Altobelli v. Hartmann
Docket No. 150656
Trial Lawyers’ Bottom Line: If an arbitration agreement lists a firm/company as a party, the agreement extends to the agents of that firm/company.
This is one of those classic cases where a partner at a large and prestigious law firm wants to leave practice to coach the top-ranked college football team in the country. What’s that? You don’t remember a case like this from law school?
Dean Altobelli wanted to leave one of Michigan’s major firms—Miller Canfield—because he was offered a job as an assistant on University of Alabama’s football team. (Aside: Altobelli is currently listed as a “football analyst” on Alabama’s athletics website). But Altobelli wanted to maintain his equity-partner position at the firm. (And who wouldn’t?) He planned to coach for only a year and then return. After discussions with Altobelli, the firm’s managing directors told him that they considered him to have voluntarily withdrawn from the partnership when he accepted the job with Alabama. This meant he would lose his equity partnership. Altobelli was obviously not pleased.
Under all attorneys’ operating agreements with the firm, the attorneys agreed to mandatory arbitration. The arbitration agreement mandated arbitration between “the Firm” and a “Former Principal.” Initially, Altobelli pursued arbitration to maintain his equity partnership, but then he also filed this lawsuit against the managing directors and two other partners, as individuals. As the Supreme Court put it, Altobelli “essentially repackage[ed] [the claims] as tortious conduct.” To get around the arbitration clause, Altobelli said he sued the defendants as individuals, thus they were not “the Firm.”
In circuit court, the firm moved for summary disposition and to compel arbitration. The circuit court found that Altobelli’s claims did not fall within the scope of the arbitration clause and denied both motions. On the merits, the circuit court then held that Altobelli did not voluntarily withdraw from the firm. On appeal, the Court of Appeals affirmed the circuit court’s denial of the firm’s motions, but overruled the circuit court’s finding on the merits.
The Supreme Court, writing through Justice Bernstein, looked to agency law to make clear that a corporation can only act through its agents. A company can’t take its own actions or make its own decisions. The Court dropped a footnote to say that it saw “no reason to distinguish between a corporation and another type of company” when applying agency principles to arbitration clauses. (Miller Canfield is an LLC). The Court clarified that if an LLC delegates management to a group of managers, the managers have agency authority, not the members. Thus, the defendants were acting as agents of Miller Canfield in making their decision.
Because the named defendants were acting as agents of “the Firm,” they were covered under the arbitration agreement. The Supreme Court continued its practice of interpreting the plain language of an arbitration clause. Here, the clause applied to a claim “of any kind or nature whatsoever.” So the Court reversed the decision of the Court of Appeals to affirm the circuit court’s dismissal of the motion to compel arbitration. The Court made clear that because the dispute is covered by the arbitration agreement, the lower courts should not have reached the merits.