Gibson v. Neighborhood Health Clinics

Decision Date21 September 1997
Citation121 F.3d 1126
CourtU.S. Court of Appeals — Seventh Circuit

For MONA GIBSON, Plaintiff - Appellant: Cynthia Rockwell, HALLER & COLVIN, Fort Wayne, IN USA.

For NEIGHBORHOOD HEALTH CLINICS, INCORPORATED, Defendant - Appellee: James P. Fenton, Cathleen M. Shrader, BARRETT & MCNAGNY, Fort Wayne, IN USA.

For EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Amicus Curiae: Gwendolyn Young Reams, Paul Bogas, Carolyn L. Wheeler, C. Gregory Stewart, EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Washington, DC USA. For NATIONAL EMPLOYMENT LAWYERS ASSOCIATION, Amicus Curiae: William J. Holloway, Michael J. Leech, HINSHAW & CULBERTSON, Chicago, IL USA.

Before BAUER, CUDAHY, and FLAUM, Circuit Judges. CUDAHY, Circuit Judge, concurring

FLAUM, Circuit Judge. Mona Gibson appeals the district court's dismissal of her claims under Title VII and the Americans with Disabilities Act ("ADA") against her former employer, Neighborhood Health Clinics ("NHC"). The district court dismissed Gibson's claims on the ground that she had contractually agreed to submit any claims against NHC to arbitration. We reverse and remand.

I.

Gibson, who had previously been employed by NHC under circumstances not relevant to the instant case, was rehired by NHC on December 22, 1994. On December 30, 1994, at which time Gibson, although rehired, had not yet returned to work, NHC held a meeting at which all employees were presented with a new Associates Policy Manual (the "Manual"), and required to sign a new Associates Understanding (the "Understanding"). Gibson was not required to attend the meeting and in fact she did not. The Understanding included the following language:

I agree to the grievance and arbitration provisions set forth in the Associates Policy Manual. I understand that I am waiving my right to a trial, including a jury trial, in state or federal court of the class of disputes specifically set forth in the grievance and arbitration provisions on pages 8-10 of the Manual.

The Manual states that when an employee alleges a violation of her rights under the ADA or Title VII (or other provisions not relevant here):

THEN IT IS CLEARLY INTENDED AND AGREED THAT THE SOLE AND EXCLUSIVE MEANS FOR THE RESOLUTION

OF ALL DISPUTES, ISSUES, CONTROVERSIES, CLAIMS, CAUSES OF ACTION OR GRIEVANCES BY AN EMPLOYEE AGAINST NEIGHBORHOOD HEALTH CLINICS SHALL BE THROUGH THE PROCESS OF ARBITRATION AND PURSUANT TO . . . THE INDIANA UNIFORM ARBITRATION ACT.

(emphasis and capitalization in the original). The opening two paragraphs of the Manual include the following language:

Neighborhood Health Clinics reserves the right at any time to modify, revoke, suspend, terminate, or change any or all terms of this Manual, plans, policies, or procedures, in whole or in part, without having to consult or reach agreement with anyone, at any time, with or without notice. . . .

. . . While Neighborhood Health Clinics intends to abide by the policies and procedures described in this Manual, it does not constitute a contract nor promise of any kind. Therefore, employees can be terminated at any time, with or without notice, and with or without cause.

The arbitration provisions were not part of the terms of employment during Gibson's previous tenure with NHC.

When Gibson was hired in December 1994, she was informed that she should report to work on January 9, 1995. On that date, she met with NHC's personnel director, Chris Baxter, who handed Gibson a stack of papers to sign, including insurance and tax forms. Among the papers was the Understanding. Gibson testified at her deposition that when she asked Baxter about the Understanding, Baxter told her that it was a form that everybody signed so that complaints about time off could be settled through a grievance procedure. The Manual referenced in the Understanding was not given to Gibson at that time; Baxter was only able to locate a copy of the Manual later that day, at which time she provided it to Gibson. Although she signed the Understanding, Gibson never signed the Manual.

NHC fired Gibson on April 6, 1995. On May 15, 1995, Gibson filed a discrimination claim with the Equal Employment Opportunity Commission, alleging sex and disability discrimination. NHC was informed of this charge shortly thereafter. Gibson then filed her complaint in the district court. NHC moved to dismiss Gibson's complaint on the ground that she had waived her right to a judicial determination of her claims against NHC by agreeing to submit such disputes to arbitration. The district court agreed, concluding that the Manual in connection with the Understanding created an enforceable arbitration agreement, and granted the motion to dismiss. In addition, because Gibson failed to abide by the deadline for submitting her claim to arbitration, the dismissal effectively foreclosed her ability to obtain redress. The district court therefore entered final judgment, from which Gibson now appeals. We have jurisdiction pursuant to 28 U.S.C. § 1291.

II.

On appeal, the parties debate an important issue: whether the prerogative of litigating one's Title VII and ADA claims in federal court is the type of important right the relinquishment of which requires a knowing and voluntary waiver. The Supreme Court indicated in Alexander v. Gardner-Denver Co., 415 U.S. 36, 51-52 n.15, 39 L. Ed. 2d 147, 94 S. Ct. 1011 (1974), that an employee could not forfeit substantive rights under Title VII absent a voluntary and knowing waiver. In Pierce v. Atchison, Topeka & Santa Fe Ry. Co., 65 F.3d 562, 571 (7th Cir. 1995), we applied the knowing and voluntary standard set out in Alexander to an employee's release of age and race discrimination claims against his employer. Thus, before an employee cedes a substantive right grounded in federal statutory law, she must understand and freely make the decision to do so.

Less clear is whether the right to have one's federal claims determined judicially rather than in an arbitration proceeding qualifies for this added protection. Compare Patterson v. Tenet Healthcare, Inc., 113 F.3d 832, 834 (8th Cir. 1997)(applying ordinary contract principles in determining whether employee agreed to submit Title VII claims to arbitration),with Prudential Ins. Co. v. Lai, 42 F.3d 1299, 1305 (9th Cir. 1994) ("[A] Title VII plaintiff may only be forced to forgo her statutory remedies and arbitrate her claims if she has knowingly agreed to submit such disputes to arbitration."),and Renteria v. Prudential Ins. Co., 113 F.3d 1104, 1105-06 (9th Cir. 1997) (same). The Supreme Court has not reached this issue, but in dicta has stated that in agreeing to arbitrate a federal claim, a party "does not forgo the substantive rights afforded by the statute; it only submits to their resolution in an arbitral, rather than a judicial, forum." Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 26, 114 L. Ed. 2d 26, 111 S. Ct. 1647 (1991) (quotingMitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628, 87 L. Ed. 2d 444, 105 S. Ct. 3346 (1985))(internal quotations omitted). Conversely, we have noted that "by being forced into binding arbitration [employees] would be surrendering their right to trial by jury--a right that civil rights plaintiffs . . . fought hard for and finally obtained in the 1991 amendments to Title VII." Pryner v. Tractor Supply Co., 109 F.3d 354, 362 (7th Cir. 1997),petition for cert. filed, 65 U.S.L.W. 3783 (U.S. May 16, 1997) (No. 96-1830), and petition for cert. filed, 66 U.S.L.W. 3108 (U.S. Jul. 18, 1997) (No. 97-123).

This issue is further complicated by the strong federal policy in favor of arbitration as embodied in the substantive provisions involved in this case. See Civil Rights Act of 1991, Pub. L. No. 102-166 § 118, 105 Stat. 1071, 1081 (1991) (not codified) (authorizing use of arbitration where appropriate to resolve disputes arising under certain federal statutes, including Title VII); 42 U.S.C. § 12212 (same for ADA); see also Federal Arbitration Act, 9 U.S.C. §§ 1 et seq.Thus, an employee's contractual agreement to submit her federal claims to arbitration implicates competing policy concerns.

Obviously, the strongest case for a court's finding that an employer and employee agreed to submit claims to arbitration will arise when the record indicates the employee has knowingly agreed to do so. If parties operate under these conditions, we believe that the twin goals of protecting federal rights and resolving claims where possible through arbitration will be effected. Moreover, the formation of arbitration agreements upon terms that both parties understand need not be unduly burdensome. The course that NHC undertook to alert those already employed to the change in policy (the convening of a meeting and the presentation of the appropriate documentation) demonstrates the feasibility of achieving this objective. While we therefore stress the advantage of arbitration agreements that are the product of an employee's knowing and voluntary consent, we decline today to decide whether such consent is a prerequisite to the validity of an agreement to arbitrate federal civil rights claims. To resolve this appeal, we need look no further than the state law of contract that generally governs arbitration agreements.

III.

The parties agree that an employee and employer may contractually agree to submit federal claims, including Title VII and ADA claims, to arbitration. See Gilmer, 500 U.S. at 35. An agreement to arbitrate is treated like any other contract. Kresock v. Bankers Trust Co., 21 F.3d 176, 178 (7th Cir. 1994). If there is no contract there is to be no forced arbitration. Matthews v. Rollins Hudig Hall Co., 72 F.3d 50, 53 (7th Cir. 1995); Farrand v. Lutheran Bhd., 993 F.2d 1253, 1255 (7th Cir. 1993) (citing AT & T...

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