Pratt v. Joe Myers Motors ( 2001 )

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
__________________________
No. 00-21022
Summary Calendar
__________________________
EDDIE L. PRATT,
Plaintiff-Appellant,
versus
JOE MYERS MOTORS-THREE, INC.,
Defendant-Appellee.
___________________________________________________
Appeal from the United States District Court
For the Southern District of Texas
(No. 99-CV-3951)
___________________________________________________
May 18, 2001
Before HIGGINBOTHAM, WIENER, and BARKSDALE, Circuit Judges.
PER CURIAM:1
Plaintiff-Appellant Eddie L. Pratt (“Pratt”) appeals the
dismissal of her employment-discrimination lawsuit against
Defendant-Appellee Joe Myers Motors-Three, Inc. (“Joe Myers”). As
we agree with the district court that the parties are bound by a
valid arbitration agreement which bars litigation of Pratt’s
claims, we affirm.
I.
1
Pursuant to 5TH CIR. R. 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
FACTS AND PROCEEDINGS
Pratt filed suit against her former employer, Joe Myers,
alleging employment discrimination on the basis of sex and race.
Joe Myers filed a motion to dismiss Pratt’s claims on the ground
that they were barred by an arbitration agreement between the
parties contained in the “Dispute Resolution Program” (the “Plan”)
set forth in an employee handbook received by Pratt at the
beginning of her employment. The Plan unambiguously states that it
is the “exclusive procedural mechanism for the final resolution of
all disputes falling within its terms.”
The district court converted the motion to dismiss into a
motion for summary judgment. In its initial memorandum opinion and
order, the district court determined that the Plan comprises an
agreement to arbitrate that encompasses this employment-
discrimination dispute. Noting that (1) by its terms, the Plan is
binding only on “the Company,” which is defined by the Plan as “Joe
Myers Dealerships,” its subsidiaries, and “any electing entity,”
(2) “Joe Myers Dealerships” is not a legal entity, and (3) no party
submitted evidence that Joe Myers Motors-Three, Inc. is either a
subsidiary of “Joe Myers Dealerships” or an “electing entity,” the
district court concluded that it was uncertain whether a contract
existed between Joe Myers and Pratt. Accordingly, the district
court denied Joe Myers’s motion for summary judgment, ordered
2
arbitration on this sole issue,2 and stayed the proceedings. The
district court made clear that if the arbitrator determined that
both parties are bound by the terms of the Plan, then Pratt’s
lawsuit must be dismissed.
After the arbitrator determined that both parties were bound
by the Plan, the district court entered a second memorandum opinion
and order in response to Pratt’s objection to arbitration and
motion for reconsideration. The district court denied Pratt’s
motions after concluding that “there are no legal constraints
external to the parties’ agreement that foreclose arbitration of
Pratt’s claims.” The district court subsequently dismissed Pratt’s
case with prejudice, and this appeal followed.
II.
ANALYSIS
A. Standard of Review
We review the district court’s grant of summary judgment de
novo, applying the same standard as the district court.3 Under the
familiar summary-judgment standard, a motion for summary judgment
is properly granted only if there is no genuine issue as to any
2
A challenge to the formation of the contract in general
rather than to the validity of the arbitration clause must be
decided by arbitration under the Federal Arbitration Act (“FAA”).
See R.M. Perez & Assoc., Inc. v. Welch, 960 F.2d 534, 538 (5th Cir.
1992).
3
Shackelford v. Deloitte & Touche, LLP, 190 F.3d 398, 403 (5th
Cir. 1999).
3
material fact.4 In deciding whether a fact issue has been created,
we must view the facts and the inferences to be drawn therefrom in
the light most favorable to the nonmoving party.5 Furthermore, we
must review all of the evidence in the record, but make no
credibility determinations or weigh any evidence.6
B. Existence of a Valid Arbitration Agreement
Pratt challenges the district court’s ruling that the parties
are bound by an arbitration agreement that bars litigation of her
employment-discrimination suit. To determine the merits of this
claim, we must conduct a two-step inquiry. First, we must
determine whether the parties agreed to arbitrate this dispute;
second, if we conclude that the parties agreed to arbitrate, we
must consider whether any federal statute or policy renders the
claims nonarbitrable.7
1. Agreement to Arbitrate
Pratt raises two objections to the district court’s
determination that the parties are bound by an agreement to
arbitrate. First, Pratt challenges, on various grounds, the
existence of a contract between her and Joe Myers. Second, Pratt
4
Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317,
322 (1986).
5
See Olabisiomotosho v. City of Houston, 185 F.3d 521, 525
(5th Cir. 1999).
6
Reeves v. Sanderson Plumbing Products, Inc., 530 U.S. 133,
135 (2000) (citations omitted).
7
See R.M. Perez, 960 F.2d at 538 (citation omitted).
4
contends that even if the Plan is a valid contract, it is not an
agreement to arbitrate because the language of the Plan, according
to Pratt, makes arbitration voluntary rather than mandatory. We
will consider each argument in turn.
a. Challenge to the Contract
Pratt argues that there is no contract between her and Joe
Myers because (1) the plain language of the Plan excludes Joe Myers
and Pratt as parties to the Plan, and (2) by not legally binding
itself to the Plan when Pratt was hired, Joe Myers provided only
“illusory promises” which cannot serve as consideration. We need
not linger long over Pratt’s challenge to the existence of a
contract because, as an attack on the formation of the contract in
general rather than just on the arbitration clause, this claim is
itself subject to arbitration under the FAA.8 Accordingly, the
district court did not err in submitting this issue to arbitration,
or in denying Pratt’s motion to vacate the arbitrator’s ruling that
both she and Joe Myers are bound by the terms of the Plan.
We also note that the district court, in its second memorandum
and order, alternatively based its ruling on the following
admissions made by Pratt in her amended complaint:
When hired by [Joe Myers] on or about May 18, 1998,
[Pratt] received and acknowledged receipt of an employee
handbook. The employee handbook contained and described
a Dispute Resolution Program [the Plan] that conferred on
[Pratt] certain contractual rights. According to the
8
See Rojas v. TK Communications, Inc., 87 F.3d 745, 748 (5th
Cir. 1996).
5
handbook and [Pratt’s] written acknowledgment,
arbitration of Pratt’s employment dispute was optional
and not mandatory.
(emphasis added). Pratt’s response to Joe Myers’s motion for
summary judgment similarly avers that she “does not dispute that
the Plan confers contractual rights and obligations upon [Pratt]
and [Joe Myers]. In fact, [Pratt] sues [Joe Myers] for violating
her contractual rights . . . including those under the Plan”
(emphasis added). Accordingly, the district court concluded that
Pratt has admitted the existence of a contract between her and Joe
Myers.
On appeal, Pratt denies that her statements qualify as
judicial admissions, and insists that her pleadings only
“hypothetically allege . . . the existence of an additional written
contract.” Pratt’s attempt to characterize her assertions as
nothing more than “alternative legal theories,” however, is
specious at best. We agree with the district court that, in
addition to the finding of an existing contract by the arbitrator,
Pratt has admitted the existence of a contract between her and Joe
Myers.
b. Exclusivity of the Arbitration Remedy
Pratt further contends that even if the Plan is a valid
contract, it is not an agreement to arbitrate because the language
of the Plan, according to Pratt, makes arbitration voluntary rather
than mandatory. In support of her contention that the Plan
“expressly authorizes judicial action,” Pratt points to the
6
following provision:
Proceedings under the Plan shall be the exclusive, final
and binding Method by which Disputes are resolved.
Consequently, the institution of a proceeding under this
Plan shall be a condition precedent to the initiation of
any legal action (including action before an
administrative tribunal with adjudicatory powers)9
against the Company and any such action shall be limited
to those under the [Federal Arbitration] Act.
(emphasis added). Pratt then argues that § 4 of the FAA, which
provides, “[i]f the making of the arbitration agreement or the
failure, neglect, or refusal to perform the same be in issue, the
court shall proceed summarily to the trial thereof[,]”10 requires
us to remand this case for a jury trial on the issue of
arbitrability.
Pratt, however, “cherry-picks” certain provisions of the FAA
that appear to support her position while ignoring others that
manifestly undercut it. For example, Pratt seizes on § 4's
provision for a jury trial when the “making” of the arbitration
agreement is at issue, but ignores the surrounding language which
makes clear that this provision of the FAA applies in the context
of an action to compel arbitration:
[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
9
The next paragraph of the Plan clarifies that “it is not
intended nor does it limit in any manner the rights of an employee
to file a claim with the Equal Employment Opportunity Commission or
the Texas Human Rights Commission.”
10
9 U.S.C. § 4.
7
jurisdiction . . . for an order directing that such
arbitration proceed in the manner provided for in such
agreement. . . . filed. If the making of the arbitration
agreement or the failure, neglect, or refusal to perform
the same be in issue, the court shall proceed summarily
to the trial thereof.11
Accordingly, the “legal action” contemplated by the FAA (and thus
permitted by the Plan) is a petition for an order to compel
arbitration, and not, as Pratt would have it, a freestanding
“judicial challenge . . . to the ‘making’ of the arbitration
agreement[.]”
In further support of her contention that the Plan offers
arbitration only as an option and not a requirement, Pratt relies
on the following paragraph of the Plan:
If the dispute involves a legally protected right, such
as protection against age, race, sex discrimination,
sexual harassment or claims for retaliation and has not
been resolved in Options One [the “Open Door Policy,” or
complaining through the chain of command], Two [the
“Conference,” or meeting with a company representative],
or Three [“Mediation”], you or the Company may request
arbitration. While you do not have to go proceed through
each of the options in their exact numerical order, the
Program is designed with multiple steps to maximize the
possibility of resolution prior to Option [F]our
[“Arbitration”]. All outside dispute resolution
processes in this program will use neutral parties
provided through the American Arbitration Association.
(emphasis added). More specifically, Pratt contends that the
phrase “you or the Company may request arbitration” can be
interpreted to mean that arbitration is merely an option, and not
a requirement.
11
Id. (emphasis added).
8
As an initial matter, we note that federal law, comprising
generally accepted principles of contract law, governs the
interpretation of an arbitration clause subject to the FAA; we look
to state law only to shape these general principles.12 Relying on
these familiar principles, we will enforce a contract according to
its plain meaning, unless such a reading would defeat the
intentions of the parties.13 In construing a written contract, we
must give effect to the intentions of the parties as expressed in
the instrument.14
Here, the Plan states unequivocally that it is “intended to
create an exclusive procedural mechanism for the final resolution
of all disputes falling within its terms.” The Plan also provides
that both the employees and the employer “will be bound to use [the
Plan] as the primary and sole means of dispute resolution.” As we
have already observed, the Plan clearly states that “[p]roceedings
under the Plan shall be the exclusive, final and binding method by
which Disputes are resolved.” And there can be no doubt that the
agreement to arbitrate encompasses Pratt’s employment
discrimination claims, as the Plan makes clear that it applies,
inter alia, to “any legal or equitable claim . . . including . . .
12
See Neal v. Hardee’s Food Systems, Inc., 918 F.2d 34, 37 n.5
(5th Cir. 1990).
13
Id. at 37.
14
State Farm Fire & Casualty Insurance Co. v. Keegan, 209 F.3d
767, 768 (5th Cir. 2000) (citation omitted).
9
allegations of: discrimination based on race, sex . . . [or] sexual
harassment.”
Pratt’s reading of the phrase “you or the Company may request
arbitration” to mean that arbitration is merely optional is
certainly correct in the sense that the Plan does not require that
each and every dispute be arbitrated. It simply does not follow,
however, that if, under the Plan, arbitration is optional, then so
too is litigation. To the contrary, the Plan expressly limits “any
legal action” to that provided for in the FAA, which in turn
provides only, under these circumstances, for an action to compel
arbitration.
In sum, we are convinced that the obvious intention of the
parties under the Plan was to submit any employment dispute that
might arise —— and not be resolved amicably —— to alternative
dispute resolution procedures rather than to resort to traditional
means of litigation to resolve disputes that could not be disposed
of amicably. We are equally persuaded that, even after according
proper summary-judgment deference to Pratt, the plain language of
the Plan will admit of no other interpretation than that Pratt is
barred from pursuing her grievances through litigation.
Accordingly, the summary-judgment record amply supports the
district court’s conclusion that both parties are bound by an
agreement to arbitrate that encompasses this dispute.
2. Whether any Federal Statute or Policy Renders Pratt’s
Claims Nonarbitrable
10
Pratt correctly states that even if we conclude that the
arbitration agreement is otherwise enforceable, we must also
consider whether any federal statute or policy renders her claims
nonarbitrable.15 In the instant case, Pratt directs us to a Ninth
Circuit case, Craft v. Campbell Soup Co., which held that Congress
did not intend the FAA to apply to employment contracts.16 But
after the parties had filed their briefs in this appeal, the
Supreme Court overruled Craft in Circuit City Stores, Inc. v.
Adams, which squarely held that the FAA applies to employment
contracts.17 In any event, the law is well established in this
circuit that employment contracts are subject to the FAA.18
Accordingly, Pratt’s sole argument with respect to whether any
federal statute or policy renders her claims nonarbitrable is
foreclosed by binding precedent.
III.
CONCLUSION
For the reasons announced above, the district court’s
dismissal of Pratt’s claims with prejudice is
AFFIRMED.
15
See R.M. Perez, 960 F.2d at 538.
16
177 F.3d 1083, 1091 (9th Cir. 1999) (overruled by Circuit
City Stores, Inc. v. Adams, --- U.S. ---, 121 S. Ct. 1302 (2001)).
17
Id. at 1306.
18
See Rojas, 87 F.3d at 749.
11
12