A former finance director for Radisson Hotel Waikiki Prince Kuhio fails in his breach of contract lawsuit against the company because he did not properly initiate his arbitration under the terms of his employment agreement, the Ninth Circuit rules, overturning a federal district court decision in favor of the employee.

The employment agreement between the parties contained a mandatory arbitration clause. When a dispute arose during the course of employment, the employee wrote a letter to the company requesting arbitration, but the company responded telling the employee that it did not consider his claim ripe for arbitration. Following termination of his employment, the employee filed a complaint in the Hawaii Circuit Court, and at that point, the company decided that it wanted to arbitrate his claim. The case was moved to federal district court, and the company moved to compel arbitration. The district court denied its motion to compel arbitration and decided that the company had previously breached its agreement and waived its right to arbitrate disputes with the employee.

The Ninth Circuit rules that the district court erred in its ruling, stating that before reaching the question whether the employer’s actions “constituted a repudiation of the agreement,” the employee “ must first establish that he properly initiated arbitration.” If he fails to do so, then the company could not have repudiated the agreement, the Court says. The Court disagrees that his original letter was a proper demand for arbitration, pointing out that the arbitration clause in his employment contract clearly stated that disputes would be settled in accordance with the model employment arbitration procedures of the American Arbitration Association.

The AAA employment rules requires that the initiating party: (1) “file a written notice (hereinafter ‘Demand’) of its intention to arbitrate” in duplicate; (2) provide a copy of the Demand to the other party; and (3) include the applicable filing fee.”

The employee, who was at the time represented by legal counsel, does not dispute that he failed to comply with any of these basic requirements, the Court points out. “Because [he] did not abide by the terms of the arbitration clause, we hold that [the company] did not breach its agreement to arbitrate,” the Ninth Circuit decides. Cox v. Ocean View Hotel Corp. dba Radisson