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BOOKER v. ROBERT HALF INTERNATIONAL

April 28, 2004.

TIMOTHY R. BOOKER, Plaintiff
v.
ROBERT HALF INTERNATIONAL, INC., Defendant



The opinion of the court was delivered by: JOHN BATES, District Judge

MEMORANDUM OPINION

Plaintiff Timothy R. Booker ("plaintiff') has sued his former employer, defendant Robert Half International, Inc. ("defendant"), under the District of Columbia Human Rights Act ("DCHRA"), D.C. Code §§ 2-1401.01 to 2-1411.06 (2001), claiming that he was constructively discharged on the basis of race in violation of his rights. In response, defendant has moved to dismiss the complaint and compel plaintiff to pursue arbitration in accordance with the Employment Agreement ("Agreement") between the parties dated April 7, 1996, and plaintiff has opposed that motion. The Court concludes that most of plaintiff's challenges to the enforcement of the arbitration clause of the Agreement are not well-taken. However, the arbitration clause includes a plainly unenforceable provision excluding punitive damages as a remedy. Defendant's motion therefore ultimately raises two issues: the ability of defendant unilaterally to modify the arbitration clause by agreeing that punitive damages will be available and the severability of the punitive damages limitation. In the end, the Court grants defendant's motion to compel arbitration, with the unenforceable punitive damages limitation severed. BACKGROUND

The relevant background facts are not in dispute. Plaintiff was employed with defendant from April 1996 until February 2001, and at the outset of his employment he signed the Agreement establishing the terms and conditions of his employment. The Agreement contained an arbitration clause, which states in full:
18. Arbitration. Any dispute or claim arising out of or relating to Employee's employment or any provision of this Agreement, whether based on contract or tort or otherwise (except for any dispute involving application of the injunctive relief provided by Section 10) shall be submitted to arbitration pursuant to the commercial arbitration rules of the American Arbitration Association. This Agreement shall be governed by the United States Arbitration Act. An arbitration award rendered pursuant to this Section shall be final and binding on the parties and may be submitted to any court of competent jurisdiction for entry of a judgment thereon. The parties agree that punitive damages may not be awarded in an arbitration proceeding required by this Agreement.
Plaintiff was allegedly constructively discharged by defendant in February 2001. He challenged his discharge through an action under the DCHRA filed in the Superior Court of the District of Columbia on April 24, 2001, alleging race discrimination. That action was removed to this Court. Thereafter, defendant requested that plaintiff submit his claims to arbitration under the Agreement. In an attempt to address concerns raised by plaintiff's counsel, defendant agreed that it would pay all arbitration fees in excess of any fees and costs plaintiff would be required to pay to pursue a statutory claim in court, and also agreed to "reasonable discovery" and that all remedies available under the DCHRA, including punitive damages, would be available to plaintiff in arbitration. Subsequently, defendant agreed to utilize the American Arbitration Association Employment Arbitration Rules rather than the Commercial Rules called for under the arbitration clause, because the former arguably provide greater discovery procedures for plaintiff.

  Notwithstanding these concessions by defendant, the parties were unable to reach an agreement that plaintiff's claim would proceed through arbitration. Defendant therefore filed its motion to dismiss and compel arbitration. Plaintiff challenges the enforceability of the arbitration clause of the Agreement, contending that there was no meeting of the minds with respect to arbitration of plaintiff's statutory claim, that enforcement of the arbitration provision would be unconscionable, that there was no mutuality of obligation, that the arbitration clause does not provide for meaningful discovery, and that the exclusion of punitive damages is unlawful. The Equal Employment Opportunity Commission ("EEOC") has been granted permission to participate in this action as amicus curiae in support of plaintiff, focusing on the punitive damages exclusion. After a hearing, the Court requested supplemental briefing from the parties and the EEOC on the issue of severability under District of Columbia law.

  LEGAL STANDARDS

  The Federal Arbitration Act ("FAA") provides that "a written provision in . . . a contract to settle by arbitration a controversy thereafter arising out of such contract . . . shall be valid, irrevocable, and enforceable save upon any grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. The FAA creates a strong presumption favoring the enforcement of arbitration agreements, and doubts regarding the scope of an arbitration agreement must be resolved in favor of arbitration. See Shearson/American Express, Inc. v. McMahon, 482 U.S. 220, 226-27 (1987) (arbitration agreements must be rigorously enforced); Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983). Arbitration should be ordered unless it can be said with certainty that the arbitration provision cannot be interpreted to cover the dispute. AT&T Technologies, Inc. v. Communication Workers of America, 475 U.S. 643, 650 (1986). This "liberal federal policy favoring arbitration agreements, manifested by . . . the Act as a whole, is at bottom a policy guaranteeing the enforcement of private contractual arrangements." Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 625 (1985).

  However, because arbitration is a matter of contract, "a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit." AT&T Technologies, 475 U.S. at 648. Thus, whether or not the dispute must be arbitrated is a matter of contract between the parties. First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943-44 (1995). Parties cannot be required to arbitrate unless they have agreed to do so, and the authority of arbitrators to resolve disputes is derived from the agreement of parties to engage in arbitration. See EEOC v. Waffle House, Inc., 534 U.S. 279, 294 (2002); Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52, 57 (1995); Nat'l. R.R. Passenger Corp. v. Boston & Maine Corp., 850 F.2d 756, 759 (D.C. Cir. 1988). It is the court, not the arbitrator, that must decide whether a dispute is subject to arbitration: "a gateway dispute about whether the parties are bound by a given arbitration clause raises a `question of arbitrability' for a court to decide." Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84 (2002).

  As established by the Supreme Court, a court's initial task "is to determine whether the parties agreed to arbitrate [the] dispute," bearing in mind the strong federal policy in favor of arbitration. Mitsubishi Motors, 473 U.S. at 626. If the court concludes that there was an agreement to arbitrate the relevant dispute, then it must assess "whether legal constraints external to the parties' agreement foreclosed the arbitration of those claims." Id. at 628.

  Here, the arbitration clause in the Agreement provides that "[a]ny dispute or claim arising out of or relating to [plaintiffs] employment or any provision of this Agreement . . . shall be submitted to arbitration." The Supreme Court has held that the coverage of the FAA extends to employment contracts. See Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 119 (2001). The language "arising out of or relating to" the underlying contract or agreement has been interpreted broadly by the Supreme Court. See Mitsubishi Motors, 473 U.S. at 624 n. 13 ("arise between [the parties] out of or in relation to" is a "broad clause"); Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 398 (1967) ("arising out of or relating to" is a "broad arbitration clause"). There is no question, then, that the employment dispute presented in plaintiff's Complaint is within the language of the arbitration clause as broadly construed consistent with the direction of the Supreme Court. The question remains, however, whether the parties entered into an enforceable agreement to arbitrate. If so, the Court must also assess whether there is some competing statute or policy sufficient to outweigh the strong federal policy favoring arbitration, and hence to foreclose arbitration of the dispute raised by plaintiff. See Mitsubishi Motors, 473 U.S. at 628.

  "A party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition any United States district court which, save for such agreement, would have jurisdiction . . . of the subject matter of a suit arising out of the controversy between the parties, for an order directing that such arbitration proceed in the manner provided for in such agreement." 9 U.S.C. § 4. When presented with a motion to compel arbitration, a district court must "determine the enforceability of the agreement [to arbitrate] and decide whether arbitration should be compelled." Nelson v. Insignia/ESG, Inc., 215 F. Supp.2d 143, 146 (D.D.C. 2002). As observed earlier, "[t]he `first principle' of arbitrability, the Supreme Court [has] emphasized, is that `arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit.'" National R.R. Passenger Corp., 850 F.2d at 759 (quoting AT & T Technologies, 475 U.S. at 648). Arbitrators derive power from the parties' agreement to submit their disputes to arbitration; "a court may not override that agreement by itself deciding such a dispute." Id.

  State contract law governs whether there is an enforceable agreement to arbitrate. First Options of Chicago, 514 U.S. 943-44. Here, that is District of Columbia law because there is no choice of law provision in the Agreement designating some other law to be followed.*fn1 Under District of Columbia contract law, "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. Fed. Nat'l Mortgage Ass'n, 209 F.3d 740, 746 (D.C. Cir. 2000). Defendant must establish that the arbitration clause in the Agreement is a valid contract between the parties: "the party asserting the existence of a contract [to submit disputes to arbitration] has the burden of proving its existence." Id. at 746. However, "[t]he party resisting arbitration [i.e., plaintiff] bears the burden of proving that the claims at issue are unsuitable for arbitration." Nelson, 215 F. Supp.2d at 150; see Green Tree Fin'l Corp.-Alabama v. Randolph, 531 U.S. 79, 91-92 (2000) (party resisting arbitration has initial burden of proof regarding issue of unenforceability of arbitration agreement). If an arbitration agreement is valid and enforceable, 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. How the parties style the motion seeking arbitration is not determinative. Rather, if the party opposing arbitration contends that no agreement to arbitrate was entered, which effectively raises the issue whether there was a meeting of the minds on the agreement to arbitrate, the standards for resolving a summary judgment motion pursuant to Fed.R.Civ.P. 56 should be applied. See Par-Knit Mills, Inc. v. Stockbridge Fabrics Co., 636 F.2d 51, 52 n.9 (3rd Cir. 1980). Hence, "the proper approach to employ in reviewing the defendant's motion to dismiss and compel arbitration is to apply the same standard of review that governs Rule 56 motions." Brown v. Dorsey & Whitney, LLP, 267 F. Supp.2d 61, 67 (D.D.C. 2003).

  Thus, it is appropriate to grant a party's motion to compel arbitration when the pleadings and the evidence demonstrate that "there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). The party seeking to compel arbitration bears the initial responsibility of demonstrating the absence of a genuine dispute of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). In determining whether there is a genuine issue of material fact sufficient to preclude summary judgment, the non-movant's statements should be accepted as true and all inferences should be drawn in the non-movant's favor. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). The non-moving party, however, must establish more than the "mere existence of a scintilla of evidence" in support of its position. Id. at 252. "If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted." Id. at 249-50 (internal citations omitted). ANALYSIS

  Plaintiff raises five basic challenges: (1) that there was no meeting of the minds, (2) that there was no mutuality of obligation, (3) that the arbitration clause of the Agreement is unconscionable, (4) that the limitation on discovery is unenforceable, and (5) that the limitation on punitive damages is unenforceable. The first three challenges go to whether there is an agreement between the parties to arbitrate. The fourth and fifth challenges address whether there are policy reasons that foreclose enforcement of an agreement to arbitrate, and include ...


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