Michigan’s Court of Appeals recently held an arbitrator lacks jurisdiction if the Legislature has granted exclusive jurisdiction to an administrative agency Kilpatrick v Lansing Comm College, Case No. 361300 (August 22, 2023). Kilpatrick was an employment case where plaintiff alleged a variety of claims, including a claim her employer violated Michigan’s Wages and Fringe Benefits Act (WFBA). The arbitrator dismissed plaintiff’s WBFA claim for lack of jurisdiction. The trial court affirmed. So did the Court of Appeals.
The Court of Appeals noted the WFBA provides that an “employee who believes that his or her employer has violated [the WFBA] may file a written complaint with the [Michigan Department of Labor (DOL)]." However, notwithstanding the Legislature’s use of the permissive “may,” the Court noted it had previously held the administrative-complaint procedure was the exclusive remedy for WFBA claims. Thus, given the DOL’s exclusive jurisdiction, the arbitrator lacked any jurisdiction. The Court supported its conclusion by analogizing to the general rule that parties may not consent to confer jurisdiction on a court that, otherwise, lacks jurisdiction.
The Court also rejected plaintiff’s argument based on the DOL’s administrative rule providing that a WFBA administrative complaint should be dismissed in cases where the “employee has given contractual assent … to arbitration by the American Arbitration Association …”. R 408.9036(n). The Court noted that, although it was bound to give “respectful consideration” to DOL's “legal analysis,” it was not bound to defer to it and, in this case, did not.
Kilpatrick is interesting for at least three reasons. First, contrary to the Court's characterization of its holding, the Legislature did not grant exclusive jurisdiction over WFBA claims to the DOL. Rather, the WFBA, by its terms (quoted above), granted employees the option of filing an administrative complaint with DOL. It was the Court, not the Legislature, that interpreted DOL's jurisdiction as "exclusive." Second, by definition, parties are required to "consent" to an arbitrator's jurisdiction in every case via an arbitration agreement. Thus, the analogy with the court's jurisdiction is inapt. Third, it is relatively unusual for a court to disregard an official agency regulation, such as the DOL cited by plaintiff.