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Lumm v. CC Services, Inc.

Court of Appeals of Oregon

January 31, 2018

Robert LUMM, an individual, Plaintiff-Respondent,
v.
CC SERVICES, INC., an Illinois corporation; Richard Beninati, an individual; Timothy Harris, an individual; and Todd Williams, an individual, Defendants-Appellants.

          Argued and submitted February 7, 2017.

         Clackamas County Circuit Court CV15090050 Donald B. Bowerman, Judge pro tempore.

          Mark A. Crabtree argued the cause for appellants. With him on the briefs were April Upchurch Fredrickson and Jackson Lewis P.C.

          Rebecca Cambreleng argued the cause for respondent. On the brief were Micah D. Fargey and Fargey Law PC.

          Before DeHoog, Presiding Judge, and Egan, Chief Judge, and Aoyagi, Judge. [*]

[290 Or. 40] Case Summary:

         Defendants appeal from the trial court's order denying their motion to compel arbitration of plaintiff's claims, which arose out of plaintiff's work for defendants as an insurance sales agent. The trial court denied the motion on the basis that factfnding was necessary to determine whether the arbitration provision at issue was enforceable under ORS 36.620(5), which provides that a "written arbitration agreement entered into between an employer and employee * * * is voidable and may not be enforced by a court" unless certain notice requirements are met. Defendants argue that, because the arbitration agreement at issue is subject to the Federal Arbitration Act (FAA), the Oregon statute is preempted because it imposes requirements solely on arbitration clauses rather than contracts in general. Held: The trial court erred because the FAA preempts enforcement of ORS 36.620(5). Under the FAA, states may not invalidate arbitration clauses based on notice requirements placed specifcally on arbitration clauses. Because of the trial court's error, it did not undertake the proper analysis and must do so on remand.

         [290 Or. 41]

          DEHOOG, P. JUDGE.

         Defendants, a corporation and its employees, appeal from the trial court's order denying their motion to compel arbitration of plaintiff's claims and stay judicial proceedings. For the reasons that follow, we conclude that the court erred, reverse, and remand for the trial court to consider defendants' motion under the proper framework.

         Plaintiff worked for defendants as an insurance sales agent. The parties dispute whether plaintiff was an employee or an independent contractor, but, as we explain below, that question is immaterial to the present appeal. After defendants terminated their relationship with plaintiff, he filed this action in the circuit court, alleging employment discrimination, retaliation, breach of contract, and other related claims.

         Defendants responded by filing a motion to compel arbitration of plaintiff's claims pursuant to the Federal Arbitration Act (FAA)[1] and, alternatively, under Oregon law. Defendants relied on an attached copy of defendant-corporation's standard "Agent's Agreement, " which plaintiff and a representative of defendant-corporation had signed, and which included the following arbitration language:

"[A]ny claim or controversy relating to or arising out of the relationship between the Agent and the Companies, this Agreement (and/or any agreement superseded by this Agreement), or the termination of this Agreement, whether the parties' rights and remedies are governed or created by contract law, tort law, common law or otherwise, or by federal, state or local statute, legislation, rule or regulations, shall be resolved exclusively by binding arbitration in Bloomington, Illinois (unless otherwise provided by law), by one arbitrator selected by the Companies and the Agent, all in accordance with the commercial arbitration rules of the American Arbitration Association then in effect."

         Defendants argued that, to the extent that plaintiff challenged the arbitration provision itself, the arbitrator, not the court, should decide that challenge, because the parties had "clearly and unmistakably agreed to allow the arbitrator to [290 Or. 42] ...


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