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Arbitration Clause Valid Despite Employer's Voiding Employment Agreement
Description Trial court ordered arbitration of a dispute between employer and employee who had an arbitration clause. When the employer fired the employee, it stated that the employment contract was void. That statement did not eliminate the requirement to go to arbitration for disputes relating to employment.
Topic Alternate Dispute Resolution
Key Words Arbitration; Fraud; Employment Agreement
C A S E   S U M M A R Y
Facts Landis had an employment agreement with FINOVA that included an arbitration provision that required any matter relating to employment be decided by arbitration. FINOVA fired Landis, saying that the employment agreement was void and asserting that he had misrepresented his role in various financial dealings. Landis sued FINOVA, claiming breach of contract and defamation. FINOVA moved to compel arbitration. Landis claimed that since FINOVA declared the employment agreement to be void the arbitration clause did not apply, so he should be able to go to trial.
Decision Arbitration compelled. If Landis claimed that there was fraud used to induce him to sign the contract with the arbitration clause, then the case could go to trial. FINOVA did not claim that there was fraud relating to the arbitration clause itself, so the clause will be enforced. At the time the parties made the employment agreement, they clearly intended to have an arbitration clause cover the relationship. All issues raised by Landis related to the employment relationship, so the clause is valid.
Citation Landis v. FINOVA Capital Corp., 2000 WL 546985 (Slip Copy, S.D.N.Y., 2000)

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