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  • Writer's pictureRobert Lusk

Sixth Circuit Confirms the Difference between ADR and Arbitration

An employer learned the difference between alternative dispute resolution (ADR), in general, and arbitration, in specific, in Southard v Newcomb Oil Company, LLC, ___ F3d ___ (CA 6 2021). In Southard, the employer required its employees to sign employment applications providing, “As a condition of employment, I accept that any complaint or conflict that cannot be resolved internally may be referred to Alternative Dispute Resolution, unless prohibited by law, before any other legal action is taken.” The employer’s handbook included the following two statements on the subject. First, “As an employee [of the employer], you agree to Alternative Dispute Resolution a [sic] forum or means for resolving disputes, as arbitration or mediation, that exists outside the state or federal judicial system, unless prohibited by law, as a means to resolve any disputes and/or complaints that cannot be resolved internally.” Second, “if there is a conflict that cannot be resolved between the employee and the company, both agree that the matter will be referred to arbitration.”

When an employee sued, the employer moved to compel arbitration. The district court declined and the Sixth Circuit affirmed. The court noted that ADR was a general term that covered a variety of dispute resolution mechanisms, including arbitration and mediation. However, arbitration, specifically, was fundamentally characterized by: a final, binding remedy by a third party; an independent adjudicator; substantive standards; and, an opportunity for each side to present its case. As the employer’s documents did not require the employee to submit to arbitration, as defined, the employee had no duty to do so and, therefore, could pursue his claims in court.

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