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James v. Client Services, Inc.

United States District Court, D. Kansas

June 11, 2015

MELINDA JAMES, Plaintiff,
v.
CLIENT SERVICES, INC., Defendant.

MEMORANDUM AND ORDER

JULIE A. ROBINSON, District Judge.

Plaintiff Melinda James brings this suit against her former employer, Client Services, Inc. alleging it violated the Americans with Disabilities Act (the "ADA") by subjecting Plaintiff to a hostile work environment, discriminating against Plaintiff through her compensation and eventual discharge, and failing to accommodate Plaintiff. Plaintiff also alleges Defendant invaded Plaintiff's privacy. This case comes before the Court on Defendant's Motion to Stay Proceedings and Compel Mediation and Arbitration (Doc. 14). The motion is fully briefed, and the Court is prepared to rule. For the reasons set forth below, the Court grants Defendant's motion to stay proceedings and compel arbitration.

I. Background

On April 5, 2010, Plaintiff began working at Defendant Client Services, Inc. ("Client Services"). During Plaintiff's first day of employment, Client Services presented Plaintiff with an Employee Mediation/Arbitration Agreement (the "Agreement").[1] The Agreement prescribes a dispute resolution procedure for potential legal claims arising between Plaintiff and Client Services. The Agreement states that Plaintiff and Client Services "agree to first attempt to resolve any claim informally."[2] "If the matter can not be resolved in an informal manner, " the Agreement provides that "the parties agree to submit the matter to mediation."[3] Client Services agreed to pay the reasonable cost of mediation. If mediation fails to resolve the claims, the Agreement provides that Client Services will pay the reasonable cost of arbitration. The Agreement states Plaintiff and Client Services "consent to the resolution by binding arbitration of all claims or controversies for which a federal or state court would be authorized to grant relief, if such claim or claims arise out of, relate to or are associated with [Plaintiff's] employment or former employment with [Client Services]."[4] The Agreement further provides, "For Claims covered by this Agreement, arbitration is the parties' exclusive legal remedy. The arbitrator has exclusive authority to resolve any dispute relating to the applicability or enforceability of this Agreement."[5] Plaintiff and Client Services signed the Agreement on April 8, 2010. Claims within the scope of the Agreement include Plaintiff's claims in this case arising under the Americans with Disabilities Act (the "ADA") and tort law.

Plaintiff and Client Services dispute some of the circumstances surrounding the execution of the Agreement. Plaintiff alleges the Client Services employee who was handling training distributed copies of the Agreement on April 5, 2010. Plaintiff contends that the Client Services employee stated that the Agreement must be signed that day or Plaintiff's employment would be immediately terminated. Plaintiff further alleges she requested to have an attorney or another person review the Agreement because Plaintiff did not understand it. According to Plaintiff, Client Services did not permit Plaintiff to consult anyone about the Agreement. Plaintiff could not take the Agreement off Client Services's property. Plaintiff could not bring a mobile phone onto Client Services's property or otherwise call during work. Plaintiff was permitted to call someone over her lunch break in the break room, but there was only one phone in the break room. The phone was busy throughout Plaintiff's lunch break. Plaintiff states she signed the Agreement, without understanding it, on April 6, 2010.[6] Plaintiff also states a Client Services supervisor forced her to change the date on the Agreement from April 6, 2010, to April 8, 2010. Client Services denies the bulk of these allegations. Plaintiff went on to work at Client Services for over three years. Plaintiff's employment at Client Services ended on July 31, 2013.

Plaintiff filed this case on September 23, 2014. Three weeks later, on November 5, 2014, Client Services discovered that Plaintiff and Client Services executed the Agreement. The delay in discovering the Agreement was due to changes in Client Services's workforce. Current managers at Client Services did not realize that the Agreement existed.

The next week, on November 12, 2014, Client Services filed an unopposed Motion for Leave to Amend Answer.[7] Client Services sought leave to add an additional defense barring Plaintiff's claims to the extent that they are subject to binding arbitration pursuant to the Agreement. The magistrate judge granted Client Services's motion. Client Services filed an Amended Answer that added the additional defense of Plaintiff's claims being subject to binding arbitration. In December 2014, before the parties' Rule 26(f) planning conference or Rule 16 scheduling conference, Client Services filed a Motion to Stay Proceedings and Compel Mediation and Arbitration (Doc. 14). Client Services also filed a Motion to Postpone Deadlines pending a ruling on the Motion to Stay Proceedings and Compel Mediation and Arbitration. Plaintiff filed a Memorandum in Opposition (Doc. 21). The magistrate judge extended the discovery planning deadlines in this case pending a ruling on the Motion to Stay Proceedings and Compel Mediation and Arbitration.

II. Governing Law

A. Overview

While the interpretation of contracts-including arbitration agreements-is usually a matter of state law, the Federal Arbitration Act (the "FAA") imposes certain rules beyond those normally found in state contract law.[8] The FAA applies to written arbitration agreements in any "contract evidencing a transaction involving commerce."[9] "The FAA provides that contractual agreements to arbitrate disputes shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.'"[10] Arbitration agreements "may be invalidated by generally applicable contract defenses, such as fraud, duress, or unconscionability.'"[11]

Congress designed the FAA "to overrule the judiciary's long standing refusal to enforce agreements to arbitrate'"[12] and, by enacting the FAA, created "a liberal federal policy favoring arbitration agreements."[13] Section 3 of the FAA impels "courts to stay litigation on matters that the parties have agreed to arbitrate...."[14] Section 4 of the FAA impels "a federal district court to compel arbitration when [the court] would have jurisdiction over a suit on the underlying dispute."[15]

B. Enforcement of Agreements to Arbitrate Arbitrability

"Where ordinary contracts are at issue, it is up to the parties to determine whether a particular matter is primarily for arbitrators or for courts to decide."[16] The Supreme Court has "recognized that parties can agree to arbitrate gateway' questions of arbitrability, ' such as whether the parties have agreed to arbitrate or whether their agreement covers a particular controversy."[17] Courts use presumptions to determine whether disputes under a contract are subject to arbitration.[18] When a contract contains an arbitration provision, "a presumption of arbitrability arises, " particularly if the clause is broad.[19] However, "[t]he presumption favoring arbitration does not apply when the dispute itself concerns arbitration."[20] "Unless the parties clearly and unmistakably provide otherwise, the question of whether the parties agreed to arbitrate is to be decided by the court, not the arbitrator."[21] Importantly, the "clear and unmistakable requirement... pertains to the parties' manifestation of intent, not the agreement's validity."[22] Accordingly, the Court begins "its analysis by asking whether the parties did or said anything to rebut the presumption that questions about the arbitrability of an arbitration dispute will be resolved by the courts."[23] The Court does "not assume that the parties agreed to arbitrate arbitrability unless there is clea[r] and unmistakabl[e]' evidence that they did so."[24]

"On the other hand, courts presume that the parties intend arbitrators, not courts, to decide disputes about the meaning and application of particular procedural preconditions for the use of arbitration."[25] One such "particular procedural ...


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