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Arbitration Pursuant to a Last Chance Agreement Bars Teacher's Wrongful Discharge Lawsuit

By Eric C. Griggs / Feb 02, 2015

A Last Chance Agreement (LCA) typically involves an employee agreeing to refrain from future misconduct in exchange for the employer declining to discharge the employee for previous wrongdoing. In general, an LCA benefits both parties by giving the employee a final opportunity to reform bad behavior and by reducing the likelihood that the employer will have to litigate the employee's subsequent discharge. Unfortunately, this goal is not always achieved, but a recent unpublished opinion from the Michigan Court of Appeals demonstrates how a school district may use an LCA to its advantage.

In Heffelfinger v Bad Axe Public Schools, the Michigan Court of Appeals held that a tenured teacher was prevented from suing his former school district for wrongful discharge because the parties had already arbitrated their dispute over the teacher's termination.

Following a 2007 incident in which the teacher used excessive force against a student, the parties entered into an LCA in which the teacher agreed to refrain from future misconduct in exchange for the Board declining to pursue tenure charges against him. The teacher also agreed that if he violated the LCA, the following events would occur: his letter of resignation would be submitted; the Board would decide whether to accept it; and the parties would arbitrate any remaining disputes. Later, the teacher was involved in another incident of misconduct, and the Board voted to accept his resignation pursuant to the LCA.

The teacher contested the Board's decision through arbitration. The arbitrator affirmed the Board's finding that the teacher had violated the LCA by engaging in misconduct. The teacher then sued the District in court claiming that he was wrongfully discharged because the LCA violated the Teachers' Tenure Act. The circuit court dismissed the case without a trial.

On appeal, the Michigan Court of Appeals held that the lower court properly dismissed the case because the teacher's claim was barred by res judicata, which is a legal principle intended to prevent multiple lawsuits in which the parties re-litigate the same dispute. In rejecting the teacher's claim that the arbitration clause was invalid, the court found the teacher to have waived that argument because he failed to raise it during the arbitration proceeding prior to filing his lawsuit. The court stated that it has never held that arbitration is inconsistent with the Tenure Act, and it considered the arbitration clause valid in this case because it was a bargained-for condition to which the teacher agreed in exchange for the District agreeing to not pursue tenure charges against him for the 2007 incident.

If you have questions regarding Last Chance Agreements or labor and employment issues in general, please contact Eric Griggs at (616) 608-1147 | egriggs@clarkhill.com, or another member of Clark Hill's Education Law group.