Opinion
Case No. 4:04-CV-86.
March 1, 2005
OPINION
Plaintiff, Charles Williams ("Williams"), filed his complaint in this action against Defendants Biomat USA Inc. ("Biomat"), and Jenine and Joe Nickels ("the Nickels"), on June 22, 2004, alleging claims for violation of 42 U.S.C. §§ 1981 and 1985 (Count I); assault and battery, ethnic intimidation and denial of equal public accommodations (Count II); racially motivated termination in violation of the Michigan Elliott-Larsen Civil Rights Act (Count III); and retaliatory discharge (Count IV), all of which arise out of the Nickels' alleged racially motivated assaults, batteries, and intimidations against Williams in the workplace. Initially, the Nickels requested an extension of time to file an answer, which the Court granted, but the Nickels did not file an answer, and the Clerk has now entered defaults against the Nickels. Presently before the Court is Biomat's motion to stay the proceedings and to compel arbitration pursuant to the Federal Arbitration Act ("FAA"), 9 U.S.C. §§ 1-208.
As support for its motion, Biomat relies upon an Employee Acknowledgment And Agreement (the "Agreement") that Williams signed on July 28, 2003. The Agreement contains an arbitration provision which states, in part:
I also acknowledge that the Company utilizes a system of alternative dispute resolution that involves binding arbitration to resolve all disputes that may arise out of the employment context. Because of the mutual benefits (such as reduced expense and increased efficiency) which private binding arbitration can provide both the Company and myself, both the Company and I agree that any claim, dispute, and/or controversy (including, but not limited to, any claims of discrimination and harassment, whether they be based on the Elliot-Larsen [sic] Civil Rights Act, Title VII of the Civil Rights Act of 1964, as amended, as well as all other state or federal laws or regulations) that either I or the Company . . . may have against the other which would otherwise require or allow resort to any court or other governmental dispute resolution forum arising from, relate to, or having any relationship or connection with my seeking employment with, employment by, or other association with the Company, whether based on tort, contract, statutory, or equitable law, or otherwise, (with the sole exception of claims arising under the National Labor Relations Act which are brought before the National Labor Relations Board, claims for medical and disability benefits under Workers' Compensation, and Unemployment Compensation claims filed with the state shall be submitted to and determined exclusively by binding arbitration under the Federal Arbitration Act, in conformity with the procedures of the Michigan Compiled Laws Annotated Sections 600.5001-.5035 and Michigan Statutes Annotated Sections 27A. 5001-.5035. However in addition to requirements imposed by law, any arbitrator herein shall be a retired Michigan Circuit Court Judge and shall be subject to disqualification on the same grounds as would apply to a judge of such court. To the extent applicable in civil actions in United States District Courts, the following shall apply and be observed: all rules of pleading all rules of evidence, all rights to resolution of the dispute by means of motions for summary judgment, judgment on the pleadings. . . . . Should any term or provision, or portion thereof, be declared void or unenforceable it shall be severed and the remainder of this agreement shall be enforceable. . . .
(Agreement at 1-2, Def.'s Mem. Supp. Ex. 1.) Biomat contends that, based upon this paragraph, Williams agreed to submit his claims in this case to arbitration and has waived his right to pursue them in litigation.
Section 2 of the FAA provides, in part:
A written provision in any . . . contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction . . . shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.9 U.S.C. § 2. "Manifesting a `liberal federal policy favoring arbitration agreements,' the FAA `is at bottom a policy guaranteeing the enforcement of private contractual arrangements.'" Javitch v. First Union Secs., Inc., 315 F.3d 619, 624 (6th Cir. 2003) (quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 625, 105 S. Ct. 3346, 3353 (1985)). To further this policy, the FAA provides that a court may stay a proceeding involving a claim subject to a valid arbitration agreement, and where a party refuses to arbitrate, a district court may compel or order the party to arbitrate. 9 U.S.C. §§ 3 and 4. In deciding a motion to compel, a court is concerned only with whether the parties entered into a valid arbitration agreement and does not reach the merits of the case. See Burden v. Check Into Cash, 267 F.3d 483, 485 (6th Cir. 2001). A court must examine the language of the agreement "in light of the strong federal policy in favor of arbitration," and "any ambiguities in the contract or doubts as to the parties' intentions should be resolved in favor of arbitration." Stoudt v. J.D. Byrider, 228 F.3d 709, 714 (6th Cir. 2000).
Williams does not dispute that he signed the Agreement and he does not argue that any of the claims he has asserted in this case fall outside of the Agreement, which, the Court notes, is broad in scope. He argues, however, that the agreement is void or voidable because: (1) it does not provide for effective discovery; and (2) it does not contain a procedure for selecting an arbitrator. Williams also suggested that the agreement is invalid because it does not address the issue of payment of the arbitrator's fees and expenses, but he has apparently withdrawn this argument in light of Biomat's offer to pay "the arbitrator's fees and expenses, together with any other expenses, not including attorney's fees, incurred in the conduct of the arbitration hearing." (Def.'s Mem. Supp. at 8.)
Citing Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 111 S. Ct. 1647 (1991), Williams contends that "[t]he law is clear that in order for an Arbitration Agreement to be enforceable, it must provide for effective discovery, including document production, information requests, depositions and subpoenas." (Pl.'s Br. Opp'n at 1.) This is not an entirely accurate statement. In Gilmer, the issue before the Court was whether the plaintiff could be compelled to arbitrate his claim under the Age Discrimination in Employment Act of 1967 ("ADEA") pursuant to an arbitration agreement in a securities registration application. The Court held that arbitration would not be inconsistent with the underlying purposes of the ADEA, that nothing the text or legislative history indicated that Congress intended to preclude arbitration of such claims, and that the plaintiff could be compelled to arbitrate his claim. The plaintiff argued that arbitration would be unfair because the limited discovery provided in arbitration would make it more difficult to prove his claim. The Court rejected the argument, noting that "[a]lthough 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 31, 111 S. Ct. at 1655 (quotingMitsubishi, 473 U.S. at 628, 105 S. Ct. at 3354.) To have an arbitration agreement invalidated on the grounds of inadequate discovery procedures, a party must show that the discovery provided for "will prove insufficient to allow [the plaintiff] a fair opportunity to present [his] claims." Id. See also Carter v. Countrywide Credit Indus., Inc., 362 F.3d 294, 298-99 (5th Cir. 2004) (affirming the district court's conclusion that the plaintiffs failed to show that the limits placed on discovery would preclude them from presenting their claims).
Williams is correct that the Agreement does not provide for any discovery at all, while it does provide for certain procedural devices that are often favorable to defendants, such as motions for summary judgment. Nonetheless, the absence of such procedures will not deprive Williams of his opportunity to fully develop his claims, because Biomat has agreed to proceed in the arbitration in accordance with discovery procedures allowed by the Michigan Court Rules. (Def.'s Reply Mem. at 2 Ex. A ¶ 1.) Biomat's agreement to the application of Michigan's discovery rules fully addresses Williams' concerns on this point. See Sapiro v. Verisign, 310 F. Supp. 2d 208, 214 (D.D.C. 2004) (concluding that it was unnecessary to determine whether the discovery rules in the arbitration agreement, which were slanted in favor of the employer, provided for sufficient discovery where the defendant agreed to proceed with the arbitration and discovery under AAA rules and the agreement contained a severability provision which allowed for the substitution of a new discovery procedure).
Williams' other objection to arbitration is that the Agreement does not identify a method for selecting the arbitrator. The Agreement merely provides that the arbitrator "shall be a retired Michigan Circuit Court Judge" without specifying a procedure for selecting the retired judge. The absence of such a procedure does not present an obstacle to arbitration because, as with the discovery issue, Biomat has agreed to initiate the arbitration proceeding before the American Arbitration Association ("AAA"). If Williams agrees to AAA arbitration, AAA will provide a list of approved arbitrators from which the parties may select their arbitrator, and AAA will select an arbitrator if the parties are unable to do so. Moreover, even if Williams does not agree to AAA arbitration, the FAA specifically addresses the issue. Section 5 provides, in part:
If in the agreement provision be made for a method of naming or appointing an arbitrator or arbitrators or an umpire, such method shall be followed; but if no method be provided therein . . . then upon the application of either party to the controversy the court shall designate and appoint an arbitrator . . . who shall act under the said agreement with the same force and effect as if he or they had been specifically named therein. . . .9 U.S.C. § 5.
Accordingly, for the reasons set forth above, the Court concludes that the Agreement is valid, that Williams' claims are within the scope of the Agreement, and that Williams should be compelled to arbitrate. In addition, the Court concludes that this case should be stayed, rather than dismissed, especially in light of the fact that Williams' claims against the Nickels, who are not parties to the Agreement, have not been finally resolved with a default judgment.
An Order consistent with this Opinion will be entered.