Pennington v. Northrop Grumman Space & Mission Systems Corp.

FILED
United States Court of Appeals
Tenth Circuit
March 14, 2008
UNITED STATES COURT OF APPEALS
Elisabeth A. Shumaker
TENTH CIRCUIT Clerk of Court
CHRISTINE M. PENNINGTON,
Plainitff - Appellant, No. 07-2250
v. D. N.M.
NORTHROP GRUMMAN SPACE & (D.C. No. 2:06-CV-00614-WPL-ACT)
MISSION SYSTEMS
CORPORATION,
Defendant - Appellee.
ORDER AND JUDGMENT *
Before O’BRIEN, EBEL, and GORSUCH, Circuit Judges.
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist in the determination
of this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is
therefore ordered submitted without oral argument.
Christine M. Pennington filed suit against her former employer, Northrop
Grumman Space & Mission Systems Corporation (“Northrop Grumman”),
*
This order and judgment is not binding precedent except under the
doctrines of law of the case, res judicata, and collateral estoppel. It may be cited,
however, for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th
Cir. R. 32.1.
alleging sex discrimination and retaliation in violation of Title VII of the Civil
Rights Act of 1964 and New Mexico law. The magistrate judge granted summary
judgment in favor of Northrop Grumman and dismissed Pennington’s complaint
with prejudice, concluding she was bound by the mandatory arbitration clause
contained in the Northrop Grumman Dispute Resolution Process (“NG DRP”). 1
Pennington claims there are disputed issues of material fact and seeks to expand
the record to include her entire deposition transcript, only portions of which were
submitted to the magistrate judge. She also renews her legal challenges to the NG
DRP. We deny Pennington’s motion to expand the record and affirm.
I. BACKGROUND
In November 1998, Pennington was hired by TRW, Inc. as a graphic
designer. Upon commencement of her employment, Pennington received and
became bound by the TRW Dispute Resolution Process (“TRW DRP”), which
contained an arbitration clause, requiring employees to participate in non-binding
arbitration before resorting to litigation. In December 2002, TRW was acquired
by, and became a wholly owned subsidiary of, Northrop Grumman Corporation.
Northrop Grumman Corporation continued to operate TRW under the name
Northrop Grumman Space & Mission Systems Corporation.
On February 9, 2004, Northrop Grumman sent an e-mail to all employees,
1
The parties consented to have their case decided by a magistrate judge
under 28 U.S.C. § 636(c) and Rule 73 of the Federal Rules of Civil Procedure.
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including Pennington, announcing the issuance of the NG DRP. The e-mail
stated: “For more than 60 years, Northrop Grumman has been a leader in offering
non-represented employees an effective grievance process, which includes steps
for an internal review of employees and, if needed, the means to enter into
binding arbitration.” (R. Vol. I, Doc. 10-2, Ex. 1(A).) It continued: “After much
consideration, we have revised those processes and are now issuing [the NG DRP]
. . . .” (Id.) The e-mail informed employees the NG DRP “culminates in final
and binding arbitration--binding on both the company and each employee.” (Id.)
Copies of the NG DRP and a mediation and arbitration process guide were
attached to the e-mail and were made available on the company’s intranet site.
The e-mail provided the NG DRP would “become effective companywide on May
10, 2004 (except for those employees represented by labor unions and those not
covered by U.S. law).” (Id.) It advised employees to review the NG DRP and
process guide “carefully and direct any questions you may have to your site
Human Resources representative.” (Id.)
Northrop Grumman terminated Pennington on October 28, 2005. She
subsequently filed a charge against Northrop Grumman with the Equal
Employment Opportunity Commission (EEOC). She received a right to sue letter
from the EEOC on April 10, 2006, and filed this action on July 10, 2006. It is
undisputed that Pennington did not demand arbitration prior to filing suit, though
her claims fall within the scope of the NG DRP.
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Northrop Grumman filed a motion to dismiss, arguing Pennington was
bound by the mandatory arbitration clause contained in the NG DRP. The
magistrate judge denied the motion, concluding Northrop Grumman had failed to
establish the elements of acceptance and mutual assent. After limited discovery,
Northrop Grumman filed a motion for summary judgment, again arguing, in
pertinent part, Pennington was bound by the arbitration clause contained in the
NG DRP. Northrop Grumman stated, as undisputed facts:
11. Pennington regularly received Northrop Grumman company
announcements on her e-mail.
12. The e-mail system used by Northrop Grumman allowed
Pennington to see who had sent an e-mail before she opened it.
13. Pennington never refused to open e-mails from Northrop
Grumman management . . . and it was her habit to open e-
mails from Northrop Grumman management.
(R. Vol. I, Doc. 34 at 4-5 (citations omitted).) It argued: “Pennington received
Northrop Grumman’s offer, and, further, she accepted that offer.” (Id. at 11.)
“Regardless of whether Pennington claims to remember having opened the e-mail,
the fact remains that Northrop Grumman sent the e-mail, Pennington received the
e-mail, and, as was Pennington’s habit, she opened the e-mail.” (Id. at 13.) In
support of its motion, Northrop Grumman submitted excerpts from the transcript
of Pennington’s deposition.
In her opposition brief, Pennington did not dispute any of the facts set forth
by Northrop Grumman. She stated: “For purposes of this Motion, Plaintiff does
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not dispute any of the facts set forth in the Defendant’s Motion for Summary
Judgment. For the reasons, set forth below, none of the facts alleged warrant the
entry of judgment in favor of the Defendant.” (R. Vol. I, Doc. 37 at 3.) As this
quotation reveals, her arguments in opposition to summary judgment were legal,
not factual. She claimed the arbitration clause contained in the NG DRP was not
enforceable because she did not assent to the NG DRP and because it was not
supported by adequate consideration and was unconscionable. She never claimed
she did not receive, open or read the February 9th e-mail. Rather, she claimed the
e-mail “did not provide sufficient information . . . regarding the Defendant’s
arbitration policy,” was misleading because it spoke at one point of “non-
represented employees” rather than “employees not represented by labor unions,”
and she could not be “bound to arbitrate by simply coming to work.” 2 (Id. at 7,
9.)
The magistrate judge granted summary judgment in favor of Northrop
Grumman, concluding the arbitration clause was valid and enforceable. The
judge noted: “None of the excerpted testimony [from Pennington’s deposition]
deals specifically with whether Pennington received, opened, or read this
particular e-mail and its attachments.” (R. Vol. I, Doc. 41 at 4-5.) However:
Pennington has not presented any testimony, by either deposition or
affidavit, denying that she received, opened, and read the e-mail and
2
Pennington arguably raised a factual issue regarding the clarity of the
February 9th e-mail, but never questioned her receipt of the e-mail.
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attachments. Moreover, she does not contest the elements of offer
and acceptance. Instead, she argues that Northrop Grumman has not
established mutual assent because the [e-mail] was insufficiently
clear. This argument implicitly indicates that Pennington saw the [e-
mail]. Under these circumstances, I conclude that Northrop
Grumman has met its summary judgment burden of establishing an
offer and acceptance.
(Id. at 5.) Thus, the judge dismissed Pennington’s complaint with prejudice. 3
II. DISCUSSION
Proceeding pro se, 4 Pennington contends the magistrate judge erred in
granting summary judgment in favor of Northrop Grumman because there are
genuine issues of material fact regarding offer, acceptance and mutual assent
which should have precluded summary judgment and the court erred by not
holding a hearing to resolve those issues. She renews her argument that the NG
DRP is unenforceable because it is unconscionable and lacked consideration.
Finally, she argues the agreement is unenforceable because she did not knowingly
and voluntarily waive a federal forum for her statutory claims.
“We review the district court’s grant of summary judgment de novo,
3
Pennington filed a motion to reconsider, arguing the dismissal should
have been without prejudice. The magistrate judge denied the motion.
Pennington does not renew her argument that the dismissal should have been
without prejudice and thus, this argument is waived. See United States v.
Abdenbi, 361 F.3d 1282, 1289 (10th Cir. 2004) (“The failure to raise an issue in
an opening brief waives that issue.”).
4
Pennington was represented by counsel before the magistrate judge, but
is proceeding pro se on appeal. We liberally construe Pennington’s pro se
appellate filings. See Cummings v. Evans, 161 F.3d 610, 613 (10th Cir. 1998).
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applying the same legal standard used by the district court pursuant to Fed. R.
Civ. P. 56(c).” Sigmon v. CommunityCare HMO, Inc., 234 F.3d 1121, 1124 (10th
Cir. 2000). Summary judgment is appropriate only “if the pleadings, the
discovery and disclosure materials on file, and any affidavits show that there is no
genuine issue as to any material fact and that the movant is entitled to judgment
as a matter of law.” Fed. R. Civ. P. 56(c). In applying this standard, “we
examine the factual record and reasonable inferences therefrom in the light most
favorable to the party opposing summary judgment.” Sigmon, 234 F.3d at 1124-
25 (quotations omitted). “If there is no genuine issue of material fact in dispute,
then we must determine if the substantive law was correctly applied by the district
court.” Id. at 1125.
Pursuant to the Federal Arbitration Act, 9 U.S.C. §§ 1-16, “[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. Generally, state law
principles regarding contract formation govern whether a valid agreement to
arbitrate exists. See First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944
(1995). The parties agree New Mexico law governs whether the arbitration clause
contained in the NG DRP is valid and enforceable.
A. Issues of Material Fact
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Under New Mexico law, a contract is legally enforceable if it is “factually
supported by an offer, an acceptance, consideration, and mutual assent.” Garcia
v. Middle Rio Grande Conservancy Dist., 918 P.2d 7, 10 (N.M. 1996) (quotations
omitted); see also Piano v. Premier Distrib. Co., 107 P.3d 11, 14 (N.M. Ct. App.
2004) (applying this test to an arbitration agreement in the employment context).
Pennington claims there are genuine issues of material fact regarding offer,
acceptance and mutual assent which should have precluded summary judgment.
She seeks to expand the record on appeal to include portions of her deposition
transcript which she claims would reveal:
2. Pennington has Dyslexia . . .
12. Anybody could use the computer of Chris Pennington and use
Penningtons [sic] work space
13. Pennington’s computer was on almost constantly and was used
for e-mail by Northrop Grumman and TRW
17. Pennington was ordered by management TRW and Northrop
Grumman to leave her computer on for temporary and other
employees to use it and it became policy
18. Pennington was at home when others were using her computer
19. Pennington’s computer as long as it was on, allowed anyone
access to Pennington’s E-mail account
20. Pennington states the reason she didn’t remember seeing E-
mails from HR was that she was not the only person using her
computer
23. Pennington saved e-mails from Northrop Grumman HR and
Management on her computer, backup to CD’s and sent the e-
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mails home to her computer.
24. Pennington provided to Northrop Grumman copies of all the e-
mails saved from 2004 to 2005 and the February 9, 2004
Northrop Grumman E-mail was not among them.
(Appellant’s Opening Br. at 2, 2-2 (citations omitted).) Though, as recognized by
the magistrate judge, Pennington implicitly acknowledged receiving the February
9th e-mail, she now claims she “never received the e-mailed Arbitration
Agreement/Contract’s.” (Appellant’s Reply Br. at 23.)
Generally, “our review is confined to an examination of materials before
the lower court at the time the ruling was made . . . .” Allen v. Minnstar, Inc., 8
F.3d 1470, 1475 (10th Cir. 1993) (quotations and emphasis omitted). Pursuant to
Rule 10(e)(1) of the Federal Rules of Appellate Procedure, a party may modify
the record if there is a question as to “whether the record truly discloses what
occurred in the district court.” This rule does not, however, “grant a license to
build a new record.” Anthony v. United States, 667 F.2d 870, 875 (10th Cir.
1981). In Allen, we denied an appellant’s motion to supplement the record with
the full transcript of a deposition. 8 F.3d at 1474. We stated:
In responding to the defendants’ motion for summary judgment
below, [the appellant] was entitled to designate, inter alia, any parts
of the [ ] deposition purportedly establishing triable issues of fact.
Portions of the deposition not filed below or presented to the district
court could not properly be considered by the court and, ipso facto,
cannot be considered by us in reviewing the court’s judgment . . . .
Id. at 1475.
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In United States v. Kennedy, we recognized that “under some
circumstances, we have an inherent equitable power to supplement the record on
appeal.” 225 F.3d 1187, 1192 (10th Cir. 2000). We described this inherent
power as a “rare exception to Rule 10(e)” and declined to apply it in that case.
Id. We applied the exception in United States v. Balderama-Iribe, permitting the
government to supplement the record with a letter from the prosecutor which
clarified his misstatement at the pretrial hearing and “clearly inform[ed] defense
counsel that Balderama-Iribe faced a mandatory life sentence if convicted . . . .”
490 F.3d 1199, 1202 n.4 (10th Cir. 2007). We noted there was no reason why the
government would have submitted this letter to the district court because the
defendant did not object in the district court to the mandatory life sentence on the
basis of the prosecutor’s misstatement. Id.Here, Pennington’s motion to expand the record does not present the “rare
exception” to Rule 10(e), but falls squarely within that rule and our cases
interpreting it. There is no indication Pennington’s failure to submit the complete
transcript of her deposition to the magistrate judge resulted from error or
accident. See Shooting Star Ranch, LLC v. United States, 230 F.3d 1176, 1177
n.2 (10th Cir. 2000) (denying plaintiff’s motion to supplement the record where
plaintiff “[did] not argue that the omission . . . was the result of either error or
accident”). Pursuant to Rule 56(e)(2) of the Federal Rules of Civil Procedure, a
party opposing a properly made and supported motion for summary judgment
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“must . . . set out specific facts showing a genuine issue for trial. If the opposing
party does not so respond, summary judgment should, if appropriate, be entered
against that party.” Had Pennington wanted to raise an issue of fact, she was
required to do so in her opposition brief. Pennington was represented by counsel
and we see no reason why she should be excused from compliance with the
federal rules.
Pennington also claims the magistrate judge erred by not holding a hearing
to resolve the disputed issues of material fact. As we just noted, the judge was
not called upon to resolve issues of fact as Pennington’s arguments against
enforcement of the NG DRP were purely legal. Where, as here, there is nothing
in the record to suggest the issues presented in a summary judgment motion
cannot be addressed adequately in the form of written briefs and supporting
documents, the court is not required to hold a formal hearing. See Geear v.
Boulder Cmty. Hosp., 844 F.2d 764, 766 (10th Cir. 1988).
B. Unconscionability
Pennington claims the NG DRP is unconscionable. In support of this
argument, she seeks to rely, in part, on the arguments she made to the magistrate
judge. 5 There, she argued the agreement was unconscionable because the terms
5
Northrop Grumman contends Pennington cannot adopt the arguments she
made before the magistrate judge without specifically setting them forth in her
appellate brief. In Gaines-Tabb v. ICI Explosives, USA, we stated: “Allowing
litigants to adopt district court filings would provide an effective means of
circumventing the page limitations on briefs set forth in the appellate rules and
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were overly favorable to Northrop Grumman and she had no meaningful choice
but to agree to them because her only other option was to quit. 6 Under New
Mexico law, a finding of unconscionability requires both a procedural and
substantive showing. A contract may be unconscionable “[i]f there has been an
absence of meaningful choice on the part of one of the parties together with
contract terms which are unreasonably favorable to the other party.” Guthmann v.
LaVida Llena, 709 P.2d 675, 679 (N.M. 1985) (quotations omitted). The
magistrate judge correctly concluded Pennington established neither of these
required elements.
A contract is procedurally unconscionable “only where the inequality is so
gross that one party’s choice is effectively non-existent.” Id. The fact that
unnecessarily complicate the task of an appellate judge.” 160 F.3d 613, 624 (10th
Cir. 1998) (citations omitted). While an appellant’s pro se status does not excuse
her from the obligation to comply with the same procedural rules that govern
other litigants, see Green v. Dorrell, 969 F.2d 915, 917 (10th Cir. 1992), we will
consider the arguments Pennington made before the magistrate judge.
6
Pennington also claims the NG DRP is unconscionable because it
provides a 180-day limit for demanding arbitration and does not allow a party to
benefit from tolling that may be available under federal or state law. Pennington
did not raise this argument before the magistrate judge and we will not consider it
here. See Singleton v. Wulff, 428 U.S. 106, 120 (1976) (“It is the general rule, of
course, that a federal appellate court does not consider an issue not passed upon
below.”); Lyons v. Jefferson Bank & Trust, 994 F.2d 716, 721 (10th Cir. 1993) (to
be considered on appeal, an issue must “be presented to, considered and decided
by the trial court”) (quotations omitted). In any event, the magistrate judge
refused to consider whether Pennington’s claims were barred on account of her
failure to submit them to arbitration within the limitations period, concluding that
was a procedural question to be determined by the arbitrators.
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Northrop Grumman imposed the NG DRP as a condition of continued
employment does not render the NG DRP procedurally unconscionable. See, e.g.,
In re Halliburton Co., 80 S.W.3d 566, 572 (Tex. 2002) (“Because an employer
has a general right . . . to discharge an at-will employee, it cannot be
unconscionable, without more, merely to premise continued employment on
acceptance of new or additional employment terms.”). A contract is substantively
unconscionable only if the terms are “such as no man in his senses and not under
delusion would make on the one hand, and no honest and fair man would accept
on the other.” Guthmann, 709 P.2d at 680 (quotations omitted). The fact that the
terms of the NG DRP may favor Northrop Grumman over its employees does not
make the agreement substantively unconscionable. See, e.g., Monette v. Tinsley,
975 P.2d 361, 365 (N.M. Ct. App. 1999) (“The terms here, while imbalanced, did
not rise to a level of unconscionability.”). Unless “no honest and fair man” would
accept the NG DRP, it is not unconscionable. Pennington has failed to make the
required showing.
C. Consideration
Pennington also claims the NG DRP is not supported by “adequate
consideration.” (Appellant’s Opening Br. at 3-12.) However, as Northrop
Grumman points out, consideration is required, but in no particular measure:
“[Y]ou either have consideration or you do not, and the amount of consideration
is not an issue.” Richards v. Allianz Life Ins. Co. of N. Am., 62 P.3d 320, 325
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(N.M. Ct. App. 2002). Therefore, we will treat Pennington’s argument as
contesting the presence, not the adequacy, of consideration. Under New Mexico
law, a contract must be supported by consideration. Garcia, 918 P.2d at 10.
“Consideration consists of a promise to do something that a party is under no
legal obligation to do or to forbear from doing something he has a legal right to
do.” Piano, 107 P.3d at 14 (quotations omitted). “However . . . when a promise,
in reality, promises nothing--it is illusory, and it is not consideration.” Id.(quotations omitted).
Northrop Grumman contends consideration exists in the form of its
reciprocal agreement to arbitrate. In the employment context, a reciprocal
agreement to arbitrate can provide the requisite consideration so long as the
employer does not retain the unilateral authority to terminate or modify the
arbitration agreement once the employee’s claim has accrued. See Dumais v. Am.
Golf Corp., 299 F.3d 1216, 1219 (10th Cir. 2002) (“We join other circuits in
holding that an arbitration agreement allowing one party the unfettered right to
alter the arbitration agreement’s existence or its scope is illusory.”); Sisneros v.
Citadel Broad. Co., 142 P.3d 34, 43 (N.M. Ct. App. 2006) (holding an arbitration
agreement was not illusory because the employer and employee had mutual
obligations to arbitrate and the employer did not have the right to terminate the
arbitration agreement once an employee’s claim accrued).
The record does not reflect whether Northrop Grumman retained the
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authority to terminate or modify the NG DRP once an employee’s claim had
accrued. In any case, Pennington does not challenge the NG DRP on this ground.
Rather, she contends the NG DRP lacks consideration because employers rarely
pursue civil claims against employees and Northrop Grumman did not represent it
would seek arbitration in lieu of a criminal action against an employee.
Pennington does not cite to case law indicating an agreement to arbitrate lacks
consideration where one party is more likely to use it than another. Like the
magistrate judge, we conclude the reciprocal obligation to arbitrate provides the
requisite consideration.
D. Waiver of Federal Forum
Finally, Pennington claims the NG DRP is unenforceable because she did
not knowingly and voluntarily agree to waive a federal forum for her statutory
claims. Northrop Grumman contends Pennington waived this argument by not
raising it in opposition to its motion for summary judgment. Without citing to the
record, Pennington claims her counsel “asked for an evidentiary hearing on this
point and was not granted one.” (Appellant’s Opening Br. at 3-20.) While her
counsel did indeed make this argument in opposition to Northrop Grumman’s
motion to dismiss, he did not make it in opposition to Northrop Grumman’s
motion for summary judgment. Because the magistrate judge was not called upon
to determine this issue, we will not consider it. See Singleton, 428 U.S. at 120;
Lyons, 994 F.2d at 721.
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We DENY Pennington’s motion to expand the record and AFFIRM the
grant of summary judgment to Northrop Grumman.
ENTERED FOR THE COURT
Terrence L. O’Brien
Circuit Judge
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