Relators had signed employment agreements with the defendant employer generally setting out the “terms and conditions” of their employment, including job duties and salary, and the agreement contained a provision stating that any dispute arising from the agreement would be resolved through arbitration. The question on appeal was whether the employees’ retaliation claim fell within the arbitration clause, and the Sixth Circuit found that it did not. It noted that the language of the clause demonstrated that it only applied to disputes arising from the employment agreement itself. Thus, the clause did not cover the retaliation claim. The retaliation claim was purely statutory and existed independently of the agreement. While the defendant argued that to succeed on their claim the relators must establish that they were retaliated against in the terms and conditions of their employment, the court noted that the False Claims Act is not limited to instances where employers breach an employment agreement addressing the “terms and conditions” of employment. Relators did not allege that the agreement was violated, but, instead, that they were retaliated against due to their statutorily-protected conduct. Moreover, the agreement did not refer to the False Claims Act, retaliation, or statutory claims.
While this is a victory for relators, the decision was based on the specific language of the arbitration clause, and the outcome could have been different had the clause been more broadly drafted. All employees should carefully consider employment agreements—with counsel—to ensure that their right to bring retaliation claims in court are protected.
Reetuparna (Reena) Dutta is a senior associate in the Business Litigation Practice at Hodgson Russ LLP. You can reach her at rdutta@hodgsonruss.com.
