Opinion
Civil No. 03-1187 (RHK/JSM)
September 15, 2003
Edwin L. Sisam, Tammy P. Friederichs, Stephen M. Thompson, Sisam Watje, P.A., Minneapolis, Minnesota, for Plaintiffs.
Paul C. Peterson, Sara J. Lathrop, Lind, Jensen, Sullivan Peterson, P.A., Minneapolis, Minnesota, for Defendants.
MEMORANDUM OPINION AND ORDER
Introduction
This matter comes before the Court on Defendants' Motion to Stay or Dismiss Litigation and Compel Arbitration. plaintiff's Susan Broadribb, Jackie Byrne, Diane Wetherell, and Jackson Wilson ("plaintiff's"), have sued Defendants Globe Airport Security Services, Inc. and Globe Aviation Services Corp. (collectively, "Globe") on behalf of themselves and a putative class alleging they were denied pay and bonuses in violation of the Fair Labor Standards Act of 1938, 29 U.S.C. § 201, et seq. Defendants have moved the Court to stay or dismiss the matter and compel plaintiff's to submit their claims to binding arbitration. For the reasons set forth below, the Court will grant Defendants' motion.
Background
Between October 1, 2001 and October 31, 2002, plaintiff's applied for jobs as pre-departure security screeners at the Minneapolis-St. Paul Airport. (Friederichs Aff. Ex. 1 (Iverson Dep.) at 12.) As part of the application process, plaintiff's were required to submit to criminal background checks, drug testing, and fingerprinting. (Id. at 15.) In addition, each applicant was required to sign a "pre-dispute resolution agreement" to govern disputes in the event of their hire. (Id. at 13.) Over the period in which plaintiff's applied for jobs, Globe used two different arbitration forms ("the Agreements"). The first ("Agreement 1"), signed by plaintiff's Broadribb and Byrne, reads:
In consideration of the Company employing you, you and the Company each agree that in the event either party (or its representatives, successors or assigns) brings an action in an agency or court of competent jurisdiction relating to your recruitment, employment with, or termination of employment from the Company, the party bringing such action agrees to waive his, her, or its right to a trial by jury. . . .
In consideration of the Company employing you, you further agree that, in the event that you seek relief in an agency or court of competent jurisdiction for a dispute covered by this Agreement, the Company may, at any time within 90 days of the service of your complaint upon the Company, at its sole option, require all or part of the dispute to be arbitrated by one arbitrator in accordance with the rules of the American Arbitration Association governing labor arbitration. You agree that the option to arbitrate any such dispute is governed by the Federal Arbitration Act and fully enforceable. . . .
This pre-dispute resolution agreement will cover all matters directly or indirectly related to your recruitment, hire, employment or termination of employment by the Company; including, but not limited to, claims involving laws against discrimination whether brought under federal and/ or state law; and/or claims involving co-employees, but excluding Worker's Compensation claims. . . .
YOU MAY WISH TO CONSULT AN ATTORNEY PRIOR TO SIGNING THIS AGREEMENT. IF SO, TAKE A COPY OF THIS FORM WITH YOU. HOWEVER, YOU WILL NOT BE OFFERED EMPLOYMENT UNTIL THIS AGREEMENT IS SIGNED AND RETURNED BY YOU.
(Friederichs Aff. Ex. 3 (emphasis added).)
The second arbitration document ("Agreement 2"), signed by plaintiff's Wetherell and Wilson, states:
As part consideration for your employment, you and the Company agree that in the event a dispute arises between you and the Company, (or its officers, directors, employees, representatives, successors, assigns or agents in their capacity as such) such dispute shall be submitted to and determined exclusively by binding arbitration under the Federal Arbitration Act. . . . The agreement is that the employees and the Company shall have disputes resolved through binding arbitration rather than courts of law.
If you have a dispute that should go to arbitration, you and the Company will select an arbitrator, who will be subject to disqualification on the same grounds as would apply to a judge in a court of law. . . . The arbitrator shall render a decision and all awards shall include a written, reasoned opinion. Both the Company and you agree that by agreeing to binding arbitration, you both give up the right to trial by a jury.
The pre-dispute resolution agreement is not a contract of employment, expressed or implied. This agreement does not alter the "at will" status of your employment.
I have read and understand all of the above. I agree that by becoming an employee of Globe Aviation Services Corporation I waive the right to bring disputes pertaining to my employment to court. I further agree to any disputes pertaining to my employment that would have been resolved in a court of law will be resolved through binding arbitration.
(Friederichs Aff. Ex. 2 (emphasis added).)
After signing one of the above Agreements and meeting other criteria, plaintiff's were hired by Globe and worked as pre-departure security screeners until the Transportation Safety Administration took over security at the Minneapolis-St. Paul Airport in October 2002.
Analysis
Congress, through the Federal Arbitration Act (the "FAA"), has established a strong federal policy in favor of arbitration.Shearson/American Express, Inc. v. McMahon, 482 U.S. 220, 226 (1987). Section 2 of the FAA provides that a written arbitration agreement in "a contract evidencing a transaction involving commerce . . . shall be valid, irrevocable, and enforceable. . . ." 9 U.S.C. § 2. A motion to compel arbitration under the FAA involves a two-step inquiry: (1) whether there is a valid agreement to arbitrate between the parties; and (2) whether the dispute falls within the scope of that arbitration agreement. Simitar Entm't Inc. v. Silva Entm't, 44 F. Supp.2d 986, 992 (D. Minn. 1999) (Erickson, Mag. J.). "[T]he party resisting arbitration bears the burden of proving that the claims at issue are unsuitable for arbitration." Green Tree Fin. Corp. v. Randolph, 531 U.S. 79, 91 (2000).
I. Valid Agreement to Arbitrate
The Court first determines whether the Agreements are valid. plaintiff's assert that the Agreements are defective because (1) Defendants "admit" that they are not, in fact, contracts, (2) they lack the fundamental components of contract formation, and (3) they are unconscionable. In response, Defendants contend that the plain language of the agreements demonstrates them to be valid, fair, and enforceable contracts. The Court concludes that Defendants are correct.
A. Admissions
Plaintiff's rely upon deposition testimony and the language of the Agreements themselves to establish that Defendants have "admitted" that the Agreements are not contracts. For instance, plaintiff's have provided this exchange between plaintiff's' counsel and Globe's representative, as designated under Fed.R.Civ.P. 30(b)(6):
Q. Is it true . . . that [the arbitration agreements] are not an employment — part of an employment agreement; is that correct?
A. Yes.
(Friederichs Aff. Ex. 1 at 25.) Likewise, plaintiff's have advanced language from Agreement 2 stating that "[t]he pre-dispute resolution agreement is not a contract of employment, expressed or implied." (Friederichs Aff. Ex. 2.) From these and other statements, plaintiff's conclude that "based on Globe's own admissions, the arbitration clauses are NOT agreements." (Pls.' Op. Mem. at 8.)
While it is clear from the testimony and the documents themselves that the Agreements are not employment contracts, there is nothing in these materials to indicate that they are not contracts per se. Indeed, plaintiff's advance no authority for the proposition that arbitration agreements cannot exist outside the scope of an employment contract. So while it is abundantly clear that the Agreements are not employment contracts — in fact, no one claims that they are — this matters not one whit for the determination of whether or not the Agreements are contracts to arbitrate.
B. Contract Formation
plaintiff's also contend that the Agreements lack the prerequisites of contract formation. An agreement to arbitrate "may be revoked upon `grounds as exist at law or in equity for the revocation of any contract.'" Southland Corp. v. Keating, 465 U.S. 1, 10-11 (1984). To determine the validity of the agreement, the Court applies "ordinary state law principles." Keymer v. Management Recruiters Int'l. Inc., 169 F.3d 501, 504 (8th Cir. 1999). Minnesota law, which both parties agree applies, requires an offer, an acceptance, and consideration to create a binding contract. Cederstrand v. Lutheran Bhd., 117 N.W.2d 213, 219-21 (Minn. 1962).
Plaintiff's strenuously argue that because the Agreements were signed before plaintiff's were hired by Globe, the agreements are unsupported by consideration. This argument, in essence, is one of timing: Because plaintiff's signed the Agreements while they were merely applicants, rather than employees, plaintiff's argue that their eventual hire could not serve as consideration because Globe had not, in fact, agreed to hire them yet.
While true, however, this argument totally ignores other sources of consideration. Although plaintiff's are correct that a promise to hire an applicant cannot be effective consideration until that promise is actually made, a promise to consider an applicant for hire is not illusory; indeed, it is difficult to conceive of an job applicant who would not find the opportunity to be hired, if otherwise qualified, to be of value. Under the plain language of the Agreements and the facts relevant to their signing, it is clear that plaintiff's exchanged their right to litigate their employment disputes in court for the opportunity to be considered for that employment. Because this is "something of value given in return for performance or promise of performance that is bargained for," Deli v. Hasselmo, 542 N.W.2d 649, 656 (Minn.Ct.App. 1996), it is consideration under Minnesota law.
plaintiff's also offer two collateral arguments. First, plaintiff's assert that the arbitration agreements are applications for employment, and therefore do not qualify as "offers." While the arbitration agreements were, indeed, signed as part of the application process, there is nothing in the agreements themselves to suggest that they are mere solicitations to deal. Rather, they clearly manifest a "willingness to enter into a bargain," Day v. Amax. Inc., 701 F.2d 1258, 1263 (8th Cir. 1983), and are therefore "offers" under Minnesota law. Second, plaintiff's argue that aspects of the arbitration agreements fail for lack of mutuality. Minnesota law, however, does not require mutuality of obligation so long as the contract itself is supported by consideration.See Cardinal Consulting Co. v. Circo Resorts, 297 N.W.2d 260, 266 (Minn. 1980) ("The concept of mutuality has been widely discredited in contract law and it is now generally recognized that the obligations of the parties need not be substantially equal for there to be a binding contract.").
C. Unconscionability
Finally, plaintiff's argue that the arbitration agreements are unconscionable. Under Minnesota law, a contract is unconscionable if it is "such as no man in his senses and not under delusion would make on the one hand, and as no honest and fair man would accept on the other." In re Hoffbeck, 415 N.W.2d 447, 449 (Minn.Ct.App. 1987) (quoting Hume v. United States, 132 U.S. 406, 415 (1889)). If a court determines that a contract contains an unconscionable clause, it may refuse to enforce the contract, enforce it without the offending language, or limit application of the unconscionable clause "to avoid any unconscionable result." Restatement (Second) of Contracts § 208 (1981).
Here, the Agreements are not unconscionable. Although plaintiff's point to clauses that they suggest are unfair, the Court's review on a motion to compel arbitration is "a limited review," Daisy Mfg. Co., Inc., v. NCR Corp., 29 F.3d 389, 393 (8th Cir. 1994) (emphasis added), and thus cannot properly address provisions for which enforcement is not sought. While the sixty-day deadline for filing for arbitration, for instance, would be troubling if not tolled during the pendency of this Court's review, those questions — should they arise — are questions for the arbitrator, not this Court. Because there is nothing relating to the scope or the validity of Agreements to indicate unfair or coercive bargaining, these provisions are not unconscionable. Therefore, the Court finds valid agreements to arbitrate.
II. Scope of the Arbitration Clause
The Court next must determine whether the parties agreed to submit their present claims to arbitration. In doing so, it must maintain "a healthy regard for the Federal policy favoring arbitration," and adhere to the Supreme Court's instruction that "any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration." Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983).
Here, there is no serious argument that the current lawsuit, which relates to pay and bonuses, is not within the scope of the Agreements. Agreement 1 states:
This pre-dispute resolution agreement will cover all matters directly or indirectly related to your recruitment, hire, employment or termination of employment by the Company.
(Friederich Aff. Ex. 3 (emphasis added).) Likewise, Agreement 2 states:
I agree that by becoming an employee of Globe Aviation Services Corporation I waive the right to bring disputes pertaining to my employment to court.
(Friederich Aff. Ex. 2 (emphasis added).) While plaintiff's aver that they did not believe that these provisions applied to employment disputes, the Court's obligation is "to give effect to the intention of the parties as expressed in the language they used in drafting the whole contract." Employers Mut. Cas. Co. v. ACCT. Inc., 580 N.W.2d 490, 493 (Minn. 1998). Because that language is clear, the Court must enforce it.
Conclusion
Having found both valid arbitration agreements and disputes within their scope, the Court will grant Globe's motion to stay the proceedings and compel arbitration. Accordingly, based on the foregoing, and all of the files, records and proceedings herein, IT IS ORDERED that Defendants' Motion to Stay or Dismiss Litigation and Compel Arbitration (Doc. No. 10) is GRANTED. This matter is hereby STAYED.