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Andresen v. Intepros Federal, Inc.

United States District Court, District of Columbia

February 27, 2017

JENSINE ANDRESEN, Plaintiff,
v.
INTEPROS FEDERAL, INC., Defendant.

          MEMORANDUM OPINION

          EMMET G. SULLIVAN UNITED STATES DISTRICT JUDGE.

         Dr. Jensine Andresen brings this lawsuit against defendant IntePros Federal, Inc. Dr. Andresen asserts various federal and District of Columbia statutory claims, including claims under the Age Discrimination in Employment Act of 1967; Title VII of the Civil Rights Act of 1964; the Fair Labor Standards Act; the District of Columbia Human Rights Act; and the District of Columbia Wage Payment and Collection Law. Pending before the Court is IntePros' renewed motion to compel arbitration and to stay this litigation pending arbitration. Upon consideration of the motion, the response and reply thereto, the parties' supplemental filings, the applicable law, and the entire record, the Court GRANTS IntePros' renewed motion to compel arbitration and STAYS this action during the pendency of the arbitration. IntePros will be responsible for arbitral fees and expenses in the manner specified herein.

         I. Background

         On June 13, 2013, Dr. Andresen entered into a written contract with IntePros entitled “Sub Contractor Agreement IT Consulting” (“the Agreement”), wherein Dr. Andresen contracted with IntePros to perform work on a government contract with TRICARE Management Activity, which has since become the Defense Health Agency (“DHA”). Am. Compl., ECF No. 10-1 ¶ 13; Sub Contractor Agreement IT Consulting (“Agreement”), Ex. 2, ECF No. 12-1. The Agreement contains an arbitration clause that reads in full:

Any and all disputes, controversies and claims arising out of or relating to this Agreement or concerning the respective rights or obligation [sic] hereunder of the parties hereto shall be settled and determined by arbitration before the Commercial Panel of the American Arbitration Association in accordance with the Commercial Arbitration Rules. The arbitrators shall have the power to award specific performance or injunctive relief and reasonable attorneys' fees and expenses to any party in any such arbitration. However, in any arbitration proceeding arising under this Agreement, the arbitrators shall not have the power to change, modify or alter any express condition, term or provision hereof, and to that extent the scope of their authority is limited. The arbitration award shall be final and binding upon the parties and judgment thereon may be entered in any court having jurisdiction thereof.

         Agreement, Provision 9(f), Ex. 2, ECF No. 12-1 at 4. Dr. Andresen worked for IntePros pursuant to the Agreement as an “Information Technology Analyst I” at DHA until she was terminated on June 16, 2014. Am. Compl., ECF No. 10-1 ¶¶ 15, 174.

         On March 26, 2015, Dr. Andresen filed a complaint against IntePros in this Court alleging age discrimination, sex discrimination, unlawful retaliation, and failure to pay overtime compensation. Compl., ECF No. 1 ¶¶ 204-31. IntePros subsequently filed a motion to compel arbitration. Def.'s Mot. to Compel Arbitration, ECF No. 5. Prior to the Court resolving that motion, on November 25, 2015, Dr. Andresen filed a motion to amend the complaint, seeking to add two additional claims of unlawful termination. See Mot. to Amend Compl., ECF No. 10. IntePros opposed the motion to amend the complaint and filed a renewed motion to compel arbitration. See Def.'s Renewed Mot. to Compel Arbitration, ECF No. 11; Def.'s Mem. in Supp. of Renewed Mot. to Compel Arbitration and Opp. to Mot. to Amend Compl. (“Def.'s Mem. Supp.”), ECF No. 12. The parties briefed the motion to amend and the renewed motion to compel arbitration. See Def.'s Mem. Supp., ECF No. 12; Pl.'s Opp. to Renewed Mot. to Compel Arbitration and Reply to Opp. to Mot. to Amend Compl. (“Pl.'s Opp.”), ECF No. 13; Def.'s Reply, ECF No. 15. On March 29, 2016, the Court granted Dr. Andresen's motion to amend her complaint and, in light of the renewed motion to compel arbitration, denied as moot IntePros' initial motion to compel arbitration. See Minute Entry of March 29, 2016. Upon review of the parties' briefing of IntePros' renewed motion, the Court concluded that supplemental briefing would greatly aid in the resolution of that motion.[1] Having received that supplemental briefing, IntePros' renewed motion is ready for adjudication.

         II. Standard of Review

         A motion to compel arbitration is examined under the summary judgment standard of Federal Rule of Civil Procedure 56(c), as if it were “‘a request for summary disposition of the issue of whether or not there had been a meeting of the minds on the agreement to arbitrate.'” Mercadante v. XE Servs., LLC, 78 F.Supp.3d 131, 136 (D.D.C. 2015) (quoting Aliron Int'l, Inc. v. Cherokee Nation Indus., Inc., 531 F.3d 863, 865 (D.C. Cir. 2008)). Under Rule 56(c), summary judgment is appropriate only if “‘there is no genuine issue as to any material fact and . . . the moving party is entitled to a judgment as a matter of law.'” Id. (quoting Aliron Int'l, 531 F.3d at 865). “‘The party seeking to compel arbitration must present evidence sufficient to demonstrate an enforceable agreement to arbitrate.'” Id. (quoting Haire v. Smith, Currie & Hancock LLP, 925 F.Supp.2d 126, 129 (D.D.C. 2013)). “The burden then shifts to plaintiffs to show that there is a genuine issue of material fact as to the making of the agreement.” Id. (internal quotation marks omitted). “The Court will compel arbitration if the pleadings and the evidence show 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.” Id. (internal quotation marks omitted).

         III. Analysis

         Congress enacted the Federal Arbitration Act (“FAA”) to counteract “widespread judicial hostility to arbitration.” Am. Express Co. v. Italian Colors Rest., 133 S.Ct. 2304, 2308-09 (2013). Section 2 is “the primary substantive provision of the [FAA].” Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983). It 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 . . . shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. The FAA “also establishes procedures by which federal courts implement § 2's substantive rule.” Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63, 68 (2010). “Under § 3, a party may apply to a federal court for a stay of the trial of an action ‘upon any issue referable to arbitration under an agreement in writing for such arbitration.'” Id. (quoting 9 U.S.C. § 3). “Under § 4, a party ‘aggrieved' by the failure of another party ‘to arbitrate under a written agreement for arbitration' may petition a federal court ‘for an order directing that such arbitration proceed in the manner provided for in such agreement.'” Id. (quoting 9 U.S.C. § 4).

         The “question whether the parties have submitted a particular dispute to arbitration”--that is, the gateway “question of arbitrability”--is usually “an issue for judicial determination.” Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83 (2002) (internal quotation marks omitted). That usual rule is upended, however, when the parties “clearly and unmistakably” agree that the question of arbitrability should be reserved for arbitral resolution. Id. A written agreement memorializing the parties' agreement to arbitrate the threshold question of arbitrability has come to be known as a “delegation provision.” See Rent-A-Center, 561 U.S. at 68. A delegation provision “is simply an additional, antecedent agreement the party seeking arbitration asks the federal court to enforce, and the FAA operates on this additional arbitration agreement just as it does on any other.” Id. at 70.

         Thus, when a valid and enforceable delegation provision is in place, a court is prohibited from reaching the gateway question of arbitrability and must reserve that question for arbitral resolution. See id.; Howard v. Rent-A-Center, Inc., No. 10-103, 2010 WL 3009515, at *3 (E.D. Tenn. July 28, 2010) (“If the court concludes the parties intended such a delegation and concludes that delegation is enforceable, the court must compel arbitration on issues relating to arbitrability along with the underlying dispute.”). However, when a delegation provision is invalid or unenforceable, that opens the door for judicial resolution of the question of arbitrability. Thus “before an arbitrator can determine the question of arbitrability, the Court must consider any challenges to the validity of the delegation provision.” Mercadante, 78 F.Supp.3d at 137. If the challenges of a party opposed to arbitration are directed at the “primary” arbitration clause generally--as opposed to being directed at the delegation provision specifically--the delegation provision must be treated as valid and enforceable and, accordingly, the question of arbitrability must be reserved for an arbitrator. Rent-A-Center, 561 U.S. at 72. Thus, in sum, where a primary arbitration clause and a delegation provision are both in place, a party opposed to arbitration must overcome two hurdles to entirely avoid arbitration: (1) She must demonstrate that the delegation provision, separate and apart from the primary arbitration clause, is invalid or unenforceable such that the threshold question of arbitrability should be subject to judicial, rather than arbitral, resolution; and, once she has cleared that first hurdle, (2) she must demonstrate that the primary arbitration clause is invalid or unenforceable such that the merits question--that is, the underlying substantive claims--should be subject to judicial, rather than arbitral, resolution.

         Here, Dr. Andresen does not dispute that the Agreement includes a delegation provision. See Pl.'s Opp., ECF No. 13 at 3. The first sentence of the Agreement's arbitration clause states that “[a]ny and all disputes, controversies and claims arising out of or relating to this Agreement or concerning the respective rights or obligation [sic] hereunder of the parties hereto shall be settled and determined by arbitration before the Commercial Panel of the American Arbitration Association in accordance with the Commercial Arbitration Rules.” Agreement, Provision 9(f), Ex. 2, ECF No. 12-1 at 4. The parties agree that the arbitration clause's incorporation of the American Arbitration Association (“AAA”) rules--which, in turn, empower an arbitrator to rule on the question of arbitrability, see AAA Commercial Arbitration Rules and Mediation Procedures (effective October 1, 2013), Rule 7[2]--constitutes clear and unmistakable evidence that they intended to delegate the question of arbitrability to an arbitrator. Def.'s Mem. Supp., ECF No. 12 at 4-6; Pl.'s Opp., ECF No. 13 at 3. “While the D.C. Circuit has not addressed the issue, courts both within and outside this jurisdiction have held that an arbitration clause adopting the rules of the AAA makes the issue of arbitrability one for the arbitrator, not the court.” W & T Travel Servs., LLC v. Priority One Servs., Inc., 69 F.Supp.3d 158, 167-68 (D.D.C. 2014) (collecting cases). Thus, the parties are on solid ground in agreeing that their Agreement includes a delegation provision that delegates the question of arbitrability to an arbitrator.

         Seeking to avoid arbitration of her claims despite the Agreement's delegation provision and primary arbitration clause, Dr. Andresen launches the requisite two-step attack: She first argues that the delegation provision is unenforceable such that the question of arbitrability is subject to judicial resolution, see Pl.'s Opp., ECF No. 13 at 3-5; Pl.'s Suppl. Br., ECF No. 17 at 2-13, and then, assuming that she has prevailed on that argument, she argues that the arbitration clause is unenforceable such that her substantive claims are subject to judicial resolution. See Pl.'s Opp., ECF No. 13 at 6-9. The Court can only reach the second prong of this attack if Dr. Andresen prevails on the first.

         As to that first prong, Dr. Andresen argues that the delegation provision is unenforceable under the effective vindication of statutory rights doctrine of the federal common law. First, she states that the arbitration clause here contains no express statement regarding the allocation of arbitral expenses and fees, “making the AAA rules controlling authority for the arbitrator's compensation and other arbitration fees.” Pl.'s Opp., ECF No. 13 at 4.[3] She asserts that those Rules provide that the “‘arbitrator may apportion such fees, expenses and compensation among the parties in such amounts as the arbitrator deems appropriate.'” Id. at 4-5 (quoting AAA Commercial Arbitration Rules and Mediation Procedures, Rule 47).[4]Relying on Cole v. Burns International Security Services, 105 F.3d 1465, 1483-86 (D.C. Cir. 1997), she argues that the possibility that she might have to pay some portion of arbitral fees and expenses to resolve the threshold question of arbitrability runs afoul of Cole's per se prohibition of an employee having “to pay any of the arbitrator's fees when pursuing federal statutory claims.” Pl.'s Opp., ECF No. 13 at 3-5; see also Pl.'s Suppl. Br., ECF No. 17 at 2-3. She further argues that Cole's per se rule remains viable--at least where federal statutory claims in the employer-employee context are concerned--after Green Tree Financial Corp.-Alabama v. Randolph, 531 U.S. 79 (2000). See Pl.'s Suppl. Br., ECF No. 17 at 3-9. In Green Tree, the Supreme Court rejected a cost-prohibitiveness unenforceability challenge to an arbitration clause in a case involving a claim under the federal Truth in Lending Act, announcing that “where . . . a party seeks to invalidate an arbitration agreement on the ground that arbitration would be prohibitively expensive, that party bears the burden of showing the likelihood of incurring such costs.” 531 U.S. at 92. Second, Dr. Andresen argues that even if Cole's per se rule does not apply in this case, she has carried her burden under Green Tree of demonstrating that arbitrating arbitrability would be prohibitively expensive. Pl.'s Suppl. Br., ECF No. 17 at 9-13. The Court turns now to an assessment of these arguments.

         A. Cole Announced a Per Se Rule Prohibiting Arbitral Fee-Sharing Between an Employee and an Employer But, Assuming that Per Se Rule Remains Viable, It Does Not Apply in the Context of a Challenge to a Delegation Provision

         In Cole, an employee had filed a Title VII discrimination claim against his employer, and the employer sought to compel arbitration under an arbitration agreement between the parties. 105 F.3d at 1467. The arbitration agreement was silent when it came to who would pay the arbitrator's fees and thus contemplated that the employee would have to shoulder some share of arbitral expenses. See Id. at 1485. “The court reasoned that requiring an employee to pay arbitration fees, other than ‘reasonable costs' analogous to federal court ‘filing fees and other administrative expenses, ' would be ‘prohibitively expensive' and deter the employee from ‘pursu[ing] his statutory claims.'” Fox v. Comput. World Servs. Corp., 920 F.Supp.2d 90, 100-01 (D.D.C. 2013) (quoting Cole, 105 F.3d at 1484). Accordingly, the court was only willing to find the arbitration agreement valid and enforceable as to the Title VII claim by reading it as allocating all of the costs of arbitration to the employer, in turn giving rise to a per se rule invalidating arbitration agreements that require an employee “to pay all or part of the arbitrator's fees and expenses.” See 105 F.3d at 1485. Thus, the court held, “an employee can never be required, as a condition of employment, to pay an arbitrator's compensation in order to secure the resolution of statutory claims.” Id. at 1468.

         There is little doubt that Cole announced a per se rule that arbitration agreements that contemplate an employee paying arbitral expenses other than those analogous to federal court filing fees and administrative expenses are unenforceable unless the arbitrator's fees are paid by the employer. See Bradford v. Rockwell Semiconductor Sys., Inc., 238 F.3d 549, 554 (4th Cir. 2001) (describing Cole as announcing a per se rule); Fox, 920 F.Supp.2d at 101 (same); Toledano v. O'Connor, 501 F.Supp.2d 127, 148 (D.D.C. 2007) (same); Nelson v. Insignia/Esg, Inc., 215 F.Supp.2d 143, 154 (D.D.C. 2002) (same). But the Supreme Court's post-Cole decision in Green Tree puts Cole's per se rule under serious strain. In Green Tree, the Court considered whether an arbitration agreement that was silent as to arbitration costs and fees was unenforceable as to a federal statutory claim because the agreement failed to affirmatively protect a party from potentially steep arbitration costs. 531 U.S. at 82. The Court held that the agreement was not unenforceable on the ground that the “risk” of prohibitive costs was “too speculative” to justify ...


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