500 F.3d 1140 (10th Cir. 2007), 05-3383, Lewis v. Circuit City Stores, Inc.

Docket Nº:05-3383.
Citation:500 F.3d 1140
Party Name:Michael J. LEWIS, Plaintiff-Appellant, v. CIRCUIT CITY STORES, INC., Defendant-Appellee.
Case Date:August 31, 2007
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit

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500 F.3d 1140 (10th Cir. 2007)

Michael J. LEWIS, Plaintiff-Appellant,


CIRCUIT CITY STORES, INC., Defendant-Appellee.

No. 05-3383.

United States Court of Appeals, Tenth Circuit.

Aug. 31, 2007

Appeal from the United States District Court for the District of Kansas, D.C. No. 05-CV-4001-JAR.

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[Copyrighted Material Omitted]

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David O. Alegria of McCullough, Wareheim & LaBunker, P.A., Topeka, KS, for Plaintiff-Appellant.

Stephen Robert Clark (Kevin J. Breer with him on the brief), of Polsinelli Shalton Welte Suelthaus, PC, St. Louis, MO, for Defendant-Appellee.

Before KELLY, EBEL, and GORSUCH, Circuit Judges.

EBEL, Circuit Judge.

Plaintiff-Appellant Michael Lewis brought suit against his former employer, Defendant-Appellee Circuit City, for wrongful termination, based on alleged retaliation against Lewis for seeking workers' compensation benefits, a tort recognized by Kansas. However, Lewis has already arbitrated a claim of retaliatory discharge against Circuit City, pursuant to an arbitration agreement he signed with his employment application, and lost on the merits of that claim. Yet Lewis now brings the very same claim of retaliatory discharge in court based on the same incident and harm alleged in the arbitration proceeding against Circuit City. Looking to well-settled law, we conclude that Lewis's claim is barred by claim preclusion. We also hold that Lewis has waived his argument that the arbitration agreement is invalid under contract law, because he proceeded through arbitration without objecting to the agreement's enforceability. In addition, we conclude that Lewis's argument that the arbitration decision violates public policy has no merit. Finally, we conclude that sanctions are not appropriate in this case. Accordingly, we AFFIRM the district court's dismissal of Lewis's suit on summary judgment and DENY Circuit City's motion for sanctions.


Lewis's Employment with Circuit City

Michael Lewis became a full-time employee of Circuit City in September 1996 as a "roadshop manager." In February 1997, he injured his knee while installing an automobile alarm, and sought medical treatment through a workers' compensation claim. He states that over the years he has "continued to have problems" with his knee and, at various times, notified Circuit City of those problems. Lewis informed his supervisor in writing in November 2002 that he still had pain in his knee

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and requested to see a medical specialist, but allegedly did not receive a response.

Circuit City terminated Lewis on January 6, 2003. The parties dispute the reason for Lewis's termination. Lewis claims that after he requested additional medical treatment in November 2002, his supervisor's attitude toward Lewis "became hostile and retaliatory, " and Lewis was disciplined and suspended. On those facts, Lewis claims that Circuit City wrongfully terminated him in retaliation for filing a worker's compensation claim.

Circuit City states that it terminated Lewis because he violated the company's weapons policy, a violation brought to the company's attention by employee Mike Guerrero.1 In early December 2002, Lewis had a "confrontation" with Guerrero that resulted in Guerrero "walking off the job." Guerrero then called an employer-provided telephone hotline to complain about Lewis. His complaint included allegations that Lewis had brought a gun to work and had cleaned it at the work counter. When questioned, Lewis admitted that he had brought a "pistol grip and slide" to work to repair it, and that he worked on it out of view of any customers. He said these were only "parts" of a handgun, not an operable handgun, and therefore the weapons policy did not apply. However, four members of Circuit City's management reviewed this information, decided that it was a violation of the weapons policy, and concluded that termination was warranted.2

The Arbitration Agreement

When Lewis applied for employment in 1996, his application included a Dispute Resolution Agreement (the "arbitration agreement") in which he agreed to settle any claims arising out of his application process or any future employment with Circuit City "exclusively by final and binding arbitration before a neutral Arbitrator." The agreement covered any claims

arising under federal, state or local statutory or common law . . . includ[ing], but not limited to ... Title VII of the Civil Rights Act of 1964, as amended, ... state discrimination statutes, state statutes and/or common law regulating employment termination, the law of contract or the law of tort: including, but not limited to, claims for... wrongful discharge ... and intentional/ negligent infliction of emotional distress or defamation. Statutory or common law claims alleging that Circuit City retaliated or discriminated against an Associate shall be subject to arbitration.

The agreement contained a statement that signing the agreement was a condition of being considered for employment by Circuit City, and that arbitration would be conducted in accordance with the Circuit City Dispute Resolution Rules and Procedures (the "arbitration procedures"). Lewis signed this statement. He does not dispute that he received notice of the procedures. The procedures specified that although the substantive law of the state in which Lewis was employed would apply to

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any claims raised in arbitration, decisions and awards would be enforceable through the Federal Arbitration Act ("FAA"), 9 U.S.C. §§ 1, et seq., and the Uniform Arbitration Act of Virginia, Va. Code Ann. § 8:01-581.01, et seq.

Procedural History

Lewis submitted an Arbitration Request Form in April 2003, identifying his intended counsel as David Alegria. In this form, he claimed that he was fired because he had informed his supervisor "that my knee had been hurt at work and I needed medical attention." He requested that his position be "restored with back pay." This form, which he signed, stated that he agreed "to accept the decision and award of the Arbitrator as final and binding." Lewis submitted another Arbitration Request Form in August 2003, which included more details about the nature of his complaint, made specific claims under the Kansas Act Against Discrimination, Kan. Stat. Ann. § 44-1001, et seq., and Title VII of the Civil Rights Act, 42 U.S.C. § 2000e, et seq., and made a generalized claim for retaliatory discharge under state law.3 Lewis requested five years' worth of annual compensation (totaling $226,910), medical reimbursement, $500,000 for emotional distress, unspecified punitive damages, and attorneys fees. This request, prepared by Alegria, did not include the statement agreeing to accept the decision and award of the arbitrator.

The arbitration hearing commenced February 25, 2004, and ended February 27, 2004. Pursuant to the procedures, a single arbitrator heard the matter. While it is not clear what the full extent of discovery was, or the nature of the hearing, the record includes a set of interrogatories completed by Lewis, several references to witness testimony, an acknowledgment of evidence and post-hearing briefs, and an apparently unsuccessful attempt to subpoena Guerrero for the hearing.

The arbitrator issued a decision on April 30, 2004, that addressed Lewis's Title VII and retaliatory discharge claims. Specifically with respect to retaliatory discharge, the arbitrator cited to Ortega v. IBP, Inc., 255 Kan. 513, 874 P.2d 1188, 1191, 1198 (1994), which stated that Kansas courts recognize the tort in the context of worker's compensation filings and concluded that a plaintiff "must establish that claim by a preponderance of the evidence, but the evidence must be clear and convincing in nature." Noting that "[n]umerous case decisions [from state and federal Kansas courts] follow the burden-shifting requirements set forth in the United States Supreme Court decision of McDonnell Douglas Corp. v. Green[, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973), ] ... for both claims of discrimination under the Civil Rights Act of 1964, and retaliatory discharge claims, " the arbitrator proceeded to analyze the facts of the case and concluded that Circuit City's reason for termination was not "mere pretext" for discrimination or retaliation.4 The arbitrator ruled that Circuit City was justified in terminating Lewis because it had interpreted the

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weapons policy in good faith. The arbitrator noted that it was possible that Circuit City's management misapplied the policy, but relied on Sanchez v. Philip Morris Inc., 992 F.2d 244, 247 (10th Cir. 1993), which states that "Title VII is not violated by the exercise of erroneous or even illogical business judgment." Although Circuit City's procedures permitted the arbitrator to shift the costs of the arbitration from Circuit City to the claimant if he should lose, the arbitrator declined to do so in Lewis's case.5

In December 2004, Lewis - -through the same counsel he used in arbitration--filed suit against Circuit City in Kansas state court alleging "wrongful termination based upon retaliation for exercising statutory rights under the Kansas workers' compensation Act." Lewis stated that he "ha[d] exhausted his arbitration remedies, " and contended that under Kansas law, "the tort of retaliatory discharge is a non-negotiable right" inappropriate for resolution by arbitration. Circuit City removed to federal court on the basis of diversity of citizenship and amount in controversy pursuant to 28 U.S.C. § 1332. Circuit City then filed a motion to dismiss, arguing that because Lewis agreed to final and binding arbitration, he could not seek a "second bite at the apple" on the very same claim in court. The district court converted Circuit City's...

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