Utah Is Very Arbitration Friendly

At a time when some courts seem willing to write arbitration clauses out of contracts because of perceived fairness issues, Utah is firmly and liberally behind them. The Utah Court of Appeals recently confirmed Utah’s very strong policy in favor of arbitration and its liberal construction of arbitration clauses. Although not decided in the context of an employment matter, in HITORQ, LLC v. TCC Veterinary Services, Inc., 2020 UT App. 123, the Utah Court of Appeals considered the question of whether an arbitration clause governing interpretation and enforcement of terms within a limited liability company’s operating agreement would also require arbitration of claims arising from the breach of a separate purchase agreement of an interest in the limited liability company. Although the Court found that it was a “close call,” id. at ¶ 40, the Court nevertheless construed the nature of the purchase agreement breach claim broadly because of Utah’s “strong policy in favor of arbitration.” The Court of Appeals went on to find that even the claim for breach of a duty of good faith and fair dealing under the purchase agreement had to be arbitrated as well. Although arbitration agreements have come under attack by some courts agreeing with plaintiffs’ attorneys representing employees against their employers or former employers, the TCC Veterinary Services opinion should give comfort to Utah employers and others incorporating Utah law into their agreements, who require arbitration of disputes with employees.

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