MEMORANDUM AND ORDER WITH REGARD TO MOTION TO STAY PROCEEDINGS AND COMPEL ARBITRATION FILED ON BEHALF OF GE GROUP ADMINISTRATORS, INC., GE FINANCIAL ASSURANCE HOLDINGS, INC. AND CYNTHIA PELLETIER (Document No. 12)
In this employment discrimination action brought by SerafinGonzalez ("Plaintiff'), three defendants — GE GroupAdministrators, Inc. and GE Financial Assurance Holdings, Inc.(together "GE"), along with Plaintiff's manager, CynthiaPelletier, (collectively "Defendants") — have moved to stayproceedings and compel arbitration pursuant to sections 3 and 4of the Federal Arbitration Act ("FAA"), 9 U.S.C. § 3, 4.Although the complaint purports to name two other defendants,one, GE Financial Assurance, Inc., does not exist (seeDefendants' Answer at 1 n. 1), and the other, Jane Lemanski, hasnot been served.1 Defendants' motion has been referred to this court as anon-dispositive pre-trial matter pursuant to28 U.S.C. § 636(b)(1)(A). See also Fed.R.Civ.P. 72; Rules 2 and 3 of theRules for United States Magistrate Judges in the United StatesDistrict Court for the District of Massachusetts; ThirdMillennium Tech., Inc. v. Bentley Sys., Inc., No. 03-1145-JTM,2003 WL 22003097, at *1-2 (D. Kan. Aug. 21, 2003) ("The districtcourts that have considered the nature of an order to stayproceedings pending arbitration and to compel arbitration haveconcluded that these are non-dispositive orders.") (collectingcases). For the reasons described below, Defendants' motion willbe allowed.
Plaintiff instituted this action on November 6, 2003, and filedan Amended Complaint on January 28, 2004. The Amended Complaintcontains four causes of action: Counts I and II allege Defendantsengaged in "unlawful employment practices" — i.e., "sexualharassment," "gender discrimination,""race/color/ethnicity/national origin/ancestry discrimination"and "retaliation" — in violation of Title VII of the Civil RightsAct of 1967 ("Title VII"), 42 U.S.C. § 2000e et seq.; and CountsIII and IV make similar claims under Mass. Gen. L. ch. 151B("chapter 151B"). In due course, Defendants filed the instantmotion to stay proceedings and compel arbitration, Plaintifftendered an opposition, Defendants filed a reply brief, Plaintiffsubmitted a supplemental memorandum in opposition, and the courtheard oral argument.
The following facts are undisputed for purposes of Defendants'motion. Plaintiff began full-time employment with GE as aTrainer/Auditor on or about March 5, 2001. (Amended Complaint ¶ 8.) Plaintiff claims he was subsequentlysubjected to unlawful employment discrimination and retaliation,including sexual harassment initiated by both Pelletier, hismanager, and Jane Lemanski, his supervisor. (See id. ¶¶ 10-20.)Plaintiff also alleges that he was wrongly suspended andterminated in May of 2002, and that he was otherwise adverselyharmed by Defendants' discriminatory practices. (Id. ¶ 22.)Thereafter, "Plaintiff timely filed . . . state and federaldiscrimination claims with the Massachusetts Commission AgainstDiscrimination (MCAD), which were dual filed with the EqualEmployment Opportunity Commission (EEOC) and withdrawn from theMCAD and EEOC." (Id. ¶ 27.)
Defendants argue that a stay should be ordered and arbitrationcompelled pursuant to sections 3 and 4 of the FAA. In addressingthese arguments, the court is mindful of the unabated publicpolicy favoring arbitration, see Bercovitch v. Baldwin Sch.,Inc., 133 F.3d 141, 148 (1st Cir. 1998) (citing MitsubishiMotors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626(1985), and Moses H. Cone Mem'l Hosp. v. Mercury Const. Corp.,460 U.S. 1, 24-25 (1983)), and the fact that the FAA was enactedin order to overcome judicial hostility towards arbitration, seeGilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 24 (1991);Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 219-21 and n.6 (1985).
Section 4 of the FAA directs a court, in appropriatecircumstances, to issue an order compelling the parties toarbitrate a dispute when one party has failed, neglected or refused to arbitrate in accordance with his agreement to doso.2 Section 3, in turn, allows a court to stay judicialproceedings when any issue therein is "referable to arbitrationunder an agreement in writing . . . until such arbitration hasbeen had in accordance with the terms of the agreement."9 U.S.C. § 3. As District Judge Nathaniel M. Gorton has observed, in orderto compel arbitration pursuant to section 4 and "stay courtproceedings pursuant to [section] 3, this Court must find that 1)there exists a written agreement to arbitrate, 2) the dispute inquestion falls within the scope of that agreement, and 3) theparty seeking arbitration has not waived its right toarbitration." Bowlby v. Carter Mfg. Corp., 138 F. Supp.2d 182,186-87 (D. Mass. 2001) (citing Brennan v. King, 139 F.3d 258,263-67 (1st Cir. 1998)). Here, Defendants assert, all threeconditions are present. The court agrees.
A. Existence of a Written Arbitration Agreement
With regard to the first condition, the court finds that awritten arbitration agreement clearly exists. On February 20,2001, before he began his employment, Plaintiff signed a one-pagedocument entitled "Acknowledgment: Conditions of Employment" which stated that his offer of employment was"contingent upon [his] acceptance of the conditions of employmentdescribed below." (Document No. 13 ("Defendants' Brief"), Exhibit1A.) The first condition conspicuously indicated, as follows,that arbitration was the chosen method to resolve certaindisputes: 1. I acknowledge that the offer of employment made to me is contingent upon meeting all employment requirements, including but not limited to the following: . . . . That I have received and reviewed a copy of the RESOLVE Program Handbook". I agree to resolve disputes in accordance with the terms of the "RESOLVE Guidelines" for Employees of GE Capital and its subsidiaries. Thus, if my date of hire . . . is on or after June 1, 2000, I agree as a condition of employment, to waive the right to pursue covered claims (as defined in the glossary in the RESOLVE Guidelines and Handbook) in court and to accept an arbitrator's award as the final, binding and exclusive determination of all covered claims.(Id. (emphasis added).) In other words, Plaintiff agreed as acondition of his employment to resolve disputes of "coveredclaims" in accordance with the RESOLVE Guidelines, to waive theright to pursue such claims in court and to accept anarbitrator's award with respect to such claims as final.
The RESOLVE Guidelines confirm the fact that a writtenarbitration agreement exists. They begin with the followingstatement: "THIS PROCEDURE IS A WRITTEN AGREEMENT FOR THERESOLUTION OF EMPLOYMENT DISPUTES, WRITTEN PURSUANT TO THEFEDERAL ARBITRATION ACT, 9 U.S.C.A. SECTIONS 1-14." (Id.,Exhibit 1B at 2.) The Guidelines go on to state that "[n]ewemployees agree, as a condition of employment, to participate in RESOLVE as theexclusive alternative to filing covered claims in court." (Id.at 6.) Continuing, the Guidelines provide that "[n]ew employeeswho have not resolved their covered claims with the Companybefore the arbitration level of RESOLVE must proceed toarbitration and the arbitrator's decision shall be the final,binding, and exclusive determination of all covered claims."(Id.)
Plaintiff does not dispute that a written arbitration exists orthat he signed the acknowledgment form. Rather, he offers fourarguments why the agreement is not valid: (1) he did notunderstand the agreement's effect and does not recall getting acopy; (2) the agreement inadequately waived his right to ajudicial forum; (3) the agreement lacks consideration; and (4) ifthe agreement were enforced, he would lose the right to a jurytrial, be deprived of the full damages available to him pursuantto Title VII and chapter 151B and be subjected to limiteddiscovery. The court finds none of these arguments persuasive.
Plaintiff's first argument (that he did not understand theagreement's effect and does not recall getting a copy) isundercut by the acknowledgment form itself which states thatPlaintiff had "received and reviewed a copy of the `RESOLVEProgram Handbook'" and "accept[ed] the conditions of employment"which the form described. (Id., Exhibit 1A.) Moreover, the onlyFirst Circuit case Plaintiff cites supports Defendants'position, i.e., that, objectively, Plaintiff understood thewritten arbitration agreement which he signed. See Rosenberg v.Merrill Lynch, Pierce, Fenner & Smith, Inc., 170 F.3d 1, 21 n.17 (1st Cir. 1999) (citing Massachusetts' traditional ruledescribed in Tiffany v. Sturbridge Camping Club, Inc.,587 N.E.2d 238, 240 n. 5 (Mass. App. Ct. 1992) that one is assumed to have read and understoodthe terms of a contract he signs). Although the court inRosenberg acknowledged that there must be "some minimal levelof notice to the employee that statutory claims are subject toarbitration," it eschewed a "subjective" notice standard "whichfocuses on what the employee actually knew" about the arbitrationprovisions. Id. at 21 & n. 17.
Plaintiff's second argument (that the agreement inadequatelywaived his right to a judicial forum) is similarly misplaced.Unlike Blanchette v. Sch. Comm. of Westwood, 692 N.E.2d 21(Mass. 1998), which Plaintiff cites, Defendants are not relyingupon an arbitration provision (contained in a collectivebargaining agreement) executed by someone else. As described,Plaintiff himself signed the agreement, the agreement appliedonly to him, it was executed prior to the commencement of hisemployment and he was adequately notified of its existence. Assuch, Plaintiff is bound by its terms.
Plaintiff's third argument (that the agreement is invalid forwant of consideration) fares no better. "Consideration can . . .be provided by a mutuality of promises to arbitrate. UnderMassachusetts law, the requirement of consideration is satisfiedif there is either a benefit to the promisor or a detriment tothe promisee." DeLuca v. Bear Stearns & Co., 175 F. Supp.2d 102,112 (D. Mass. 2001) (citations omitted). See also Pond v.Harris, 113 Mass. 114, 118 (1873) ("The law is now settled thatthe mutual promises of the parties in an agreement forarbitration are sufficient consideration each for the other.").These conditions are met here; the acknowledgment form plainlystates that Plaintiff's offer of employment was "contingent" uponhis acceptance of certain conditions, one of which was hiscommitment to final and binding arbitration of covered claims arising out of his employment.
Finally, the court finds Plaintiff's fourth argument (if theagreement were enforced he would lose the right to a jury trial,be entitled to the full damages available to him under Title VIIand chapter 151B and be subjected to limited discovery)unpersuasive as well. As Plaintiff is no doubt aware, the SupremeCourt has "rejected most . . . arguments" challenging theadequacy of arbitration procedures, like those raised here, "asinsufficient to preclude arbitration of statutory claims."Gilmer, 500 U.S. at 30. "Such generalized attacks onarbitration rest on the suspicion of arbitration as a method ofweakening the protections afforded in the substantive law towould be complainants, and as such, they are far out of stepwithout current strong endorsement of the federal statutesfavoring this method of resolving disputes." Id.
Moreover, Plaintiff's damages argument is simply wrong.Plaintiff's assertions to the contrary, the RESOLVE Guidelinesallow him to recover all the remedies to which he would beentitled if he pursued his claims in court. (Defendants' Brief,Exhibit 1B at 32 ("The arbitrator shall interpret and apply thelaw of remedies of the state or the federal circuit, or both, inwhich the claim arose. . . . [and] may grant any remedy or reliefthat would have been available had the claim been asserted incourt.").) Indeed, the Guidelines provide that, except for $50paid by the employee, GE will pay all filing, administrative andhearing room fees, the arbitrator's fee and travel expenses andthe expenses of witnesses who are produced at the arbitrator'srequest. (Id. at 33.)
Similarly, Plaintiff's concern about limited discovery is oflittle moment. As the First Circuit has recognized (again in theRosenberg case Plaintiff cites), "although arbitration discovery procedures might not be as extensive as inthe federal courts, by agreeing to arbitrate, a party trades theprocedures and opportunity for review of the courtroom for thesimplicity, informality and expedition of arbitration."Rosenberg, 170 F.3d at 16 (citing Gilmer, 500 U.S. at 31). Asthe Supreme Court put it, "there are real benefits to theenforcement of arbitration provisions," i.e., they "allow partiesto avoid the costs of litigation." Circuit City Stores, Inc. v.Adams, 532 U.S. 105, 122-23 (2001). At bottom, the court findsunpersuasive all of Plaintiff's arguments to avoid the parties'agreement to arbitrate.
B. Scope of the Agreement
The court also finds that, at least for the moment, Plaintiff'sclaims all fall within the scope of the parties' arbitrationagreement. "Covered claims" are defined in the RESOLVE Guidelinesas "personal, employment-related claims against the Company orindividual managers acting within the scope of their employmentthat a court in the jurisdiction in question would have theauthority to decide under any municipal, state, or federalstatute, regulation, or application of common law." (Id. at 8.)In addition, covered claims "include, but are not limited to . . .[e]mployment discrimination and harassment claims, based on,for example, age, race, sex, religion, national origin, veteranstatus, citizenship, handicap/disability, or other characteristicprotected by law" as well as "[r]etaliation claims for legallyprotected activity and/or for whistleblowing." (Id. at 8-9.)Plaintiff's causes of action appear to fit neatly within thesedefinitions.
Still, Plaintiff notes that, under the RESOLVE Guidelines,"[c]laims against individual managers which do not involveconduct within the scope of the managers' employment" are excluded from the definition of "covered claims."(Id. at 9.) And, he argues, the sexual harassment claimsagainst Pelletier (and Lemanski) are such claims. However, notonly has Plaintiff cited no caselaw for this position, hiscomplaint actually asserts that both Pelletier (and Lemanski)were acting within their supervisory capacities. (See AmendedComplaint ¶¶ 14, 16.) Perhaps more importantly, the claimsthemselves assert various "employment" actions taken against himby "the Defendants" collectively, (see, e.g., id. ¶¶ 22-24,31-34, 37-40, 44-47 and 50-52), and even Plaintiff's civil coversheet describes this as an "employment discrimination" case.
That being said, this court has observed, albeit in a differentcontext, that certain sexual misconduct may not fall within thescope of one's employment. See Lorenzo v. Gallant, 2002 WL31833751, at *13 (D. Mass. Dec. 16, 2002) (citing, inter alia,Canty v. Old Rochester Reg'l Sch. Dist., 54 F. Supp.2d 66, 71n. 6 (D. Mass. 1999) ("Sexual misconduct, especially sexualassault and rape, by an employee is not considered an actperformed within the scope of his or her employment."), andArmstrong v. Lamy, 938 F. Supp. 1018, 1045 (D. Mass. 1996)(public school teacher's sexual contact with student is notwithin the scope of his employment)), overruled on other groundsby Educadores Puertorriquennos en Accion v. Hernandez,367 F.3d 61 (1st Cir. 2004). For the moment, however, this court concludesthat, as pled, all of Plaintiff's claims fall within the scope ofthe arbitration agreement.3 C. Waiver
As a final argument, Plaintiff contends that Defendants havewaived their right to arbitration "because [Defendants] litigatedthe . . . claims in the . . . MCAD . . . and the . . . EEOC . . .for approximately 18 months without ever filing a motion to stayin order to arbitrate the Plaintiff's claims." (Plaintiff's Briefat 6.) "It would be grossly unfair," Plaintiff continues, "toallow the Defendant[s] to now avail [themselves] of a completelydifferent forum since [they] suddenly disfavor the federalcourt." (Id.)
At first blush, Plaintiff's argument appears to have someresonance. After careful consideration of the facts and the law,however, the court finds Plaintiff's argument unavailing. First,there is no factual support that Defendants actually "litigated"Plaintiff's claims in the EEOC or the MCAD or that thoseproceedings lasted eighteen months, and, at oral argument,Plaintiff declined the opportunity to pursue further discovery onthis matter. Thus, other than Plaintiff's counsel's unsupportedcontention in his brief, the only reference to such proceedingsis in the Amended Complaint which merely alleges that Plaintiff"timely filed" claims with the MCAD and the EEOC and that thoseclaims were subsequently "withdrawn," presumably by Plaintiff,from those administrative bodies. (Amended Complaint ¶ 27.) Fortheir part, Defendants assert that they simply "cooperated in the[administrative] proceedings and in no way waived their right tocompel arbitration by doing so." (Document No. 21 (Defendants'Reply) at 8.) Second, even assuming the factual accuracy of Plaintiff'sassertions, the First Circuit is clear that it is not anemployer-defendant's responsibility to raise arbitration as adefense in administrative proceedings before the EEOC or MCAD: [Defendants]' arbitration arguments do not constitute relevant defenses before the EEOC. As the Supreme Court recently noted, "An individual . . . claimant subject to an arbitration agreement will still be free to file a charge with the EEOC, even though the claimant is not able to institute a private judicial action." We see no reason to suppose that the Massachusetts courts would treat [the plaintiff]'s statelaw discrimination claims differently. Therefore, we do not find that [defendants] waived their arbitration defenses by their failure — if failure there was — to raise before either of the administrative agencies contentions that would not have been pertinent defenses in such a forum.Brennan, 139 F.3d at 263 (emphasis added) (quoting Gilmer,500 U.S. 20 at 28). Other courts have reached similarconclusions. See Brown v. ITT Consumer Fin. Corp.,211 F.3d 1217, 1223 (11th Cir. 2000) (finding "without merit" argumentthat employer "waived its right to arbitrate . . . by failing toraise the arbitration issue with the EEOC"); Roberson v. ClearChannel Broad., Inc., 144 F. Supp.2d 1371, 1375 (S.D. Fla.2001) (similar); DeGroff v. Mascotech Forming Techs.,179 F. Supp.2d 896, 913 (N.D. Ind. 2001) (employer's "participation inthe EEOC's conciliation efforts was certainly not inconsistentwith its right to arbitrate" and "a delay in institutingarbitration as a result of participation in EEOC proceedings isinsufficient to constitute waiver") (citing cases).
As recently described elsewhere, "[t]he reasoning in thesecases is persuasive. It is consistent with the general rule thata party must demand arbitration as early as feasible once[judicial] litigation has begun." Hankee v. Menard, Inc.,2002 WL 32357167, at *5 (W.D. Wis. Apr. 15, 2002) (emphasis in original).Moreover, "participation in administrative proceedings andarbitration is not mutually exclusive: an aggrieved individualwho cannot institute a private judicial action because of anarbitration agreement retains the right to file a charge with theEEOC." Id. (citing Gilmer, 500 U.S. at 28).
This very policy is reflected in the RESOLVE Guidelinesthemselves, which state that nothing therein "is intended todiscourage or interfere with the legally protected rights ofemployees to file charges with government agencies . . . [s]uch[as] . . . the Equal Employment Opportunity Commission. . . ."(Defendants' Brief, Ex. 1B at 7.) To be sure, the Guidelines alsostate that "if an employee files a charge with the EEOC . . . orwith state or municipal agencies, the Company may request theagency to defer its processing of the charge until the employeeand the Company have completed the RESOLVE procedure." (Id.(emphasis added).) Obviously, however, such a request is notmandated. Thus, a failure by GE to pursue such discretionarydeferral does not, as Plaintiff would have it, equate to a waiverof arbitration.
Finally, to find a waiver in the circumstances presented here,would, in this court's view, "undermine the investigatory andconciliatory role that the EEOC and [MCAD] play in enforcing theanti-discrimination laws." Hankee, 2002 WL 32357167, at *5.Accordingly, the court concludes that Defendants have not waivedtheir right to arbitration.
For the reasons stated, the court finds that a writtenarbitration exists, that all of Plaintiff's claims presently fall within the scope of thatagreement and that Defendants have not waived the right toarbitration. Accordingly, pursuant to sections 3 and 4 of theFAA, the court hereby ALLOWS Defendants' motion to stayproceedings and compel arbitration. The parties, by December 9,2004, shall report the status of the arbitration to the court inwriting.
IT IS SO ORDERED.
1. As to Lemanski, the court recently denied Plaintiff'srequest for thirty more days, beyond the initial ninety dayextension already granted, to complete service of process. (SeeJune 1, 2004 order regarding Document No. 26.)
2. In pertinent part, section 4 states as follows: A party aggrieved by the alleged failure, neglect or refusal of another to arbitrate under a written agreement for arbitration may petition any United States district court . . . for an order directing that such arbitration proceed in the manner provided for in such agreement. . . . [U]pon being satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue, the court shall make an order directing the parties to proceed to arbitration in accordance with the terms of the agreement. . . .9 U.S.C. § 4.
3. Plaintiff's suggestion to the contrary, the FAA does notmandate that the action remain in federal court when the claimsagainst one party (e.g. Pelletier) are potentially notarbitrable. On the contrary, "the relevant federal law requirespiecemeal resolution when necessary to give effect to anarbitration agreement. Under the [FAA], an arbitration agreementmust be enforced notwithstanding the presence of other personswho are parties to the underlying dispute but not to thearbitration agreement." Moses H. Cone Mem'l Hosp., 460 U.S. at20 (emphasis added).