Arkansas Diagnostic Center, P.A. v. Tahiri

• Decision Date: 31 May 2007
• Docket Number: No. 06-667.,06-667.
• Parties: ARKANSAS DIAGNOSTIC CENTER, P.A., Appellant, v. Dr. Abdalla TAHIRI, M.D., Appellee.
• Court: Arkansas Supreme Court

257 S.W.3d 884

370 Ark. 157

ARKANSAS DIAGNOSTIC CENTER, P.A., Appellant, v. Dr. Abdalla TAHIRI, M.D., Appellee.

No. 06-667.

Supreme Court of Arkansas.

May 31, 2007.

Friday, Eldredge & Clark, LLP, by: Jeffrey H. Moore, Little Rock, AR, for appellant.

Ball & Stuart, PLLC, by: Jason A. Stuart, Little Rock, AR, for appellee.

PAUL E. DANIELSON, Justice.

Appellant Arkansas Diagnostic Center, P.A. (ADC), appeals from the circuit court's order denying its motion to compel arbitration of its employment agreement with appellee Dr. Abdalla Tahiri.¹ ADC's sole point on appeal is that the circuit court erred in denying the motion, as it contends that the Federal Arbitration Act (FAA) applies to the agreement and requires arbitration of all claims. We affirm the circuit court's denial of the motion to compel arbitration.

The facts are these. On May 1, 2004, Dr. Tahiri entered into an employment agreement with ADC, an Arkansas medical corporation. Section 12 of the agreement specifically provided that "[a]ny controversy or claim arising out of, or relating to, this Agreement, or the breach thereof, shall be settled by arbitration in the City of Little Rock in accordance with the rules then existing of the American Arbitration Association, and judgment upon the award rendered may be entered in any court having jurisdiction thereof."

On February 21, 2006, Dr. Tahiri filed a complaint against ADC in the circuit court. The complaint alleged that during the term of his contract with ADC, the working conditions at ADC became so intolerable that it jeopardized his ability to continue professionally practicing his medical skills. Specifically, he alleged that "[o]n a frequent and recurring basis and due to the intentional actions and inactions of ADC and its agents, doctors, and employees, Dr. Tahiri was not permitted access to procedure rooms at ADC or other facilities at his previously scheduled times[.]" In addition, he contended, his schedule was made, altered, and managed in such a manner as to create conflicts for him which thereby forced him to work many more hours than would have otherwise been necessary and than were contemplated when he entered into his employment agreement with ADC. As a result of his denial of access and unauthorized scheduling, Dr. Tahiri alleged, his privileges at the local hospitals were placed at risk, and he was forced to cease providing services in connection with ADC as of May 4, 2005. Dr. Tahiri asserted five counts against ADC: (1) breach of contract; (2) quantum meruit/unjust enrichment; (3) trover/conversion; (4) accounting; and (5) declaratory judgment.

In Dr. Tahiri's request for a declaratory judgment, he asserted that section 12 of his employment agreement was both invalid and unenforceable, due to the fact that Arkansas's adoption of the Uniform Arbitration Act provided that arbitration provisions shall have no application to employer-employee disputes. Dr. Tahiri maintained that such a determination was necessary due to his position that section 17 of the employment agreement, which prohibited his practice of medicine in competition with ADC, was fatally defective and unenforceable.

On March 16, 2006, ADC responded to Dr. Tahiri's complaint and moved to compel arbitration. It further stated a counterclaim, alleging that Dr. Tahiri had failed to remit fifty percent of collections from former ADC patients, which were collected by Dr. Tahiri during the year following his separation from ADC. In its motion to compel arbitration, ADC asserted that the employment agreement with Dr. Tahiri was subject to the Federal Arbitration Act and, alternatively, to the Arkansas Uniform Arbitration Act. In addition, ADC filed a motion to dismiss Dr. Tahiri's claims for unjust enrichment and conversion.

Dr. Tahiri responded to ADC's counterclaim, generally denying it, and responded to ADC's motion to compel arbitration. In that response, Dr. Tahiri admitted that the majority of his claims arose out of the employment agreement and the remaining claims out of tort; however, he claimed, ADC's motion to compel arbitration should be denied. On April 7, 2006, Dr. Tahiri moved for partial summary judgment, alleging that the employment agreement's covenant not to compete was not arbitrable, as "[a] plain reading of the Employment Agreement shows the Employment Agreement does not evidence `a transaction involving commerce' ...; but instead, is a contract between a local doctor and local employer for medical services to local patients." He asserted that because the employment agreement did not evidence "a transaction involving commerce" as required by 9 U.S.C. § 2 and because the parties had tacitly chosen Arkansas law to govern Dr. Tahiri's provision of services under the agreement, the Federal Arbitration Act did not apply and Arkansas statutes controlled. Nonetheless, he averred, the Arkansas Uniform Arbitration Act provided that the Act should have no application to torts or employer-employee disputes and, for that reason, he claimed, the employment agreement's arbitration provision was inapplicable and summary judgment was proper. Dr. Tahiri further sought summary judgment on his claim for breach of the employment agreement.

ADC responded and moved to stay the case and its response to Dr. Tahiri's motion for partial summary judgment pending a ruling by the circuit court on its motion to compel arbitration. The circuit court granted the stay and set the motion to compel arbitration for a hearing. Following a hearing held May 12, 2006, the circuit court entered its order on May 23, 2006, denying ADC's motion to compel arbitration. ADC now appeals.

ADC argues that the employment agreement at issue involves interstate commerce, thereby subjecting it to the FAA. It submits that at the hearing before the circuit court, it presented evidence to show that it treated out-of-state patients, received payments from out-of-state insurance carriers, purchased goods from out-of-state vendors, and paid for Dr. Tahiri to travel to seminars outside of Arkansas. ADC avers that where an employer's business activities involve interstate commerce, no matter how slight, Congress has plenary authority to direct the application of the FAA.

Dr. Tahiri responds that ADC failed to introduce uncontroverted facts sufficient to prove that the employment agreement and Dr. Tahiri's actions under that agreement had the requisite nexus with interstate commerce. He contends that his and ADC's practice of medicine under the employment agreement was purely local in nature. He avers that neither the express language of the employment agreement, nor the uncontroverted facts presented at the hearing, evidence "a transaction involving commerce" between any two states or any foreign nation, but instead, contemplate and evidence only transactions wherein a Little Rock doctor performed services for central Arkansas patients through a Little Rock clinic. Finally, Dr. Tahiri asserts that the covenant not to compete in the employment agreement is void as a violation of public policy and, therefore, it is unenforceable and outside the jurisdiction of an arbitrator.

ADC replies that the employment agreement is valid and enforceable and, further, that the parties did not choose Arkansas law. It further maintains that the reach of the Commerce Clause and the application of the FAA is not limited by what the parties contemplated. It urges that the analysis required is not a "minimum-contacts" analysis, but rather one to determine whether the activities of the employer affect or involve interstate commerce. Finally, ADC urges, Dr. Tahiri's request for an advisory opinion on his restrictive-covenant argument should be denied.

An order denying a motion to compel arbitration is an immediately appealable order. See Ark. R.App. P.-Civ. 2(a)(12) (2006); National Cash, Inc. v. Loveless, 361 Ark. 112, 205 S.W.3d 127 (2005). We review a circuit court's order denying a motion to compel de novo on the record. See National Cash, Inc. v. Loveless, supra.

At issue in the instant case is whether the arbitration provision contained in the employment agreement between Dr. Tahiri and ADC is enforceable under the FAA.² Title 9 of the United States Code addresses arbitration. Specifically, 9 U.S.C.A. § 2 provides:

A written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.

9 U.S.C.A. § 2 (1999) (emphasis added). The United States Supreme Court has explained that the purpose of the FAA "was to reverse the longstanding judicial hostility to arbitration agreements that had existed at English common law and had been adopted by American courts, and to place arbitration agreements upon the same footing as other contracts." Equal Employment Opportunity Comm'n v. Waffle House, Inc., 534 U.S. 279, 289, 122 S.Ct. 754, 151 L.Ed.2d 755 (2002) (quoting Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 24, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991)). It "contains no express pre-emptive provision, nor does it reflect a congressional intent to occupy the entire field of arbitration." Volt Info. Scis., Inc. v. Board of Trustees of Leland, 489 U.S. 468, 477, 109 S.Ct. 1248, 103 L.Ed.2d 488 (1989). "Arbitration under the Act is a matter of consent, not coercion, and parties are generally free to structure their arbitration agreements as they see fit." Id. at 479, 109 S.Ct. 1248. With respect to the FAA and employment contracts, the Supreme Court has explicitly held that employment contracts, except for those covering...