Opinion
Civil Action No. 03-CV-05715.
March 30, 2005
RICHARD J. ORLOSKI, ESQUIRE, On behalf of Plaintiff.
SCOTT L. VERNICK, ESQUIRE, On behalf of ACS, Inc.
CATHERINE THEA BARBIERI, ESQUIRE, County of Northampton.
MEMORANDUM
This matter is before the court on the Motion to Compel Arbitration and for a Stay of Proceedings of Defendant ACS, Inc. filed July 26, 2004 and on the Motion to Compel Arbitration and for a Stay of Proceedings of Defendant County of Northampton filed February 11, 2005. For the reasons expressed below we deny both motions.
Plaintiff filed a response to each motion, titled Plaintiff's Brief in Opposition to Petition to Compel Arbitration by Defendant ACS, and Plaintiff's Response to Defendant County of Northampton's Motion to Compel Arbitration and for a Stay of Proceedings by Defendant.
PROCEDURAL BACKROUND
Plaintiff Jeffrey Britland brought a wrongful termination action by filing a five-count Complaint in the Court of Common Pleas of Northampton County against defendants ACS, Incorporated ("ACS") and the County of Northampton.
Plaintiff was employed by ACS which, at the time, had contracted with the County to provide it with computer support services. Each count is raised by plaintiff Jeffrey Britland only, and the Complaint is entitled "Complaint by Jeffrey Britland Only".
Plaintiff Karen Brandau does not allege any claims in the Complaint despite being named as a plaintiff in the caption. Accordingly, throughout this Memorandum references to plaintiff refer to Mr. Britland alone.
Defendant ACS State and Local Solutions, Incorporated is incorrectly identified in the caption of this case as ACS, Inc. However the pleadings have not been formally amended, and that defendant refers to itself in some of its pleadings as "ACS, Inc.", and in others as "ACS State and Local Solutions, Inc." We will refer throughout this Memorandum to each designation interchangeably.
In his Complaint, plaintiff Jeffrey Britland alleges three counts against defendant ACS, Inc.: Count One alleges a violation of Pennsylvania's Whistleblower Law, Act of December 12, 1986, P.L. 1559, §§ 1-8, 43 P.S. §§ 1421-1428; Count Two alleges a violation of 42 U.S.C. § 1983; and Count Three alleges a claim for wrongful termination under "Pennsylvania public policy". Plaintiff Britland alleges two counts against Northampton County: Count Four alleges a pendent state cause of action for tortious interference with an employment relationship; and Count Five alleges a state claim of promissory estoppel.
On October 15, 2003 defendant ACS filed a Notice of Removal of this case to this court. The removal was based upon federal-question jurisdiction arising from plaintiff's Section 1983 claim. On October 22, 2003, ACS filed a motion to dismiss the Complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Plaintiff filed a response in opposition on November 18, 2003. On February 6, 2004 defendant Northampton County also filed a motion to dismiss pursuant to Rule 12(b)(6).
On July 16, 2004 the undersigned issued an Order denying ACS' motion to dismiss without prejudice for defendant to raise the same issues on a motion for summary judgment. On that same date, the undersigned issued a separate Order granting the County's motion as to Count Four, but denying it without prejudice as to Count Five, leaving open the opportunity for the County to later file a motion for summary judgment.
Ten days after our Orders, on July 26, 2004, ACS filed the within motion, which plaintiff has opposed. Northampton County answered the Complaint on September 9, 2004 and also filed a cross-claim against defendant ACS. On February 11, 2005 Northampton County filed its within motion.
ACS argues that arbitration is appropriate because it had implemented a Dispute Resolution Plan ("DRP") which provided the exclusive means for resolving work-related disputes. Arbitration was one component of the DRP. The County contends that plaintiff was aware of this program, that he continued in his employment after the introduction of this program, and that by doing so he is bound by its terms.
In support of its position, defendant ACS presented the Declaration of Gladys Mitchell, Vice President and Ethics Officer for ACS. Miss Mitchell states that several plan documents were provided to all employees. She claims that these plan documents consisted of: (1) a memorandum from ACS President Jeff Rich to all employees dated March 15, 2002 in which Mr. Rich informed ACS employees of the new DRP being implemented; (2) a document titled "Dispute Resolution Plan" which summarized the plan's components; (3) a document titled "Acceptance of, and Agreement to, ACS' Dispute Resolution Plan" which contained a signature line for the employee to sign and date; and (4) the DRP plan itself. Furthermore, ACS contends that Mr. Britland had completed a computerized training program which, among other subjects, discussed the DRP and its terms.
Northampton County's motion adopts the arguments in the ACS motion. Additionally, the County argues that the DRP allowed third parties to a dispute to consent to arbitration, and that Northampton County, which is not a party to the arbitration agreement, consented to having the arbitrator decide its claims.
In response, plaintiff contends that he did not have actual notice of the arbitration policy, that he has not signed any documents, and has therefore not assented to being bound by the terms of any arbitration agreement. In his affidavit, plaintiff avers that he did not receive any DRP materials. Additionally, plaintiff acknowledges completing the computer training program but contends that the program portrayed the DRP as an optional, and not exclusive, means for solving workplace problems. Finally, plaintiff argues that defendant ACS waived any arbitration argument by proceeding in court with the filing of its motion to dismiss before filing its current motion.
JURISDICTION
The case was removed to this court pursuant to federal question jurisdiction arising from the Section 1983 claims raised in Count Two of plaintiff Britland's Complaint. 28 U.S.C. §§ 1331 and 1441(a); 42 U.S.C. § 1983. This court may exercise supplemental jurisdiction over plaintiff's state law claims in the remaining four counts of the Complaint. 28 U.S.C. § 1367(a).
STANDARD OF REVIEW
Motions to compel arbitration are evaluated under the summary judgment standard set forth in Federal Rule of Civil Procedure 56. See Par-Knit Mills, Incorporated. v. Stockbridge Fabrics Company, Limited, 636 F.2d 51, 54 n. 9 (3d Cir. 1980). This standard places the burden on the moving party to demonstrate that there is no genuine issue as to any material fact and that it is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). The court must view the facts and construe all reasonable inferences in the light most favorable to the non-moving party.Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
DISCUSSION ACS Motion Contract Formation
Neither party contends that the agreement falls outside the Federal Arbitration Act ("FAA"), 9 U.S.C. §§ 1-16. The FAA establishes a strong presumption in favor of compelling arbitration premised on the intent of Congress that courts should enforce the terms of private agreements to arbitrate disputes.Dean Witter Reynolds, Incorporated v. Byrd, 470 U.S. 213, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985); Palcko v. Airbourne Express, Incorporated, 372 F.3d 588 (3d Cir. 2004). Consistent with this presumption, the court must first determine that a contract exists before addressing the issue of whether a particular dispute falls within the contract terms.
Under the FAA, state law governs the formation of contracts. Under Pennsylvania law the relevant inquiry for evaluating contract formation is: "(1) whether both parties manifested an intention to be bound by the agreement; (2) whether the terms of the agreement are sufficiently definite to be enforced; and (3) whether there was consideration." ATACS Corporation v. Trans World Communications, Incorporated, 155 F.3d 659, 666 (3d Cir. 1998).
As stated by the United States Court of Appeals for the Third Circuit:
Before a party to a lawsuit can be ordered to arbitrate and thus be deprived of a day in court, there should be an express, unequivocal agreement to that effect. If there is doubt as to whether such an agreement exists, the matter, upon a proper and timely demand, should be submitted to a jury. Only when there is no genuine issue of fact concerning the formation of the agreement should the court decide as a matter of law that the parties did or did not enter into such an agreement.Standard Bent Glass Corporation v. Glassrobots Oy, 333 F.3d 440, 446 (3d Cir. 2003) (quoting Par-Knit, 636 F.2d at 54).
In evaluating whether parties have entered into an enforceable contract, the primary inquiry for the court is whether there has been "manifestation of assent of the parties to the terms of the promise and to the consideration for it." ATACS, 155 F.3d at 666. (Citations omitted.) The within matter presents the court with conflicting affidavits. Defendant contends that all employees received the documents that make up the DRP, and plaintiff claims he never received these documents. Whether plaintiff received these documents goes to the issue of whether plaintiff was aware of the terms of DRP and whether he agreed to be bound by them.
When faced with questions about the formation of a contract, "[a]n unequivocal denial that the agreement had been made, accompanied by supporting affidavits . . . in most cases should be sufficient to require a jury determination on whether there had in fact been a `meeting of the minds.'" Par Knit, 636 F.2d at 54.
Plaintiff unequivocally states that he did not receive these documents. He avers that he had no knowledge that these provisions made the DRP measures his exclusive means for remedy of employment disputes. Furthermore, Mr. Britland contends had he known of this exclusive provision, he would not have agreed to those terms.
Other than the affidavit of Miss Mitchell, nothing in the materials provided establish that plaintiff received these materials. Plaintiff correctly notes that defendant has not presented any document signed by plaintiff in which he agrees to the terms of the DPR.
Although a signature is one way of assenting to the terms of a newly implemented DPR policy, assent can also be inferred when the policy provides that continued employment is conditioned on acceptance of the DPR and the employee receives this policy and continues in employment. See Venuto v. Insurance Company of North America, No. Civ. 98-96, 1998 WL 414723 (E.D. Pa. July 22, 1998) (Giles, C.J.).
However, when a factual dispute exists as to whether the policy was even received by plaintiff, an inference that his continued employment constitutes acceptance cannot be drawn because, as noted above, at this stage of the proceedings the court must construe all reasonable inferences in the light most favorable to plaintiff as the non-moving party.
In addition to the various documents which ACS claims establish the binding arbitration agreement, defendant also argues that plaintiff was made aware of the DRP and its mandatory nature through the means of a computerized training program. Among other topics, this program summarized the DPR policy and then tested trainees on the materials discussed. ACS notes that plaintiff received a grade of 100% on the DPR portion of the test. After review of this training program, we agree with plaintiff.
The language of the materials and the test, is suggestive as opposed to commanding — they mention DPR as being "an" option for resolving disputes, but not as "the" option. Nothing in the training program suggests to a trainee that his continued employment constitutes an acceptance of the DPR as the exclusive means for resolving disputes.
Under these circumstances we cannot conclude with certainty that plaintiff assented to the DPR as the exclusive means for resolving employment disputes. In such instances, an employee may demand resolution by a factfinder on the issue of whether a contract was formed. 9 U.S.C. § 4; Par-Knit, 636 F.2d at 54. Plaintiff makes such a request here. Thus viewing the materials in the light most favorable to plaintiff as the non-moving party, we must deny ACS's petition.
Waiver
Alternatively, even if we were to conclude there was an agreement between the parties and that the DRP was applicable, we conclude that defendant has waived arbitration. Waiver of arbitration rights is not to be lightly inferred by federal courts. Palcko, 372 F.3d at 598 (quoting Gavlik Construction Company v. H.F. Campbell Company, 526 F.2d. 777, 783 (3d Cir. 1975)).
The touchstone for evaluating waiver claims is prejudice to the plaintiff. Palcko, supra. In analyzing any prejudice to the plaintiff we must consider
not only the timeliness or lack thereof of a motion to arbitrate but also the degree to which the party seeking to compel arbitration has contested the merits of its opponent's claims . . . whether that party has informed its adversary of the intention to seek arbitration even if it has not yet filed a motion to stay the district court proceedings . . . the extent of its non-merits motion practice . . . its assent to the district court's pretrial orders . . . and the extent to which both parties have engaged in discovery.Hoxworth v. Blinder, Robinson Co., Incorporated, 980 F.2d 912, 926-927 (3d Cir. 1992).
In this case, in neither the removal petition nor either of defendants' motions to dismiss did defendants express any intention to compel arbitration. Rather, ACS at two junctures availed itself of this court's jurisdiction, first in removing the case and second in asking the court to dismiss plaintiff's case for legal inadequacy. This latter action prejudiced plaintiff by requiring him to commit time and resources to research and brief his opposition to the legal issues defendants raised in their motions to dismiss.
We conclude that this course of action is inconsistent with the basic premise of having the alternative dispute resolution mechanisms in place, specifically a more informal, inexpensive and timely means of resolving disputes. Furthermore, it was not until this court denied the motions to dismiss that either defendant filed the within motions.
It is worth noting that the materials upon which defendant asked the court to rely in finding an agreement, the document titled "Dispute Resolution Plan" which summarized the plan, had a question-and-answer section. One of the questions asked, "Does having this Program mean I can't sue ACS?" to which the answer reads, "If you are covered by the Plan and you file a lawsuit, ACS Attorneys will go before court, tell the court of the ACS Dispute Resolution Plan, and ask that the case be dismissed and sent back to the plan." Defendant ACS' actions in this case are inconsistent with its own procedures as set forth in that document.
Although defendant ACS has finally come to court seeking dismissal based upon the purported agreement, it was only after removal of the case to this court that defendant specifically asked the court to address the legal sufficiency of plaintiff's claims. Although waiver of an arbitration provision is not found lightly by a court, the facts of this case support such a finding. Accordingly, we conclude that defendants waived any right to arbitrate this matter, if that right ever existed in the first place.
Northampton County Motion
As noted above, Northampton County's motion to compel arbitration and for a stay of proceedings adopts the arguments in the ACS Motion. Therefore, based on the reasons for denying ACS' motion to compel arbitration, Northampton County's motion must also be denied.
In addition to the reasons advanced by ACS, the County relies on the specific terms of the DRP that allow a third party to consent to having the arbitrator resolve its claims in the matter. Although Northampton County is not a party to the arbitration agreement between plaintiff and ACS, the County consents to submit to arbitration of the dispute.
Because we have concluded that the DRP is not applicable, or alternatively, that any issue as to its applicability has been waived, we must dismiss Northampton County's motion as well.
CONCLUSION
For the foregoing reasons, we deny each defendant's motion to compel arbitration and deny their requests to stay the proceedings.