The Tenth Circuit recently issued a decision addressing the scope of an arbitration clause in a poorly-drafted employment agreement. Normally, under contract law, ambiguities are construed against the drafter, who would be the employer in this case. However, because of presumptions arising from federal arbitration law, the court found in favor of the employer and held that the scope of the arbitration clause covered the dispute at hand. See Sanchez v. Nitro-Lift Technologies, L.L.C., No. 12–7046 (10th Cir. Aug. 8, 2014) (click here for a copy of the decision).
The employees in this case filed actions against their employer for failure to pay overtime wages. The employees had signed a contract labeled “Confidentiality/Non-Compete Agreement,” and as the label suggested, this narrow contract focused on confidentiality and non-compete obligations of the employees. However, embedded within this narrow contract was a broad arbitration clause purporting to cover “any dispute” between the parties. The contract was poorly drafted, with references to non-existent paragraphs.
In light of the broad clause within the narrow contract, the Tenth Circuit found there were 2 reasonable constructions of the arbitration clause: either the parties agreed to arbitrate all disputes arising between them, or because of the specific focus of the narrow contract, the parties agreed to arbitrate all disputes regarding confidentiality and non-compete obligations.
Relying on the federal policy that “[a]ny doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration,” a federal docket-clearing policy manufactured by the Supreme Court in its 1983 Moses H. Cone decision, the Tenth Circuit found that the arbitration clause in the narrow confidentiality/non-compete contract covered the wage disputes raised by the employees.