Gregory Toney v. EQT Corportation and Daniel Crowe

STATE OF WEST VIRGINIA
SUPREME COURT OF APPEALS
Gregory Toney, FILED
Plaintiff Below, Petitioner June 13, 2014
RORY L. PERRY II, CLERK
SUPREME COURT OF APPEALS
vs) No. 13-1101 (Kanawha County 12-C-834) OF WEST VIRGINIA
EQT Corporation, and Daniel Crowe, individually,
Defendants Below, Respondents
MEMORANDUM DECISION
Petitioner Gregory Toney, by counsel Mark L. French and Sean W. Cook, appeals the
Circuit Court of Kanawha County’s “Order Granting Defendants’ Renewed Motion to Dismiss
and Compel Arbitration and Denying Plaintiff’s Motion for Stay of Arbitration,” entered on
August 29, 2013. Respondents EQT Corporation (“EQT”) and Daniel Crowe, by counsel Kevin
L. Carr, Lewis G. Brewer, and Ellen J. Vance, filed a response. Petitioner filed a reply.
This Court has considered the parties’ briefs and the record on appeal. The facts and legal
arguments are adequately presented, and the decisional process would not be significantly aided
by oral argument. Upon consideration of the standard of review, the briefs, and the record
presented, the Court finds no substantial question of law and no prejudicial error. For these
reasons, a memorandum decision affirming the circuit court’s order is appropriate under Rule 21
of the Rules of Appellate Procedure.
Facts and Procedural Background
Petitioner was employed by EQT for several years prior to his termination in January of
2012. Respondent Daniel Crowe had served as petitioner’s immediate supervisor since 2008. On
May 9, 2012, following his termination from employment, petitioner filed a civil action against
respondents alleging age discrimination, hostile work environment based on age, retaliatory
discharge, hostile work environment and unlawful retaliation based on petitioner reporting
alleged violations of the West Virginia Human Rights Act, breach of express and/or implied
employment contract, breach of implied covenant of good faith and fair dealing in employment,
violation of West Virginia Wage Payment and Collection Act, and intentional and reckless
infliction of emotional distress.
On April 22, 2013, respondents filed a renewed1 motion to dismiss petitioner’s civil
action and to compel arbitration based upon an Alternative Dispute Resolution Agreement
1
Respondents renewed motion to dismiss followed (1) the circuit court’s denial of their
original motion to dismiss on October 16, 2012, in which the circuit court determined that
discovery was necessary on the issue of whether petitioner received consideration for signing the
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(“ADR Agreement”) executed between petitioner and respondents on March 7, 2007. The ADR
Agreement covered “any claim that is related in any way to an individual’s employment with
Equitable [now EQT] that is recognized in the federal or state courts where the employee
works,” with certain exclusions not relevant to this case.2 Petitioner filed a response to
respondents’ motion, and the circuit court held a hearing thereon on August 13, 2013.3 The
circuit court granted respondents’ motion and compelled arbitration by order entered on August
29, 2013. Petitioner now appeals the August 29, 2013, order to this Court.
In compelling arbitration,4 the circuit court found that by signing the ADR Agreement,
petitioner agreed to submit specified employment related disputes to arbitration, and EQT
likewise became (1) mutually obligated to be bound by the result of arbitration, and (2) mutually
obligated to submit specified disputes it had with petitioner to arbitration. Additionally, in
exchange for signing the ADR Agreement in March 2007, petitioner became eligible to
participate in EQT’s 2007 Short Term Incentive Plan (“STIP”) and future STIPs offered by EQT.
The STIP is an incentive program that provides employees who meet certain performance goals
with cash bonuses. Had petitioner not signed the ADR Agreement, he would not have been
ADR Agreement; (2) this Court’s refusal of respondents’ petition for writ of prohibition on
November 14, 2012, where respondents sought to prohibit discovery beyond the arbitration issue
and to proceed summarily to that issue; and (3) the United States District Court for Southern
District of West Virginia’s denial of respondents’ petition seeking to compel arbitration on April
26, 2013, on the basis of judicial abstention. These prior rulings did not rule upon the
enforceability of the ADR Agreement.
2
In addition to requiring both EQT and petitioner to submit all employment disputes to a
neutral arbitrator, the ADR Agreement also contained language whereby petitioner expressly
acknowledged that the agreement did not change his status as an “at-will” employee who could
be terminated with or without cause or with or without notice.
3
According to the circuit court, both parties indicated that no further discovery was
required on the issue of the enforceability of the ADR Agreement.
4
In Syllabus Point 2 of State ex rel. TD Ameritrade, Inc. v. Kaufman, 225 W.Va. 250,
692 S.E.2d 293 (2010), this Court held that
[w]hen a trial court is required to rule upon a motion to compel arbitration
pursuant to the Federal Arbitration Act, 9 U.S.C. §§ 1–307 (2006), the authority
of the trial court is limited to determining the threshold issues of (1) whether a
valid arbitration agreement exists between the parties; and (2) whether the claims
averred by the plaintiff fall within the substantive scope of that arbitration
agreement.
In the present case, the parties do not dispute that petitioner’s claims fall within the substantive
scope of the ADR Agreement. The issue here is whether the ADR Agreement is valid.
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eligible to participate in the 2007 STIP or future STIPs.5 However, the circuit court found that
petitioner would have continued his employment with EQT had he refused to sign, but he would
not have been eligible to receive the bonuses provided by the STIP.
At the time petitioner signed the ADR Agreement, EQT had already determined that he
was eligible to receive a cash bonus pursuant to the 2007 STIP. The only remaining eligibility
requirement for petitioner’s participation in the STIP was his execution of the ADR Agreement.
As a direct result of his signing the ADR Agreement, petitioner received a gross bonus of $8,475
under the 2007 STIP. The circuit court also found that because petitioner remained eligible for
subsequent STIPs as a result of his signing the ADR Agreement in 2007, he received additional
gross bonuses totaling $59,035 for the subsequent years until his termination in 2012.
The circuit court concluded that because petitioner’s claims in his civil action fell within
the substantive scope of the ADR Agreement, pursuant to the Federal Arbitration Act, such
claims must be arbitrated according to the terms of the ADR Agreement. The circuit court
concluded that because both EQT and petitioner agreed to submit their respective “employment
disputes” to arbitration and to be bound by the results thereof, petitioner had been provided
adequate consideration supporting the ADR Agreement. The circuit court further concluded that
participation in the STIPs, and the additional compensation petitioner received as a result of his
participation, constituted additional consideration supporting the ADR Agreement. Because
petitioner participated in the STIP in 2007, continued to participate until his termination, and
received substantial additional compensation as a result of his participation, the court concluded
that the consideration provided by EQT was not illusory. Lastly, the circuit court determined that
the ADR Agreement was neither procedurally nor substantively unconscionable. Petitioner now
appeals to this Court and challenges the circuit court’s determination that a valid arbitration
agreement existed between the parties.
Discussion
The standard of review is set forth in Syllabus Point 4 of McGraw v. American Tobacco
Co., et al., 224 W.Va. 211, 681 S.E.2d 96 (2009), which states as follows:
This Court will preclude enforcement of a circuit court's order compelling
arbitration only after a de novo review of the circuit court's legal determinations
leads to the inescapable conclusion that the circuit court clearly erred, as a matter
of law, in directing that a matter be arbitrated or that the circuit court's order
constitutes a clear-cut, legal error plainly in contravention of a clear statutory,
constitutional, or common law mandate.
Moreover, whether an arbitration agreement constitutes a valid contract is a matter of
state contract law. See State ex rel. Clites v. Clawges, 224 W.Va. 299, 305, 685 S.E.2d 693, 699
(2009); Southland Corp. v. Keating, 465 U.S. 1, 16 (1984). In West Virginia, the fundamental
elements of a legal contract are an offer and acceptance supported by consideration. See Syl. Pt.
5
Petitioner participated in the STIP prior to 2007. However, it was not until 2007 that
EQT required employees execute the ADR Agreement to be eligible to participate.
3
1, First Nat’l Bank of Gallipolis v. Marietta Mfg. Co., 151 W.Va. 636, 153 S.E.2d 172 (1967).
This Court has held that
[i]t is elementary that mutuality of assent is an essential element of all contracts.
Wheeling Downs Racing Ass’n v. West Virginia Sportservice, Inc., 158 W.Va.
935, 216 S.E.2d 234 (1975). In order for this mutuality to exist, it is necessary that
there be a proposal or offer on the part of one party and an acceptance on the part
of the other. Both the offer and acceptance may be by word, act or conduct that
evince the intention of the parties to contract. That their minds have met may be
shown by direct evidence of an actual agreement or by indirect evidence through
facts from which an agreement may be implied. See Lacey v. Cardwell, 216 Va.
212, 217 S.E.2d 835 (1975); Charbonnages de France v. Smith, 597 F.2d 406,
415–416 (4th Cir.1979).
Ways v. Imation Enters. Corp., 214 W.Va. 305, 313, 589 S.E.2d 36, 44 (2003). In addition, in
Syllabus Points three and four of Kirby v. Lion Enterprises, Inc., __ W.Va. __, 756 S.E.2d 493(2014), we held as follows:
“The formation of a contract with multiple clauses only requires consideration for
the entire contract, and not for each individual clause. So long as the overall
contract is supported by sufficient consideration, there is no requirement of
consideration for each promise within the contract, or of ‘mutuality of obligation,’
in order for a contract to be formed.” Syl. Pt. 6, Dan Ryan Builders, Inc. v.
Nelson, 230 W.Va. 281, 737 S.E.2d 550 (2012).
The law enunciated in syllabus point six of Dan Ryan Builders, Inc. v. Nelson,
230 W.Va. 281, 737 S.E.2d 550 (2012), that “the formation of a contract with
multiple clauses only requires consideration for the entire contract, and not for
each individual clause” modified the law set forth in Board of Education v. W.
Harley Miller, Inc., 160 W.Va. 473, 236 S.E.2d 439 (1977), to the extent that an
arbitration clause in a contract need not be specifically “bargained for.”
With the above case law in mind, including our recent decision in Kirby, we now address
petitioner’s appeal, in which he raises three assignments of error. First, he argues that the ADR
Agreement is unenforceable for lack of adequate consideration. Because he was enrolled in the
STIP prior to 2007, petitioner contends that he did not receive any new consideration when he
signed the ADR Agreement and gave up his right to pursue his grievances in court. Citing
Williston on Contracts § 7:7, *2, petitioner states that “the doctrine that past consideration is no
consideration represents the overwhelming weight of authority and has represented the weight of
authority since the early common law.” However, by focusing so heavily on the STIP, petitioner
ignores the fact that the ADR Agreement contains mutual commitments by EQT and petitioner to
submit their respective employment disputes to binding arbitration. “A valuable consideration
may consist either in some right, interest, profit, or benefit accruing to the one party or some
forbearance, detriment, loss or responsibility given, suffered, or undertaken by the other.” Syl.
Pt. 1, Tabler v. Hoult, 110 W.Va. 542, 158 S.E. 782 (1931). In the present case, the circuit court
was correct in finding that the mutual commitments to arbitrate alone constitute sufficient
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consideration to support the contract. Accordingly, we reject petitioner’s first assignment of
error.
Focusing again on only the STIP, petitioner argues in his second assignment of error that
the ADR Agreement is unenforceable because participation in the STIP was based on an
“illusory promise.” Petitioner points to the United States Court of Appeals for the Fourth Circuit,
which addressed illusory promises as a deficient form of consideration and held that
A promise becomes consideration for another promise only when it constitutes a
binding obligation. Unlike a binding obligation, an “illusory promise” appears to
be a promise, but it does not actually bind or obligate the promisor to anything.
Because an illusory promise is not binding on the promisor, an illusory promise
cannot constitute consideration.
Hill v. Peoplesoft USA, Inc., 412 F.3d 540, 543 (4th Cir. 2005) (internal citations omitted).
Petitioner contends that EQT’s promise that petitioner would be eligible for STIPs is an illusory
promise because the income gained from the STIP was not guaranteed, but rather is based on
EQT’s “complete and sole discretion.”
We reject petitioner’s second assignment of error for much the same reason as we
rejected his first. We believe the ADR Agreement is supported by valid consideration inasmuch
as it contains mutual commitments by the parties to arbitrate their respective disputes. However,
even if we examine the alleged illusory nature of eligibility in the STIP, we disagree with
petitioner. The circuit court correctly found that petitioner received valuable consideration – over
$8,000 in gross pay – as a direct result of accepting the ADR Agreement in 2007. At that time,
petitioner was aware that he would receive this bonus pursuant to the 2007 STIP; all that was
required was his execution of the ADR Agreement. He chose to sign and received the bonus.
There was nothing illusory about this promise at the time it was made.
As for the STIPs in subsequent years, the record shows that they were never a condition
of employment or an entitlement for EQT employees. As such, EQT did not promise in 2007 that
it would continue the STIPs in perpetuity, but rather, that employees who executed the ADR
Agreement would remain eligible to participate in future STIPs so long as they met certain
performance criteria. We believe EQT’s promise of future eligibility constitutes a statement of a
future contingency, not a meaningless gesture, or an illusory promise. Cf. Syl. Pt. 6, State ex rel.
Saylor v. Wilkes, 216 W.Va. 766, 613 S.E.2d 914 (2005) (“An employer’s promise merely to
review an employment application in exchange for a job applicant’s promise to submit
employment-related disputes not associated with the application process to arbitration does not
represent consideration sufficient to create an enforceable contract to arbitrate such employment
disputes.”).
Petitioner’s final assignment of error is that the ADR Agreement is an unconscionable
contract of adhesion, and thus, is unenforceable. In Syllabus Point 5 of Kirby, we held that
“The doctrine of unconscionability means that, because of an overall and
gross imbalance, one-sidedness or lop-sidedness in a contract, a court may be
5
justified in refusing to enforce the contract as written. The concept of
unconscionability must be applied in a flexible manner, taking into consideration
all of the facts and circumstances of a particular case.” Syl. Pt. 12, Brown ex rel.
Brown v. Genesis Healthcare Corp., 228 W.Va. 646, 724 S.E.2d 250 (2011),
overruled in part on other grounds sub nom. Marmet Health Care Ctr., Inc. v.
Brown, ––– U.S. ––––, 132 S.Ct. 1201, 182 L.Ed.2d 42 (2012).
__ W.Va. __, 756 S.E.2d. 493 (2014). Moreover, petitioner must establish both procedural and
substantive unconscionability in order to invalidate the agreement. See Dan Ryan Builders, Inc.
v. Nelson, 230 W.Va. 281, 737 S.E.2d 550 (2012); State ex rel. Johnson Controls, Inc. v. Tucker,
229 W.Va. 486, 729 S.E.2d 808 (2012).
With respect to procedural unconscionability, this Court has held:
Procedural unconscionability is concerned with inequities, improprieties,
or unfairness in the bargaining process and formation of the contract. Procedural
unconscionability involves a variety of inadequacies that results in the lack of a
real and voluntary meeting of the minds of the parties, considering all the
circumstances surrounding the transaction. These inadequacies include, but are
not limited to, the age, literacy, or lack of sophistication of a party; hidden or
unduly complex contract terms; the adhesive nature of the contract; and the
manner and setting in which the contract was formed, including whether each
party had a reasonable opportunity to understand the terms of the contract.
Syl. Pt. 17, Brown ex rel. Brown v. Genesis Healthcare Corp., 228 W.Va. 646, 724 S.E.2d 250(2011). The record in the present case reveals that petitioner is a high school graduate; graduated
from the State Police Academy; earned an associate degree as a petroleum engineer; and held a
responsible position with EQT as an assistant superintendent in pipeline operations.
Additionally, the evidence demonstrates that, prior to signing the ADR Agreement, petitioner
had the opportunity to ask questions of EQT’s human resources department.6 There is simply
nothing in the record to indicate procedural unconcionability.
Substantive unconscionablility involves unfairness in the contract itself
and whether a contract term is one-sided and will have an overly harsh effect on
the disadvantaged party. The factors to be weighed in assessing substantive
unconscionability vary with the content of the agreement. Generally, courts
should consider the commercial reasonableness of the contract terms, the purpose
and effect of the terms, the allocation of the risks between the parties, and public
policy concerns.
Syl. Pt. 19, id. Here, petitioner simply repackages his arguments in support of his first two
assignments of error regarding an alleged lack of consideration, which we have rejected above.
We do not find the ADR Agreement to be substantively unconscionable.
6
Petitioner admitted that he did not read the ADR Agreement prior to signing it, but
knew that he needed to sign in order to participate in the STIP.
6
For the foregoing reasons, we affirm.
Affirmed.
ISSUED: June 13, 2014
CONCURRED IN BY:
Justice Margaret L. Workman
Justice Menis E. Ketchum
Justice Allen H. Loughry II
DISSENTING:
Chief Justice Robin Jean Davis
Justice Brent D. Benjamin
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