Montana Supreme Court Sends Employee On Arbitration Expedition

This week, our search for intriguing precedent has taken us all the way to the County of Lewis and Clark, Montana, and the case of Shannon Marsden. 

Marsden, an employee of Blue Cross Blue Shield Montana (“BCBSMT”), had an employment agreement with a clause that required arbitration of any dispute arising under it.  The agreement was for a two-year term, but provided that Marsden could be fired if the president of the company “believed that it would be in the best interest of BCBSMT.”

After BCBSMT terminated Marsden’s employment, she brought a claim under Montana’s Wrongful Discharge from Employment Act (“WDEA”), alleging that she was fired because she reported illegal rebates of insurance commissions. 

However, Marsden’s claim came with a catch.

The WDEA only allows claims by employees who do not have employment agreements for a specific term.  To get around this restriction, Marsden argued that because of the clause allowing a “best interest” termination, she was really an employee at-will, not an employee for a specified term.  As a result of this argument, Marsden found herself in the unusual position of claiming that she could have been terminated at any time under her contract.  BCBSMT, meanwhile, argued that the “best interest” provision was not akin to a “without cause” termination provision, which would have transformed the term contract into an at-will contract under Montana law. 

The district court found that resolving these competing arguments would require interpreting the contract.  Because of the arbitration clause, it said, an arbitrator had to rule on the at-will issue first.  Marsden appealed this ruling to the Montana Supreme Court, but it agreed with the lower court.  Marsden v. Blue Cross Blue Shield of Montana, 2012 WL 6721072 (Mont. Dec. 28, 2012). 

Of course, Marsden has not lost her WDEA claim entirely – she just has to litigate it in a forum not of her choosing.  This is part of a trend we have noted elsewhere on this blog: when a plaintiff’s employment contract contains an arbitration clause, the courts may strain to send even non-contractual claims to arbitration.  In this case, Marsden may be perfectly happy with that result, given that she has at least generated a dispute as to whether she has a viable WDEA claim despite her contract for a specified term of employment.

• Arbitration
• Wrongful Termination