Colorado: Court of Appeal Broadens Arbitration Agreements and Expands Duty-of-Loyalty Claims

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September 20, 2018

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In Digital Landscape Inc. v. Media Kings LLC, the Colorado Court of Appeal reviewed the scope of an arbitration agreement’s reach. Specifically, the agreement stated all claims “arising under” the contract at issue would be arbitrated. The court broadly interpreted the wording, stating that “arising under” had the same meaning as “relating to,” because the phrase “arising under” implies a broad scope consistent with both federal and Colorado policies favoring arbitration.

There, Digital Landscape claimed breach of contract for Media Kings’ failure to pay under the contract, and Media Kings claimed it was damaged when Digital Landscape took over one of Media Kings’ clients that Digital was supposed to be servicing as an agent of Media; the latter was disputed by Digital as being covered by the agreement to arbitrate. The court stated that Media’s claim was covered by the “arising under” language in the arbitration agreement; moreover, the parties could have drafted the arbitration clause to include limiting language or to explicitly exclude particular types of claims from its scope. There was no indication that the “arising under” was meant to limit the scope of arbitrated claims.

Additionally, the court interpreted Media’s claim against Digital to include an unpled duty-of-loyalty claim, because the description of Media’s claim was sufficient to be interpreted as such. Although Digital was not an employee of Media, it was found by the arbitrator to be an agent of Media as an independent contractor. This opens new avenues of protections for employers who may now be able to recover additional damages, such as disgorgement, lost assets, or lost profits, from former employees and independent contractors.

Action Items

  1. Have arbitration agreements reviewed by legal counsel for consistency with this ruling.
  2. Subscribers can call our HR On-Call Hotline at (888) 378-2456 for further assistance.

Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser.

© 2018 ManagEase

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