United States District Court for the District of Columbia
March 26, 2004.
MIRIAM SAPIRO Plaintiff,
The opinion of the court was delivered by: EMMET SULLIVAN, District Judge
Plaintiff, Miriam Sapiro, brings this action against her former
employer, VeriSign. Plaintiff alleges that defendant discriminated
against her because of her family responsibilities and retaliated against
her in violation of the District of Columbia Human Rights Act, D.C. Code
§ 2-1402.11 et. seq. (2001) Defendant VeriSign filed this Motion to
Compel Arbitration alleging that plaintiff executed an Arbitration
Agreement with defendant and that this litigation is in violation of that
Agreement. Thus, defendant requests that this Court compel arbitration
and dismiss this case or, alternatively, stay this litigation while the
arbitration is pending.
II. Factual Background
Plaintiff was hired in November 2000 to serve as VeriSign's Director of
International Policy. Plaintiff's employment offer letter was made on
Network Solutions Inc. ("NSI") letterhead and stated that NSI was a
wholly-owned subsidiary of VeriSign.
From 1995 to June 2000, Science Applications International Corporation
("SAIC") either owned or was a significant shareholder in NSI. As part of
that arrangement, SAIC supported NSI's human resource function and NSI
used many of SAIC's forms, including the Dispute Resolution Guide and the
Arbitration Agreement. In June 2000, VeriSign acquired NSI. Rather than
create new forms, VeriSign continued to use the forms bearing the SAIC
insignia and continued to distribute SAIC's Dispute Resolution Guide.
When plaintiff attended the New Employee Orientation, plaintiff was
presented with several documents some bearing the name of SAIC
and some bearing the name of NSI. One of those documents was a seventeen
page Dispute Resolution Guide. The Dispute Resolution Guide describes a
comprehensive program for challenging disputes with management, which
included multiple internal appeals, investigations, mediation, and
accordance with the Dispute Resolution Program, and as a condition
of employment, plaintiff was required to sign a "Mutual Agreement to
Arbitrate Claims," whereby plaintiff agreed to arbitrate any claims or
controversies including claims for discrimination or retaliation. This
Agreement was signed on November 27, 2000. Plaintiff concedes that she
signed this Agreement but argues that VeriSign, her current employer, was
not a party to the Agreement. Rather, the employer listed on the Mutual
Agreement to Arbitrate Claims and the author of the seventeen page
Dispute Resolution was SAIC.
Six months after plaintiff began working for VeriSign, VeriSign issued
its own employee handbook making clear that it no longer had a
relationship with SAIC. The new employee handbook, called the Navigator,
contains no dispute resolution program, no agreement to arbitrate, and no
mechanism for challenging decisions made by management. Instead, the
Navigator emphasized that management decisions were "final and binding on
all concerned." The Navigator also stated that it "supersedes" other
inconsistent employment manuals.
On April 24, 2002, defendant eliminated plaintiff's position. Plaintiff
claims that her position was eliminated in retaliation for her request
for a flexible working arrangement.
Plaintiff brings this lawsuit to enforce her rights under the B.C. Human
Rights Act. Defendant maintains that plaintiff has brought her claims in
the wrong forum. Defendant contends that complaints of discrimination and
retaliation are covered by the Arbitration Agreement and must be
arbitrated. Plaintiff submits that there is no arbitration agreement to
enforce because VeriSign was not a party to the Agreement plaintiff
signed and, regardless, VeriSign could not perform its requirements under
the Agreement. Defendant alleges that plaintiff knew that she was signing
an agreement with NSI/VeriSign and that VeriSign can perform under the
A. The decision-maker on the issue of arbitrability
The question of whether or not the claim should be arbitrated is a
matter of contract between the parties. First Options of Chicago, Inc.
v. Kaplan, 514 U.S. 938, 943-44 (1995). Defendant claims that the parties
agreed to submit questions of arbitrability to the arbitrator. In support
of its argument, defendant submits that the SAIC Employment Arbitration
Rules & Procedures Section M notes, "[t]he arbitrator has the
to resolve any dispute relating to the formation, interpretation,
applicability or enforceability of the Arbitration Agreement." Def.'s
Mot. Attach. 4, Ex. 1 at C-4. Thus, defendant claims that this case
should be dismissed so that an arbitrator can decide if plaintiff's
claims are subject to the Arbitration Agreement.
It is well settled, however, that "a gateway dispute about whether the
parties are bound by a given arbitration clause raises a `question of
arbitrability' for a court to decide" based on state contract law. Howsam
v. Dean Witter Reynolds, Inc., 123 S.Ct. 588, 592 (2002). District of
Columbia contract law has stated that "the determination of whether the
parties have consented to arbitrate is a matter to be determined by the
courts on the basis of the contract between the parties." Bailey v.
Federal Nat. Morg. Ass'n., 209 F.3d 740, 746 (D.C. Cir. 2000).
Here, because there needs to be a determination as to whether the
Arbitration Agreement establishes a valid contract between the parties at
issue, this Court, rather than an arbitrator, is the proper entity to
make that determination.
B. Arbitration is the appropriate procedure for resolving plaintiff's
The Federal Arbitration Act ("FAA") provides that "[a] written
provision in . . . a 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." 9 U.S.C. § 2 (2000). The Supreme Court
has held that FAA's coverage extends to employment contracts. See Circuit
City Stores, Inc. v. Adams, 532 U.S. 105, 119 (2001). The FAA provides
that when a court is presented with a dispute covered by an arbitration
agreement, the court "shall make an order directing the parties to
proceed to arbitration in accordance with the terms of the agreement."
9 U.S.C. § 4.
Thus, the Court is called upon to determine (1) whether the parties
entered into a binding and enforceable arbitration agreement; and if so,
(2) whether the arbitration agreement encompasses the claims that
plaintiff raised in her complaint. "Under District of Columbia law, the
party asserting the existence of a contract to submit disputes to
arbitration has the burden of proving its existence." Bailey v. Federal
Nat. Morg. Ass'n. 209 F.3d 740, 746 (D.C. Cir. 2000). "The party
resisting arbitration bears the burden of proving that the claims at
issue are unsuitable for arbitration." Nelson v. Insignia/ESG, Inc.
215 F. Supp.2d 143, 149 (D.D.C. 2002). Thus, here, defendant has the
burden of proving that the parties entered into a valid
arbitration agreement. If defendant is successful, plaintiff must
then prove that the Agreement does not encompass her complaints or she
will be compelled to arbitrate. Because the Court is persuaded that a
binding and enforceable agreement exists and the Court is not persuaded
that plaintiff's complaints are not suitable for arbitration, the Court
will grant the defendant's motion to compel arbitration.
1. The existence of a binding and enforceable arbitration agreement.
Under District of Columbia law, "a signature on a contract indicates
`mutuality of assent' and a party is bound by the contract unless he or
she can show special circumstances relieving him or her of such an
obligation." Emeroyne v. CACI International, Inc., 141 F. Supp.2d 82, 86
(D.D.C. 2001) (citing Davis v. Winfield, 664 A.2d 836, 838 (D.C. 1995)).
In Emeroyne, the plaintiff, like the plaintiff here, was an attorney.
Plaintiff notes that the D.C. Circuit reviewed an arbitration agreement
between a plaintiff and a third party and concluded that, because the
employer was not a party covered by the arbitration provision, it could
not compel arbitration of the discrimination claims. Gardner v. Benefits
Communications Corp., 175 F.3d 155, 159-160 (B.C. Cir. 1999). Thus, in
order for this
court to compel arbitration, this Court must find that VeriSign is
properly a party to the Agreement.
A contract should be read so as to honor the intent of what a
reasonable person, in the position of the parties at the time the
contract was executed, would have thought. Patterson v. District of
Columbia, 795 A.2d 681, 683 (D.C. 2002). Defendant argues that it was
plaintiff's and VeriSign's intent to be bound by the Agreement between
this employee and this employer.
The Arbitration Agreement provides that "[a]ny reference in the
Agreement to SAIC will also be a reference to all subsidiaries and
affiliated corporations . . . and the successors and assign of any of
them." VeriSign is a succesor to NSI, which was previously an affiliate
and/or subsidiary corporation of SAIC.
Moreover, because both parties thought employee and employer were
entering into the Agreement, the equitable remedy is to hold both parties
to that bargain. See Isaac v. First National Bank of Maryland,
647 A.2d 1159, 1163 n. 10 (D.C. 1994). Thus, VeriSign is permitted to
enforce the Agreement against plaintiff, just as plaintiff would have
been permitted to enforce the Arbitration Agreement against VeriSign.
Plaintiff claims that even if the agreement was valid, this
Court should not require plaintiff to perform because defendant is
unable to perform its part of the bargain it cannot provide the
comprehensive dispute resolution program. Plaintiff claims that because
the first three steps were not available to her, it would be unfair and
inequitable for the Court to enforce a contract that could run only
one-way. The Dispute Resolution Guide notes that the dispute resolution
system is a "four-stage plan" where "the last stage of the Program
involves final and binding arbitration."
Although the Court is troubled by the fact that the Arbitration
Agreement and the Dispute Resolution Guide bear the "SAIC" insignia, it
seems clear that a reasonable person would have understood that the
intent of the Agreement was to bind plaintiff and employer. This is
especially true if the reasonable person is a highly-skilled attorney, as
this plaintiff is. While plaintiff is correct that the Dispute Resolution
Guide was distributed to plaintiff without the disclaimer that steps 1-3
no longer apply, looking at the four corners of the Arbitration
Agreement, the parties expressly agreed to be bound only by the
arbitration provision. Included in the "Mutual Agreement to Arbitrate
Claims", was the provision, written in all caps, that read: "EMPLOYEE
AGREES THAT ALL UNDERSTANDINGS AND AGREEMENTS
BETWEEN SAIC AND EMPLOYEE RELATING TO THE SUBJECTS COVERED IN THE
AGREEMENT ARE CONTAINED IN IT. EMPLOYEE HAS VOLUNTARILY ENTERED INTO THE
AGREEMENT WITHOUT RELIANCE ON ANY PROVISION OR REPRESENTATION BY SAIC
OTHER THAN THOSE CONTAINED IN THE AGREEMENT." Def.'s Mot. Attach. 4, Ex.
1 at B-2. Because, the Arbitration Agreement does not mention the other
three steps in the Dispute Resolution Guide, the four corners of the
Agreement only bind the parties to arbitrate. In addition, despite
plaintiff's contention, there was valid consideration for plaintiff's
agreement to arbitrate NSI/VeriSign agreed to employ her, and the
ability to enforce the Arbitration Agreement was mutual. Mutual
agreements to arbitrate are independently sufficient forms of
consideration. See Morrison v. Circuit City Stores, Inc., 317 F.3d 646,
667 (6th Cir. 2003). Therefore, regardless of the reliance plaintiff may
have placed on Dispute Resolution Guide, the Agreement speaks only to
arbitration and should be enforced.
Further, plaintiff's arguments that the Navigator is inconsistent with
the Agreement to arbitrate and that the Agreement is superseded by the
issuance of VeriSign's policy are not persuasive. VeriSign policy states
that "[n]ot all VeriSign policies and procedures are set forth in this
pre-established policies that are not contradicted by the issuance
of the Navigator are considered valid policies. Moreover, the cover of
the Navigator states that it is not a contract. Thus, because the
Navigator does not speak to the Arbitration Agreement, the Navigator does
not supersede or negate plaintiff's binding contractual promise to
In order for an arbitration agreement to be enforceable, the D.C.
Circuit has required that it: (1) provide for a neutral arbitrator; (2)
provide for more than minimal discovery; (3) require a written award; (4)
provide for all types of relief that would otherwise be available in
court, and (5) not require employees to pay either unreasonable costs or
any arbitrator's fees or expenses as a condition of access to the
arbitration forum. See Cole v. Burns International Security Services,
105 F.3d 1465, 1484 (D.C. Cir. 1997).
Plaintiff argues that the Arbitration Agreement does not meet the
standard laid out by the B.C. Circuit because the arbitration provision
does not provide for meaningful discovery. Moreover, plaintiff claims
that while the Arbitration Agreement states that it adopts the rules of
the American Arbitration Association ("AAA"), the discovery rules in the
Arbitration Agreement have been re-written and slant in favor of the
While defendant maintains that the rules and procedures in the
Arbitration Agreement provide for sufficient discovery, NSI/VeriSign has
agreed to proceed with the arbitration and all discovery under the AAA
Rules. Def. Reply at 12. Thus, the Court need not determine whether the
discovery provisions in the Arbitration Agreement are sufficient.
Moreover, the substitution of a new discovery procedure is not
problematic because the Arbitration Agreement has a severability clause:
"Should any portion of the Agreement be found to be unenforceable, such
portion will be severed from the Agreement, and remaining portion shall
continue to be enforceable." Def.'s Mot. Attach. 4, Ex. 1 at B-2.
Therefore, the Court need only sever the discovery provision portion of
the Agreement. See Gannon v. Circuit City Stores, Inc., 262 F.3d 677,
680-81 (8th Cir. 2001).
2. The Arbitration Agreement encompasses the claims raised in
The Arbitration Agreement provides that plaintiff "will settle by
arbitration all statutory, contractual and/or common law claims"
including any claims of "discrimination" or "retaliation" or for
"violation of any federal, state, or other governmental law, statute,
regulations or ordinance." Def.'s Mot. Attach. 4, Ex. 1 at B-1.
Plaintiff's claims of
discrimination and retaliation are encompassed in the Agreement.
C. The Court shall Stay the Complaint pending arbitration.
The FAA provides that once arbitration is compelled, the trial should
be stayed until arbitration is complete. 9 U.S.C. § 3. Because
arbitration is compelled in this case, this case will be stayed pending
the completion of arbitration.
D. An arbitration provision preempts a trial de novo unless an
The D.C. Circuit noted that judicial review of arbitration awards
pursuant to an employment agreement to arbitrate is limited to: (1) the
enumerated reasons in the FAA, 9 U.S.C. § 10; (2) when the award is
contrary to some explicit, well-defined, and dominant public policy; (3)
when the award is "in `manifest disregard of the law.'" Cole v. Burns
International Security Services, 105 F.3d 1465, 1486 (D.C. Cir. 1997). In
addition, the B.C. Circuit accepted the assumption that by agreeing to
arbitrate a statutory claim, a party does not forgo the substantive
rights afforded by the statute; it only submits to their resolution in an
arbitral, rather than judicial forum. Id.
Plaintiff attempts to argue that the Supreme Court and other courts
have held that a prior arbitration cannot preclude a trial
de novo in a judicial forum for employment discrimination claims. See,
e.g. Alexander v. Gardner-Denver Co., 415 U.S. 36, 52 (1974). Alexander,
however, involved a collective bargaining agreement rather than an
individual employment agreement. In Hilliard v. National Council of
Senior Citizens, the court explained that arbitration clauses in the
context of a collective bargaining agreement, which are fashioned with
group interest in mind, should be viewed differently than individual
agreements, where a person is able to consider her own interest. 1992
U.S. Dist. Lexis 7493, *4-5 (D.D.C. May 20, 1992). Moreover, Alexander
and its progeny were not decided pursuant to the FAA, a statute that
reflects a "liberal federal policy favoring arbitration." Id.
In addition, plaintiff attempts to argue that when Congress amended
Title VII, Congress emphasized that alternative methods of dispute
resolution in discrimination cases were not intended to replace the
aggrieved employee's statutory rights: "The committee emphasizes . . .
that the use of alternative dispute resolution mechanisms is intended to
supplement, not supplant, the remedies provided by Title VII." HR Rep.
No. 40(1) 102nd Cong. 1st Sess., reprinted in 1991 U.S.C.C.A.N. 549, 635.
In addressing the exact quote from the House Report that
plaintiff relies on, the District of Columbia Court of Appeals rejected
the argument that the report language compelled the finding of a right to
a post-arbitration de novo trial. Benefits Communication Corp. v.
Klieforth, 642 A.2d 1299, 1304-05 (D.C. 1994).
Thus, unless plaintiff can meet one of the conditions espoused in
Cole, plaintiff is not entitled to a post-arbitration de novo trial.
Regardless, the Court shall stay the case pending the completion of
While the Court remains troubled that defendant distributed the Dispute
Resolution Guide to plaintiff without the disclaimer that steps 1-3 no
longer applied, the four corners of the Mutual Agreement to Arbitrate
Claims bound the parties only to arbitrate their claims.
This case will remain stayed on the active calendar of the Court until
arbitration is complete.
An appropriate Order accompanies this Memorandum Opinion.
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