Gray v. GC Services, LP, No. 1 CA-CV 21-0533 (App. Div. I, December 14, 2023) (J. Brown) https://www.azcourts.gov/Portals/0/OpinionFiles/Div1/2023/1%20CA-CV%2021-0533%20-%20Gray%20v.%20GC%20Services%20-%20Opinion.pdf

BROAD MANDATORY BINDING ARBITRATION CLAUSE IN EMPLOYMENT CONTRACT WHERE PARTIES AGREED TO ARBITRATE “ALL LEGALLY CONGNIZABLE CLAIMS” REQUIRES ALL CLAIMS INCLUDING “FAILURE TO STATE A CLAIM” & ISSUE PRECLUSION BE DECIDED IN ARBITRATION/SUPERIOR COURT ONLY HAS JURISIDCITION TO DETERMINE IF AN ARBITRATION CLAUSE EXISTS WHICH ENCOMPASSES THE DISPUTE

 Plaintiff resigned from her customer service representative position with the defendant. Later she sued for wrongful discharge in various jurisdictions including Maricopa County Superior Court. A “nearly identical” suit was filed and lost in New York state court. Defendant moved to compel arbitration, and to dismiss the Arizona lawsuit on the basis plaintiff was bound to resolve this dispute under the mandatory arbitration clause in her employment contract, on the basis plaintiff failed to state a justiciable claim under rule 12(b)(6) of the Arizona Rules of Civil Procedure and based upon claim preclusion. The trial court found it unnecessary to address the applicability of the arbitration clause finding the complaint should be dismissed for failure to state a claim and that in light of the judgment against plaintiff in the New York case there was claim preclusion. Plaintiff appealed to the Arizona Court of Appeals which vacated and remanded the case to the superior court.

The parties agree that the arbitration clause in question here is expressly governed by the Federal Arbitration Act. The Federal Act favors the enforcement and broad interpretation of arbitration clauses and the resolution of claims through arbitration.  Here employment contract stated that all “legally cognizable claims in the broadest context” were subject to mandatory binding  arbitration.  Accordingly the superior court did not have jurisdiction to dismiss plaintiff's complaint for failure to state a claim. The trial court “was limited to ‘deciding whether an arbitration agreement exists and whether it encompasse[d] the dispute. . . .  the court lacked the authority to dismiss Gray's complaint for failure to state a claim or based on claim preclusion because those issues must be resolved through arbitration.”