Opinion
CIVIL ACTION No. 03-2380-KHV.
July 2, 2004
MEMORANDUM AND ORDER
Joey Smith brings suit against Devlin Partners, L.L.C., alleging sexual harassment and retaliation in violation of Title VII of the Civil Rights Act of 1964 ("Title VII"), 42 U.S.C. § 2000e et seq. as amended. This matter comes before the Court on defendant's Motion To Extend Stay And To Compel Arbitration (Doc. #9), filed May 3, 2004, to which plaintiff has not responded. Pursuant to D. Kan. Rule 7.4, if a respondent fails to file a timely response, "the motion will be considered and decided as an uncontested motion, and ordinarily will be granted without further notice." On this record, however, defendant has not presented sufficient evidence of an enforceable agreement to arbitrate. The Court therefore overrules defendant's motion.
Plaintiff filed this case almost a year ago, on July 24, 2003, but it has been stayed pursuant to the parties' joint motions, pending their attempts to resolve the case through mediation. Specifically, on September 10, 2003, the parties filed a joint motion to stay proceedings until they "completed the dispute resolution process" described in defendant's Dispute Resolution Handbook ("DRH"). Doc. #3 at 1. According to the motion, the DRH set forth a four-step binding arbitration procedure. Id. ¶¶ 2-3. The parties agreed to begin with step three (mediation) and that before reaching the fourth step (binding arbitration), plaintiff could challenge whether the arbitration policy was enforceable. Id. ¶¶ 4, 5. On September 12, 2003, the Court granted the motion, staying the case for 90 days until December 11, 2003. See Doc. #4.
On December 11, 2003, the parties filed a second joint motion to extend the stay "until the parties have completed the dispute resolution process, or until March 1, 2004, whichever period is longer." Doc. #5 at 1. In support of the motion, the parties said that they had scheduled mediation for December 9, 2003, but that plaintiff's counsel had to cancel due to a death in his family.See id. ¶¶ 3-4. In light of the holiday season and the calendars of counsel, the parties requested an additional two and a half months to complete mediation. See id. ¶ 6. On December 15, 2003, the Court entered an order which extended the stay until March 1, 2004. See Doc. #6. In the order, the Court stated its assumption that the dispute resolution process would resolve all or a substantial part of this case. Id.
On March 1, 2004, the parties filed a joint motion for an "indefinite" stay of proceedings. Doc. #7. The parties said that they had rescheduled mediation for March 4, 2004, but had to cancel due to "unexpected scheduling conflicts." Id. ¶ 5. The parties stated that they had tentatively rescheduled the mediation for March 16, 2004, and that additional time would be needed "to complete the arbitration process, if necessary." Id. ¶ 6. On March 5, 2004, the Court entered an order which extended the stay until May 3, 2004. See Doc. #8.
On May 3, 2004, defendant filed its motion to extend the stay and compel arbitration. Doc. #9. In support of the motion, defendant stated that the parties had mediated the matter on April 13, 2004, but did not resolve the case. See Doc. #10 at 1.
I. Legal Standards
The Federal Arbitration Act ("FAA"), 9 U.S.C. § 1 et seq., ensures that written arbitration agreements in maritime transactions and transactions involving interstate commerce are "valid, irrevocable, and enforceable." 9 U.S.C. § 2. Federal policy favors arbitration agreements and requires that the Court "rigorously enforce" them. Shearson/Am. Exp., Inc. v. McMahon, 482 U.S. 220, 226 (1987) (quoting Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 221 (1985)); see Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 122-23 (2001) (arbitration agreements in employment contracts are generally enforceable). "[A]ny doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration." Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983). The presumption of arbitrability falls away, however, when the dispute is whether the parties have a valid and enforceable arbitration agreement in the first place. See Riley Mfg. Co. v. Anchor Glass Container Corp., 157 F.3d 775, 779 (10th Cir. 1998) (citing First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944-45 (1995)).
FAA Section 3 states:
If any suit or proceeding be brought in any of the courts of the United States upon any issue referable to arbitration under an agreement in writing for such arbitration, the court in which such suit is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration.9 U.S.C. § 3. Defendant bears an initial summary-judgment-like burden of establishing that it is entitled to arbitration. See, e.g., Par-Knit Mills, Inc. v. Stockbridge Fabrics Co., 636 F.2d 51, 54 n. 9 (3d Cir. 1980) (standard on motion to compel arbitration is same as summary judgment standard); Doctor's Assoc., Inc. v. Distajo, 944 F. Supp. 1010, 1014 (D. Conn. 1996) (same), aff'd, 107 F.3d 126 (2d Cir.), cert. denied, 522 U.S. 948 (1997). Thus, defendant must present evidence which is sufficient to demonstrate an enforceable agreement to arbitrate.See, e.g., Oppenheimer Co. v. Neidhardt, 56 F.3d 352, 358 (2d Cir. 1995). If defendant makes such a showing, the burden shifts to plaintiff to demonstrate a genuine issue for trial.See id.; see also Naddy v. Piper Jaffray, Inc., Nos. 15431-9-III, 15681-8-III, 1997 WL 749261, at *2 (Wash.Ct.App. Dec. 4, 1997).
Before granting a stay pending arbitration, the Court must determine that the parties have a written agreement to arbitrate.See 9 U.S.C. § 3 and 4; Avedon Eng'g, Inc. v. Seatex, 126 F.3d 1279, 1283 (10th Cir. 1997). If the parties dispute making an arbitration agreement, a jury trial on the existence of an agreement is warranted if the record reveals genuine issues of material fact regarding the parties' agreement. See id. When deciding whether the parties have agreed to arbitrate, the Court applies ordinary state law principles that govern the formation of contracts. See First Options, 514 U.S. at 944.
II. Facts
In support of its motion, defendant submits three exhibits. Defendant has not authenticated the exhibits and it has presented no sworn testimony.
The first exhibit is an unauthenticated employment application which plaintiff apparently signed on November 19, 2001. The application contains the following "Arbitration Provision":
I agree that I will settle any and all claims, disputes or controversies arising out of or relating to my application or candidacy for employment, employment, or cessation of employment with the Company, exclusively by final and binding arbitration before a neutral Arbitrator under the American Arbitration Association's "National Rules for the Resolution of Employment Disputes". By way of example only, such claims include claims under federal, state, and local statutory or common law, the law of contract, and the law of tort.
Exhibit 1 at 2, defendant's Memorandum In Support Of Motion To Extend Stay And To Compel Arbitration ("Defendant's Memorandum") (Doc. #10) filed May 3, 2004.
The second exhibit is entitled "Dispute Resolution Program — Program Booklet" ("DRP"). It sets forth a four-step process for resolving employment-related disputes — (1) communication with co-workers/supervisors, (2) executive review by an operating partner, (3) mediation and (4) arbitration pursuant to the American Arbitration Association ("AAA") employment-related rules. See Exhibit 2 at 2-4, Defendant's Memorandum. Under the DRP, defendant agrees to arbitrate certain claims which it may have against plaintiff, see id. at 4, and it cannot unilaterally change or delete any provision which governs mandatory binding arbitration. See id. at 6. Defendant asserts that it gave plaintiff a copy of the DRP at the time she executed her employment application, but it provides no sworn testimony to support the assertion. See Defendant's Memorandum at 2.
The third Exhibit is a form which plaintiff apparently signed on November 27, 2004. It acknowledges that plaintiff "received a copy of the Dispute Resolution Handbook and agree[s] to submit all employee related claims to binding arbitration per the guidelines found in the Dispute Resolution Handbook." Exhibit 3 to Defendant's Memorandum. The form also acknowledges that plaintiff received a copy of the Team Member Handbook and understands that she is an employee at will and can be terminated at any time, with or without notice and with or without cause. Defendant asserts that the form indicates plaintiff's willingness to follow the DRP, but it provides no evidence to support the assertion. See Defendant's Memorandum at 2.
The record does not indicate whether the Dispute Resolution Handbook is the same as the DRP.
III. Analysis
On this record, defendant has not demonstrated an enforceable agreement to arbitrate. As an initial matter, defendant has not authenticated the documents which it contends create the arbitration agreement. Moreover, the documents alone are not sufficient to establish a binding agreement. The employment application contains only a one-sided promise by plaintiff to arbitrate employment disputes. It contains no reciprocal agreement or other consideration by defendant. A promise to employ plaintiff at will is not sufficient. See Phox v. Atriums Mgmt. Co., 230 F. Supp.2d 1279, 1283 (D. Kan. 2002) (promise of employment illusory because of at will nature of plaintiff's employment). In addition, the acknowledgment that plaintiff agreed to the terms of the Dispute Resolution Handbook, see Exhibit 3, Defendant's Memorandum, does not show that plaintiff agreed to the terms of the DRP. Because defendant has not submitted evidence sufficient to establish an enforceable agreement to arbitrate, the Court overrules its motion to compel arbitration.
The record apparently does not contain the terms of the Dispute Resolution Handbook.
Because defendant has not shown that the parties have a written agreement to arbitrate, an extension of the stay is inappropriate. See Avedon Eng'g, 126 F.3d at 1283. The Magistrate Judge shall proceed with pretrial proceedings which shall ensure that discovery is completed and dispositive motions are filed by October 31, 2004. IT IS THEREFORE ORDERED that defendant's Motion To Extend Stay And To Compel Arbitration (Doc. #9), filed May 3, 2004 be and hereby is OVERRULED. IT IS FURTHER ORDERED that the Magistrate Judge proceed to issue a scheduling order in the case. The case is set for trial on February 15, 2005. Dispositive motions shall be filed no later than October 31, 2004.
The Court notes that this case is nearly a year old and from the docket sheet, it appears that nothing has been accomplished except one mediation session, two months ago. The Court expects that the parties will now give this matter the priority attention which it deserves, and that discovery will be completed in four months or less. See D. Kan. Rule 26.1. No further stays will be granted.