Opinion
No. 01-1359
April 22, 2002
ORDER DENYING DEFENDANT'S MOTION TO DISMISS AND GRANTING DEFENDANT'S MOTION TO STAY PENDING ARBITRATION
Plaintiff Valerie Maples has filed suit against her former employer, Sterling Jewelers, Inc., for allegedly discriminating against her on the basis of her pregnancy in violation of the Tennessee Human Rights Act, T.C.A. § 4-21-101 et seq. ("THRA"). Plaintiff has also asserted a state law claim of intentional infliction of emotional distress. Jurisdiction in this court is predicated on diversity of citizenship, 28 U.S.C. § 1332. Defendant has filed a motion to dismiss or, in the alternative, to stay the action pending arbitration. Plaintiff has responded to the motion, and Defendant has filed a reply to the response. For the reasons set forth below, the portion of Defendant's motion seeking to dismiss the action is DENIED, and the portion of the motion seeking to stay the action pending arbitration is GRANTED.
Plaintiff was hired by Defendant on or about October 12, 2000, as a full-time sales person. The employment application completed by Plaintiff stated that the parties agreed to use Defendant's alternative dispute resolution program ("RESOLVE") to settle workplace disputes. After being hired, Plaintiff signed a written agreement in which she agreed to submit to RESOLVE all claims concerning (1) federal, state, or municipal human rights or civil rights statutes or (2) public policy, contract, tort, or common law. Defendant's Exhibit 2. In the agreement, Plaintiff acknowledged that she knowingly and voluntarily waived her statutory rights to bring a claim covered by the agreement in a judicial forum. Id. The agreement stated that it was governed by and would be interpreted in accordance with Ohio law. Id. Plaintiff alleges that her employment was terminated on August 23, 2001, because of her pregnancy.
The facts are stated for the purpose of deciding this motion only.
Plaintiff does not dispute the fact that she signed the agreements or that the agreements are governed by Ohio law. Instead, Plaintiff argues that the agreements are unenforceable because (1) they establish procedural hurdles with a penalty of dismissal should the employee fail at any step; (2) they shorten the statute of limitations; (3) the discovery provisions are inadequate and ill-defined; (4) there is no provision for meaningful judicial review; and (5) Defendant refused to divulge the rules for inspection. Plaintiffs Response at p. 2.
Under the Federal Arbitration Act ("FAA"), a district court must stay proceedings if satisfied that the parties have agreed in writing to arbitrate the issue(s) presented in the lawsuit. 9 U.S.C. § 3. The district court has no discretion to refuse to compel arbitration if the court finds that the parties have so agreed. Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218 (1985). Any limitation of an arbitration provision must be read narrowly in order to effectuate the strong national policy of favoring enforcement of agreements to arbitrate, and any doubts must be resolved in favor of arbitration. Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 24-25 (1983); Cincinnati Gas Electric Co. v. Benjamin F. Shaw Co., 706 F.2d 155 (6th Cir. 1983). Arbitration should be ordered unless it can be said that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute. United Steelworkers of America v. Warrior Gulf Navigation Co., 363 U.S. 574, 582-83 (1960); McMahan Sec. Co. v. Forum Capital Markets, 35 F.3d 82, 88 (2nd Cir. 1994).
When a contract contains a broad arbitration clause covering all controversies arising under the agreement, arbitration must be ordered unless the party seeking to avoid it can show that the particular dispute was expressly excluded. Cincinnati Gas, 706 F.2d at 160. In Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (1985), the Supreme Court made clear the applicability of the FAA to statutorily-created causes of action. See also Circuit City Stores, Inc. v. Adams, 532 U.S. 105 (2001) (compelling arbitration of state court employment discrimination action); Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991) (compelling arbitration of Age Discrimination in Employment Act claim). The party resisting arbitration bears the burden of proving that the claims at issue are unsuitable for arbitration. Id.
Plaintiff first argues that the agreements to arbitrate are unenforceable because they establish procedural hurdles with a penalty of dismissal should the employee fail at any step. RESOLVE is a three step process during which an employee who alleges that she has been subjected to an unlawful employment action must first contact the program administrator and file a complaint form. If the employee is not satisfied with the outcome of Step 1, then she may proceed to Step 2 which provides for an appeal to an outside mediator or a five member review panel. If the employee is not satisfied with the outcome of Step 2, then she proceeds to Step 3 which provides for binding arbitration in accordance with the rules set forth by the American Arbitration Association. The decision of the arbitrator is final and binding on the employee and the employer. Defendant's Exhibit 3. Pursuant to the agreement, an employee may not file a lawsuit instead of using RESOLVE or accepting the arbitrator's final decision. Id. According to Plaintiff this process "clearly erects procedural barriers which prevent Plaintiff from vindicating her rights to legal and equitable relief as contemplated by THRA and Title VII." Plaintiff's Response at p. 3.
Plaintiff has cited no law in support of her argument. To the contrary, as discussed in Morrison v. Circuit City, 70 F. Supp.2d 815 (S.D. Ohio 1999),
Furthermore, the Sixth Circuit recognizes that both statutory and common law claims may be subject to an arbitration agreement enforceable under the FAA. See Cosgrove v. Shearman Lehman Brothers, 1997 WL 4783, 1997 U.S.App. LEXIS 392 [6th Cir. 1997], at *5-*6 (citing Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 26, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991) (holding that claims arising under the Age Discrimination in Employment Act ("ADEA") may be subject to an enforceable arbitration agreement); Willis v. Dean Witter Reynolds, Inc., 948 F.2d 305, 310 (6th Cir. 1991) (extending the holding of Gilmer to claims arising under Title VII)). The Supreme Court reiterated in Gilmer that, "[h]aving made the bargain to arbitrate, the party should be held to it unless Congress itself has evinced an intention to preclude a waiver of judicial remedies for the statutory rights at issue." Id., 500 U.S. at 26 (quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628 (1985)).
Because we find no evidence that Congress intended to preclude the arbitration of her statutory claims and because Plaintiff fails to persuade us that Ohio would preclude the arbitration of her state-law claims, the Court concludes that Plaintiff should be held to her bargain unless (1) the traditional grounds for revocation of a contract exist in this case or (2) the Agreement fails to protect the substantive rights guaranteed by law. See 9 U.S.C. § 2; Gilmer, 500 U.S. at 28, 33, 111 S.Ct. 1647 (quoting Mitsubishi Motors Corp., 473 U.S. at 637, 627).70 F. Supp.2d at 820-21.
Here, Plaintiff has failed to show that any "traditional grounds for revocation of a contract exist" or that the agreements fail "to protect the substantive rights guaranteed by law." To the extent that Plaintiff argues that she "was given no choice but to sign the arbitration agreement" upon penalty of termination from her job, Plaintiff's Response at p. 2, Plaintiffs argument is without merit. In Morrison, the court rejected the argument that an agreement to arbitrate was a contract of adhesion merely because the employee had to sign it before she could be considered for employment. 70 F. Supp.2d at 821. The court relied, in part, on Beauchamp v. Great West Life Assurance Co., 918 F. Supp. 1091 (E.D. Mich. 1996), and EEOC v. Frank's Nursery Crafts, 966 F. Supp. 500 (E.D. Mich. 1997) ( rev'd on other grounds, 177 F.3d 448 (61h Cir. 1999)), "in support of the proposition that adhesion contracts do not exist where applicants have a choice of where to apply for a job." 70 F. Supp.2d at 822.
In Beauchamp, the court indicated its reluctance in finding a contract of adhesion in a context where a plaintiff could choose to work for other employers without signing arbitration agreements. Likewise, the court in Frank's Nursery Crafts stated that "[i]f [the applicant] disagreed with anything contained in the application she was free to simply look elsewhere for employment. . . . (When a party . . . voluntarily agrees to something in an attempt to obtain employment, they are not being `forced' to do anything"). (emphasis in original).Id. (citations omitted).
Plaintiff has not presented any other "traditional grounds for revocation" of her arbitration agreements. Furthermore, the agreements sufficiently protect Plaintiffs "substantive rights guaranteed by law." The agreements clearly describe the claims to which they apply, specify the cost to each party, state in bold type that the employee is waiving her right to "commence any court action," and provide that the employee does not waive her right to file a complaint or charge with the National Labor Relations Board or the Equal Employment Opportunity Commission, although she waives her individual right to any relief that results from such a charge. Defendant's Exhibits 2 and 3. If the claim proceeds to a hearing in front of an arbitrator, the employee is entitled to be represented by an attorney and to present witnesses or any other evidence that is allowed by the Federal Rules of Evidence. Defendant's Exhibit 3. The arbitrator issues a written decision and may award reinstatement, back pay, reasonable attorney's fees, "or any other remedy that a court would provide." Id. The Supreme Court has found that "so long as the prospective litigant effectively may vindicate [his or her] statutory cause of action in the arbitral forum, the statute will continue to serve both its remedial and deterrent function." Gilmer, 500 U.S. at 28 (quoting Mitsubishi Motors Corp., 473 U.S. at 637). Thus, Plaintiffs first argument fails.
Plaintiff next complains that the agreement shortens the statute of limitations. The THRA requires that a "civil cause of action . . . shall be filed . . . within one (1) year after the alleged discriminatory practice ceases." T.C.A. § 4-21-311(d). RESOLVE provides that the aggrieved employee must file the initial complaint form "within 300 days of the alleged unlawful action." Defendant's Exhibit 3.
Plaintiffs employment was terminated on August 23, 2001. Complaint at ¶ 14. Plaintiff filed her complaint in this court on December 6, 2001, well within the three hundred day time limit of RESOLVE. Article III limits a federal court to decide only a "case or controversy, i.e., a definite and concrete controversy involving adverse legal interests at every stage in the litigation." McFarlin v. Newport Special Sch. Dist., 980 F.2d 1208, 1210 (8th Cir. 1992). Because Plaintiff filed her complaint within the requisite time period, Defendant is not entitled to a statute of limitations defense; therefore, this issue does not present "a definite and concrete controversy involving adverse legal interests."Cf. Green Tree Financial Corp.-Alabama v. Randolph, 531 U.S. 79 (2000) (When "a party seeks to invalidate an arbitration agreement on the ground that arbitration would be prohibitively expensive, that party bears the burden of showing the likelihood of incurring such costs . . ." "The `risk' that Randolph will be saddled with prohibitive costs is too speculative to justify the invalidation of an arbitration agreement.") Furthermore, parties to an arbitration agreement may shorten a statute of limitations. Morrison, 70 F. Supp.2d at 826.
Thirdly, Plaintiff contends that the discovery provisions for arbitration are inadequate and ill-defined. The Supreme Court has "rejected generalized attacks on arbitration that rest on `suspicion of arbitration as a method of weakening the protections afforded in the substantive law to would-be complainants.'" Green Tree Financial Corp.-Alabama v. Randolph, 531 U.S. at 90 (citations omitted). Moreover, the Court has specifically approved of reasonable limitations on discovery in the arbitration of statutory discrimination claims. Gilmer, 500 U.S. at 31.
Gilmer also complains that the discovery allowed in arbitration is more limited than in the federal courts, which he contends will make it difficult to prove discrimination. It is unlikely, however, that age discrimination claims require more extensive discovery than other claims that we have found to be arbitrable, such as RICO and antitrust claims. Moreover, there has been no showing in this case that the NYSE discovery provisions, which allow for document production, information requests, depositions, and subpoenas, will prove insufficient to allow ADEA claimants such as Gilmer a fair opportunity to present their claims. Although those procedures might not be as extensive as in the federal courts, by agreeing to arbitrate, a party "trades the procedures and opportunity for review of the courtroom for the simplicity, informality, and expedition of arbitration.Id. at 30-31 (emphasis added) (citations omitted).
Relying on Gilmer, the Sixth Circuit Court of Appeals explained that:
The question is not whether plaintiff might have been able to secure the discovery it wanted under Fed.R.Civ.P. 56(f) in a civil action. The Supreme Court has explained that "by agreeing to arbitrate, a party `trades the procedures and opportunity for review of the courtroom for the simplicity, informality, and expedition of arbitration.'" Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 31 (1991) (citation omitted). Arbitration may proceed summarily and with restricted inquiry into factual issues. See Robbins v. Day, 954 F.2d 679, 685 (11th Cir. 1992).
* * * * *
"Arbitrators are not bound by formal rules of procedure and evidence, and the standard for judicial review of arbitration procedures is merely whether a party to arbitration has been denied a fundamentally fair hearing." See National Post Office v. U.S. Postal Serv., 751 F.2d 834, 841 (6th Cir. 1985). Fundamental fairness requires only notice, an opportunity to present relevant and material evidence and arguments to the arbitrators, and an absence of bias on the part of the arbitrators. See Bowles Financial Group, Inc. v. Stifel, Nicolaus Co., 22 F.3d 1010, 1013 (10th Cir. 1994) (citing cases).Louisiana D. Brown 1992 Irrevocable Trust v. Peabody Coal Co., 2000 WL 178554 at **5-6 (6th Cir.). See also Willis v. Dean Witter Reynolds, Inc., 948 F.2d 305 (6th Cir. 1991) (relying on Gilmer in rejecting the contention of the plaintiff and the EEOC "that arbitration is inappropriate for Title VII claims because arbitration provides insufficient procedural safeguards and different mechanisms for discovery than are available in a judicial forum.")
In the present case, discovery is limited to "essential and relative documents and witnesses," see Plaintiffs Exhibit A, as opposed to documents that "appear" reasonably calculated to lead to the discovery of admissible evidence. See Fed.R.Civ.P. 26(b)(1). Discovery disputes are resolved by an arbitrator rather than by the court. As explained inGilmer, Plaintiff has "trade[d] the procedures and opportunity for review of the courtroom for the simplicity, informality, and expedition of arbitration." Because there has been no showing that the discovery mechanism of RESOLVE "provides insufficient procedural safeguards," this argument is without merit.
Although Exhibit A, which is a letter from defense counsel to Plaintiff's attorney, refers to "essential and relative documents and witnesses," it appears that the correct term is "essential and relevant documents and witnesses." Defendant's Reply at pp. 6-7 (emphases added).
According to Plaintiff, the agreement cannot be enforced because there is no provision for meaningful judicial review, Plaintiff is in error. Pursuant to Ohio law, arbitration awards are subject to judicial review.
After an award in an arbitration proceeding is made, any party to the arbitration may file a motion in the court of common pleas for an order vacating, modifying, or correcting the award as prescribed in sections 2711.10 and 2711.11 of the Revised Code.
Finally, Plaintiff states that Defendant has refused to divulge the rules for inspection. Defendant has provided Plaintiff with copies of Plaintiff's signed employment application, her signed application agreement, and the RESOLVE informational brochure. Also, defense counsel responded to Plaintiff counsel's request for information concerning discovery with additional information and instructed Plaintiffs counsel to contact him should there be further questions or the need for more information. Exhibit 1 to Defendant's Reply. Apparently, Plaintiffs counsel did not seek further information from defense counsel and should not complain at this juncture.
Because Plaintiff, as the party resisting arbitration, has not carried her burden of proving that the claims at issue are unsuitable for arbitration, see Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991), Defendant's motion for a stay pending arbitration is GRANTED. This action is hereby STAYED until the arbitration is completed. The parties will advise the court within thirty (30) days of the completion of the arbitration.
The portion of Defendant's motion seeking to dismiss the action is DENIED.