Mary Begole v. North Mississippi Med Ctr, Inc, et ( 2019 )

Case: 18-60369 Document: 00514826211 Page: 1 Date Filed: 02/07/2019
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 18-60369 FILED
February 7, 2019
DR. MARY BEGOLE, Lyle W. Cayce
Clerk
Plaintiff - Appellant
v.
NORTH MISSISSIPPI MEDICAL CENTER, INCORPORATED; NORTH
MISSISSIPPI HEALTH SERVICES, INCORPORATED; TUPELO
EMERGENCY CARE ASSOCIATES, L.L.C.; DR. JOSEPH JOHNSEY,
Defendants - Appellees
Appeal from the United States District Court
for the Northern District of Mississippi
USDC No. 1:17-CV-33
Before CLEMENT, OWEN, and HO, Circuit Judges.
PER CURIAM:*
Doctor Mary Begole tried to litigate her employment dispute in federal
court. The district court held that her claims are subject to arbitration. We
agree and consequently affirm.
* 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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH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.
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FACTS AND PROCEEDINGS
On June 10, 2014, Begole signed an employment agreement (“EA”) to
work as a physician in the emergency department of North Mississippi Medical
Center (“NMMC”). The EA includes a clause providing for the arbitration of
“all disputes . . . arising out of or relating to this [EA].”
Following a reorganization, NMMC resolved to use Tupelo Emergency
Care Associates, LLC (“TECA”) to contract with emergency physicians. Each
of the emergency physicians who had been employed by NMMC were offered
an independent contractor agreement (“ICA”). On February 12, 2015, Begole
signed such an agreement. The ICA includes a clause providing for the
arbitration of “[d]isputes arising under this [ICA].”
Following the termination of her service with NMMC, Begole filed suit
against NMMC, TECA, and several affiliates (including her supervisor, Doctor
Johnsey). She asserted claims under Title VII of the Civil Rights Act of 1964
and the Age Discrimination in Employment Act (ADEA) as well as several
state law claims including wrongful termination, intentional interference with
contract, intentional interference with business relations, and fraud. The
defendants filed a motion to compel arbitration, which the district court
granted.
Begole asserts that arbitration is improper. She contends that any
arbitration requirement is unconscionable, that further discovery was
required, that her wrongful termination tort claim is not subject to arbitration,
and that arbitration of her claims against her supervisor, Doctor Johnsey,
cannot be compelled, under the doctrine of equitable estoppel, because he was
not a signatory to the EA or ICA.
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STANDARD OF REVIEW
“This court reviews the grant or denial of a motion to compel arbitration
de novo.” Carey v. 24 Hour Fitness, USA, Inc., 669 F.3d 202, 205 (5th Cir. 2012).
“[W]hether to utilize equitable estoppel [to compel arbitration] is within the
district court’s discretion; we review to determine only whether it has been
abused.” Grigson v. Creative Artists Agency L.L.C., 210 F.3d 524, 528 (5th Cir.
2000). “[I]n reviewing cases decided under Rule 12(b)(3), this court must view
all the facts in a light most favorable to the plaintiff.” Noble Drilling Servs.,
Inc. v. Certex USA, Inc., 620 F.3d 469, 473 (5th Cir. 2010) (internal quotation
marks omitted).
DISCUSSION
I. Unconscionability
“[I]n order to determine whether legal constraints exist which would
preclude arbitration, ‘courts generally . . . should apply ordinary state-law
principles that govern the formation of contracts.’” E. Ford, Inc. v. Taylor, 826
So. 2d 709, 713–14 (Miss. 2002) (quoting Bank One, N.A. v. Coates, 125 F.
Supp. 2d 819, 827 (S.D. Miss. 2001) (quoting Webb v. Investacorp, Inc., 89 F.3d
252, 257 (5th Cir. 1996)).
Mississippi recognizes that “[u]nconscionability can be procedural or
substantive.” Covenant Health & Rehab. of Picayune, LP v. Estate of Moulds
ex rel. Braddock, 14 So. 3d 695, 699 (Miss. 2009). “Under substantive
unconscionability, we look within the four corners of an agreement in order to
discover any abuses relating to the specific terms which violate the
expectations of, or cause gross disparity between, the contracting parties.” Id.
(internal quotation marks omitted). “Procedural unconscionability may be
proved by showing a lack of knowledge, lack of voluntariness, inconspicuous
print, the use of complex legalistic language, disparity in sophistication or
bargaining power of the parties and/or a lack of opportunity to study the
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contract and inquire about the contract terms.” E. Ford, Inc., 826 So. 2d at 714
(internal quotation marks omitted).
Begole argues that both the ICA and EA agreements are procedurally
unconscionable, and that the EA is substantively unconscionable.
A. Procedural Unconscionability
With respect to the ICA, Begole argues that she did not have time to
study it because the document was presented to her after its effective date,
while she was treating critically ill patients, and because she worried that she
did not have medical malpractice insurance until it was consummated.
The defendants respond by correctly pointing out that, generally,
allegations of unconscionability, related to the formation of the contract as a
whole, are for the arbitrator. See Prima Paint Corp. v. Flood & Conklin Mfg.
Co., 388 U.S. 395, 403–04 (1967). Begole’s broad attacks on the nature of the
presentation of the contract are subject to this rule and the district court was
correct to conclude that they must be arbitrated.
However, Begole rightly points out that where a party challenges the
validity of the agreement to arbitrate in particular, the district court must
weigh in on whether the specific decision to agree to arbitrate was
unconscionable. See id; see also Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63,
71, (2010). Begole identifies several instances at the district court where she
claimed that the decision to agree to arbitrate was unconscionable—because
the term sheet she received before being presented with the ICA did not include
the arbitration provision.
Begole is correct that these allegations must be reviewed by the district
court. But the district court did review them and correctly concluded that they
were without merit.
Under Mississippi law . . . parties to a contract have an inherent
duty to read the terms of the contract prior to signing; that is, a
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party may neither neglect to become familiar with the terms and
condition and then later complain of lack of knowledge, nor avoid
a written contract merely because he or she failed to read it or have
someone else read and explain it.
MS Credit Ctr., Inc. v. Horton, 926 So. 2d 167, 177 (Miss. 2006).
Begole has not alleged that the defendants rushed her or gave her
unreasonable deadlines within which to sign the ICA. Because she has simply
claimed that the inconsistency between the term sheet and the ICA made the
agreement to arbitrate unconscionable—an issue that would have been
remedied by simply reading the contract—this claim must fail. 1
Begole further alleges that the EA is procedurally unconscionable
because it contained misrepresentations and omissions about NMMC’s
commitment to patient care, compliance with applicable laws, and safeguards
against sexual harassment. But these are the same kinds of issues that apply
to the agreement as a whole, and not to the specific decision to arbitrate. See
Prima Paint, 388 U.S. at 403–04. For this reason, any dispute about the
unconscionability of the EA was correctly referred to the arbitrator.
B. Substantive Unconscionability
The district court and each of the parties appear to concede that the
punitive damages waiver in the EA may have been substantively
unconscionable. But the district court held that any such unconscionability
would not render the agreement to arbitrate unconscionable because for an
agreement to be entirely unenforceable it must usually include numerous
unconscionable terms.
1 Begole argues, in the alternative, that she was at least entitled to discovery on this
issue. But this argument is unavailing because our holding does not depend on the resolution
of any factual dispute and takes as a given Begole’s characterization of the formation of the
contract.
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Begole cites Covenant Health & Rehabilitation of Picayune, LP v. Estate
of Moulds ex rel. Braddock for the proposition that because the defendants
have attempted enforce the unconscionable punitive damages waiver, they
cannot now compel arbitration. But Moulds says no such thing. See 14 So. 3d
695, 703 (Miss. 2009).
Instead, Mississippi law indicates that “[i]f the court as a matter of law
finds the contract or any clause of the contract to have been unconscionable . . .
the court may refuse to enforce the contract, or it may enforce the remainder
of the contract without the unconscionable clause, or it may so limit the
application of any unconscionable clause as to avoid any unconscionable
result.” Miss. Code § 75–2–302.
In Moulds the Mississippi Supreme Court held that where an agreement
contains a “multitude” or “plethora” of unconscionable terms, the entire
agreement can become unenforceable. 14 So. 3d at 702, 703. Begole has not
shown that the offending punitive damages provision undermines the
agreement as a whole. Consequently, consistent with the Mississippi statute,
the district court correctly concluded that it could be severed, and the
agreement to arbitrate disputes enforced.
II. Wrongful Termination
Begole next argues that her wrongful termination tort claim may not be
referred to arbitration because, as an independent tort claim, it does not “arise”
“out of” or “under” either of the agreements. But the cases to which Begole cites
do not create a blanket exemption of arbitration of tort claims under similar
personal service agreements (employment or independent contractor). See, e.g.,
Keyes v. Dollar Gen. Corp., 240 So. 3d 373, 376–77 (Miss. 2018) (analyzing an
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arbitration agreement that, unlike Begole’s, listed out claims that would be
considered “Covered Claims” and claims which were not “Covered Claims”).
Indeed, we have held that similar language was “sufficiently broad to
encompass” non-contractual employment-related claims. Rojas v. TK
Commc’ns, Inc., 87 F.3d 745, 749 (5th Cir. 1996). We agree with the district
court’s conclusion that Begole’s wrongful termination claim is closely related
to her employment and triggers either of the arbitration clauses. In other
words, Begole’s entire dispute is predicated on her contractual relationship
with the defendants and so this dispute, by operation of logic, arises “out of” or
“under” those contracts.
III. Equitable Estoppel
Begole argues that her tort claims against her supervisor, Doctor
Johnsey, are not subject to arbitration because he is a non-signatory to the
agreements providing for arbitration. The district court concluded that
equitable principles allow this non-signatory, Doctor Johnsey, to compel a
signatory, Begole, to arbitrate. Begole argues that this conclusion is
inconsistent with Mississippi’s skeptical view of equitable estoppel.
But “we do not lightly override” a district court’s decision to compel
arbitration under equitable estoppel because “the district court is better
equipped to make the call than this court.” Hill v. G E Power Sys., Inc., 282
F.3d 343, 349 (5th Cir. 2002). The Mississippi Supreme Court has explained
that “equitable estoppel will allow a nonsignatory to compel arbitration, when
the signatory to the contract containing an arbitration clause raises allegations
of substantially interdependent and concerted misconduct by both the
nonsignatory and one or more of the signatories to the contract.” B.C. Rogers
Poultry, Inc. v. Wedgeworth, 911 So. 2d 483, 491 (Miss. 2005) (internal
quotation marks omitted). The district court concluded that Begole’s claims—
which are centered around interference with her contractual, service
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relationships with NMMC and TECA—“allege interdependent and concerted
misconduct against all Defendants.” We cannot conclude that such a
characterization is an abuse of discretion. 2
CONCLUSION
For the foregoing reasons, Begole’s claims are subject to arbitration—we
AFFIRM.
2 Begole argues, in the alternative, that she was at least entitled to discovery on this
issue. But it is unclear what exactly Begole hopes to find that could help her. She claims to
seek “any purported ‘detrimental reliance’ by Dr. Johnsey that would somehow allow him to
rely on the arbitration clauses.” But we see no reason to order discovery designed to turn up
evidence of detrimental reliance which could only serve to strengthen the district court’s
decision rather than weaken it.
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