McMullen v. Meijer, Inc.

• Decision Date: 14 January 2004
• Docket Number: No. 01-1211.,01-1211.
• Citation: 355 F.3d 485
• Parties: Wendy McMULLEN, Plaintiff-Appellant, v. MEIJER, INCORPORATED, Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

355 F.3d 485

Wendy McMULLEN, Plaintiff-Appellant, v. MEIJER, INCORPORATED, Defendant-Appellee.

No. 01-1211.

United States Court of Appeals, Sixth Circuit.

Argued: February 7, 2003.

Decided and Filed: January 14, 2004.

Appeal from the United States District Court for the Eastern District of Michigan, Anna Diggs Taylor, J.

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Patrick M. Kirby (argued and briefed), Flint, MI, for Appellant.

Jeffrey Scott Rueble (argued and briefed), Assistant General Counsel, Meijer, Grand Rapids, MI, for Appellee.

Before GILMAN and GIBBONS, Circuit Judges; ECONOMUS, District Judge.^*

AMENDED OPINION

PER CURIAM.

Appellant Wendy McMullen brought this action against her former employer, Meijer Inc., seeking a declaratory judgment that her Title VII claims are not subject to the mandatory pre-dispute arbitration agreement she signed upon accepting employment with Meijer. Although McMullen acknowledges that the terms of the arbitration agreement cover her statutory employment discrimination claims, she contends that the arbitration agreement is unenforceable with regard to her Title VII claims because it grants Meijer exclusive control over the pool of potential arbitrators from which the arbitrator is selected.

After initially denying Meijer's summary judgment motion, the district court reconsidered and granted summary judgment in favor of Meijer in light of a perceived change in controlling case law. McMullen appeals the grant of summary judgment in favor of Meijer and also the denial of her summary judgment motion. We reverse both rulings because we find that Meijer's exclusive control over the pool of potential arbitrators prevents McMullen from effectively vindicating her statutory rights. However, we also find that an issue remains as to whether the arbitrator-selection provision can be severed from the rest of the arbitration agreement. Therefore, we remand to the district court for further proceedings consistent with this opinion.

I.

In 1989, Meijer hired McMullen as a store detective at its store in Flint, Michigan. McMullen faced discipline in 1998 for an incident involving her pursuit and confrontation of a juvenile shoplifter in the store parking lot. Meijer offered McMullen a choice between demotion with a 33% decrease in salary, or outright termination. McMullen chose termination and decided to challenge her discipline through Meijer's termination appeal procedure (TAP).

The terms of the TAP establish a two-step procedure requiring binding arbitration of all disputes arising out of termination of employment. The TAP expressly incorporates the Employment Dispute Resolution Rules of the American Arbitration Association (AAA).¹ Further, the TAP specifically asserts that:

This procedure is intended to be the sole and exclusive remedy and forum for all claims arising out of or relating to an eligible team member's termination from employment.

The decision and award of the arbitrator is final and binding between the parties as to all claims arising out of or relating to an [sic] team member's termination from employment which were or could have been raised at any step in this procedure and judgment may be entered on the award in any circuit court or other court of competent jurisdiction.

Contemporaneous to hiring McMullen, Meijer had provided her with a copy of an employee handbook describing both the TAP and the company's policy of terminating employees only with "just cause." McMullen had then signed a form acknowledging receipt of the handbook and assenting to the company's policies and procedures.

Upon instituting termination appeal proceedings, McMullen argued that her discharge had been motivated by an intent to discriminate against her on the basis of her gender. Meijer denied her appeal internally and informed her that, "[i]f you would like to contest the results of this further review, you must request an arbitration hearing...." Subsequently, McMullen signed and filed the necessary paperwork to begin the arbitral process.

Once an arbitration hearing is requested, the TAP grants Meijer the right to unilaterally select a pool of at least five potential arbitrators, each of whom must be: (1) an attorney, (2) unemployed by and unaffiliated with the company, (3) generally recognized as a neutral and experienced labor and employment arbitrator, and (4) listed on the rosters of the Federal Mediation and Conciliation Service (FMCS) or the AAA, as well as other arbitration rosters.² Then, counsel for the company and the aggrieved employee mutually select an arbitrator from that pool by alternatively striking names until only one remains. On August 20, 1998, counsel for McMullen and Meijer, following this procedure, selected arbitrator William Daniel to hear McMullen's appeal.³

Several months later, and only one day prior to the scheduled date of the arbitration hearing, McMullen filed this declaratory judgment action in state court challenging the fairness of the TAP's arbitrator-selection process. Asserting federal question jurisdiction, Meijer removed the action to the United States District Court for the Eastern District of Michigan.

On December 13, 1999, Meijer brought a motion to compel arbitration and for summary judgment. On March 23, 2000, the district court denied both motions from the bench. The court's ruling indicated that the procedures used by Meijer to select an arbitrator did not comport with the requisite level of fairness for such mandatory-arbitration contracts to be binding. In conjunction with its decision, the court criticized the extent of control exercised by Meijer over the arbitral panel. The court also stated, "I'm sorry that there were not cross motions in the case. There weren't, so we'll still have this case alive here."

On September 21, 2000, McMullen moved for summary judgment. On October 2, 2000, Meijer moved for reconsideration of its earlier motions based on this court's intervening decision in Haskins v Prudential Insurance Company of America, 230 F.3d 231 (6th Cir.2000). The district court held a hearing on the motions on November 27, 2000, and subsequently denied McMullen's motion for summary judgment, granted Meijer's motion for reconsideration, and, upon reconsideration, granted Meijer's motions for summary judgment and to compel arbitration.⁴

II.

The district court's decision to grant Meijer's motion for summary judgment is reviewed de novo, Smith v. Ameritech, 129 F.3d 857, 863 (6th Cir.1997), as is the district court's decision to grant Meijer's motion to compel arbitration, Wiepking v. Prudential-Bache Securities, Inc., 940 F.2d 996, 998 (6th Cir.1991). Similarly, the district court's decisions regarding the existence of a valid arbitration agreement and the arbitrability of a particular dispute are reviewed de novo. Floss v. Ryan's Family Steak Houses, Inc., 211 F.3d 306, 311 (6th Cir.2000). A district court's denial of summary judgment is an interlocutory order that is not ordinarily appealable, but when the appeal from a denial of summary judgment is presented together with an appeal from a grant of summary judgment, we have jurisdiction to review the denial. Thomas v. United States, 166 F.3d 825, 828 (6th Cir.1999). When a district court denies a motion for summary judgment because it determines that there exists a genuine issue of material fact, we review the denial only for an abuse of discretion. Garner v. Memphis Police Dep't, 8 F.3d 358, 363 (6th Cir. 1993). When, however, the district court denies summary judgment based solely upon legal grounds, we review the denial de novo. Id. Because the district court denied McMullen's summary judgment motion solely upon legal grounds, we review this denial de novo.

The Supreme Court has held that agreements to arbitrate employment disputes as a condition of employment are generally enforceable under the Federal Arbitration Act, 9 U.S.C. § 1 et seq. (FAA). Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 109, 121 S.Ct. 1302, 149 L.Ed.2d 234 (2001). This court has consistently upheld the validity of pre-dispute mandatory arbitration agreements. Haskins, 230 F.3d at 239; Willis v. Dean Witter Reynolds, Inc., 948 F.2d 305, 310 (6th Cir.1991). It is well settled that judicial protection of pre-dispute arbitral agreements extends to agreements to arbitrate statutory employment discrimination claims. Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 26, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991); Willis, 948 F.2d at 312. Arbitration of statutory claims is appropriate because "[b]y agreeing to arbitrate a statutory 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, 500 U.S. at 26, 111 S.Ct. 1647 (quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985)).

Notwithstanding a general policy favoring such agreements, there are circumstances under which courts will not enforce pre-dispute mandatory arbitration agreements with regard to statutory employment discrimination claims. In Floss, we held that, "even if arbitration is generally a suitable forum for resolving a particular statutory claim, the specific arbitral forum provided under an arbitration agreement must nevertheless allow for the effective vindication of that claim." Floss, 211 F.3d at 313. The central issue in this case is whether Meijer's exclusive control over the pool of potential arbitrators renders the arbitral forum so fundamentally unfair as to prevent McMullen from effectively vindicating her statutory rights, thereby precluding enforcement of the pre-dispute agreement to arbitrate the statutory claims.

Before reaching this central issue, however, we must address two preliminary arguments made by Meijer. First, Meijer argues that, regardless of the viability of the pre-dispute agreement, McMullen should be compelled to arbitrate her claims...