Background
Six former employees of Detroit Medical Center alleged that the hospital terminated them after they raised concerns about personal protective equipment and patient conditions during the COVID-19 pandemic. Kenisa Barkai was fired after posting a short social-media video and discussing PPE shortages with local news. The other five employees were fired after a national news organization published photographs of bodies in bags at the hospital, although each denied taking or transmitting the photographs.
The employees sued for claims including retaliation under Michigan’s Whistleblowers’ Protection Act, wrongful discharge in violation of public policy, intentional or reckless infliction of emotional distress, and conspiracy. The defendants sought summary disposition and enforcement of a Fair Treatment Process that required final and binding arbitration of employment-related disputes. The trial court declined to compel arbitration, but the Court of Appeals reversed. The Michigan Supreme Court later vacated that judgment and remanded for reconsideration in light of Rayford v. American House Roseville I, LLC, which examined a contractually shortened limitations period in an employment agreement.
The Court’s Holding
The Court of Appeals again reversed the trial court and directed it to grant the defendants’ motions and compel arbitration. It held that Rayford did not change the result because Rayford concerned the reasonableness and potential unconscionability of a shortened limitations period, while these consolidated cases concerned an arbitration agreement.
The court applied the published and binding decision in Johnson v. Best Buy Co., Inc. (On Remand), which concluded that an employment arbitration provision can remain reasonable and enforceable despite adhesion-contract concerns when it binds both parties, uses standard arbitration rules, and identifies the claims it covers. The Fair Treatment Process had those features: it applied mutually, adopted American Arbitration Association procedures, and broadly covered employment-related claims, including the plaintiffs’ claims. The court therefore remanded for entry of an order compelling arbitration and did not retain jurisdiction.
Key Takeaways
- Rayford’s analysis of contractually shortened limitation periods did not itself invalidate or require further factual development concerning the employees’ arbitration agreements.
- Under binding Michigan Court of Appeals precedent, a standardized employment arbitration agreement may be enforceable when it is mutual, uses established arbitration rules, and clearly describes its coverage.
- The employees must pursue their whistleblower, wrongful-discharge, emotional-distress, and related claims through arbitration rather than in court.
Why It Matters
The decision limits Rayford’s immediate effect on employment arbitration disputes and confirms that adhesion-contract concerns do not automatically render a workplace arbitration policy unconscionable. Michigan courts must still examine the agreement’s terms, including mutuality, procedural rules, and scope.
The ruling also underscores that the Court of Appeals remains bound by its published Johnson decision while the Michigan Supreme Court considers whether Rayford’s adhesion-contract analysis applies to employment arbitration policies and whether federal arbitration law preempts that analysis.