Against a recent spate of proarbitration decisions reported on here, here and here, the Sixth Circuit has now bucked that trend, refusing to apply retroactively an agreement to arbitrate to bar pending claims where the language used in the arbitration agreement indicates an intent to “head off future lawsuits, not to cut off existing ones.” In Russell v. Citigroup, Inc., Russell had filed a class action against his employer Citigroup at a time when his arbitration agreement with the company did not reach class claims. He was rehired at a time later when Citigroup had updated its standard arbitration contract to cover class claims. Notably, Russell did not consult with his lawyers before signing the new contract and the outside law firm directly representing Citigroup in the pending case did not know that Russell had reapplied to work at Citigroup.
Citigroup sought to compel Russell to arbitrate the pending class action, but the district court concluded that the new arbitration agreement did not cover lawsuits commenced before the agreement was signed. The Sixth Circuit agreed, focusing on the use of the present tense “arise” to describe the disputes covered in the agreement, rather than the past tense “arose” or present-perfect “have arisen.” Also the preamble to the agreement was similarly forward-looking, referring to disputes that “may arise.” Facing this plain language, the Federal Arbitration Act’s directive to resolve “any doubts concerning the scope of arbitrable issues…in favor of arbitration” was not enough to require arbitration.
