Opinion
NO. 3-03-CV-3033-M.
June 9, 2004
FINDINGS AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE
Defendants Citicorp Credit Services, Inc. (USA) and Bill Morrison have filed a motion to dismiss this race, sex, and age discrimination case and to compel arbitration. For the reasons set forth herein, the motion should be granted.
I.
Plaintiff Diane Burton, an African-American female, worked in the Citicorp Project Management Office under the supervision of Bill Morrison from 2000 until May 2003. (Plf. Orig. Compl. at 3, ¶ 8 5, ¶ 17). Throughout her employment, plaintiff alleges that she was subjected to "a racist corporate culture." ( Id. at 5, ¶ 22). More particularly, plaintiff claims that she was belittled and ignored by her peers and subordinates, isolated by other managers, and passed over for promotions in favor of less qualified white males. ( Id. at 5-7, ¶¶ 23-44). Plaintiff further alleges that she was sexually harassed by Morrison, who sabotaged her work when she refused his advances. ( See id. at 8-12, ¶¶ 52-87). In May 2003, plaintiff was terminated and replaced by a younger white male employee. ( Id. at 12, ¶¶ 88-90).
By way of example, plaintiff states that a co-worker told her "the only reason Plaintiff was there was because she was black and management was afraid to fire her." (Plf. Orig. Compl. at 6, ¶ 28).
On December 22, 2003, plaintiff sued defendants in federal district court for race and age discrimination, sexual harassment, and retaliation in violation of Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e, et seq., the Age Discrimination in Employment Act, 29 U.S.C. § 621, et seq., and the Texas Commission on Human Rights Act, TEX. LAB. CODE ANN. § 21.051, et seq. Plaintiff also asserts claims for intentional infliction of emotional distress and slander. Defendants now move to dismiss this case in favor of arbitration. In support of their motion, defendants point to a company policy that requires the arbitration of all employment-related disputes. This policy, which was distributed to all employees with an explanatory memorandum, provides:
The Policy makes arbitration the required and exclusive forum for the resolution of all employment disputes based on legally protected rights (i.e., statutory, contractual or common law rights) that may arise between an employee or former employee and U.S. Consumer Group or its current and former parents, subsidiaries and affiliates and its and their current and former officers, directors, employees, and agents (and that are not resolved by the internal dispute resolution procedure), including without limitation claims, demands or actions under Title VII of the Civil Rights Act of 1964, the Civil Rights Acts of 1866 or 1991, the Age Discrimination in Employment Act of 1967,. . . .
(Def. App. at 8, 21) (emphasis added). Plaintiff counters that there is no evidence she agreed to this policy and that any agreement to arbitrate based on her continued employment fails for lack of consideration and mutuality of obligation. The issues have been fully briefed by the parties and the motion is ripe for determination.
II.
The Federal Arbitration Act provides, in pertinent part:
If any suit or proceeding be brought in any of the courts of the United States upon any issue referable to arbitration under an agreement in writing for such arbitration, the court in which such suit is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration.9 U.S.C. § 3. The language of this section is mandatory. Where the court finds that the parties agreed to arbitrate a dispute, its role is limited to enforcing that agreement. See ATT Technologies, Inc. v. Communications Workers of America, 475 U.S. 643, 649-50, 106 S.Ct. 1415, 1419, 89 L.Ed.2d 648 (1986). The decision whether to enforce an arbitration clause involves a two-step inquiry. First, the court must determine whether the parties agreed to arbitrate the dispute. Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, 473 U.S. 614, 626, 105 S.Ct. 3346, 3353, 87 L.Ed.2d 444 (1985); R.M. Perez Associates, Inc. v. Welch, 960 F.2d 534, 538 (5th Cir. 1992). The court then must consider whether any statute or policy renders the claims non-arbitrable. Mitsubishi Motors, 105 S.Ct. at 3355; R.M. Perez, 960 F.2d at 538. As neither party raises any issue regarding the second prong of this test, the sole issue before the court is whether plaintiff agreed to arbitrate her claims.
A.
It is well-settled that arbitration is a matter of contract. First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943, 115 S.Ct. 1920, 1924, 131 L.Ed.2d 985 (1995). Ordinarily, "a party cannot be required to submit to arbitration any dispute which he has not agreed to so submit." Air Line Pilots Association v. Miller, 523 U.S. 866, 876, 118 S.Ct. 1761, 1767, 140 L.Ed.2d 1070 (1998), quoting Steelworkers v. Warrior Gulf Navigation Co., 363 U.S. 574, 582, 80 S.Ct. 1347, 1353, 4 L.Ed.2d 1409 (1960). In determining whether a valid arbitration agreement exists, the court must look to the state law governing formation of contracts. 9 U.S.C. § 2; First Options, 115 S.Ct. at 1924. Under Texas law, either party in an at-will employment relationship may modify the terms of the relationship as a condition of continued employment. Jones v. Fujitsu Network Communications, Inc., 81 F. Supp.2d 688, 691 (N.D. Tex. 1999), citing Hathaway v. General Mills, Inc., 711 S.W.2d 227, 229 (Tex. 1986). When an employer notifies an employee of such a modification, the employee must either accept the new terms or quit. Hathaway, 711 S.W.2d at 229. An employee who continues working with knowledge of the change is deemed to have accepted the modification. Quinn v. EMC Corp., 109 F. Supp.2d 681, 687 (S.D. Tex. 2000); Hathaway, 711 S.W.2d at 229.
Contrary to this well-settled precedent, plaintiff maintains that her continued at-will employment does not constitute valid consideration for an agreement to arbitrate. In support of this argument, plaintiff relies on Light v. Centel Cellular Co. of Texas, in which the court stated:
At-will employees may contract with their employers on any matter except those which would limit the ability of either employer or employee to terminate the employment at will. Consideration for a promise, by either the employee or the employer in an at-will employment, cannot be dependent on a period of continued employment. Such a promise would be illusory because it fails to bind the promisor who always retains the option of discontinuing employment in lieu of performance.883 S.W.2d 642, 644-45 (Tex. 1994) (emphasis added) (footnote omitted). Although this is a correct statement of the law, the Texas Supreme Court recently clarified that this principle does not prevent an employer and employee from agreeing to arbitrate their disputes so long as both parties are mutually bound thereby. Davidson v. Webster, 128 S.W.3d 223, 228 (Tex. 2003), citing In re Halliburton Co., 80 S.W.3d 566, 569-70 (Tex. 2002), cert. denied, 123 S.Ct. 901 (2003). Stated differently, "mutual promises to submit all employment disputes to arbitration constitute sufficient consideration, because both parties [are] bound to the promises to arbitrate." Id. See also In re Jebbia, 26 S.W.3d 753, 758 (Tex.App.-Houston [14th Dist.] 2000, orig. proceeding); In re Alamo Lumber Co., 23 S.W.3d 577, 579-80 (Tex.App.-San Antonio 2000, orig. proceeding).
Plaintiff further argues that the arbitration policy lacks mutuality because Citicorp reserved the right "to revise, amend, modify or discontinue this Policy at any time in its sole discretion." (Plf. App. at 8-10, ¶¶ 26-30; see also Def. App. at 15, 30). However, as defendants correctly note, any revision or amendment to the arbitration policy could only take effect 30 days after notice to the employee. ( Id. at 15, 26). The Texas Supreme Court has upheld arbitration agreements with similar notice provisions. See Halliburton, 80 S.W.3d at 569-70 (agreement to arbitrate was not illusory because, inter alia, it required 10 days notice of any modification or termination). Moreover, the Citicorp arbitration policy specifically applies to "all employment disputes" between the employer and employee. ( Id. at 8, 21). In a footnote, the company makes clear that the policy is reciprocal in nature:
Nothing in this provision shall be construed to negate the mutuality of this agreement to arbitrate, and U.S. Consumer Group explicitly agrees to arbitrate, pursuant to this Policy, any disputed disciplinary action after it has been taken.
( Id. at 9, n. 2). Citicorp also agreed that "[t]he results of the arbitration process are final and binding on the employee and U.S. Consumer Group." ( Id. at 9, 21).
The court concludes that the reciprocal promises by plaintiff and Citicorp to arbitrate any employment disputes constitute adequate consideration to support the arbitration agreement. Therefore, the only remaining issue is whether plaintiff received notice of the arbitration policy.
B.
Citicorp implemented its Employment Arbitration Policy in October 2001. (Def. App. at 4, ¶ 3). At that time, all employees were given a copy of the policy and an explanatory memorandum. This memo states:
Effective immediately, the U.S. Consumer Group . . . is implementing a new Dispute Resolution Policy and Employment Arbitration Policy. The full Dispute Resolution Policy ("DRP") and Employment Arbitration Policy ("Arbitration Policy") are attached to this memorandum. You are urged to read each of these in its entirety.
* * * *
In the unusual situation when the DRP does not fully resolve an employment-related dispute, you must request external binding arbitration in accordance with the Arbitration Policy if you wish to pursue the matter further.
Pursuant to the Arbitration Policy, you and the Company agree to make arbitration the required and exclusive forum for resolution of all employment-related disputes that are based on legally protected rights. Arbitration is an essential element of your employment relationship and a condition of employment. Please read the entire Arbitration Policy for full details about the types of claims that may be brought in arbitration and the entire process. Your continued employment will constitute acceptance of the Arbitration Policy.
* * * *
These polices are effective as of the date of this memorandum. If you have any questions, please contact your Human Resources representative.
( Id. at 6) (emphases in original). A distribution list shows that plaintiff received copies of these documents on October 19, 2001. ( Id. at 16). The arbitration policy was subsequently incorporated into Citicorp's 2002 Employee Handbook. Plaintiff signed a form acknowledging receipt of the handbook on July 18, 2002. ( Id. at 27).
Although plaintiff does not deny receiving copies of the arbitration policy and explanatory memorandum, she objects to the distribution list as inadmissible hearsay. The court finds that the distribution list is admissible as a business record. The evidence shows that Coleen Burke, a Human Resources employee, directed Linda Parrish, a department manager, to distribute copies of the arbitration policy and explanatory memo to all employees in the Project Management Office. Parrish noted the date the documents were given to each employee, including plaintiff, and initialed the distribution list. After the arbitration policy and explanatory memo were distributed, the list was returned to the Human Resources Department. ( See Def. App. at 4, ¶ 5 Exh. D; Def. Supp. App. at 2, ¶ 5). This is sufficient to support a finding that the distribution list is a "record of regularly conducted activity." See FED. R. EVID. 803(6).
Even if plaintiff did not receive notice of the arbitration policy in 2001, she clearly received a copy of the 2002 Employee Handbook which contains a nearly identical version of the policy. Plaintiff contends that the receipt form she signed does not manifest an agreement to be bound by the terms of the arbitration policy. However, that document states: " Important: I understand that this Handbook contains a provision that requires me to submit employment-related disputes to binding arbitration . . . I have read that provision carefully." (Def. App. at 27) (emphasis in original). Moreover, whether plaintiff signed any particular document is irrelevant. See Valero Refining, Inc. v. M/T Lauberhorn, 813 F.2d 60, 64 (5th Cir. 1987). She manifested her acceptance as a matter of law by continuing to work for Citicorp after notification that the arbitration policy would be implemented. Thus, defendants have established that plaintiff was notified of the arbitration policy and "kn[ew] the nature of the changes and the certainty of their imposition." Jones, 81 F. Supp.2d at 691; Hathaway, 711 S.W.2d at 229.
C.
A district court may dismiss, rather than stay, an action where all issues are properly subject to arbitration. Fedmet Corp. v. M/V Buyalyk, 194 F.3d 674, 678 (5th Cir. 1999); Alford v. Dean Witter Reynolds, Inc., 975 F.2d 1161, 1164 (5th Cir. 1992). Here, all claims asserted by plaintiff fall within the scope of the arbitration policy. The only possible role a court could have would be to review the arbitration award once the proceedings are concluded. See Alford, 975 F.2d at 1164. Under these circumstances, the case should be dismissed rather than stayed.RECOMMENDATION
Defendants' motion to dismiss and to compel arbitration should be granted. This case should be dismissed without prejudice in favor of arbitration.
In their reply brief, defendants seek attorney's fees and costs incurred in bringing this motion to dismiss and to compel arbitration. However, defendants fail to present any argument or authority to support their entitlement to attorney's fees and expenses. Nor does the arbitration agreement appear to contemplate such relief. ( See Def. App. at 14, ¶ 24(e)) ("Each side shall pay its own legal fees and expenses subject to Paragraph 20(b) above.").