AC&S Inc. v. George

• Decision Date: 17 November 2020
• Docket Number: No. 19-0459,19-0459
• Citation: 851 S.E.2d 495
• Court: West Virginia Supreme Court
• Parties: AC&S INC., Defendant Below, Petitioner, v. Jeffrey R. GEORGE, Plaintiff Below, Respondent.

851 S.E.2d 495

AC&S INC., Defendant Below, Petitioner,

v.Jeffrey R. GEORGE, Plaintiff Below, Respondent.

No. 19-0459

Supreme Court of Appeals of West Virginia.

Submitted: October 7, 2020

Filed: November 17, 2020

Brian J. Moore, Esq., Arie M. Spitz, Esq., Dinsmore & Shohl LLP, Charleston, West Virginia, Counsel for Petitioner.

W. Jesse Forbes, Esq., Forbes Law Offices PLLC, Charleston, West Virginia and Todd S. Bailess, Esq., Rodney A. Smith, Esq., Bailess Smith PLLC, Charleston, West Virginia, Counsel for Respondent.

WALKER, Justice:

After his employment with AC&S Inc. (AC&S) was terminated in April 2016, Jeffrey R. George filed this case claiming unlawful employment discrimination and retaliation. AC&S moved to dismiss and to compel arbitration of Mr. George's claims under the terms of the collective bargaining agreement (CBA) in place at the workplace. In May 2019, the circuit court denied the motion and AC&S appealed on the grounds that the arbitration clause of the CBA was a waiver of Mr. George's individual right to pursue his statutory and common law claims outside of arbitration. Although the CBA here required arbitration of all disputes arising under the CBA, it did not include a "clear and unmistakable" waiver of Mr. George's individual right to pursue his statutory and common law employment discrimination claims in state court. So, the circuit court correctly denied AC&S's motion to dismiss and to compel arbitration.

I. FACTUAL AND PROCEDURAL BACKGROUND

Mr. George was employed by AC&S as a chemical operator in Nitro, West Virginia.

He was a member of the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union AFL-CIO (union), which is the sole agent of all bargaining unit employees at AC&S's Nitro facility. In September 2014, the union and AC&S entered into a CBA that established the terms and conditions of employment for covered employees.

The CBA contains two arbitration provisions. Article X, Section 2, of the CBA provides:

It is expressly understood and agreed by all parties to this Agreement, the Employer, the Union, and Bargaining Unit employees that the sole remedy for disputes regarding disciplinary actions taken by the Employer against employees covered by this Agreement shall be in accordance with ARTICLE XI, GRIEVANCE AND ARBITRATION PROCEDURES, of this Agreement.

And Article XI, Section 1, of the CBA provides general language requiring that

all complaints, disputes, controversies, or grievances arising between the Employer and ... [covered employees], which involve[ ] only questions of interpretation or application of any provisions of this Agreement shall be adjusted and resolved ... in the manner provided by this ARTICLE, ARTICLE XI, GRIEVANCE AND ARBITRATION PROCEDURES.

On April 26, 2016, AC&S terminated Mr. George's employment for alleged violation of safety rules and insubordination. Mr. George believes his termination was in retaliation for filing a workers’ compensation claim and because he was perceived as having an impairment or being disabled.

The union filed a grievance on Mr. George's behalf the day he was terminated.¹ AC&S denied Mr. George's grievance and neither he nor the union on his behalf pursued arbitration under the CBA.

In October 2017, Mr. George filed this lawsuit in circuit court alleging that he was wrongfully terminated in violation of the West Virginia Workers Compensation Act,² the West Virginia Human Rights Act,³ and substantial public policies of the State of West Virginia.⁴ AC&S responded by moving to dismiss and compel arbitration, arguing that the arbitration clause in the CBA governing Mr. George's employment mandated arbitration of his claims. After Mr. George filed a response, the circuit court held a hearing on the motion.

On May 7, 2019, the circuit court denied AC&S's motion. It found that Mr. George's individual employment discrimination claims fell outside the scope of the CBA. Relying on the United States Supreme Court opinions of Wright v. Universal Maritime Corp .,⁵ and 14 Penn Plaza LLC v. Pyett ,⁶ the circuit court stated that "[i]n order to compel an employment discrimination claim pursuant to an arbitration agreement contained in a CBA, the requirement to arbitrate such claims must be particularly clear such that the waiver of a judicial forum is clear and unmistakable." The circuit court applied the test set forth by the Fourth Circuit Court of Appeals in Carson v. Giant Food, Inc .,⁷ which stated that the "clear and unmistakable" waiver standard can be satisfied in the following two ways:

The first is the most straightforward. It simply involves drafting an explicit arbitration clause. Under this approach, the CBA must contain a clear and unmistakable provision under which the employees agree to submit to arbitration all federal causes of action arising out of their employment. Such a clear arbitration clause will suffice to bind the parties to arbitrate claims arising under a host of federal statutes, including Title VII, 42 U.S.C. § 1981, the ADEA, and the ADA.

The second approach is applicable when the arbitration clause is not so clear. General arbitration clauses, such as those referring to "all disputes" or "all disputes concerning the interpretation of the agreement," taken alone do not meet the clear and unmistakable requirement of [ Wright ]. When the parties use such broad but nonspecific language in the arbitration clause, they must include an "explicit incorporation of statutory antidiscrimination requirements" elsewhere in the contract.... If another provision, like a nondiscrimination clause, makes it unmistakably clear that the discrimination statutes at issue are part of the agreement, employees will be bound to arbitrate their federal claims.⁸

The circuit court found that the CBA met neither of these approaches. The CBA contains no language that 1) incorporates the statutory or common law claims Mr. George is asserting, or 2) requires union members to submit to arbitration "all causes of action" arising from their employment, coupled with a nondiscrimination clause. So, the CBA required arbitration of any contractual disputes regarding disciplinary actions but not arbitration of Mr. George's employment discrimination claims. Finally, the circuit court rejected AC&S's argument that Mr. George's "course of conduct" in filing a union grievance regarding his termination demonstrated that he understood his claims must be pursued through arbitration.

II. STANDARD OF REVIEW

AC&S appeals the circuit court's denial of its motion to dismiss and compel arbitration. In Credit Acceptance Corporation v. Front ,⁹ we held that "[a]n order denying a motion to compel arbitration is an interlocutory ruling which is subject to immediate appeal under the collateral order doctrine." And, "[w]hen an appeal from an order denying a motion to dismiss and to compel arbitration is properly before this Court, our review is de novo. "¹⁰ Our review is also plenary to the extent our analysis requires us to examine the CBA.¹¹

III. ANALYSIS

AC&S contends that the circuit court should have granted its motion to dismiss and to compel arbitration of Mr. George's employment-related claims. Our consideration is necessarily limited in scope. We begin by observing that

[w]hen a trial court is required to rule upon a motion to compel arbitration pursuant to the Federal Arbitration Act [FAA], 9 U.S.C. §§ 1 - 307 (2006), the authority of the trial court is limited to determining the threshold issues of (1) whether a valid arbitration agreement exists between the parties; and (2) whether the claims averred by the plaintiff fall within the substantive scope of that arbitration agreement.^{[12 ]}

The question here is not whether the CBA includes an arbitration agreement that pertains to Mr. George's employment; it undisputedly does. Instead, the primary issue is whether his statutory and common law employment discrimination claims fall within the substantive scope of the CBA.

In this appeal, AC&S argues that 1) the circuit court should not have applied the "clear and unmistakable" waiver standard when determining the validity of the arbitration clause; 2) alternatively, the arbitration clause meets that standard; and 3) the circuit court erred when it failed to take Mr. George's course of conduct into account. Mr. George counters that the circuit court did not err in applying the "clear and unmistakable" waiver standard because Wright remains binding precedent, and the CBA does not meet that standard. Mr. George also states that the broadest conclusion that can be drawn from his decision to file a grievance initially is that he intended to arbitrate contractual violations of the CBA.

A. "Clear and Unmistakable" Waiver Standard

Normally, the inclusion of an arbitration clause in a CBA creates a "presumption of arbitrability" as to disputes that arise between the parties to that agreement.¹³ There is an exception to that rule where a dispute ultimately concerns not the application or interpretation of the CBA, but the meaning of a statute; Wright requires a court to determine whether, without use of the presumption, an "ordinary textual analysis of a CBA show[s] that matters which go beyond the interpretation and application of contract terms are subject to arbitration[.]"¹⁴ In Wright , the Supreme Court emphasized that a waiver of employee rights to a judicial forum must be "clear and unmistakable."¹⁵ In addition, "[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."¹⁶

There are advantages and disadvantages to the employer and the union in negotiating an arbitration clause in a CBA that reaches employees’ individual statutory rights. With those considerations in mind, both parties—who are highly sophisticated at negotiating the terms of a CBA—must balance those interests.¹⁷ I...