Bolinger v. Virgin Islands Telephone Corp.
| Citation | 293 F.Supp.2d 559 |
| Decision Date | 29 October 2003 |
| Docket Number | No. CIV.A.2002/0049.,CIV.A.2002/0049. |
| Parties | Tod BOLINGER Plaintiff, v. VIRGIN ISLANDS TELEPHONE CORP., and Innovative Communication Corp. Defendants. |
| Court | U.S. District Court — Virgin Islands |
Lee J. Rohn, Law Offices of Lee J. Rohn, Christiansted, VI, Counsel for Plaintiff.
Joel H. Holt, Christiansted, VI, Counsel for Defendants.
Plaintiff Todd Bolinger, ("Bolinger" or "Plaintiff") initiated this action on April 23, 2002, in the St. Croix Division of the District Court for the United States Virgin Islands, asserting claims for fraud and breach of contract against his employer, Virgin Islands Telephone Corporation ("VITELCO"), and its parent company, Innovative Communication Corporation ("ICC"). This Court has jurisdiction over this matter pursuant to section 22(a) of the Revised Organic Act of 1954 and 28 U.S.C. § 1332, as there is complete diversity of citizenship between the parties and the amount in controversy exceeds $75,000, exclusive of costs and interest. Presently before this Court are Plaintiff's motions to amend the complaint and to cite additional authority and Defendant's motion to compel arbitration according to the terms of Plaintiff's employment contract. For the reasons set forth below, Plaintiff's motion to amend the complaint will be granted and the motion to cite additional authority will be denied. Defendant's motion to compel arbitration will be granted.
Plaintiff, Todd Bolinger entered into a contract with Defendant VITELCO to serve as the company's Director of Technical Support Services for a period of one year commencing on April 19, 1999. (Compl. at ¶ 6). The contract, which by its terms, was renewable on an annual basis, entitled Bolinger to a broad range of compensation and benefits, including: a minimum base salary of $125,000 per year; use of a fully insured company vehicle "for both business and personal use;" full reimbursement for phone services (both local and long distance) and "all travel expenses"; $2,500 per month for housing expenses, and participation in the company's standard retirement and health insurance plans. . The contract also contained an arbitration clause which provides as follows:
SECTION 5.06. Binding Arbitration. Any disputes under or in any way relating to this Agreement, the employment or any relations between the parties, or wrongs allegedly done to the Employee shall be submitted solely to arbitration under the commercial rules of the American Arbitration Association, and will be determined in a sealed proceeding.
(Def.'s Opposition to Motion to Amend at Exhibit A).
Although Plaintiff did not receive a renewal contract in accordance with the terms of his employment agreement, Plaintiff's job title was changed from Director of Technical Support to Vice-President of Operations in February 2001. Bolinger's employment continued uninterrupted until October 2001, when he was called into the office of VITELCO's president, Samuel Ebberson, and informed that his employment was being terminated. (Compl. at ¶ 8; Pl.'s Opposition to Def.'s Motion to Stay and Order Arb. at 1). Plaintiff was handed a notice of termination and then allegedly coerced under "extreme duress" into signing a broadly drafted release which, by its terms, relinquished his right to pursue any present or future claims against the company. (Id. at ¶ 9-12). In exchange for signing the release, Bolinger received a settlement of $20,800. (Reply to Pl.'s Opp. to Def.'s Motion to Compel Arbitration at Exhibit A).
Shortly thereafter, Bolinger filed a two-count complaint in this Court, against both VITELCO and its parent company, ICC, asserting claims for breach of contract (Count I) and fraud (Count II). On May 10, 2002, Defendants filed their answer, along with a motion for an order staying the proceedings in this matter and compelling Bolinger to submit to binding arbitration in accordance with Section 5.06 of his employment agreement. Bolinger filed opposition to the motion to compel claiming that the arbitration clause contained within the contract did not control because the contract was not renewed. (Pl.'s Opp. to Def.'s Motion to Compel Arbitration at 1). In the alternative, Plaintiff argues that the costs of arbitration are prohibitive, making it unlikely that Plaintiff could vindicate his rights in an arbitral forum. (Id. at 2).
Plaintiff moved to amend the complaint on June 6, 2003, seeking to add to the existing claims for breach of contract and fraud, allegations of misrepresentation (Count III), wrongful discharge (Count IV) and intentional or negligent infliction of emotional distress so outrageous, fraudulent or reckless as to entitle Plaintiff to an award of punitive damages (Counts V-VI). Defendant filed opposition to Plaintiff's motion to amend claiming that the proposed amendments are futile.
On August 28, 2003, Plaintiff filed a motion to cite additional authority, namely Alexander, et. al. v. Anthony Intl., 341 F.3d 256 (3rd Cir.2003), presently pending before the Third Circuit, in support of his opposition to Defendant's motion to compel arbitration.1 In Alexander, the Plaintiff, who possessed a seventh-grade education, worked for Hess Oil refinery for twenty years as a heavy equipment operator. Id. Hess contracted with Defendant Anthony Crane to provide heavy equipment services, including the services of Plaintiff. Before commencing work with Anthony Crane, Plaintiff attended an orientation meeting during which he received an hourly employment contract. Plaintiff was required to sign the contract as a condition of employment. That contract included an arbitration clause which provided, among other things, that employees must bring disputes within thirty days and that the losing party would bear the costs of arbitration. The Third Circuit held that the arbitration agreement was "fundamentally unconscionable" because the plaintiffs had no "real opportunity to negotiate," and the thirty-day time limitation and the "loser pays" provision "unreasonably favor[ed] Anthony Crane to the plaintiff's detriment." Id. at 262-63. In making its ruling, the Third Circuit, applying principles of contract law, found that the arbitration agreement was unenforceable because it was both procedurally and substantively unconscionable. Id at 266.
Defendant moves to compel arbitration in accordance with the arbitration clause contained in Plaintiff's employment contract and pursuant to the Federal Arbitration Act ("FAA"), 9 U.S.C. §§ 1-16. The FAA "establishes a federal policy favoring arbitration" and was enacted to "reverse centuries of judicial hostility to arbitration agreements." Shearson/American Express, Inc. v. McMahon, 482 U.S. 220, 225, 107 S.Ct. 2332, 96 L.Ed.2d 185 (1987). Guided by that policy, federal courts have held that when interpreting an agreement to arbitrate, "all ambiguities must be resolved in favor of arbitrability." Smith v. The Equitable, 27 F.Supp.2d 565, 568 (E.D.Pa.1998) ().
Because arbitration is a matter of contract, it is for the court to determine whether the parties agreed to arbitrate the claims in dispute. Laborers' Int'l Union v. Foster Wheeler Corp., 868 F.2d 573, 576 (3rd Cir.1989); Audio Video Ctr. v. First Union Nat'l Bank, 84 F.Supp.2d 624, 625 (E.D.Pa.2000). The Court must engage in a limited review to establish whether there is an agreement to arbitrate and whether the dispute falls within the scope of that agreement. In re The Prudential Ins. Co. of America, 924 F.Supp. 627 (D.N.J.1996). In assessing whether a dispute falls within the scope of an arbitration clause, the court should focus "on the factual allegations in the complaint rather than the legal causes of action asserted." If the allegations involve matters covered by the arbitration agreement, "the claims must be arbitrated, regardless of the legal labels ascribed to the claims." RCM Technologies, Inc. v. Brignik Technology, Inc., 137 F.Supp.2d 550, 553 (D.N.J.2001) (Brotman, J.) (citations omitted).
Plaintiff in this case disputes the existence of an enforceable contract, claiming that the employment contract lapsed after it was not renewed, and that the arbitration clause does not control. In the alternative, Plaintiff argues that if the arbitration clause is enforceable, the costs are prohibitive. In determining whether the employment contract is enforceable, the Court applies general principles of contract as expressed in the Restatement. See 1 V.I.C. § 4. With respect to expired employment contracts, under the Restatement a contract may be inferred from fact. See Restatement Second of Contracts § 19(1) (). Accordingly, an employment contract may survive expiration where the parties' conduct manifests an intent to continue its terms. This principle was affirmed in Luden's Inc. v. Local Union No. 6 of the Bakery, 28 F.3d 347 (3rd Cir.1994). In that case, the Court concluded that the duty to arbitrate contained in a collective bargaining agreement where one party had unilaterally terminated the agreement continued as a term-in-fact. The Court relied on common law contract authority stating that:
General principles of contract law teach us that when a contract lapses but the parties to the contract continue to act as if they are performing under a contract, the material terms of the prior contract will survive...
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...act.” Restatement (Second) of Contracts § 19(1) (1981).7 In other words, “a contract may be inferred from fact.” Bolinger v. V.I. Tel. Corp., 293 F.Supp.2d 559, 564 (D.Vi.2003) (finding that arbitration agreement in expired employment contract was enforceable because plaintiff “continued em......