Case Name: RUSHTON v. MEIJER, INCORPORATED (ON REMAND)
Court: Michigan Court of Appeals
Jurisdiction: Michigan
Decision Date: 1997-08-19
Citations: 225 Mich. App. 156
Docket Number: Docket No. 199684
Parties: RUSHTON v MEIJER, INCORPORATED (ON REMAND)
Judges: Before: Fitzgerald, P.J., and Taylor and Holbrook, Jr., JJ.
Reporter: Michigan appeals reports; cases decided in the Michigan Court of Appeals.
Volume: 225
Pages: 156–186

Head Matter:
RUSHTON v MEIJER, INCORPORATED (ON REMAND)
Docket No. 199684.
Submitted December 9, 1996, at Lansing.
Decided August 19, 1997, at 9:25 A.M.
Leave to appeal sought.
Christine M. Rushton brought an action in the Genesee Circuit Court against Meijer, Incorporated, alleging wrongful discharge, gender discrimination, and retaliation. The plaintiff had been employed by the defendant as a part-time floor detective. When the plaintiff was hired, she agreed to abide by the defendant’s policies and procedures and acknowledged receipt of an associate handbook, in which there was a provision that required that employees who were terminated follow the alternative dispute resolution (adr) procedure set forth in the handbook before seeking any judicial remedy. When the plaintiff was terminated from her employment, she invoked the adr procedure, indicating that she believed that she had been terminated without just cause, that she was the victim of gender discrimination, and that her termination had been in retaliation for her complaining about not being given a full-time job. Following an investigation, the plaintiff’s termination was upheld. Rather than pursue the next step in the adr procedure, which was binding arbitration, the plaintiff commenced her action in the circuit court. The defendant moved for summary disposition on the basis of the plaintiff’s failure to complete the alternative dispute resolution procedure. Following the plaintiff’s withdrawal of her retaliation claim, the court, Valdemar L. Washington, J., denied defendant’s motion for summary disposition of the wrongful discharge and gender discrimination claims. The defendant appealed by leave granted. The Court of Appeals, Fitzgerald, P.J., and Tailor and Holbrook, Jr., JJ., relying on the holding in Heurtebise v Reliable Business Computers, Inc, 207 Mich App 308 (1994), as controlling precedent for the proposition that private agreements to arbitrate civil rights claims are enforceable, reversed the order of the trial court that denied summary disposition with respect to both the wrongful discharge and the gender discrimination claims. Unpublished memorandum opinion of the Court of Appeals, issued March 1, 1995 (Docket No. 164272). The plaintiff sought leave to appeal to the Supreme Court, which remanded the matter to the Court of Appeals for reconsideration in light of Heurtebise v Relia ble Business Computers, Inc, 452 Mich 405 (1996). 453 Mich 943 (1996).
On remand, the Court of Appeals held:
1. The Supreme Court in Heurtebise reversed the decision of the Court of Appeals in that case because the employee handbook contained language demonstrating that the employer did not intend to be bound by the provisions set forth in the handbook, in that the handbook stated that the policies contained therein did not create any employment or personal contract, that the employer retained the right to terminate any employee at any time for any reason, and that the employer retained the right to change any and all of the policies set forth in the handbook.
2. Unlike the employee handbook in Heurtebise, the defendant’s employee handbook in this case does not contain any language suggesting that the defendant does not intend to be bound by the provisions in the handbook or that the defendant does not consider that those policies result in employment that can be terminated only for just cause. Although the defendant’s handbook reserves to the defendant the right to modify or delete existing policies that are set forth in the handbook, it is clear that the defendant intended to be bound by the policies set forth in the handbook until such time that it exercises, with adequate notice to its employees, the reserved right to modify those policies. Because the defendant made no changes to the policies set forth in the handbook before the plaintiff instituted her action, both the plaintiff and the defendant are contractually bound by those provisions.
3. Because the provisions of the defendant’s employee handbook clearly require that a terminated employee pursuing a breach of contract claim first exhaust the nonjudicial remedies set forth in the ADR procedure, including the submission of the matter to binding arbitration, and because contractual provisions requiring the submission of claims of breach of contract to binding arbitration have been held to be valid and enforceable, the plaintiff’s failure to proceed with the remedies under the adr procedure of the employee handbook with respect to the wrongful discharge claim barred her pursuit of that claim in the circuit court. Accordingly, the trial court erred in failing to grant summary disposition for the defendant with respect to the wrongful discharge claim.
4. Section 803 of the Civil Rights Act, MCL 37.2803; MSA 3.548(803), expressly prohibits any requirement that a person asserting a right under that act first exhaust any nonjudicial remedies before seeking legal or equitable remedies in a court of this state. Accordingly, any provision in an employment contract that presumes to require that an employee who has a claim arising under the provisions of the Civil Rights Act first exhaust any nor\judicial remedies is contrary to public policy and unenforceable. Accordingly, the plaintiff was not required to proceed with the nonjudicial remedies set forth in the employee handbook rather than seeking a judicial remedy of her gender discrimination claim by the filing of a complaint in the circuit court, and the trial court properly refused to grant summary disposition for the defendant with respect to the claim of gender discrimination.
5. Because the plaintiffs employment as a store detective did not directly involve or affect interstate commerce, the federal arbitration act, 9 USC 1 et seq., is inapplicable to this matter, even though the defendant’s general business might involve interstate commerce.
Affirmed in part, reversed in part, and remanded.
Taylor, J., concurring in part and dissenting in part, stated that not only did the trial court err in refusing to grant summary disposition for the defendant with respect to the wrongful discharge claim, but also erred in refusing to grant summary disposition with respect to the gender discrimination claim because there is no binding authority to compel the conclusion that parties may not before a dispute arises contractually decide to submit any dispute that might arise under the Civil Rights Act to binding arbitration as the means of resolving the dispute. The provision of the Civil Rights Act upon which the majority primarily relies, MCL 37.2803; MSA 3.548(803), provides only that the Civil Rights Act does not diminish the right of a person to seek preexisting common-law and statutory legal and equitable rights in the courts of this state and is silent with respect to the question whether parties can contractually adopt binding arbitration as the means of resolving a dispute arising under the Civil Rights Act. In the face of that silence, a predispute agreement to arbitrate such disputes is consistent with state statutory law concerning arbitration and is valid and enforceable.
1. Contracts — Employment Contracts — Employee Handbooks — Intention to be Bound.
An employer’s indication that it intends to be bound by the policies and procedures set forth in its employee handbook creates a valid employment contract binding both the employer and the employee to the provisions contained in the handbook even where the employer has reserved an unexercised right to amend or delete existing policies contained in the handbook.
2. Arbitration — Employment Contracts — Breach of Contract — Agreement to Arbitrate.
An employer and an employee in an employment contract may validly agree that any dispute involving a breach of that contract be submitted to binding arbitration as the means of resolving the dispute.
3. Arbitration — Civil Rights Act — Employment Contracts — Agreement to Arbitrate — Public Policy.
An agreement in an employment contract requiring any subsequent dispute involving a claim arising under the Civil Rights Act to be submitted to binding arbitration is contrary to the express provisions of that act and is unenforceable as a matter of public policy (MCL 37.2803; MSA 3.548[803]).
Wascha & Waun, P.C. (by Thomas W. Waun), for the plaintiff.
Jeffrey A. Rueble and Miller, Canfield, Paddock and Stone (by Charles S. Mishkind and Diane M. Soubly), for the defendant.
Amici Curiae:
Dickinson, Wright, Moon, Van Dusen & Freeman (by John Corbett O’Meara, Thomas G. Kienbaum, and Noel D. Massie), for American Society of Employers and others.
ON REMAND
Before: Fitzgerald, P.J., and Taylor and Holbrook, Jr., JJ.

Opinion:
Holbrook, Jr., J.
This case is on remand to us from the Michigan Supreme Court, 453 Mich 943 (1996), for reconsideration in light of Heurtebise v Reliable Business Computers, Inc, 452 Mich 405; 550 NW2d 243 (1996). We reverse in part and affirm in part.
As we stated in our earlier opinion:
Plaintiff worked as a part-time floor detective for defendant Meijer, Incorporated. When she was hired by Meijer, plaintiff signed an employment form agreeing to abide [by] defendant's policies and procedures. Plaintiff acknowledged receipt of an associate handbook which included defendant's termination appeal procedure. This document unambiguously provided that terminated employees were required to exhaust the alternate dispute resolution (adr) procedure. A separate document which plaintiff received indicated that exhaustion of the adr procedure is a condition precedent to litigation, regardless of whether the arbitrator's final decision is upheld by a trial court.
When defendant terminated plaintiff's employment, she [plaintiff] invoked the adr procedure. She indicated that she believed she had been discharged without just cause, that she was the victim of gender discrimination, and that she had been retaliated against for complaining about not being given a full-time job. Following an investigation, plaintiff's discharge was upheld at step one of the adr procedure. Plaintiff chose not to pursue the next step in the procedure, binding arbitration, and instead filed a lawsuit alleging wrongful discharge, gender discrimination, and retaliation. Defendant moved for summary or partial disposition, or for an order enforcing the adr award or procedure. At the hearing on defendant's motion, plaintiff withdrew her retaliation claim. The court then denied defendant's motion for summary disposition of the wrongful discharge and gender discrimination claims. [Rushton v Meijer, Inc, unpublished memorandum opinion of the Court of Appeals, issued March 1, 1995 (Docket No. 164272).]
In our original opinion, we reversed the trial court's denial of a defense motion for summary disposition of plaintiff's wrongful discharge and gender discrimination claims because plaintiff had failed to exhaust the remedies available to her pursuant to the ADR procedure that defendant had established to resolve such claims. In reversing the trial court's denial of defendant's motion for summary disposition of plaintiff's gender discrimination claim, we relied on Heurtebise v Reliable Business Computers, Inc, 207 Mich App 308; 523 NW2d 904 (1994), as controlling precedent for the proposition that private agreements to arbitrate civil rights claims are enforceable.
i
The Michigan Supreme Court reversed this Court's decision in Heurtebise, because the employee handbook contained language demonstrating that the employer did not intend to be bound by its provisions. 452 Mich 414. As the Supreme Court noted, the handbook in Heurtebise contained clauses stating: (1) the policies in the handbook do not create any employment or personal contract, express or implied; (2) the employer had the right to terminate employees' employment at any time, without notice, for any reason; and (3) the employer reserved the right to make modifications to any or all of the policies in the handbook. Thus, the instrument in Heurtebise expressly disclaiming contract status, yielding the employee no benefit above the minimal required status even to be an employee — namely, at-will status— and having provisions that could be changed unilaterally by the employer was, as might be expected, determined not to be a contract by the Supreme Court.
It is in light of this holding that we are directed to reexamine the Meijer employee handbook. The dissimilarities are marked. Unlike the Heurtebise handbook, the Meijer handbook does not contain language stating that Meijer does not intend to be bound by its provisions. Further, it does not indicate that Meijer considers the policies not to create a contract and, finally, rather than an at-will termination policy, this instrument has consideration running to the employee in the form of an express promise of termination from employment only for just cause. Were this the extent of the provisions of the Meijer handbook, we could easily discern its determinative distinctions from the Heurtebise booklet and find it to be a contract binding on both parties. There is, however, reservation language in the Meijer handbook stating that the existing policies may be "modified or deleted" by the employer. This reservation clause, plaintiff argues, would allow all or part of the contractual provisions to be deleted and means that the instrument here at issue, just as the one in Heurtebise, is no contract at all.
This argument has some allure, but on serious scrutiny, the problem plaintiff points to is illusory in the factual circumstances found here. It must be recalled that this instrument is an agreement to control an ongoing course of conduct between the employer and its employees. By its clear terms, they are both bound by it unless and until the employer chooses to change it. Even then, the employer cannot retroactively escape from its requirements. Any change can only take effect prospectively. See In re Certified Question, 432 Mich 438, 441; 443 NW2d 112 (1989). Accordingly, because the alleged improper acts by the employer at issue here came before any change was made in the agreement by the employer (in fact, as far as we know, even now no changes have been instituted by the employer), both parties are bound. In particular, the parties are bound to utilize the exclusive ADR procedure for handling their contract dispute. While the reservation language in the handbook will allow Meijer, for example, to change its policy of being a just-cause employer to become an at-will employer, the change would be effective only from the time of the implementation of the change (and after reasonable employee notification). Until such a change is made (which might cause the new arrangement to run afoul of the Heurtebise holding), Meijer is bound by the handbook in its dealing with its employees. Indeed, any other conclusion would mean that an employer could never change its employment agreements with its employees. Once a just-cause employer would mean always a just-cause employer. No employer would be likely to choose voluntarily to be so bound, and, thus, plaintiffs position, if adopted, would have the unfortunate and surely undesirable consequence of discouraging the practice of granting employees just-cause termination protection. Moreover, if an employer should cavalierly eliminate provisions that restrict its options in dealing with its employees, arbitrability could be jeopardized under Heurtebise, and valued employees, the retention of whom no doubt prompted the adoption of the just-cause policy in the first place, might choose to leave the employer. Rood v General Dynamics Corp, 444 Mich 107, 137-141; 507 NW2d 591 (1993). This economic regulation of the employment marketplace will undoubtedly cause an employer to exercise caution before making any change in the employment relationship, just as conditions of the employment market no doubt were factors considered in the granting of just-cause termination status in this case.
Therefore, because the Meijer and Heurtebise handbooks are distinguishable, this plaintiff was bound by the handbook with regard to any contractual claim. The fact that Meijer could later change the agreement does not vitiate the fact that, as things currently stand, these parties are contractually bound. Accord ingly, Meijer can, consistent with prior case law, require employees to arbitrate contract disputes regarding adverse employment decisions. See, e.g., Toussaint v Blue Cross & Blue Shield of Michigan, 408 Mich 579, 624; 292 NW2d 880 (1989). Because plaintiff failed to pursue her breach of contract claim utilizing the required ADR procedure, she is barred from pursuing such a claim in the circuit court. Renny v Port Huron Hosp, 427 Mich 415, 429-430; 398 NW2d 327 (1986); Zeniuk v RKA, Inc, 189 Mich App 33, 35, 37-38; 472 NW2d 23 (1991). Accordingly, we reverse the trial court's order denying defendant's motion for summary disposition of this claim.
H
With regard to plaintiff's gender discrimination claim, we conclude, in light of Heurtebise, that summary disposition was properly denied by the trial court. To this end, we agree with and adopt as our own the reasoning of Justice Cavanagh in parts m through VI of his opinion in Heurtebise, which addressed, albeit in dicta, the issue "whether private employers can require employees, as a condition of employment, to waive prospectively their right to pursue civil rights claims in a judicial forum." 452 Mich 414.
As noted by Justice Cavanagh in Heurtebise, "[u]nlike federal law, Michigan has an unwavering history of faithfully defending an aggrieved individual's right to a judicial forum to remedy unlawful discrimination." 452 Mich 414. This unwavering history is currently reflected in the judicial remedies clause of Const 1963, art 5, § 29, as well as its legislative counterpart, MCL 37.2803; MSA 3.548(803). Article 5, § 29 of our state constitution establishes a civil rights commission with certain powers and responsibilities, and incorporates a judicial remedies clause: "Nothing contained in this section shall be construed to diminish the right of any party to direct and immediate legal or equitable remedies in the courts of this state." Similarly, our Legislature in § 803 of the Civil Rights Act has reinforced and broadened the constitutional right of Michigan's citizens to immediate and direct judicial review of a civil rights claim: "This [civil rights] act shall not be construed to diminish the right of a person to direct or immediate legal or equitable remedies in the courts of this state." Justice Cavanagh aptly concluded that § 803 "expressly prohibits an exhaustion of administrative remedies requirement." 452 Mich 420.
Michigan's declared public policy entitling a state civil rights plaintiff to direct and immediate review of such claims in the circuit court cannot be abrogated by contract:
A contract which is contrary to public policy is illegal and void. Federoff v Ewing, 386 Mich 474, 481; 192 NW2d 242 (1971). Public policy has been described as "the community common sense and common conscience, extended and applied throughout the State to matters of public morals, public health, public safety, public welfare, and the like." Skutt v Grand Rapids, 275 Mich 258, 264; 266 NW 344 (1936). It is expressed in the constitution, statutes, judicial decisions, or customs and conventions of the people, and it concerns the primary principles of equity and justice. Id. [Badon v General Motors Corp, 188 Mich App 430, 439; 470 NW2d 436 (1991).]
Contrary to defendant Meijer's argument, we do not find the parties' employment contract to be governed by the federal arbitration act (faa), 9 USC 1 et seq. In Bernhardt v Polygraphic Co of America, Inc, 350 US 198, 200-201; 76 S Ct 273; 100 L Ed 199 (1956), Bernhardt, a New York resident, was hired by Polygraphic, a New York corporation, to be the superintendent of its lithographic plant in Vermont. Under the terms of the parties' employment contract (which contained an arbitration clause), Bernhardt "was to perform" the contract after he "later became a resident of Vermont." The Court held that the contract did not evidence " 'a transaction involving commerce,' " id., at 200, and that the faa did not apply because there was no showing that Bernhardt, in performing the contract, "was working 'in' commerce, was producing goods for commerce, or was engaging in activity that affected commerce." Id. at 201. See also Allied-Bruce Terminix Cos, Inc v Dobson, 513 US 265; 115 S Ct 834; 130 L Ed 2d 753 (1995).
The facts of the present case are considerably less compelling than those in Bernhardt. Plaintiff Rushton was employed by Meijer as a floor detective. Her contractual duties did not facilitate, affect, or arise out of interstate or foreign commerce. Thus, even the broadest construction of the statutory phrase "involving commerce" cannot encompass plaintiffs employment contract with Meijer. Moreover, it is not enough that one party's business in general involves interstate activity. Becker v Amoco Pipeline Co, 1989 US Dist LEXIS 11309 (ND Ill, 1989). Therefore, the fact that Meijer's general business activities may involve interstate commerce does not change the analysis because the proper focus under the FAA is on the particular contract at issue. Accordingly, we conclude that the FAA is inapplicable to this matter.
Only two of the dissent's arguments warrant a response. First, the dissent chides us for neglecting this state's statutory arbitration act, which the dis sent argues overrides § 803 of the Civil Rights Act. A basic rule of statutory construction is that a statute specific in language and enacted contemporaneously with or after a general statute covering the same subject matter constitutes an exception to the general statute if there appears to be conflict between them. State Hwy Comm'r v Detroit City Controller, 331 Mich 337, 363-364; 49 NW2d 318 (1951). Here, § 803 of the Civil Rights Act — which was enacted in 1976 and took effect in 1977 — must be viewed as an exception to the generally applicable arbitration statute — which was enacted in 1963. Our courts have never held out the proposition suggested by the dissent that the Legislature, when enacting legislation that indirectly affects extant legislation, must expressly repeal or amend the affected statute. Thus, the fact that the arbitration statute does not expressly exempt civil rights claims in the context of employment disputes is of no moment.
Second, the dissent asserts that our decision will force "sophisticated employers," like defendant Meijer, either to abandon its policy of just-cause employment or to simply leave the state for a business-friendly environment. The dissent "cannot help but sense" that we, along with three members of the Supreme Court, have attempted to "str[ike] a blow for the working people of this state." As members of the judiciary, however, our mandate is to enforce the laws as written by the Legislature. We acknowledge our surprise at our dissenting colleague's willingness, in this case, to abandon his long-held support for the unambiguous written word of the Legislature. Indeed, it was our dissenting colleague who stated that, "[c]learly, it is for the Legislature, and not the courts, to change substantive laws affecting public policy," McDougall v Eliuk, 218 Mich App 501, 518-519; 554 NW2d 56 (1996) (Taylor, RJ., dissenting), and that "judicial misgivings regarding the wisdom of a legislative . . . policy do not provide, absent a violation of the constitution, a legal foundation for overriding legislative intent," but rather that "[t]he wisdom of this policy is a political question to be resolved in the political forum," People v Poole, 218 Mich App 702, 714; 555 NW2d 485 (1996). Section 803 plainly and forcefully provides that the Civil Rights Act "shall not be construed to diminish the right of a person to direct or immediate legal or equitable remedies in the courts of this state" (emphasis added). The dissent's ambitious attempt to create an ambiguity where none exists is not persuasive.
After examining federal and Michigan civil rights jurisprudence, Justice Cavanagh stated, and we agree:
In conclusion, with respect to equal opportunity in the pursuit of civil liberties, such as employment, I believe that the right to be free from unlawful discrimination is of highest priority and too important to jeopardize. I further believe that the constitutionally guaranteed direct access to a judicial forum is so interwoven with the enforcement of civil rights in Michigan that we cannot separate them without potentially harming substantive civil rights. Accordingly, I would hold that the Michigan Constitution and our longstanding public policy preclude the enforcement of prospective arbitration agreements in employment contracts.
Finally, I would assert that I am not backing away from the public policy favoring alternative means of dispute resolution. For aggrieved individuals seeking to pursue remedies for claims that have already accrued, arbitration may present a quicker and cheaper means of receiving relief, and I fully support the parties' voluntary intent in those cases. I would limit this opinion to the arbitration agree ments in employment contracts entered into before any claim for unlawful discrimination has accrued. [Heurtebise, 452 Mich 437-438.]
Accordingly, we hold that Meijer cannot require its employees, as a condition of employment, to waive prospectively their right to pursue direct and immediate review of civil rights claims in a judicial forum. The provision of the parties' private employment contract requiring plaintiff, a nonunion employee, to exhaust the termination appeal procedure, including binding arbitration, before filing a lawsuit in the circuit court, is void as it relates to her gender discrimination claim under Michigan law. The trial court's order denying defendant's motion for summary disposition of plaintiff's gender discrimination claim is affirmed.
Reversed in part and affirmed in part. Remanded for further proceedings regarding plaintiff's gender discrimination claim. We retain no further jurisdiction.
Fitzgerald, P.J., concurred.
Justices Levin and Mallett concurred with Justice Cavanagh. Justice Boyle, concurring separately, expressed no opinion "whether or when an agreement to arbitrate might be found to be enforceable." 452 Mich 438. Chief Justice Brickley and Justices Riley and Weaver concurred with Justice Boyle.
The faa provides, in pertinent part:
A written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract. [9 USC 2.]
"[C]ommerce," as herein defined, means commerce among the several States or with foreign nations, . . . but nothing herein contained shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce. [9 USC 1.]
Accord Ferro v Ass'n of Catholic Schools, 623 F Supp 1161, 1167 (SD NY, 1985) (teacher's employment contract did not evidence a transaction involving commerce); Becker v Amoco Pipeline Co, 1989 US Dist LEXIS 11309 (ND Ill, 1989) (agreement involving the laying of pipeline over a local tract of land did not contemplate interstate activity). Cf. Dickstein v DuPont, 320 F Supp 150 (D Mass, 1970), aff'd 443 F2d 783 (CA 1, 1971) (employment contract of an account executive contemplated use of interstate travel or communication facilities and therefore affected commerce); Bleumer v Parkway Ins Co, 277 NJ Super 378; 649 A2d 913 (1994) (day-today management and control activities of the plaintiff, an automobile insurance sales manager, necessarily involved interstate commerce); Bridas Sociedad Anonima Petrolera Indus y Comercial v Int'l Standard Electric Corp, 128 Misc 2d 669; 490 NYS2d 711 (1985) (a shareholders' agreement was "inextricably intertwined" with a sale of stock in a foreign corporation by an American corporation to another foreign corporation and therefore arose out of foreign commerce).
See MCL 600.5001 et seq.; MSA 27A.5001 et seq.
Given our resolution of this issue, we decline to address the issue whether the provision of the parties' contract requiring the discharged employee to file an internal complaint within fourteen days constitutes an improper shortening of the applicable statute of limitations. See, e.g., Herweyer v Clark Hwy Services, Inc, 455 Mich 14; 564 NW2d 857 (1997).