Flynn v. Aerchem, Inc.

• Decision Date: 03 July 2000
• Docket Number: No. IP00-0182-C-B/S.,IP00-0182-C-B/S.
• Citation: 102 F.Supp.2d 1055
• Parties: Paulette FLYNN, Amy Edmunson, Shelley Turpin, and Steven Floyd, Plaintiffs, v. AERCHEM, INC., an Indiana Corporation and its subsidiaries; Michael Jeffers, Kevin Jeffers, and Maxine Jeffers, individually and as sole owners of AerChem and its subsidiaries, Defendants.
• Court: U.S. District Court — Southern District of Indiana

102 F.Supp.2d 1055

Paulette FLYNN, Amy Edmunson, Shelley Turpin, and Steven Floyd, Plaintiffs, v. AERCHEM, INC., an Indiana Corporation and its subsidiaries; Michael Jeffers, Kevin Jeffers, and Maxine Jeffers, individually and as sole owners of AerChem and its subsidiaries, Defendants.

No. IP00-0182-C-B/S.

United States District Court, S.D. Indiana, Indianapolis Division.

July 3, 2000.

COPYRIGHT MATERIAL OMITTED

David J. Colman, Bloomington, IN.

Daniel C. Emerson, Bose, McKinney & Evans, Indianapolis, IN.

ENTRY GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS AND TO STAY JUDICIAL PROCEEDINGS PENDING ARBITRATION

BARKER, Chief Judge.

On January 28, 2000, Plaintiffs, Paulette Flynn, Amy Edmunson, Shelley Turpin, and Steven Floyd, filed a complaint in this Court against Defendants, AerChem, Inc. and its owners, Kevin Jeffers, Michael Jeffers, and Maxine Jeffers (collectively "AerChem"), alleging violations of Title VII of the Civil Rights Act of 1964 ("Title VII"), as well as assault, battery, and intentional infliction of emotional distress. Defendants claim that Paulette Flynn's ("Flynn") claims are subject to an Employment Arbitration Agreement ("Agreement") and move to dismiss Flynn's claims, pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6), and to compel arbitration of Flynn's claims pursuant to the Agreement. See Defs.' Mot. to Dismiss and to Stay Judicial Proceedings Pending Arbitration ("Defs.' Mot. to Dismiss") at 1. Defendants also move to stay the remaining Plaintiffs' claims pending arbitration of Flynn's claims. For the reasons discussed below, Defendants' motion to compel arbitration must be GRANTED. Defendants' motion to dismiss Flynn's claims is DENIED. Flynn's claims are SEVERED from those of the remaining Plaintiffs, pursuant to Federal Rule of Civil Procedure 21, and STAYED pending arbitration, pursuant to 9 U.S.C. § 3. Defendants' motion to stay the remaining Plaintiffs' claims must also be DENIED, allowing such claims to proceed independently of Flynn's claims.

Background

Flynn was employed by AerChem, from August or September of 1995 through September 10, 1999. See Compl. ¶¶ 6, 49; Ans. ¶¶ 4, 13. On October 26, 1998, Flynn executed an "Employment Arbitration Agreement" with AerChem. See Defs.' Mot. to Dismiss, Ex. A. Through this Agreement, Flynn consented to submit all claims to arbitration "arising out of, concerning, or relating to Employee's employment" with AerChem, including all Title VII and tort claims. Id.

Flynn does not recall specifically signing the Agreement and claims the signature thereon does not match her own. See Pls.' Verified Mot. in Opp'n to Defs.' Mot. to Dismiss and to Stay Judicial Proceedings ("Pls.' Ver. Mot.") ¶ 1. Flynn further alleges that if she did indeed sign the Agreement, she did so "as part of an Employee Handbook" and "under economic duress without any awareness of the contents or meaning" of the Agreement. Id. ¶¶ 2-3. Defendants support their motion with a copy of the Agreement and an affidavit of Ronald Tippman, whom they claim witnessed Flynn signing the Agreement. See Defs.' Mot. to Dismiss, Ex. A; Defs.' Reply, Ex. A.

Discussion

As previously noted, AerChem requests that we dismiss Flynn's claims for lack of subject matter jurisdiction and for failure to state a claim upon which relief can be granted. Our research indicates that even if we conclude that the Agreement is a valid contract, dismissal is not the proper method of disposing of Flynn's suit. The Federal Arbitration Act ("FAA"), 9 U.S.C. §§ 1 et seq., directs that, upon request of one of the parties, a court is bound to stay a trial when it determines that an issue therein is, in fact, referable to arbitration pursuant to a written agreement to arbitrate. See 9 U.S.C. § 3; see also Hires Parts Svc., Inc. v. NCR Corp., 859 F.Supp. 349, 354-56 (N.D.Ind.1994) (district court staying judicial proceedings, pursuant to 9 U.S.C. § 3, because permitting claims to proceed both in the district court and in arbitration is contrary to the FAA's purpose of avoiding wasted resources, delay, and expense of litigation). Therefore, we shall focus on whether there is a valid written agreement to arbitrate between Flynn and AerChem and if so, what is the scope of that agreement.

I. Federal Policy and the Arbitration of Title VII Claims

The Agreement purportedly signed by Flynn and Ronald Tippman, acting on behalf of AerChem, called for the undersigned employee to agree:

to submit to final and binding arbitration any controversy, dispute, or claim arising out of, concerning, or relating to Employee's employment with Company, including, but not limited to, any claim by Employee implicating rights under:

(a.) Title VII of the Civil Rights Act of 1964, 42 U.S.C. 2000 et seq.;

(b.) The Civil Rights Act of 1991, 42 U.S.C. 1981 a[sic];

....

(m.) Any contract, tort or common law.

Defs.' Mot. to Dismiss, Ex. A. Federal policy strongly favors arbitration. See Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 26, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991). In fact, the FAA provides that prospective agreements to arbitrate in the employment context are enforceable and valid. See Koveleskie v. SBC Capital Markets, Inc., 167 F.3d 361, 364 (7th Cir.1999).

Much discussion has occurred over whether Congress intended to include Title VII claims within the scope of disputes subject to pre-dispute arbitration agreements. In response to that question, the Seventh Circuit has conclusively found a "clear congressional intent to encourage arbitration of Title VII and ADEA claims, not to preclude such arbitration." Koveleskie, 167 F.3d at 365 (quoting Seus v. John Nuveen & Co., 146 F.3d 175, 183 (3rd Cir.1998)). In holding that Title VII claims are arbitrable, the Seventh Circuit relied on Gilmer, in which case the Supreme Court noted that employees who sign pre-dispute arbitration agreements do not agree to forego their substantive rights under statutes such as Title VII; rather, they allow disputes related to these rights to be resolved in "an arbitral, rather than a judicial, forum." Gilmer, 500 U.S. at 26, 111 S.Ct. 1647 (quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985)). Accordingly, an agreement such as the one between Flynn and AerChem to arbitrate federal claims, including Title VII claims, is valid and legally enforceable, save any defects in its formation. See Gibson v. Neighborhood Health Clinics, Inc., 121 F.3d 1126, 1130 (7th Cir.1997); see also Gilmer, 500 U.S. at 35, 111 S.Ct. 1647.

II. The Formation of a Contract under Indiana Law

Flynn challenges the Agreement's validity in several respects. She alleges Aer-Chem failed to make an offer because the Agreement was never formally presented to her for evaluation and acceptance; she claims she did not accept the agreement because she did not sign it, and if she did sign it, she claims such an action was taken unknowingly, and therefore was not a valid acceptance. Each of these contentions is discussed below, as is the issue of whether sufficient consideration for the agreement exists.

A court cannot order arbitration unless a valid contract to arbitrate is found, and we look to ordinary state contract law to evaluate pre-dispute arbitration agreements, such as the one between AerChem and Flynn. See Gibson, 121 F.3d at 1130. In this case, all relevant events took place in Indiana, and the Agreement itself explicitly calls for construction according to Indiana law; therefore, we use Indiana law to evaluate the validity of the Agreement.¹ In Indiana, the burden of proving an enforceable arbitration agreement rests on AerChem, the party seeking to compel arbitration. See Wilson Fertilizer & Grain v. ADM Milling Co., 654 N.E.2d 848, 849 (Ind.Ct.App. 1995).

A valid contract requires that an offer be made and accepted, with a meeting of the minds by the contracting parties. See Bain v. Board of Trustees of Starke Mem'l Hosp., 550 N.E.2d 106, 110 (Ind.Ct.App.1990). For a meeting of the minds to exist, both parties must have the same intent. See id. The "cardinal rule" of contract interpretation calls for the parties' intent to be interpreted in light of the surrounding circumstances, including present and past business dealings; however, in cases where the agreement is evidenced by a written instrument, the parties' intent may be gleaned from the document itself. Id. Courts do not search for the parties' hidden, "secreted" intentions but instead examine the "final expression" of the parties' intent from the written agreement. Id. In this case, we have a written instrument, the Agreement, which we look to in evaluating the parties' intentions.

A. Offer and Acceptance

Flynn argues that AerChem's "offer" was insufficient because it was included within an employee handbook. She notes that the Indiana Supreme Court has held that a signed employee handbook was not a valid employment contract; however, that holding was expressly limited to the facts of that case. See Orr v. Westminster Village North, Inc., 689 N.E.2d 712 (Ind. 1997).

That case has no bearing on the agreement in the case at bar. In Orr, the Indiana Supreme Court was asked to construe an entire employee handbook as a contract but it declined to decide whether Indiana would adopt such an exception to the at-will employment doctrine. Id. at 717, 721. Here, neither party has asked us to construe an employee handbook as an employment contract, though Flynn claims the Agreement was part of an employee handbook. See Pls.' Ver. Mot. ¶ 2. Despite this contention, she did not present any evidence beyond her own speculation to establish that the Agreement was part of a handbook. The Agreement was presented to us as a separate document, not as an attachment to an employee handbook, and on its face it bears no reference to any other handbook, agreement, guidelines, or documents. See Defs.' Mot. to...