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Malicious Prosecution Claims Not Subject To Arbitration Agreement

Published by on October 7, 2008

The Supreme Court of Virginia found that an employment arbitration agreement did not cover a post-employment malicious prosecution action in Dillard’s Inc. v. Carol West Judkins and Dillard’s, Inc. v. Sabrina Dewalt.  A copy of the opinion in here. Plaintiffs Carol West Judkins and Sabrina Dewalt were employees of Dillard’s, Inc. (“Dillard’s”), in the City […]

The Supreme Court of Virginia found that an employment arbitration agreement did not cover a post-employment malicious prosecution action in Dillard’s Inc. v. Carol West Judkins and Dillard’s, Inc. v. Sabrina Dewalt.  A copy of the opinion in here.

Plaintiffs Carol West Judkins and Sabrina Dewalt were employees of Dillard’s, Inc. (“Dillard’s”), in the City of Hampton.  In December 2001, Dillard’s discharged both plaintiffs after a co-worker accused them of embezzlement.  Soon thereafter, Dillard’s brought criminal charges against both plaintiffs for embezzlement.  The criminal charges, which resulted in the plaintiffs arrest, were ultimately dismissed after preliminary hearings.  Plaintiffs subsequently filed motions against Dillard’s for malicious prosecution.  Dillard’s brought a motion to compel arbitration, based on an arbitration agreement that plaintiffs had signed during their employment with Dillard’s.  The Supreme Court of Virginia reviewed the circuit court’s ruling on interlocutory appeal that the arbitration agreement in question did not cover the dispute

 In 2001, Dillard’s required all its employees to enter into an arbitration agreement as a condition of continued employment.  The “Rules of Arbitration” required by Dillard’s ended with:  “DEFINITIONS … You or the associate means the associate of Dillard’s, Inc., who is covered by this agreement and has a disputed resulting from termination of employment.”

Here, plaintiffs made no complaint that they had been wrongfully terminated.  The plaintiffs complained that they had been wrongfully subjected to criminal prosecution after employment had ended.   The Court found that if Dillard’s had intended for all disputes arising out of employment to be submitted to arbitration it could have used less restrictive language in the agreement.  Further the agreement contained eight specific subjects that were “not covered,” one of which was “Criminal Charges.”  Therefore, the Supreme Court found that the dispute was not covered by the arbitration agreement. 

Contributed by Michael K. Wilson

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