Lloyd v. Hovensa, LLC.

• Citation: 369 F.3d 263
• Decision Date: 13 May 2004
• Docket Number: No. 03-1592.,No. 03-1502.,03-1502.,03-1592.
• Parties: Bruno LLOYD Appellant v. HOVENSA, LLC; Wyatt, V.I., Inc. Bruno Lloyd v. Hovensa, LLC.; Wyatt, V.I., Inc. Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (3rd Circuit)

369 F.3d 263

Bruno LLOYD Appellant v. HOVENSA, LLC; Wyatt, V.I., Inc.

Bruno Lloyd v. Hovensa, LLC.; Wyatt, V.I., Inc. Appellant.

No. 03-1502.

No. 03-1592.

United States Court of Appeals, Third Circuit.

Argued December 10, 2003.

Filed May 13, 2004.

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Lee J. Rohn, K. Glenda Cameron (Argued), Law Offices of Lee J. Rohn, Christiansted, St. Croix, USVI, for Bruno Lloyd Appellant/Cross-Appellee.

Charles E. Engeman, David J. Comeaux (Argued), Ogletree, Deakins, Nash, Smoak & Stewart, St. Thomas, USVI, for Wyatt, V.I., Inc. Appellee/Cross-Appellant.

Linda J. Blair, Rachel L. Witty (Argued), Bryant, Barnes & Moss, Christiansted, St. Croix, USVI, for Hovensa, LLC Appellee.

Before NYGAARD, BECKER and STAPLETON, Circuit Judges.

STAPLETON, Circuit Judge.

Bruno Lloyd appeals from an order of the District Court of the Virgin Islands compelling arbitration of his claims against Wyatt, V.I., Inc. ("Wyatt" or "Cross-Appellant") and HOVENSA, LLC ("HOVENSA"; collectively, "Appellees") pursuant to the Federal Arbitration Act ("FAA"), 9 U.S.C. § 1 et seq. Wyatt cross-appeals from the District Court's order insofar as it denied Wyatt's motion for a stay of the proceedings on Lloyd's claims pending arbitration.

Lloyd, who applied for employment at Wyatt, brought suit against Appellees alleging, inter alia, discriminatory conduct in violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq. Invoking the provisions of an arbitration agreement entered into as a condition of Lloyd's application, Appellees filed a motion to compel arbitration of Lloyd's claims and to stay the proceedings pending arbitration. The District Court granted Appellees' motion to compel arbitration, but dismissed the case with prejudice rather than granting a stay. For the reasons that follow, we will reverse the District Court's order and remand with instructions to enter an order consistent with this opinion.

I.

Lloyd worked for more than twelve years as a boilermaker and pipefitter for various contractors at the HOVENSA refinery in St. Croix, Virgin Islands. Although the contractors for maintenance and repairs changed over these years, Lloyd remained employed at the HOVENSA refinery. In November 2001, Lloyd was working for Jacobs/IMC, one of the contractors at the refinery. At that time, HOVENSA awarded a contract to Wyatt, a newly created subsidiary of Wyatt Field Services Company ("Wyatt Field Services"), for services that Jacobs/IMC had been performing. Lloyd was then informed by Jacobs/IMC that he would be laid-off when Jacobs/IMC's contract expired on December 31, 2001.¹ After Wyatt was awarded the new contract, it filled positions in its upper management with persons on the continental United States who were already employed by its parent corporation, Wyatt Field Services. These persons, according to Lloyd, were predominantly white.

In January 2002, Wyatt began to hire between 300 and 400 people in the Virgin Islands. Also in January 2002, Wyatt began requiring all applicants to sign a Dispute Resolution Agreement ("DRA") as a condition of having their applications considered. App. at 196. The DRA states, in relevant part:

I recognize that differences may arise between Wyatt and me in relation to my application for employment. Both Wyatt and I agree to resolve any and all claims, disputes or controversies arising out of or relating to my application or candidacy for employment, the terms and conditions of my employment, and any claims arising from or relating to the employment relationship exclusively by final and binding arbitration before a neutral arbitrator pursuant to the American Arbitration Association's National Rules for the Resolution of Employment Disputes [("AAA Rules")].... This agreement extends to disputes with or claims against Wyatt V.I., Inc., HOVENSA, L.L.C., and any of their related or affiliated companies, entities, or individuals (as intended third party beneficiaries).

App. at 37.

On January 9, 2002, Lloyd applied for employment with Wyatt and signed the DRA. He was not hired. Lloyd thereafter filed this action against both Wyatt and HOVENSA. The complaint alleged: (1) violation of the Federal Civil Rights Act of 1964; (2) violation of Titles 10 and 24 of the Virgin Islands Code; (3) wrongful discharge by HOVENSA; (4) breach of an implied contract of good faith and fair dealing by HOVENSA; and (5) negligent and/or intentional infliction of emotional distress. Lloyd requested punitive as well as compensatory damages.

On September 27, 2002, Wyatt filed a motion to compel arbitration, pursuant to the DRA, and to stay the proceedings pending arbitration. Lloyd opposed this motion, arguing that the agreement to arbitrate was unenforceable because AAA Rules 17, 18, and 34 with respect to confidentiality, AAA Rule 7 with respect to discovery procedure, and the DRA's fee-splitting provision were all unconscionable and against public policy. Lloyd also requested that the District Court allow him further discovery based on his belief that Wyatt's use of the DRA only in the Virgin Islands was motivated by bad faith or an otherwise improper motive. He claimed that, if Wyatt had indeed discriminated against Black or Hispanic Virgin Islanders through the use of the DRA, then the DRA would be violative of federal and Virgin Islands law and unenforceable as a matter of public policy.

On November 18, 2002, Wyatt filed a reply to Lloyd's memorandum opposing arbitration and HOVENSA filed a notice of joinder, thereby joining Wyatt's motion to compel arbitration. The District Court held a hearing on the motion on January 14, 2003, at which the testimony of several witnesses was taken.

After the evidentiary hearing, the District Court granted Wyatt's motion to compel arbitration and dismissed the complaint with prejudice. The District Court held that AAA Rules 17, 18, and 34, as incorporated into the DRA, were unconscionable. In addition, the District Court denied Lloyd's request for discovery on his theory that Wyatt used the DRA in a racially discriminatory manner. The District Court noted that Lloyd had never filed a motion for an order to conduct discovery, in accordance with Fed.R.Civ.P. 7(b) or Local R. Civ. P. 7.1, during the nearly three months between his October 21, 2002 memorandum opposing arbitration and the evidentiary hearing. The District Court further held that the most Lloyd had shown was that Wyatt differentiated between applicants on the basis of residency and nothing more. Accordingly, the District Court found that the DRA had not been used as a tool of unlawful discrimination. Finally, the District Court severed the confidentiality provisions of AAA Rules 17, 18 and 34 from the DRA and granted Wyatt and HOVENSA's motion to compel arbitration. Rather than stay the proceedings pending arbitration, however, the District Court dismissed the action with prejudice because it found all of Lloyd's claims to be arbitrable and thus left no claims for adjudication by the District Court.² Lloyd filed a timely notice of appeal and Wyatt subsequently filed a notice of cross-appeal.

II.

The District Court had jurisdiction over this case under 28 U.S.C. §§ 1331 and 48 U.S.C. § 1612(a), because the case arose under, inter alia, Title VII, 42 U.S.C. §§ 2000e, et seq. The District Court exercised supplemental jurisdiction over Lloyd's Virgin Islands claims pursuant to 28 U.S.C. § 1367 and 48 U.S.C. § 1612(a).

We have jurisdiction over this appeal and cross-appeal pursuant to 9 U.S.C. § 16(a)(3) because the District Court's order constituted a final decision with respect to an arbitration. See Green Tree Fin. Corp.-Ala. v. Randolph, 531 U.S. 79, 88-89, 121 S.Ct. 513, 148 L.Ed.2d 373 (2000).³ We recognize that a district court's order compelling arbitration is usually an interlocutory order that cannot be appealed. See 9 U.S.C. § 16(b)(2).⁴ In this case, however, the District Court both compelled the parties to arbitrate their dispute and also dismissed the matter with prejudice. In Green Tree, the Supreme Court also considered an order compelling arbitration and dismissing the plaintiff's case with prejudice, and, applying the well-established meaning of the term "final decision," ruled that such order

plainly dispose[s] of the entire case on the merits and le[aves] no part of it pending before the court. The FAA does permit parties to arbitration agreements to bring a separate proceeding in a district court to enter judgment on an arbitration award once it is made (or to vacate or modify it), but the existence of that remedy does not vitiate the finality of the District Court's resolution of the claims in the instant proceeding. 9 U.S.C. §§ 9, 10, 11. The District Court's order was therefore "a final decision with respect to an arbitration" within the meaning of § 16(a)(3), and an appeal may be taken.

531 U.S. at 86, 121 S.Ct. 513. Accordingly, we have before us a final appealable order that we may address on the merits.⁵

III.

We first address the issue of whether the District Court erred in dismissing Lloyd's complaint with prejudice rather than staying the proceedings pending arbitration. On cross-appeal, Wyatt argues that pursuant to § 3 of the FAA, 9 U.S.C. § 3, the District Court was required to grant Appellees' motion to stay the litigation of Lloyd's claims pending the outcome of the arbitration and that the dismissal of Lloyd's case was therefore improper.⁶

Courts of Appeals have reached different resolutions of the issue of whether a District Court has discretion to deny a motion for a stay pending arbitration and dismiss a complaint where it finds all claims before it to be arbitrable. Compare Choice Hotels Intern., Inc. v. BSR Tropicana Resort, Inc., 252 F.3d 707, 709-10 (4th Cir.2001) ("Notwithstanding the terms of § 3, however, dismissal is a proper remedy when all of the issues presented in a lawsuit are arbitrable."), and Green v. Ameritech Corp., 200 F.3d...