## Facts

- James S. Matthews, age 66, was hired by Rollins Hudig Hall Co. under a written employment agreement for a five-year term, terminable only for defined “cause.”
- The agreement included a Chicago-based arbitration clause requiring arbitration of “[a]ny controversy or claim relating to a breach of this Agreement,” with the award final and binding.
- Near the end of the contract term, the company terminated Matthews, asserting “cause” based on an alleged material breach (failure to use best efforts to promote the business).
- Matthews initiated arbitration alleging wrongful termination under the contract.
- Matthews also filed suit in federal court alleging (1) age discrimination under the ADEA and (2) breach of contract for termination without cause.
- Matthews later added a state-law fraudulent-inducement claim alleging he was induced to sign the contract by assurances he would not be required to generate or promote new business.
- Defendants moved to compel arbitration and stay the court action; the district court denied the motion as to the ADEA and fraudulent-inducement claims.
- Defendants appealed the denial of the motion to compel arbitration.

## Issues

1. Whether an arbitration clause covering any controversy or claim “relating to a breach” of an employment agreement requires arbitration of an ADEA age-discrimination claim tied to the employee’s termination.
2. Whether the same clause requires arbitration of a state-law fraudulent-inducement claim alleging misrepresentations about job obligations, where the arbitration provision itself is not specifically attacked.

## Decision

- The Seventh Circuit reversed the district court’s denial of the motion to compel arbitration.
- The court held the ADEA claim fell within the arbitration clause because it was closely connected to the termination governed by the contract’s for-cause provisions and therefore related to an alleged breach.
- The court held the fraudulent-inducement claim was also arbitrable because it concerned obligations and performance expectations under the contract and did not specifically challenge the validity of the arbitration clause.
- The case was remanded with instructions to compel arbitration and stay the judicial proceedings as required by the agreement.

## Legal Principles

- Under the Federal Arbitration Act, doubts about the scope of arbitrable issues are resolved in favor of arbitration when the parties have agreed to arbitrate.
- Broad “relating to” language in an arbitration clause can extend beyond a contract claim labeled “breach” to statutory and tort claims that are factually intertwined with alleged contractual nonperformance or termination.
- Federal statutory employment-discrimination claims are arbitrable absent a clear congressional directive to preclude arbitration; arbitration may substitute for a judicial forum without waiving substantive statutory rights.
- A fraudulent-inducement claim directed at the contract as a whole, rather than specifically at the arbitration provision, is generally for the arbitrator to decide.

## Conclusion

The Seventh Circuit required arbitration of both the ADEA and fraudulent-inducement claims because they were sufficiently connected to the employment agreement and its termination provisions, and because the plaintiff did not mount a specific challenge to the arbitration clause itself.


Matthews v. Rollins Hudig Hall Co., 72 F.3d 50 (7th Cir. 1995)