Brazil v. Menard, Inc.
| Decision Date | 27 April 2022 |
| Docket Number | 1:22-CV-1001-CBK |
| Parties | Thomas BRAZIL, Plaintiff, v. MENARD, INC., Defendant. |
| Court | U.S. District Court — District of South Dakota |
Stephanie E. Pochop, Johnson Pochop & Bartling Law Office, Gregory, SD, Gavin D. Pochop, Johnson Pochop and Bartling Law Office, LLP, Sioux Falls, SD, for Plaintiff.
Vincent A. Purtell, John R. Hinrichs, Heidepriem, Purtell, Siegel & Hinrichs LLP, Sioux Falls, SD, for Defendant.
Thomas Brazil ("plaintiff") filed suit against his former employer Menard, Inc. ("defendant") for unlawful discrimination in violation of the Age Discrimination in Employment Act of 1967, 29 U.S.C. § 621, et seq. ("ADEA"). Doc. 1. Menard has motioned this Court to compel arbitration over Mr. Brazil's ADEA claim, invoking the arbitration agreement embedded in plaintiff's employment contract ("Employment Agreement," "Agreement") entered between the parties while plaintiff was employed by the corporation. Doc. 15. The defendant asks this Court to dismiss the matter in its entirety pursuant to Federal Rule of Civil Procedure 12(b)(3)(A)(i), invoking the Federal Arbitration Act ("FAA")’s statutory commands under 9 U.S.C. § 3. In the alternative, Menard asks this Court to stay the litigation pending arbitration.
Mr. Brazil resists Menard's motion, arguing that there is not a "valid and enforceable arbitration agreement" between the parties because the Employment Agreement expired December 31, 2020. PLAINTIFF'S MEMORANDUM BRIEF IN OPPOSITION TO MOTION TO COMPEL ARBITRATION , doc. 19 at 1. For over 40 years Brazil would sign his yearly employment contract with Menard, for whom he worked in Watertown, South Dakota. Plaintiff's ADEA claim centers on assertions of disparate treatment by Menard towards him because of his age, with younger employees treated more favorably. These allegations occurred between the end of 2019 and December 2020, when the plaintiff's latest and last Agreement was still in effect. The termination, though, took place on January 28, 2021, past the expiration date as listed in the Agreement. Therefore, Brazil posits, this matter was not agreed to be decided by binding arbitration. Menard's response centers on the fact that the alleged discriminatory actions occurred before termination took place (and while the Agreement was still in effect,) thus qualifying this matter for arbitration.
Section 16 of the Agreement lays out what sort of matters must be sent to arbitration. Its pertinent provisions state:
EMPLOYMENT AGREEMENT , doc. 12-1 at 5 (emphases in original). So, if there was a binding arbitration agreement in place when the alleged transgressions took place, this matter cannot be litigated in this Court, but rather by an arbitration panel in Codington County, South Dakota. Other relevant portions of the Agreement to this motion include Section 14, which provides for "legal relations created between [the parties]" to be construed under Wisconsin law; Section 17's "At-Will Employment" stating that "Nothing in this Agreement is to be construed as altering your status as an ‘at-will’ employee;" and bears noting that this Agreement was not in fact signed by Brazil, but rather acknowledged on April 5, 2020. Id. at 5–7. While the Agreement's expiration date was December 31, 2020, both parties continued operating as if this was perfunctory. Mr. Brazil continued to come into work. Menard continued treating him as if he was still bound by its prior Employment Agreement through continued compensation and delegation of tasks. Simply put, neither party acted as if December 31, 2020, was really Brazil's last day of employment. So, then, what was the plaintiff for the weeks he continued working in January 2021? An employee, a contractor, a trespasser?
Neither party disputes that Wisconsin law must guide this Court on interpreting contract principles. But they could not differ more on the critical question at the crux of this motion: Was the prior Employment Agreement (and therefore, a binding arbitration agreement) still in effect when Brazil was terminated in January 2021 after its supposed expiration on December 31, 2020, when both parties continued operating as if the Agreement was still in effect and where neither party sought to renegotiate or enter into a new contract? Because Wisconsin case law is clear that both parties remained bound by the four corners of the prior Employment Agreement, this matter should be stayed so that arbitration may occur.
The Federal Arbitration Act arose in the 1920's to "counteract judicial hostility to arbitration and establish ‘a liberal federal policy favoring arbitration agreements.’ " New Prime Inc. v. Oliveira, ––– U.S. ––––, 139 S.Ct. 532, 543, 202 L.Ed.2d 536 (2019) (quoting Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983) ). See also Reid v. Doe Run Res. Corp., 701 F.3d 840, 845 (8th Cir. 2012) (). With this liberal backdrop, courts enforce arbitration agreements so long as "the dispute falls within the scope" of the contract between the disputing parties. Duncan v. Int'l Mkts. Live, Inc., 20 F.4th 400, 402 (8th Cir. 2021) (per curiam) (internal quotations omitted). Section 4 of the statute "authorizes a ‘party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration [to] petition [a] United States district court ... for an order directing that such arbitration proceed in the manner provided for in such agreement.’ " Id. (quoting 9 U.S.C. § 4 ).
Where "the underlying dispute falls within the court's jurisdiction – for example, by presenting a federal question [such as an ADEA-based claim] – then the court may rule on the petition to compel." Badgerow v. Walters, ––– U.S. ––––, 142 S.Ct. 1310, 1314, 212 L.Ed.2d 355 (2022). When "the terms of a written arbitration agreement [are] ‘valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract,’ " this Court must submit the matter to arbitration. Northport Health Servs. of Ark., LLC v. U.S. Dep't of Health & Hum. Servs., 14 F.4th 856, 866 (8th Cir. 2021) (quoting 9 U.S.C. § 2 ).
As the movant, Menard bears the burden to show (1) there was an agreement to arbitrate, and that (2) this dispute falls within the scope of that arbitration agreement. Sommerfeld v. Adesta, LLC, 2 F.4th 758, 761 (8th Cir. 2021). And this question of whether a dispute falls within the four corners of an arbitration agreement is, "at heart, a matter of contract interpretation." Meierhenry Sargent LLP v. Williams, 915 F.3d 507, 510 (8th Cir. 2019). Here, the parties only dispute step (1), whether there was an agreement to arbitrate at the time of Brazil's termination in January 2021, the action at the crux of his claim. Neither side disputes that if there was a binding agreement in place in January, that this dispute falls squarely within the arbitration clause. And pursuant to Section 14 of the Agreement, Wisconsin contract law "governs whether an arbitration agreement is valid." Dickson v. Gospel for ASIA, Inc., 902 F.3d 831, 834 (8th Cir. 2018) (citing Faber v. Menard, Inc., 367 F.3d 1048, 1052 (8th Cir. 2004) ). See also Union Elec. Co. v. AEGIS Energy Syndicate 1225, 713 F.3d 366, 368 (8th Cir. 2013) (per curiam) () (alteration in original) (quoting Keymer v. Mgmt. Recruiters Int'l, Inc., 169 F.3d 501, 504 (8th Cir. 1999) ). As a federal court sitting in diversity, this Court must apply the choice-of-law principles of the state where it sits to...
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