Alexander v. Anthony Intern., L.P.
| Decision Date | 19 August 2003 |
| Docket Number | No. 02-3764.,02-3764. |
| Citation | 341 F.3d 256 |
| Parties | Blaise ALEXANDER; Gerald Freeman, Appellants v. ANTHONY INTERNATIONAL, L.P. |
| Court | U.S. Court of Appeals — Third Circuit |
K. Glenda Cameron, (Argued), Law Office of Lee J. Rohn, Christiansted, St. Croix, for Appellants.
Linda J. Blair, (Argued), Bryant, Barnes & Moss, Christiansted, St. Croix, for Appellee.
Before ROTH, McKEE and COWEN, Circuit Judges.
Blaise Alexander and Gerald Freeman appeal from the order of the District Court for the Virgin Islands compelling arbitration pursuant to the Federal Arbitration Act ("FAA"), 9 U.S.C. § 1 et seq., and dismissing their complaint against Anthony Crane International, L.P. ("Anthony Crane")1 with prejudice. Plaintiffs asserted several claims under Virgin Islands law arising out of the alleged discriminatory conduct of Anthony Crane, their previous employer. Because of an arbitration agreement in the employment contract, the District Court ruled that such claims must be pursued in the arbitral forum and dismissed plaintiffs' complaint. We, however, conclude that this agreement to arbitrate is unenforceable pursuant to the well-established doctrine of unconscionability. We therefore will reverse.
Plaintiffs have worked for over twenty years as heavy equipment and certified crane operators at the Hess oil refinery on St. Croix, United States Virgin Islands. Plaintiffs, originally from St. Lucia, attended schools operating under the British system of education. Alexander left school at the age of fourteen, having received the equivalent of a seventh-grade education. Freeman, who also left school at the same age, had no more than the equivalent of a fifth-grade education.
Hess Oil Virgin Islands Corporation has entered arrangements with a series of contractors to provide heavy equipment services. It announced in June 1996 that the equipment contract was awarded to Anthony Crane. Anthony Crane, a Pennsylvania company, has offices throughout the United States and the world.
On August 10, 1996, plaintiffs, along with other prospective employees, attended an orientation meeting conducted by Anthony Crane. The attendees received several documents, including the Hourly Employee Contract. The acceptance of this standard form contract constituted a condition of employment, and plaintiffs had no opportunity to negotiate or otherwise reject its specific terms. Plaintiffs signed the agreement and began working for Anthony Crane. They claimed that they accepted the terms of the contract because they needed the job. Alexander actually had three children in college at the time.
Among its various provisions, the Hourly Employee Contract contains several clauses governing the resolution of disputes. It provides that "[a]ny controversy or claim arising out of or relating in any way to this Contract, to the breach of this Contract, and/or to EMPLOYEE's employment with ANTHONY ... shall be settled by arbitration and not in a court or before an administrative law judge." App. at 17, 30. Arbitrable matters include all claims "arising out of or relating in any fashion to this Contract, to the breach of this Contract, or to EMPLOYEE'S employment with ANTHONY."2 App. at 18, 31. The employee also waives the right to a trial by jury as to any claim or dispute ruled non-arbitrable.
The arbitration must occur pursuant to the FAA and "the arbitration provisions of the Employment Dispute Resolution Rules of the American Arbitration Association (Rules 11-35 of the January 1993 version, to the extent applicable)." App. at 19, 32. According to the Hourly Employee Contract, the employee must satisfy a thirty-day limitations period in order to pursue a claim against Anthony Crane:
EMPLOYEE must present EMPLOYEE's claim in written form to the Company within thirty (30) calendar days of the event which forms the basis of the claim. For the purposes of this time limitation, the event forming the basis of a claim arising from discharge of EMPLOYEE shall be the date of discharge. In no event may EMPLOYEE bring a claim of any nature against ANTHONY unless the claim is filed as set forth in this paragraph within thirty (30) days of the last day EMPLOYEE was employed by ANTHONY. The written notice submitted by the EMPLOYEE shall describe the event forming the basis of claim, a description of his claim, the relief sought by EMPLOYEE, and an address and telephone number where EMPLOYEE can be reached. Notice must be given to the General Manager by hand delivery or by certified mail, return receipt requested, and must be received by the General Manager on or before the expiration of thirty (30) calendar days from the date of the event forming the basis of the claim. If notice is given by hand delivery, EMPLOYEE must retain a receipted copy of the notice. If notice is given by certified mail, EMPLOYEE must retain a copy of the return receipt. In the event that timely notice is not provided to the Company as set forth herein, it is agreed that the EMPLOYEE has waived EMPLOYEE's right to assert the claim, and shall have no further remedy against the Company. It is further agreed that this time limitation is to be strictly enforced by the arbitrator.
App. at 19-20, 32-33. The contract further requires Anthony Crane to submit, within fifteen calendar days of its receipt of the employee's timely notice, a request to the Federal Mediation and Conciliation Service or the American Arbitration Association ("AAA") for a list of five impartial arbitrators in order to commence the selection process.
The Hourly Employee Contract also allocates the costs of arbitration. It provides that the "losing party shall bear the costs of the arbitrator's fees and expenses." App. at 20, 33. Anthony Crane agreed to advance these fees and expenses, but, if it prevails in the proceeding, the employee is bound to provide reimbursement. The contract states that, with the exception of the arbitrator's fees and expenses, "each party shall bear its own costs and expenses, including attorney's fees." App. at 20, 33.
The Hourly Employee Contract delineates the form and extent of any arbitration award in the employee's favor. It authorizes the arbitrator to uphold Anthony Crane's actions or grant relief to the employee. Such relief "shall consist of net pecuniary damages and/or reinstatement." App. at 21, 34. "Net pecuniary damages" is defined as:
... gross wages which EMPLOYEE could have earned with ANTHONY during any period of suspension or from the time period commencing on the date of discharge and terminating on the date of the arbitration award, minus any compensation from other employment earned by EMPLOYEE during such time period, and minus any unemployment compensation received by EMPLOYEE during such time period.
App. at 21, 34. The contract "specifically excluded" incidental or consequential damages from this definition. App. at 21, 34. The arbitrator is also prohibited from substituting his or her judgment for the judgment of Anthony Crane and from altering or amending the form of any disciplinary action if the arbitrator found such action was merited. The Hourly Employee Contract finally contains an invalidity provision, stating that the invalidity of any portion of the contract shall not affect the validity of any other provision and that the parties agree that any remaining provisions "shall remain in full force and effect." App. at 22, 35.
Anthony Crane allegedly engaged in discriminatory conduct after its hiring of plaintiffs. Plaintiffs claimed that it used "white, Statesider employees" to perform the same or similar work at higher pay and benefits. App. at 42. Anthony Crane allegedly discriminated in making promotions, with all foreman and higher positions filled by these "white, Stateside employees." App. at 42. Michael Cain, the operations manager, allegedly informed Anthony Crane workers at a September 1996 meeting that the company would not recognize seniority and "that no `old men' would be filling" crane operator positions. App. at 43.
On February 17, 1997, Anthony Crane ordered Alexander to take a qualification test. Plaintiffs alleged that Alexander was given no warning or an opportunity to prepare and that only certain older, black employees were required to take this examination. Anthony Crane then terminated Alexander based on his test performance. According to plaintiffs, the company interpreted the test results in a discriminatory fashion. Alexander was fifty-nine years old at the time of his termination.
Anthony Crane informed Freeman on December 26, 1996 that he was being laid off because of a work reduction. Plaintiffs challenged this purported justification, claiming that Anthony Crane retained younger, white employees with less experience and fewer qualifications and hired such employees to perform the same or similar work after Freeman's "layoff." Although Freeman allegedly discovered that Anthony Crane was still hiring crane operators, the company informed him that no work was available.
Plaintiffs filed charges with both the Equal Employment Opportunity Commission and the Virgin Islands Department of Labor. On May 27, 1997, plaintiffs filed a complaint in the District Court. Alleging that Anthony Crane is a citizen of Pennsylvania, plaintiffs premised jurisdiction on diversity of citizenship. The complaint lacked any federal causes of action but contained five counts under Virgin Islands law. Anthony Crane allegedly violated both the Virgin Islands Wrongful Discharge Act and the Virgin Islands Civil Rights Act. The complaint further alleged that Anthony Crane's actions constituted intentional and negligent infliction of emotional distress. Plaintiffs sought punitive damages in addition to back pay, costs, and attorney's fees.
On December 22, 1997, Anthony Crane moved to stay this action pending arbitration. In an order dated April...
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