Dillard's Inc. v. Gallups

• Decision Date: 10 September 2010
• Docket Number: 2090994.
• Citation: 58 So.3d 196
• Parties: DILLARD'S, INC.v.Kenneth GALLUPS.
• Court: Alabama Court of Civil Appeals

58 So.3d 196

DILLARD'S, INC.

v.Kenneth GALLUPS.

2090994.

Court of Civil Appeals of Alabama.

Sept. 10, 2010.

James L. Sanders II and Timothy M. Allen of Estes, Sanders & Williams, LLC, Birmingham, for appellant.Matthew W. White of Adams, Umbach, Davidson & White, LLP, Opelika, for appellee.THOMAS, Judge.

On February 15, 2009, Kenneth Gallups sued Dillard's, Inc., seeking workers' compensation benefits (“the workers' compensation claim”) and alleging that Dillard's had discharged him from his employment in violation of Ala.Code 1975, § 25–5–11.1, solely because he had made a claim for workers' compensation benefits (“the retaliatory-discharge claim”); that action was assigned case number CV–09–900091. Dillard's moved to sever the workers' compensation claim from the retaliatory-discharge claim, filed separate answers to both claims, and moved to compel arbitration as to the retaliatory-discharge claim. Gallups opposed Dillard's motion to compel arbitration.

The trial court severed the retaliatory-discharge claim from the worker's compensation claim, assigned the retaliatory-discharge claim case number CV–09–900091.01 (“the retaliatory-discharge case”), stayed discovery in the retaliatory-discharge case, and set a hearing on the motion to compel arbitration for July 31, 2009. However, although the retaliatory-discharge case was assigned case number CV–09–900091.01, the parties and the trial court continued to file all motions, responses, and orders relating to the retaliatory-discharge case in case number CV–09–900091. After the hearing on the motion to compel arbitration, the trial court denied that motion. Dillard's appealed to the Alabama Supreme Court, which transferred the appeal to this court, pursuant to Ala.Code 1975, § 12–2–7(6).

“ ‘A direct appeal is the proper procedure by which to seek review of a trial court's order denying a motion to compel arbitration.’ Homes of Legend, Inc. v. McCollough, 776 So.2d 741, 745 (Ala.2000); Rule 4(d), Ala. R.App. P. We review the trial court's grant or denial of a motion to compel arbitration de novo. Bowen v. Security Pest Control, Inc., 879 So.2d 1139, 1141 (Ala.2003). The party seeking to compel arbitration has the initial burden of proving the existence of a contract calling for arbitration and proving that that contract evidences a transaction involving interstate commerce. Polaris Sales, Inc. v. Heritage Imports, Inc., 879 So.2d 1129, 1132 (Ala.2003). The moving party ‘ “ ‘must produce some evidence which tends to establish its claim.’ ” ' Wolff Motor Co. v. White 869 So.2d 1129, 1131 (Ala.2003) (quoting Jim Burke Auto., Inc. v. Beavers, 674 So.2d 1260, 1265 (Ala.1995), quoting in turn In re American Freight Sys., Inc., 164 B.R. 341, 345 (D.Kan.1994)). Once the moving party meets this initial burden, the nonmovant then has the burden to present evidence tending to show that the arbitration agreement is invalid or inapplicable to the case. Polaris, 879 So.2d at 1132.”

Title Max of Birmingham, Inc. v. Edwards, 973 So.2d 1050, 1052–53 (Ala.2007).

The contract governing the arbitration of disputes between Dillard's and its employees is entitled “Rules of Arbitration” (“the Rules”).¹ According to the Rules, the following types of claims, among others not relevant here, are required to be arbitrated:

“Personal injuries except those covered by workers' compensation or those covered by an employee welfare benefit plan, pension plan or retirement plan which are subject to the Employee Retirement Income Security Act of 1974 (ERISA) other than claims for breach of fiduciary duty (which shall be arbitrable).

“Retaliation for filing a protected claim for benefits (such as workers' compensation) or exercising your protected rights under any statute.”

Based on the above-quoted provisions, Dillard's argued that, although Gallups's workers' compensation claim was specifically excluded under the Rules, his retaliatory-discharge claim was specifically included as an arbitrable claim. Gallups argued, however, that the above-quoted provisions created an ambiguity because, he contended, his retaliatory-discharge claim arose under the Alabama Workers' Compensation Act, codified at Ala.Code 1975, § 25–5–1 et seq., and would therefore be exempted from the agreement by the first-quoted provision above (“the first provision”) while being included as a arbitrable claim by the second-quoted provision above (“the second provision”). Gallups further argued that a retaliatory-discharge claim was not arbitrable under the Rules because, he asserted, the Rules required that he have filed a protected claim like his workers' compensation claim and he had not actually filed a claim for benefits before he was discharged. Finally, Gallups argued that the language of the second provision is vague, ambiguous, and confusing and that, by its language, it does not apply to his retaliatory-discharge claim.

The trial court determined in its order denying Dillard's motion that Gallups's retaliatory-discharge claim arose under the Alabama Workers' Compensation Act and that, therefore, it was not subject to arbitration under the Rules. In its detailed order, the trial court relied in large part on federal district court cases holding that retaliatory-discharge claims arise under the Alabama Workers' Compensation Act for purposes of determining whether actions containing such claims can be removed to federal court pursuant to 28 U.S.C. § 1445(c), which prohibits removal to the federal courts of “[a] civil action in any State court arising under the workmen's compensation laws of such State.” See, e.g., Reed v. Heil Co., 206 F.3d 1055 (11th Cir.2000); Brooks v. Wireless One, Inc., 43 F.Supp.2d 1294 (M.D.Ala.1999); and Subra v. CMS Therapies, Inc., 900 F.Supp. 407 (M.D.Ala.1995). The trial court also relied on cases involving releases signed in workers' compensation actions, which releases have been construed to preclude a subsequent retaliatory-discharge action arising out of the workers' compensation claim giving rise to the release. Sanders v. Southern Risk Servs., 603 So.2d 994 (Ala.1992); Gates Rubber Co. v. Cantrell, 678 So.2d 754 (Ala.1996); and Walton v. Beverly Enters.-Alabama, Inc., 4 So.3d 537, 545 (Ala.Civ.App.2008). Based on those cases, the trial court concluded that Gallups's retaliatory-discharge claim arose out of the Alabama Workers' Compensation Act and was therefore a claim for “[p]ersonal injuries ... covered by workers compensation” which is not arbitrable under the Rules.

Dillard's argues on appeal that the language of the Rules clearly requires arbitration of Gallups's retaliatory- discharge claim. ² According to Dillard's, the trial court's reliance on federal caselaw applying § 1445 and Alabama caselaw governing releases is misplaced because the Alabama Supreme Court has held that a retaliatory-discharge action does not arise under the Alabama Workers' Compensation Act. See Jackson County Hosp. v. Alabama Hosp. Ass'n Trust, 619 So.2d 1369, 1371 (Ala.1993). Finally, Dillard's relies on the presumption in favor of arbitration that arises under the Federal Arbitration Act, codified at 9 U.S.C. § 1 et seq., which, it contends, requires that any questions regarding arbitrability should be resolved in favor of arbitration. See Title Max of Birmingham, Inc. v. Edwards, Inc., 973 So.2d 1050, 1054 (Ala.2007) (quoting Homes of Legend, Inc. v. McCollough, 776 So.2d 741, 745 (Ala.2000) (quoting in turn Volt Info. Scis., Inc. v. Board of Trs. of Leland Stanford Junior Univ., 489 U.S. 468, 475–76, 109 S.Ct. 1248, 103 L.Ed.2d 488 (1989))) (“ ‘ “[D]ue regard must be given to the federal policy favoring arbitration, and ambiguities as to the scope of the arbitration clause itself resolved in favor of arbitration.” ’ ”).

It is well settled that “ ‘ “[a]rbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit.” ’ ” Ex parte Cain, 838 So.2d 1020, 1026 (Ala.2002) (quoting AT & T Techns., Inc. v. Communications Workers of America, 475 U.S. 643, 648, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986) (quoting in turn United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960))). A court should apply state-law contract principles when considering whether the parties intended to arbitrate a particular dispute. McCollough, 776 So.2d at 745 (quoting First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944, 115 S.Ct. 1920, 131 L.Ed.2d 985, (1995)). However, “ ‘in applying general state-law principles of contract interpretation to the interpretation of an arbitration agreement within the scope of the [Federal Arbitration] Act, due regard must be given to the federal policy favoring arbitration, and ambiguities as to the scope of the arbitration clause itself resolved in favor of arbitration.’ ” McCollough, 776 So.2d at 745 (quoting Volt Info. Scis., 489 U.S. at 475–76, 109 S.Ct. 1248). “ ‘[A]s with any other contract, the parties' intentions control, but those intentions are generously construed as to issues of arbitrability.’ ” McCollough, 776 So.2d at 746 (quoting Mitsubishi Motors Corp. v. Soler Chrysler–Plymouth, Inc., 473 U.S. 614, 626, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985)). “Thus, a motion to compel arbitration should not be denied ‘unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute.’ ” Ex parte Colquitt, 808 So.2d 1018, 1024 (Ala.2001) (quoting United Steelworkers of America, 363 U.S. at 582–83, 80 S.Ct. 1347).

Alabama law provides that “the intent of the contracting parties is discerned from the whole of the contract.” McCollough, 776 So.2d at 746. In addition, the terms used in the contract are to be given their plain, ordinary, and natural meaning, except in cases where its is apparent that the terms have special or technical meanings. Id. Because Gallups...