Dumais v. American Golf Corp., No. 01-2224.

• Decision Date: 15 August 2002
• Docket Number: No. 01-2224.
• Citation: 299 F.3d 1216
• Parties: Teresita J. DUMAIS, Plaintiff-Appellee, v. AMERICAN GOLF CORPORATION, doing business as Paradise Hills Golf Club, a foreign corporation; and William Winkler, Defendants-Appellants.
• Court: U.S. Court of Appeals — Tenth Circuit

299 F.3d 1216

Teresita J. DUMAIS, Plaintiff-Appellee, v. AMERICAN GOLF CORPORATION, doing business as Paradise Hills Golf Club, a foreign corporation; and William Winkler, Defendants-Appellants.

No. 01-2224.

United States Court of Appeals, Tenth Circuit.

August 15, 2002.

Martin R. Esquivel of Dines, Gross & Esquivel, P.C., Albuquerque, NM, for Defendants-Appellants.

Christopher M. Moody (Whitney Warner with him on the brief) of Noeding & Moody, P.C., Albuquerque, NM, for Plaintiff-Appellee.

Before EBEL, McKAY, and BRISCOE, Circuit Judges.

McKAY, Circuit Judge.

Appellee Dumais began working at the Paradise Hills Golf Course on May 3, 1996. At that time, Golf Enterprises owned the course. Some two months later, Appellant American Golf assumed ownership of Paradise Hills. American Golf required all employees, including Appellee, to complete new employment applications. On July 25, 1996, Appellee also signed two separate arbitration agreements. One was titled "We Can Work It Out," and the other, the "New Co-Worker Authorization & Acknowledgment Form."

The "We Can Work It Out" agreement required Appellee to bring any claim of unlawful harassment, discrimination, or wrongful discharge arising out of her employment relationship with American Golf exclusively through the process of final and binding arbitration. Appellee also specifically acknowledged that she knowingly and voluntarily waived her rights to pursue these employment claims in court.

The "New Co-Worker Authorization & Acknowledgment Form" bound Appellee to the provisions of American Golf's employment handbook titled "Co-Worker Alliance Handbook." This handbook also contained an agreement to arbitrate employment claims. The parties dispute whether Appellee actually received a copy of the Handbook.

One section of the Handbook declares that American Golf "reserves the right to at any time change, delete, modify, or add to any of the provisions contained in this handbook at its sole discretion," with the exceptions of Appellee's employment-at-will status and the arbitration provision. Aple.App. at 58. However, on the page of the Handbook where the employees sign which acknowledges that they read and understood the Handbook's provisions, American Golf reserves the right to amend, supplement, or revise everything in the Handbook with the exception of employees' at-will status. Id. at 66. The Handbook also states, "This Co-Worker Alliance is my personal agreement of employment with [American Golf]. I understand that this handbook supersedes any and all prior handbooks." Id. at 58.

In July of 1999, Appellee left American Golf's employ. She subsequently filed a Charge of Discrimination with the EEOC. Then, in February 2000, Appellee filed suit in the United States District Court for the District of New Mexico. In response, Appellants filed a motion to compel arbitration.

The motion to compel arbitration was assigned to a magistrate judge for disposition. On April 25, 2001, the magistrate judge held an evidentiary hearing where he refused to consider two affidavits American Golf wished to enter into evidence concerning the date Appellee began employment with American Golf. On May 20, 2001, the magistrate judge issued his Proposed Findings and Recommended Disposition, which the district court adopted in its June 14, 2001 Order.

The district court found that Appellee commenced employment with American Golf on May 3, 1996, rather than July 31, 1996. The district court held that the arbitration agreement was invalid because it was illusory, lacked mutuality, and was not supported by consideration. Additionally, the district court held that the arbitration agreements did not cover Appellee's infliction of emotional distress or prima facie tort claims against American Golf or any claims brought against Appellant William Winkler. The district court also refused to overturn the magistrate judge's decision to reject American Golf's affidavits.

Appellants timely appealed to this court. Appellants challenge the district court's finding regarding Appellee's beginning date of employment, the district court's decision not to allow American Golf's affidavits into evidence, and the district court's holdings that the agreement to arbitrate was illusory, lacked mutuality, was not supported by consideration, and did not cover Appellee's claims for infliction of emotional distress, prima facie tort, or any claims against Mr. Winkler.

Because it is immaterial to our resolution of this appeal, we need not review whether the district court's finding regarding the date Appellee commenced employment with American Golf was clearly erroneous. Instead, we begin our review of the district court's Order by considering whether it correctly held that the arbitration agreement between American Golf and Appellee was illusory. We review the denial of a motion to compel arbitration de novo and employ the same legal standard employed by the district court. Armijo v. Prudential Ins. Co. of Am., 72 F.3d 793, 796 (10th Cir.1995).

The district court held that the arbitration agreement was illusory because the Handbook contains two conflicting provisions. One provision allows American Golf to unilaterally alter, modify, change, etc., any provision of the Handbook except Appellee's employment-at-will status and the arbitration agreement. A second provision permits American Golf to unilaterally alter, modify, change, etc., any provision of the Handbook except Appellee's employment-at-will status. This rendered American Golf's contract with Appellee ambiguous because "[t]he inconsistent provisions... are reasonably and fairly susceptible to different constructions." Aplt.App. at 323.

Construing the Handbook against the drafter (American Golf), the district court held that the conflicting provisions allowed American Golf to change the arbitration provision at will. "[T]he agreement binds [Appellee] to arbitration but allows [American Golf] free rein to renege. This lopsided agreement is illusory because it allows [American Golf] to unilaterally modify the terms at any time." Id.

The parties' respective positions in this litigation are unusual because they represent the opposite of what typically occurs. Essentially, Appellee is arguing that the Handbook gives American Golf increased power to modify (all provisions except employment-at-will status), and American Golf is arguing that its power to modify is more circumscribed (cannot modify employment-at-will or arbitration...