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Nowak v. Usvets Inc.

United States District Court, D. Arizona

April 1, 2014

Ronald R Nowak, Plaintiff,
USVETS Incorporated, Defendant.


DAVID G. CAMPBELL, District Judge.

Defendant U.S. Veterans Initiative has filed a motion to dismiss Plaintiff Ronald Nowak's complaint with prejudice pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure or, in the alternative, to compel arbitration. Doc. 24. The motion is fully briefed and no party has requested oral argument. For the reasons that follow, the Court will grant the motion, dismiss this action, and compel arbitration.

I. Background.

Plaintiff was employed by Defendant between January 16, 2010 and January 26, 2011. Doc. 1, ¶¶ 11, 39. Plaintiff alleges that in October 2010 he "became aware of disparate treatment of a female employee based on her race." Id., ¶ 19. He contends that his "supervisor regularly made inappropriate comments in the workplace about women based on their sex, and minorities and foreigners based on their race and national origin." Id., ¶ 25. Plaintiff further alleges that he "met with the site director and expressed his concerns about the jokes and comments" in November 2010. Id., ¶ 29. After the meeting, Plaintiff contacted the EEOC and filed a complaint. Id., ¶¶ 31-32. Upon receiving notification of the EEOC complaint, Plaintiff asserts that Defendant "began targeting [him] for termination and continued targeting [him] for termination." Id., ¶ 34. On November 16, 2010, Plaintiff attended a meeting with his supervisor and site director during which he alleges that both individuals "berated, threatened, harassed, and chastised [Plaintiff] for contacting the EEOC[.]" Id., ¶ 36. After this meeting, Plaintiff suffered heart palpitations and sought treatment at a local hospital. Id., ¶¶ 37-38.

Plaintiff again met with the site director and "one of defendant's top executives" on January 22, 2011, and contends that he was told that he "would be unable to continue working for the [D]efendant if [he] continued to pursue his EEOC complaint" ( id., ¶ 42), and that the executive "repeatedly urged" him to abandon the complaint ( id., ¶ 43). Plaintiff was placed on suspension during the meeting and was terminated four days later on January 26, 2011. Id., ¶¶ 45-46. Plaintiff alleges that his termination was "retaliation for complaints about disparate and discriminatory treatment of co-workers based on national origin" in violation of Title VII of the Civil Rights Act of 1964. Id., ¶ 61. Defendant has moved to dismiss this action or, in the alternative, compel arbitration on the ground that its Employee Handbook, which Plaintiff signed, "requires mandatory binding arbitration for all employees to resolve all employment-related disputes." Doc. 24 at 2.

II. Legal Standard.

Under the Federal Arbitration Act, "[a] written provision in... a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof, ... shall be valid, irrevocable, and enforceable[.]" 9 U.S.C. § 2; see, e.g., Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 113-19 (2001) (holding that FAA applies to employment contracts except those of transportation workers) (citing 9 U.S.C. §§ 1-2); Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000); Tracer Research Corp. v. Nat'l Envtl. Servs. Co., 42 F.3d 1292, 1294 (9th Cir. 1994), cert. dismissed, 515 U.S. 1187 (1995). "Although [a] contract provides that [state] law will govern the contract's construction, the scope of the arbitration clause is governed by federal law." Tracer Research Corp, 42 F.3d at 1294 (citing Mediterranean Enters., Inc. v. Ssangyong Corp., 708 F.2d 1458, 1463 (9th Cir. 1983)); see Circuit City Stores, 279 F.3d at 892 (holding that FAA "not only placed arbitration agreements on equal footing with other contracts, but established... a federal common law of arbitrability which preempts state law"); Simula, Inc. v. Autoliv, Inc., 175 F.3d 716, 719 (9th Cir. 1999) ("Federal substantive law governs the question of arbitrability."); Chiron Corp., 207 F.3d at 1130-31 (holding that "district court correctly found that the federal law of arbitrability under the FAA governs the allocation of authority between courts and arbitrators" despite arbitration agreement's choice-of-law provision).[1]

"Notwithstanding the federal policy favoring it, arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit.'" Tracer Research Corp, 42 F.3d at 1294 (quoting United Steelworkers of Am. v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582 (1960)); see French v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 784 F.2d 902, 908 (9th Cir. 1986). Where the arbitrability of a dispute is in question, a court must look to the terms of the contract. See Chiron Corp., 207 F.3d at 1130. "Any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration.'" Simula, 175 F.3d at 719 (quoting Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 20 (1983)); see French, 784 F.2d at 908.

A court "cannot expand the parties' agreement to arbitrate in order to achieve greater efficiency [and] the [FAA] requires piecemeal resolution when necessary to give effect to an arbitration agreement.'" Tracer Research Corp, 42 F.3d at 1294 (quoting Moses H. Cone Mem'l Hosp., 460 U.S. at 24-25) (emphasis in original). "[T]he judicial inquiry... must be strictly confined to the question whether the reluctant party did agree to arbitrate[.]" United Steelworkers, 363 U.S. at 582. "The court's role under the [FAA] is therefore limited to determining (1) whether a valid agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute at issue." Chiron Corp., 207 F.3d at 1130 (citing Simula, 175 F.3d at 719-20; Republic of Nicar. v. Standard Fruit Co., 937 F.2d 469, 477-78 (9th Cir. 1991)).

III. Analysis.

The arbitration provision in this case states that "arbitration shall be the exclusive method for resolving any employment related dispute, and both [Defendant] and the employee are giving up any right that they might otherwise have to have a judge or jury decide any such employment related dispute." Doc. 24 at. 5. Plaintiff does not dispute that he signed the Employee Handbook. He argues, however, that he "had no part in drafting the purported arbitration agreement, " "no opportunity to negotiate the terms or existence of the arbitration agreement, " and that it was presented to him on a "take-it-or-leave-it" basis. Doc. 25 at 2. He argues that the arbitration agreement is not enforceable.

A. Choice of Law.

Plaintiff contends that California law governs the arbitration agreement because the Employee Handbook states that disputes "shall be submitted and resolved by final and binding arbitration as provided for by the California Arbitration Act, California Code of Civil Procedure, Section 1280, et seq. " Id. at 3. He cites Engalla v. Permanente Medical Group, 938 P.2d, 903, 915 (Cal. 1997), for the proposition that "[w]hen California law is expressly incorporated into the agreement in question, ' it governs the adjudication of any disputes arising from that agreement.'" Id. Defendant rejoins that the "Agreement is silent as to substantive law, " and that Arizona's choice of law rules therefore apply. Doc. 26 at 2.

No choice of law provision appears in the Employee Handbook. The Court must therefore conduct a choice of law analysis. "A federal court ordinarily applies the choice-of-law rules of the state in which it sits." Consul Ltd. v. Solide Enter. Inc., 802 F.3d 1143, 1146 (9th Cir. 1986) (citing Piper Aircraft Co. v. Reyno, 454 U.S. 235, 243 n.8 (1981)). Because this Court sits in Arizona, it must apply Arizona's choice-of-law rules. Arizona has adopted the "most significant relationship" test set forth in the Restatement (Second) of Conflict of Laws. See Bates v. Super. Ct., 749 P.2d 1367, 1369 (Ariz. 1988); Garcia v. General Motors Corp., ...

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