.
Looking at the contract as a whole, the court observed a number of other provisions, including the severability and integration clauses, which the parties must have intended to survive the expiration of the contract, were also not included in the survival clause. Clearly, the court concluded, the parties did not “intend for the survival clause to serve as an exhaustive list of the provisions that would survive expiration of the agreement.” Finding ambiguity regarding the survival of the arbitration clause, coupled with the strong federal presumption in favor of arbitration, the court concluded that the arbitration provision was enforceable. Moreover, the court pointed out, “the need for an arbitration provision to have postexpiration effect is intuitive, because if the duty to arbitrate automatically terminated upon expiration of the contract, a party could avoid his contractual duty to arbitrate by simply waiting until the day after the contract expired to bring an action regarding a dispute that arose while the contract was in effect.” Nevertheless, the court indicated that its holding did not mean that an arbitration provision would always survive the expiration of a contract. For example, the court stated, if a contract’s survival clause listed all of the agreement’s provisions except the arbitration clause, that might constitute a clear rebuttal of the presumption favoring arbitration and yield a different result.
The case is also notable because the arbitration provision in the agreement was silent on the issue of class arbitration. The Sixth Circuit stated that where an “agreement is silent as to whether an arbitrator or a court should determine the question of classwide arbitrability. . . the determination lies with this court . . . . [H]ere the parties’ arbitration clause nowhere mentions classwide arbitration. We therefore conclude that the arbitration clause does not authorize classwide arbitration, and hold that the plaintiffs must proceed individually.”