N Valley Emergency v. Hon. santana/team Physicians

SUPREME COURT OF ARIZONA
En Banc

NORTH VALLEY EMERGENCY ) Arizona Supreme Court
SPECIALISTS, L.L.C., an Arizona ) No. CV-03-0279-PR
Limited Liability Company, )
) Court of Appeals
Petitioners, ) Division One
) No. 1 CA-SA 03-0137
v. )
) Maricopa County Superior
THE HONORABLE MARK R. SANTANA, ) Court
JUDGE OF THE SUPERIOR COURT OF ) No. CV 2002-015581
THE STATE OF ARIZONA, in and for )
the County of Maricopa, )
) O P I N I O N
Respondent Judge, )
)
TEAM PHYSICIANS OF ARIZONA, P.C., )
an Arizona professional )
corporation d/b/a EMERGENCY )
PHYSICIANS, EPI, )
)
Real Party in Interest. )
)
__________________________________)

Petition for Review from Special Action
Court of Appeals, Division One
No. 1 CA-SA 03-0137

Petition for Special Action from the
Maricopa County Superior Court
No. CV 2002-015581
The Honorable Mark R. Santana, Judge

VACATED AND REMANDED
________________________________________________________________

Lubin & Enoch, P.C. Phoenix
By: Stanley Lubin
And: Nicholas J. Enoch
Attorneys for Petitioners
Robbins & Green, P.A. Phoenix
By: Philip A. Robbins
And: Janet B. Hutchison
James O. Ehinger
Attorneys for Real Party in Interest
________________________________________________________________

R Y A N, Justice

¶1 Arizona’s arbitration act, Ariz. Rev. Stat. (“A.R.S.”)

§§ 12-1501 to -1518 (2003), provides that the act has “no

application to arbitration agreements between employers and

employees or their respective representatives.” A.R.S. § 12-

1517. We granted review to determine whether Arizona Revised

Statutes section 12-1517 applies to all arbitration agreements

between employers and employees or only those found in

collective bargaining contracts. We hold that § 12-1517 exempts

from the Arizona Uniform Arbitration Act (“Act”) all arbitration

agreements between employers and employees.

I.

¶2 Team Physicians of Arizona, Inc. (“TPA”), provides

medical services to hospital emergency departments. To furnish

these services, TPA employs physicians and physician assistants.

Each of the physicians and physician assistants employed by TPA

entered into an employment agreement containing essentially the

same arbitration clause requiring “any and all disputes” arising

out of the employment agreement to “be settled by arbitration.”

In 2002, employees left TPA and formed North Valley Emergency

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Specialists, L.L.C. (“NVES”). NVES provides emergency medical

services to hospitals in competition with TPA.

¶3 TPA filed a lawsuit in superior court against NVES and

numerous individual physicians and physician assistants, seeking

damages and injunctive relief. TPA eventually requested that

the individual defendants submit their cases to arbitration in

accordance with the arbitration clauses. The individual

defendants refused to submit to arbitration.

¶4 TPA filed a motion to compel arbitration under A.R.S.

§ 12-1502, which provides that a court shall order arbitration

when there is a valid arbitration agreement between the parties.1

In response, the defendants argued that the trial court did not

have the statutory authority to grant TPA’s motion because

A.R.S. § 12-1517 exempted employment contracts from the Act.

The trial court ruled that § 12-1517 was intended to apply only

to collective bargaining agreements, stayed the lawsuit, and

ordered that the parties arbitrate the damage claims.

¶5 The defendants filed a petition for special action in

the court of appeals, which declined jurisdiction. The

1
Arizona Revised Statutes § 12-1501 states the following: “A
written agreement to submit any existing controversy to
arbitration or a provision in a written contract to submit to
arbitration any controversy thereafter arising between the
parties is valid, enforceable and irrevocable . . . .” Section
12-1502(A) gives the court the power to order arbitration when
an agreement described in § 12-1501 exists.

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defendants then petitioned this court for review, asking us to

reverse the order compelling arbitration. We accepted review

because many employment agreements now contain arbitration

clauses and because no Arizona appellate court has ruled on the

issue. We have jurisdiction under Article 6, Section 5(3), of

the Arizona Constitution, A.R.S. § 12-120.24 (2003), and Arizona

Rule of Civil Appellate Procedure 23.

II.

¶6 TPA asks us to uphold the trial court’s interpretation

of A.R.S. § 12-1517 for several reasons.2 First, it argues that,

based upon the legislative history of Arizona’s arbitration

statutes, the current version of the Act was intended to exempt

only arbitration agreements in collective bargaining contracts.

Second, TPA contends that because the Act is based upon a model

or uniform act, we should assume the legislature intended to

2
In its supplemental brief, citing Circuit City Stores, Inc.
v. Adams, 532 U.S. 105 (2001), TPA argues that the Federal
Arbitration Act (“FAA”) preempts the Arizona Arbitration Act
because “all forms of employment agreements . . . are subject to
compulsory arbitration under the [FAA].” TPA raised this
argument neither in the trial court nor in its petition for
special action in the court of appeals. Therefore, the issue is
waived. See Van Loan v. Van Loan, 116 Ariz. 272, 274, 569 P.2d
214, 216 (1977). Moreover, TPA did not ask the trial court to
make any finding that the contracts in this case involve
interstate commerce. See Ex parte Webb, 855 So. 2d 1031, 1035-
36 (Ala. 2003); Munoz v. Green Tree Fin. Corp., 542 S.E.2d 360,
363 (S.C. 2001); see also Citizens Bank v. Alafabco, Inc., 539
U.S. 52, 56 (2003) (per curiam) (interpreting the term
“involving commerce” to mean “affecting commerce”); S. Cal.
Edison Co. v. Peabody W. Coal Co., 194 Ariz. 47, 51, ¶ 13, 977
P.2d 769, 773 (1999) (discussing the scope of the FAA).

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place the same construction on the Act as did the drafters of

the uniform act. Third, TPA claims that interpreting § 12-1517

as exempting all arbitration agreements between employers and

employees from Arizona’s arbitration act contravenes the

legislature’s policy of favoring arbitration. Finally, TPA

contends that a grammatical construction of § 12-1517 does not

support the exemption of all employer-employee arbitration

agreements from the Act.

¶7 The defendants, on the other hand, contend that the

plain language of A.R.S. § 12-1517 precludes all arbitration

agreements between employers and employees from being subject to

compulsory arbitration. It argues that TPA’s assertion that the

legislature intended to exclude from compulsory arbitration only

collective bargaining agreements that contain arbitration

clauses is clearly contrary to the language the legislature

used.

¶8 Because this case presents a question of statutory

interpretation, our review is de novo. See Canon Sch. Dist. No.

50 v. W.E.S. Constr. Co., 177 Ariz. 526, 529, 869 P.2d 500, 503

(1994).

III.

¶9 A statute’s language is “the best and most reliable

index of a statute’s meaning.” State v. Williams, 175 Ariz. 98,

100, 854 P.2d 131, 133 (1993) (quoting Janson v. Christensen,

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167 Ariz. 470, 471, 808 P.2d 1222, 1223 (1991)). In addition,

“[i]f the language is clear, the court must ‘apply it without

resorting to other methods of statutory interpretation,’ unless

application of the plain meaning would lead to impossible or

absurd results.” Bilke v. State, 206 Ariz. 462, 464, ¶ 11, 80

P.3d 269, 271 (2003) (quoting Hayes v. Cont’l Ins. Co., 178

Ariz. 264, 268, 872 P.2d 668, 672 (1994)). The clear language

of § 12-1517 leads us to conclude that an arbitration agreement

between an employer and employee is not subject to the

provisions of the Act, whether the agreement is found in a

contract between a single employer and a single employee or in a

collectively bargained contract.

A.

¶10 Despite the clear language of A.R.S. § 12-1517, TPA,

tracing the history of compulsory arbitration in Arizona, first

maintains that the legislature intended the present version of

the exemption for employer-employee arbitration agreements in

the Act to exclude only arbitration agreements contained in

collective bargaining contracts. It therefore contends that the

agreements here are subject to arbitration. We conclude that

the legislative history does not compel the result TPA urges.

¶11 Before 1929, title II, paragraph 7, of the Revised

Statutes of Arizona (1887) permitted the parties to agree to

submit any “right of action . . . to arbitration.” Subsequent

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versions of this statute continued to permit parties to submit

their claims to arbitration. See Rev. Code Ariz. § 4294 (1928);

Rev. Stat. Ariz. § 1480 (1913); Rev. Stat. Ariz. tit. III, ¶ 295

(1901). Under these statutes, however, parties could not be

compelled to arbitrate their claims. See San Francisco Sec.

Corp. v. Phoenix Motor Co., 25 Ariz. 531, 538, 220 P. 229, 231-

32 (1923). In 1929, the legislature replaced the permissive

arbitration statute with a compulsory arbitration system. See

1929 Ariz. Sess. Laws, ch. 72, § 1 (codified at Rev. Code Ariz.

§ 4301a (Supp. 1934)). But § 4301a specifically excluded

collective bargaining contracts from being subject to compulsory

arbitration. That statute declared “that the provisions of [the

arbitration] act shall not apply to collective contracts between

employers and employees.” Subsequent editions of the Act

continued to exempt collective contracts from compulsory

arbitration. See, e.g., A.R.S. § 12-1509(B) (1954); Ariz. Code

§ 27-309 (1939).

¶12 In 1955, however, the National Conference of

Commissioners on Uniform State Laws promulgated a revised

version of the Uniform Arbitration Act (“UAA”). Among the

concerns the commissioners had was the practice in many states,

including Arizona, of exempting collectively bargained “labor-

management” contracts from compulsory arbitration. See UAA,

prefatory note at 2. To rectify the perceived problem, section

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1 of the revised UAA provided that the act also applied “to

arbitration agreements between employers and employees or

between their respective representatives [unless otherwise

provided in the agreement].”

¶13 In 1962, the Arizona legislature adopted the revised

UAA. 1962 Ariz. Sess. Laws, ch. 108, § 2. But in adopting the

Act, the legislature did not include the language found in

section 1 of the UAA, which would have made Arizona’s

arbitration act applicable to all employer-employee arbitration

agreements, whether collectively bargained or otherwise.

Instead, the legislature took the language from section 1 of the

UAA, cast it in the negative, and included it as a separate

provision, now found in A.R.S. § 12-1517. Thus, unlike the UAA,

Arizona’s arbitration act provides that it has “no application

to arbitration agreements between employers and employees or

their respective representatives.” A.R.S. § 12-1517 (emphasis

added).

¶14 We presume that by amending the language of section 1

of the revised UAA, the legislature intended to change its

meaning. See State v. Garza Rodriguez, 164 Ariz. 107, 111, 791

P.2d 633, 637 (1990) (“[W]e presume that by amending a statute,

the legislature intends to change the existing law.”). If the

legislature had wanted to continue to exclude from the Act only

those employer-employee arbitration agreements that were

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collectively bargained, as it had done in the past, no change in

statutory language would have been needed.

B.

¶15 TPA next argues that when a statute is based on a

model or uniform act, the courts will “assume that the

legislature ‘intended to adopt the construction placed on the

act by its drafters.’” UNUM Life Ins. Co. v. Craig, 200 Ariz.

327, 332, ¶ 25, 26 P.3d 510, 515 (2001) (quoting State v.

Sanchez, 174 Ariz. 44, 47, 846 P.2d 857, 860 (App. 1993)). But

our legislature specifically rejected the portion of the revised

UAA that made it applicable “to arbitration agreements between

employers and employees or between their respective

representatives.” As such, the rule that the legislature

“intended to adopt the construction placed on the act by its

drafters,” id., has no application to A.R.S. § 12-1517, which is

a departure from the UAA. Thus, we cannot assume that the

legislature intended to exclude only arbitration agreements in

collective bargaining contracts from the Act simply because the

Act was modeled after the revised UAA.

C.

¶16 TPA’s third contention posits that an interpretation

of A.R.S. § 12-1517 that excludes all employer-employee

arbitration agreements is contrary to the purposes of the Act

because it would be inconsistent with the legislature’s policy

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of favoring arbitration. Although we agree Arizona has a strong

public policy favoring arbitration, see S. Cal. Edison Co. v.

Peabody W. Coal Co., 194 Ariz. 47, 51, ¶ 11, 977 P.2d 769, 773

(1999), the plain language of A.R.S. § 12-1517 carves out an

exception to that policy. A straightforward reading of the

statute reveals that § 12-1517 specifically exempts employer-

employee arbitration agreements from compulsory arbitration

under the Act; therefore, TPA’s argument fails.

D.

¶17 TPA next contends that because A.R.S. § 12-1517 refers

to “employers and employees” in the plural, the statute must be

interpreted as applying only to collective bargaining

agreements, and not to arbitration agreements between a single

employer and a single employee. It cites Wilson v. McGrow,

Pridgeon & Co., 467 A.2d 1025, 1031 (Md. 1983), in support of

this contention.

¶18 We decline to adopt TPA’s interpretation of A.R.S. §

12-1517 for two reasons. First, under Arizona’s rules of

statutory construction, “[w]ords in the singular number include

the plural, and words in the plural number include the

singular.” A.R.S. § 1-214(B) (2002). And unless the

legislature expresses “‘manifest intent’ to the contrary,” a

plural noun will be construed to include the singular of that

noun. Homebuilders Ass’n of Cent. Ariz. v. City of Scottsdale,

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186 Ariz. 642, 649, 925 P.2d 1359, 1366 (App. 1996).

Accordingly, under our rules of statutory construction, § 12-

1517 plainly includes arbitration agreements between a single

employer and a single employee as well as arbitration agreements

in collectively bargained contracts.

¶19 Second, we find TPA’s reliance on Wilson misplaced.

Maryland’s Uniform Arbitration Act, like Arizona’s, has a

provision exempting arbitration agreements between employers and

employees. That provision states, in part, the following: “This

subtitle does not apply to an arbitration agreement between

employers and employees or between their respective

representatives . . . .” Md. Code Ann., Cts. & Jud. Proc. § 3-

206(b) (1974).

¶20 Like Arizona, Maryland has a rule of statutory

interpretation that declares “[t]he singular always includes the

plural, and vice versa, except where such construction would be

unreasonable.” Md. Ann. Code art. 1, § 8 (1957). But the

Wilson court questioned whether this rule of statutory

interpretation was applicable because when the entire Maryland

Code was revised, many terms were changed from the plural to the

singular to reflect a uniform style, 467 A.2d at 1027 (citing

Revisor’s Note to Md. Code (1974) (stating that “[t]he only

changes made are in style”)), but the plural of the words

“employers” and “employees” remained in the Maryland Uniform

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Arbitration Act, along with the singular of the word

“agreement.” Id. The court noted that had the language been

changed to the singular — employer and employee — an inference

could be drawn “that conversion to the singular in conformity

with the code revision style guideline would not be a change in

style, but one of substance.” Id. (citing Md. Code Ann., Cts. &

Jud. Proc. § 3-206(b)). Noting that the revisors of the

Maryland Code elected not to make this change, but instead

retained the plural “employers” and “employees,” the court

questioned whether the statute intended to exclude an

arbitration agreement between an individual employer and

individual employee. Id.

¶21 Consequently, the Wilson court looked to the

legislative history of the Maryland Uniform Arbitration Act.

See id. at 1028-29. The court pointed out that, in adopting the

UAA, the Maryland legislature, at the urging of labor union

representatives, specifically intended to exclude the Maryland

Uniform Arbitration Act from applying to arbitration agreements

in collective bargaining contracts, but not other employer-

employee contracts. Id. As a result, the court concluded “that

the primary purpose of that Maryland variation from the [UAA]

was to exclude arbitration agreements in collective bargaining

contracts from the Act.” Id. at 1031.

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¶22 We distinguish Wilson on two bases. First, as stated

above, Arizona’s rules of statutory construction provide that

“[w]ords in the singular number include the plural, and words in

the plural number include the singular.” A.R.S. § 1-214(B).

Unlike the legislative history in Maryland, Arizona’s

legislative history does not indicate that we should depart from

that rule. Second, and more important, we conclude that the way

in which our legislature adopted the language found in A.R.S. §

12-1517, discussed supra part III(A), demonstrates that it had

intended a result contrary to the result reached in Wilson. For

these reasons, we find Wilson unpersuasive.

E.

¶23 TPA also argues that under the last antecedent rule,

the term “their respective representatives” applies only to

“employees.” Thus, according to TPA, A.R.S. § 12-1517 “must be

read to refer to labor-management agreements, rather than to

individual employment contracts.” We determine that the last

antecedent rule does not apply to § 12-1517.

¶24 “The last antecedent rule is recognized in Arizona and

requires that a qualifying phrase be applied to the word or

phrase immediately preceding as long as there is no contrary

intent indicated.” Phoenix Control Sys., Inc. v. Ins. Co. of N.

Am., 165 Ariz. 31, 34, 796 P.2d 463, 466 (1990). But “[t]he

last antecedent rule is not inflexible and it will not be

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applied where the context or clear meaning of a word or phrase

requires otherwise.” Id.

¶25 Section 12-1517 expressly uses the phrase “respective

representatives.” “Words and phrases shall be construed

according to the common and approved use of the language.”

A.R.S. § 1-213 (2002). The word respective is commonly defined

as “[r]elating or pertaining to two or more persons or things

regarded individually.” The American Heritage Dictionary 1107

(1979). If the statute had read “employees or their

representatives,” TPA’s argument might prevail. But the word

“respective” refers to two or more persons or things.

Therefore, considering the context and the clear meaning of the

phrase “respective representatives,” we conclude that the phrase

relates equally to both employers and employees.

¶26 In addition, the use of the word “or” signals that the

last antecedent rule was not meant to apply. Plainly read, the

disjunctive provision in § 12-1517 works to preclude enforcement

of arbitration clauses between the following: an employer and an

employee, an employer and an employee representative, an

employer representative and an employee, and an employer

representative and an employee representative. Thus, we decide

that the last antecedent rule does not apply to A.R.S § 12-1517.

¶27 Finally, we reject the trial court’s reasoning that

the absence of a comma after the word “employees” in the phrase

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“employees or their respective representatives” means “that the

reference to ‘representatives’ is used in the conjunctive, so

that [A.R.S. § 12-1517] must be read as referencing employers on

the one hand and ‘employees or their respective representative’

on the other.” The fact that the legislature did not use a

comma after the word “employees” does not affect the usual and

common meaning of the word “respective” as used in § 12-1517.

Thus, plainly read, § 12-1517 applies to arbitration agreements

between an employer and employee, whether such agreements are in

individual contracts or collectively bargained contracts.

IV.

¶28 In sum, the plain language of A.R.S. § 12-1517 exempts

all employer and employee employment agreements from the

provisions of Arizona’s arbitration act.3 Accordingly, the trial

court erred in ordering that this matter proceed to arbitration.

¶29 Citing A.R.S. §§ 12-341 (2003) and 12-341.01(A)

(2003), the defendants request an award of attorneys’ fees and

costs. We grant the request. See Wagenseller v. Scottsdale

Mem’l Hosp., 147 Ariz. 370, 393-94, 710 P.2d 1025, 1048-49

(1985).

3
Neither party argued whether the arbitration clauses are
enforceable as a common-law contract term. Nor did they argue
that an employer and an employee can agree to engage in binding
arbitration without the benefit of the statute. Therefore, we
do not decide whether these types of agreements are enforceable
under the common law.

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 V.

¶30 For the foregoing reasons, we vacate the order of the

trial court that compelled arbitration and remand this matter to

that court for further proceedings consistent with this opinion.

__________________________________
Michael D. Ryan, Justice

CONCURRING:

_________________________________________
Charles E. Jones, Chief Justice

_________________________________________
Ruth V. McGregor, Vice Chief Justice

_________________________________________
Rebecca White Berch, Justice

_________________________________________
Andrew D. Hurwitz, Justice

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