Opinion
No. 02-7743
December 30, 2002
ORDER AND MEMORANDUM
ORDER
AND NOW, this 30th day of December, 2002, upon consideration of Defendant's Motion to Dismiss Plaintiffs' Petition to Compel Arbitration (Document No. 2, filed October 15, 2002), and Plaintiffs' Response to Defendant's Motion to Dismiss (Document No. 4, filed October 30, 2002), IT IS ORDERED that, for the reasons set forth in the following Memorandum, Defendant's Motion to Dismiss Plaintiffs' Petition is DENIED.
IT IS FURTHER ORDERED that defendant shall file and serve its answer to the Petition to Compel Arbitration within twenty (20) days of the date hereof. One (1) copy of the answer shall be served on the Court (Chambers, Room 12613) when the original is filed.
MEMORANDUM
This action arises out of allegations of gender discrimination in the termination of employment of plaintiffs Timothy Davis ("Davis") and Dennis Montone ("Montone") (collectively, "plaintiffs") by Clear Channel Communications, Inc., ("defendant"). Plaintiffs seek arbitration to resolve the dispute under the terms of their employment agreement. Defendant objects to arbitration on the ground that plaintiffs failed to comply with the arbitration provisions of the employment agreement. Presently before the Court is defendant's Motion to Dismiss Plaintiffs' Petition to Compel Arbitration. For the reasons set forth below, the Court denies defendant's motion.
I. BACKGROUND
Defendant is a telecommunications company that owns numerous affiliate radio stations. Pet. ¶¶ 3, 4. Plaintiffs were employed by two Philadelphia, Pennsylvania radio stations owned by defendant, WIOQ-FM and WLCE Promotions. Id. ¶¶ 4, 5. Plaintiffs were fired by defendant on March 18, 2002, as a result of a promotional event for WJOQ at the Top Dog Nightclub ("Top Dog") in Cherry Hill, NJ.Id. ¶¶ 8, 9.
Defendant's stated reason for terminating Montone's employment was his taking of a "station vehicle [to the Top Dog] under false pretenses and operat[ing] the vehicle with station and non-station employees who were not authorized to be in that vehicle and the consumption of alcohol during a street patrol." Id. ¶ 8.
Davis was allegedly terminated because "he engaged in a false pretense of being [in] the [same station vehicle as Montone] without authorization, operated the [vehicle] with station and non-station employees who were not authorized to be in the [vehicle] and the consumption of alcohol while in the possession of vehicle keys." Id. ¶ 9.
Plaintiffs claim that the grounds for their termination were pretextual — they assert that Montone was "specifically authorized" to take the station vehicle to the Top Dog with certain individuals, including Davis, to promote WJOQ and that defendant was "well aware" that Davis would also be operating that vehicle. Id. ¶¶ 8, 9. Plaintiffs also allege that a female employee of WIOQ who was engaged in the same conduct as plaintiffs was not terminated by defendant, and that they "were treated in a disparate way solely because they are male," in violation of their federal and state constitutional rights.Id. ¶ 11, 14.
The Arbitration Agreement of defendant's Employee Guide (July 2000) ("Agreement") provides that "[a]rbitration is the procedure used for the resolution of any dispute that may arise between [defendant] and its employees." Pet. Ex. A, Agreement at 19. Under the Agreement's Rules Governing the Arbitration, a party may initiate arbitration by serving upon the other party a written request. See id. at 22. Such written notices to defendant must be sent to the Senior Vice President of Employee Relations in the defendant's San Antonio, Texas office. Id. The written request "shall identify and describe the nature of each claim asserted, the facts upon which each claim is based, and the relief or remedy sought." Id.
To challenge their allegedly unlawful terminations, plaintiffs sent two letters to defendant's office in Bala Cynwyd, Pennsylvania, on June 6, 2002, and July 16, 2002, demanding arbitration to resolve the employment dispute; plaintiffs did not send their requests directly to defendant's San Antonio office. Pet. ¶¶ 12, 13; Ex. B, C. Moreover, contrary to the Agreement, the letters did not describe the nature of each claim asserted, the facts upon which each claim was based, and the relief or remedy sought.
The written request dated June 6, 2002, states, in pertinent part: "This office represents [plaintiffs] in connection with any and all claims which they may have arising from their illegal and unlawful termination on March 18, 2002. Please consider this written notice a specific request and demand for Arbitration pursuant to the Clear Channel Communications Employee Guide, July, 2000, pages 19-26." Pet., Ex. B. The July 16, 2002 request provides, in relevant part: "This letter references our letter of June 6, 2002. We again demand Arbitration pursuant to Clear Channel Communication[s] Employee Guide, July 2000, page 19-26" Id., Ex. C.
Defendant refused plaintiffs' demand for arbitration. On September 5, 2002, plaintiffs then filed a Petition to Compel Arbitration in the Philadelphia Court of Common Pleas and sought attorney fees and filing costs. Id. ¶ 25. Defendant removed plaintiffs' Petition to this Court on October 7, 2002, and subsequently filed its Motion to Dismiss.
Defendant argues that because plaintiffs failed to comply with the express terms of the Agreement for demanding arbitration — in that they did not send their requests for arbitration to the specified San Antonio office and their requests did not describe the nature and circumstances of their claims and the relief or remedy sought, but simply demanded arbitration — their effort to compel arbitration was premature and defendant did not wrongfully refuse to arbitrate the dispute. It is defendant's position that plaintiffs' failure to comply with the arbitration provisions of the Agreement precludes them from obtaining an order compelling arbitration.
Although not relied upon by the Court in its decision, it notes that plaintiffs state — in response to the argument that they failed to send their written requests to the San Antonio office — that the first request, although sent to defendant's offices in Bala Cynwyd, eventually reached defendant's corporate counsel in San Antonio, who acknowledged the request and advised plaintiffs that their claims were not "covered" under the Agreement. Pls' Resp. at 2. Plaintiffs allege that a copy of the second request was faxed to the same attorney in San Antonio, who responded by confirming defendant's position that plaintiffs' claims were not "covered disputes." Id. at 3 and Ex. 2. Defendant does not assert that position in its Motion to Dismiss. See infra.
The Motion to Dismiss presents a single issue — the significance of plaintiffs' alleged failure to request arbitration in accordance with the Agreement. Neither party addresses the question whether that issue is to be determined by the Court or the arbitrator. The Court concludes that the issue presented is one of procedural arbitrabiity that is for the arbitrator to decide. Accordingly, the Court denies the Motion to Dismiss.
II. DISCUSSION
In general, § 4 of the federal Arbitration Act, 9 U.S.C. § 1,et. seq., enables a petitioner to invoke the authority of a federal district court in order to compel arbitration under an agreement. See 9 U.S.C. § 4. It provides that "a party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement" may petition the court to compel arbitration. Id. Section 4 further directs the district court to order a party to arbitrate if it is "satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue." Id. Although "the general language of § 4 fails to delineate with precision the scope of the district court's jurisdiction in an action to compel arbitration,"Painewebber Inc. v. Hartmann, 921 F.2d 507, 510 (3d Cir. 1990), courts have distinguished between issues of "substantive arbitrability" and "procedural arbitrability" when determining the proper forum for deciding various issues of arbitrability. See Troy Chemical Corp. v. Teamster Union Local No. 408, 37 F.3d 123, 126 (3d Cir. 1994).
"Fortunately, the federal Arbitration Act and the Pennsylvania Uniform Arbitration Act [ 42 Pa. C.S.A. § 7301 et. seq.] and the case law that has developed under each, are functionally equivalent as regards the authority of a district court to review an agreement to arbitrate and to stay or compel arbitration." Painewebber, Inc. v. Hartmann, 921 F.2d 507, 510 n. 3 (3d Cir. 1990) (comparing 9 U.S.C. § 4 with 42 Pa. C.S.A. § 7304 and also noting that the relevant federal and Pennsylvania case law "is so clearly established and has evolved essentially in unison").
Substantive arbitrability involves the question whether the parties have agreed to arbitrate the subject matter of the dispute. See John Wiley Sons, Inc. v. Livingston, 376 U.S. 543, 557-58 (1964); see also Bell Atlantic-Pennsylvania, Inc. v. Comms. Workers of America, 164 F.3d 197, 203 (3d Cir. 1999) (stating that a case involves substantive arbitrability if the parties disagree that an "underlying dispute is arbitrable"). The question of substantive arbitrability — "whether an agreement creates a duty for the parties to arbitrate the particular grievance" — is "undeniably an issue for judicial determination." ATT Techs., Inc. v. Comms. Workers, 475 U.S. 643, 649 (1986); see also Hartmann, 921 F.2d at 511 (concluding that an "`issue' requiring resolution by the district court arises under § 4 [of the Arbitration Act] only when the party refusing to arbitrate contends that the dispute is not one that the parties agreed to arbitrate") (emphasis in original). Thus, it is for the courts to decide "the question whether the parties' dispute involves a subject matter that is within the ambit of a contractual arbitration agreement." Independent Ass'n of Continental Pilots v. Continental Airlines, 155 F.3d 685, 692 (3d Cir. 1998).
Procedural arbitrability, on the other hand, involves the question whether "procedural prerequisites . . . or some part of them apply to a particular dispute, whether such procedures have been followed or excused, or whether the unexcused failure to follow them avoids the duty to arbitrate." John Wiley, 376 U.S. at 557-58 (emphasis added); see also Bell Atlantic, 164 F.3d at 203 (stating that the question of procedural arbitrability arises when the parties "disagree about the effects of laches, waiver, exhaustion of prearbitration steps, limitations periods, or other `procedural' issues").
Issues of procedural arbitrability are for the arbitrator to decide once a court determines that the parties agreed to arbitrate the subject matter. See John Wiley, 376 U.S. at 557, 58 (holding that the court must send the parties to arbitration in "cases in which arbitrability of the subject matter is unquestioned but a dispute arises over the procedures to be followed" that "bear on the [dispute's] final disposition"); Ass'n of Flight Attendants, AFL-CIO v. USAir, Inc., 960 F.2d 345, 349 (3d Cir. 1992) (holding that once the court determines that the underlying grievance is covered by the arbitration clause, the court's role ends; "beyond this, the court usurps the exclusive function of the arbitrator when it ventures to decide procedural matters"); Chauffeurs. Teamsters Helpers, Local Union No. 765 v. Stroehmann Bros. Co., 625 F.2d 1092, 1093-94 (3d Cir. 1980) ("The court's role . . . [is] to determine whether the underlying subject matter of the grievance was arbitrable. Once that determination has been made the entire dispute must be resolved by the arbitrator."); see also Int'l Union of Operating Engineers v. Flair Builders, Inc., 406 U.S. 487, 491-92 ("[O]nce a court finds . . . the parties are subject to an agreement to arbitrate, and that agreement extends to [the claims at issue] between them, then a claim that particular grievances are barred by laches is an arbitrable question under the agreement.")
Applying these principles, the Third Circuit has ruled in a number of cases involving arbitration under collective bargaining agreements that failure to comply with the provisions of an arbitration agreement similar to the provisions at issue in this case present questions of procedural arbitrability for the arbitrator, not the court, to decide. InChauffeurs, Teamsters Helpers, Local Union No. 765 v. Stroehmann Bros. Co., 625 F.2d 1092 (3d Cir. 1980), the court held that the lower court erred in deciding whether an untimely union submission to the American Arbitration Association and failure of the union to mail a copy of the submission to the employer barred arbitration when the parties agreed that the underlying dispute was arbitrable. Chauffeurs, 625 F.2d at 1093. Those issues, said the Third Circuit, were for the arbitrator to decide. Id. Similarly, in Becton Dickinson Co. v. District 65, 799 F.2d 57, 59 (3d Cir. 1986), the failure of the union to submit a written grievance for arbitration and to allow the employer five days to respond in writing in accordance with the arbitration agreement was held to be a procedural question for the arbitrator to decide. Finally, inTroy Chemical Corp. v. Teamster Union Local No. 408, 37 F.3d 123 (3d Cir. 1994), the court ruled that the failure of the parties to request arbitration in writing within two working days of the incident giving rise to a grievance, and the failure of the parties to confer within three days of the incident, as required by the arbitration agreement, presented questions of procedure for the arbitrator and not the court.Id. at 125-26. Finding the dispute was subject to the grievance machinery, the Third Circuit concluded that whether the grievances at issue were waived by the failure to adhere to these steps of the agreement "was a question of procedure for the arbitrator and not the court." Id. at 126.
In this case, defendant does not argue that the parties are not subject to the terms of the Agreement, nor does it contend that the subject matter of plaintiffs' claims are not covered under the Agreement. Rather, defendant's Motion to Dismiss is grounded entirely upon plaintiffs' improper initiation of arbitration by failing to state in their written requests the nature and circumstances of the claims and by sending them to the wrong office. Thus, the Court is not faced with deciding, in the first instance, the substantive arbitrabiity issue of whether plaintiffs' claims are within the scope of the Agreement.
Parenthetically, the Court notes that the Agreement covers "claims for wrongful discharge and/or for violation of any federal, state, or local law, statute, ordinance or regulation," Agreement at 22, ¶ 3, "[a]ny claim for discrimination . . . because of sex," id. ¶ 4, and "[a]ny claim of . . . discrimination against [defendant] for opposing the violation of any federal, state, or local statute . . . including . . . Title VII of the Civil Rights Act of 1964 . . ." Id. ¶ 5.
What is involved in this case is an issue of procedural arbitrability — whether plaintiffs failure to follow the procedural prerequisites to the Agreement avoids defendant's duty to arbitrate.See John Wiley, 376 U.S. at 557-58. Accordingly, defendant's contentions as to plaintiffs' noncompliance with the procedural provisions of the Agreement and the significance of this procedural default is a question for the arbitrator to decide. See Chauffeurs, 625 F.2d at 1093;Becton, 799 F.2d at 59-61; Troy Chemical, 37 F.3d at 126. It is not for this Court to determine whether defendant properly refused plaintiffs' written requests for arbitration due to their failure to comply with the Agreement's procedural requirements. See Commodity Servs. Inc. v. Philipp Lion, 613 F.2d 1222, 1227 (2d Cir. 1980) (holding that a "court under section 4 [of the Arbitration Act] is limited to determining whether a party refused to arbitrate, not whether it rightfully refused" arbitration due to the other party's untimely demand) (emphasis added).
III. CONCLUSION
For the foregoing reasons, the Court concludes that the defendant's Motion to Dismiss is denied.