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Stirrup v. Education Management LLC

United States District Court, D. Arizona

September 16, 2014

Joi N. Stirrup, Plaintiff,
Education Management LLC, et al., Defendants.


CHARLES R. PYLE, Magistrate Judge.

The Magistrate Judge has jurisdiction over this matter pursuant to the parties' consent. See 28 U.S.C. § 636(c).

Pending before the Court are: (1) Defendants' Motion to Compel Arbitration and Stay These Proceedings Pending Arbitration (Doc. 10); (2) Plaintiff's Combined Response to Motion to Compel Arbitration and Stay These Proceedings and Motion for Partial Summary Judgment (Doc. 12); and (3) Plaintiff's Second Motion for Partial Summary Judgment and Supplemental Response to Defendants' Motion to Compel Arbitration (Doc. 23). The parties have also filed supplemental briefing regarding newly decided cases. (Docs. 25, 26, 31, 32). On August 11, 2014, the pending motions came on for oral argument. For the following reasons, the Court denies Defendants' Motion to Compel Arbitration and Stay These Proceedings Pending Arbitration and denies Plaintiff's Motions for Partial Summary Judgment.


Plaintiff Joi Stirrup alleges discrimination in the form of constructive discharge from her employment in violation of the False Claims Act, 31 U.S.C. § 3730(h), and wrongful termination in violation of A.R.S. § 23-1501(A)(3)(c)(i), (ii). (Complaint (Doc. 1), &6). Stirrup alleges that she had been employed by Defendants Education Management, LLC, and Education Management Corporation (collectively referred to as "EM") from December 2008 until the date of her constructive discharge in May 2013. ( Id. at &&1-5, 10). At the time of her discharge, Stirrup was employed as the registrar at The Art Institute of Tucson ("AiTU"), which is owned and managed by EM. ( Id. at &&5, 11).

Stirrup alleges that while working at AiTU, she came to suspect that EM was not documenting or reporting the cancellations of newly enrolled students in order to keep: (1) tuition payments from lenders whose loans were insured by the U.S. government and/or (2) the students' Pell grant funds; and/or (3) benefits paid for the students by the Department of Veterans Affairs or the Arizona Department of Economic Security, "all...of which EM was not entitled to receive or keep when a student timely exercised their right of cancellation." ( Id. at &13). Stirrup further alleges that failure to report that a student withdrew, unlawfully increased the amount of federal and state funding EM received. ( Id. at ¶15; see also id. at && 18, 19 (citing two alleged instances of such conduct that Stirrup learned about in February 2013)). Stirrup also alleges that EM overstated "the schedules or case loads of some AiTU students in order to obtain more federally insured tuition money and federally funded Pell grants." ( Id. at &17),

Stirrup alleges that she spoke to superiors about correcting records regarding the conduct described above. ( Id. at &20). Stirrup alleges that her superiors denied wrongdoing and acted toward her with "hostility, which increased to the point where her working conditions became intolerable by May 14, 2013, and she was compelled to resign on that day." ( Id .; see also id. at &21 (describing alleged retaliatory conduct)).


EM seeks to compel arbitration of Stirrup's claims and to stay these proceedings pending arbitration. EM argues that in October 2012, Stirrup agreed, pursuant to EM's "Alternative Dispute Resolution Policy" ("ADR Policy"), to arbitrate claims of employment discrimination, harassment, retaliation, or wrongful termination. (Doc. 10, p.1).

In Response, Stirrup filed a combined Opposition to Defendants' Motion and a Motion for Partial Summary Judgment ("MPSJ"). (Doc. 12). Stirrup asserts that she never entered into an arbitration agreement with EM and she was not aware of the ADR Policy until August 2013, several months after her constructive discharge. (MPSJ, p. 3).

After the Motion to Compel Arbitration and MPSJ were briefed, the Ninth Circuit decided Davis v. Nordstrom, Inc., 755 F.3d 1089 (9th Cir. 2014) and the Court requested supplemental briefing in light of Davis. ( See Docs. 22, 25, 26). After oral argument, Stirrup filed a notice of Supplemental Authority Re First Motion for Partial Summary Judgment (Doc. 31), discussing the recent Ninth Circuit decision in Nguyen v. Barnes & Noble, Inc., ___ F.3d. ___, 2014 WL 4056549 (9th Cir. Aug. 18, 2014), and EM filed a Response to Plaintiff's Supplemental Authority (Doc. 32).


"The Federal Arbitration Act ("FAA"), 9 U.S.C. ' 1, et seq. reflects a liberal policy in favor of arbitration.'" Davis, 755 F.3d at 1092 (quoting AT&T Mobility LLC v. Concepcion, ___ U.S. ___, 131 S.Ct. 1740 (2011)). It is well-settled that "arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which [s]he has not agreed so to submit.'" Samson v. Nama Holdings, LLC, 637 F.3d 915, 923 (9th Cir. 2011) (quoting Howsam v. Dean Witter Reynolds, 537 U.S. 79, 83 (2002)); see also Davis, 755 F.3d at 1092 (a contract to arbitrate will not be inferred absent a clear agreement). Further, the "district court's role under the [FAA] limited to determining (1) whether a valid agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute at issue. If the response is affirmative on both counts, then the Act requires the court to enforce the arbitration agreement in accordance with its terms." Samson, 637 F.3d at 923-24 (quoting Chiron Corp. v. Ortho Diagnostic Systems, Inc., 207 F.3d 1126, 1130 (9th Cir.2000)).

"A motion to compel arbitration is decided according to the standard used by district courts in resolving summary judgment motions pursuant to Rule 56. Fed.R.Civ.P." Coup v. The Scottsdale Plaza Resort, LLC, 823 F.Supp.2d 931, 939 (D. Ariz. 2011) (citations omitted). "If there is doubt as to whether such an agreement exists, the matter, upon a proper and timely demand, should be submitted to a jury.'" Id. (quoting Three Valleys Mun. Water Dist. v. E.F. Hutton & Co., Inc., 925 F.2d 1136, 1141 (9th Cir.1991)). Thus, "[o]nly when there is no genuine issue of fact concerning the formation of the agreement should the court decide as a matter of law that the parties did or did not enter into such an agreement.'" Id. ( quoting Three Valleys, 925 F.2d at 1141); see also Interbras Cayman Co. v. Orient Victory Shipping, Co., 663 F.2d 4, 7 (2d Cir. 1981) ("To make a genuine issue entitling the plaintiff to a trial by jury, an unequivocal denial that the agreement had been made was needed, and some evidence should have been produced to substantiate the denial."). Where there is a question of fact, and the party alleged to be in default of the arbitration agreement requests a jury trial, the matter shall be decided by jury. See 9 U.S.C. § 4; see also Simpson v. Inter-Con Security Sys., Inc., 2013 WL 1966145 (W.D. Wash. May 10, 2013) (the court decides the question of whether the parties agreed to arbitrate on summary judgment if there is no dispute of material fact, otherwise the court conducts a jury or bench trial).[1]

Summary judgment is appropriate when there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). The party seeking summary judgment "bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of [the record]...which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The nonmoving party's evidence is presumed true and all inferences are to be drawn in the light most favorable to that party. Eisenberg v. Insurance Co. of North Amer., 815 F.2d 1285, 1289 (9th Cir. 1987).

Only disputes over facts that might affect the outcome of the suit will prevent the entry of summary judgment, and the disputed evidence must be "such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Thus, if the record taken as a whole "could not lead a rational trier of fact to find for the nonmoving party, " summary judgment is warranted. Miller v. Glenn Miller Prods., Inc., 454 F.3d 975, 988 (9th Cir.2006) (quoting Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)). If the burden of persuasion at trial would be on the nonmoving party, the movant may carry its initial burden of production under Rule 56(c) by producing, "evidence negating an essential element of the nonmoving party's claim or defense..., " or by showing, after suitable discovery, that the "nonmoving party does not have enough evidence of an essential element of its claim or defense to carry its ultimate burden of persuasion at trial." Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1105-1106 (9th Cir. 2000).

Because the summary judgment standard applies to the parties' respective motions, the Court, in essence, is resolving cross-motions for summary judgment. The Ninth Circuit instructs that "[w]hen parties file cross-motions for summary judgment, we consider each motion on its merits. American Tower Corp. v. City of San Diego, ___ F.3d. ___, 2014 WL 3953765, *3 (9th Cir. Aug. 14, 2014) (citing Fair Housing Council of Riverside County, Inc. v. Riverside Two, 249 F.3d 1132, 1136 (9th Cir. 2001)). Further, "the district court [is] required to review the evidence properly submitted in support of [plaintiff's cross-motion for summary judgment] as to determine whether [plaintiff] presented an issue of material fact precluding summary judgment in favor of Defendants." Fair Housing Council of Riverside County, Inc., 249 F.3d at 1135 (footnote omitted); see also id. at 1134 ("We hold that, when simultaneous cross-motions for summary judgment on the same claim are before the court, the court must consider the appropriate evidentiary material identified and submitted in support of both motions, and in opposition to both motions, before ruling on each of them."); Walters v. Odyssey Healthcare Management Long Term Disability Plan, 2014 WL 4371284, *3 (D. Ariz. Sept. 4, 2014) ("when multiple parties submit cross-motions for summary judgment, the Court considers each motion on its own merits but must consider all of the evidence presented in determining whether a genuine issue of material fact exists.").

EVIDENCE BEFORE THE COURT. On October 3, 2012, almost 4 years after Plaintiff began employment with EM, an e-mail was sent to employees notifying them of the adoption of the ADR Policy and providing a link to the Policy as follows:

[EM] has implemented an Alternative Dispute Resolution Policy[2] to promptly and fairly address all work-related disputes. This new policy is being distributed to all employees and allows for both informal and formal avenues for resolving concerns. This Policy is a term and condition of your continued employment with [EM] Please click here to access the ADR Policy.
Please acknowledge by clicking here that you received, reviewed and agree to comply with the Alternative Dispute Resolution Policy. Questions regarding the Alternative Dispute Resolution Policy should be directed to your ...

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