Gambardella v. Pentec, No. 3:01cv1827(JBA) (D. Conn. 8/25/2003)

• Decision Date: 25 August 2003
• Docket Number: No. 3:01cv1827(JBA).,3:01cv1827(JBA).
• Parties: Gambardella, v. Pentec, Inc., et al.
• Court: U.S. District Court — District of Connecticut

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Gambardella, v. Pentec, Inc., et al.

No. 3:01cv1827(JBA).

United States District Court, D. Connecticut.

August 25, 2003.

Ruling on Motion for Leave to File Rule 60(b)

Motion [Doc. #44]

JANET ARTERTON, District Judge.

Plaintiff commenced this employment discrimination suit against her former employer despite having signed an agreement to arbitrate such disputes. When defendants filed their motion to compel arbitration, plaintiff opposed by asserting that she was fraudulently induced to sign the arbitration agreement and that the provision of the agreement providing that she would pay one-half of the cost of arbitration deprives her of rights guaranteed to Title VII plaintiffs. The Court's ruling on the motion rejected both contentions, see Gambardella v. Pentec, Inc., 218 F. Supp.2d 237, 244-246 (D. Conn. 2002), but raised a related ground sua sponte: the unavailability of legal fees for a prevailing Title VII complainant.¹

Following the Court's ruling declining to compel arbitration, defendants filed their pending interlocutory appeal, and this case was stayed. After the appeal was filed, defendants indicated to the Second Circuit that "it is Pentec's position that the arbitration agreement does not foreclose the award to a prevailing plaintiff of reasonable attorney's fees or taxable costs from Pentec," and that defendants would assert this position on appeal. [Doc. #44] ¶ 4. Rather than raise this argument for the first time at the appellate level, defendants filed the instant motion for permission for leave to file a Rule 60(b) motion [Doc. #44], asking that the Court express its inclination to grant such a motion.²

In support of the motion for leave, defendants argue that the Court's sua sponte consideration of the attorney's fees issue deprived them of the chance to express their position here that fees and costs are not precluded by the arbitration agreement. They argue that the agreement should be construed to allow for an award of attorney's fees to a prevailing party, thus guaranteeing Gambardella's right to fees and costs if she prevails while preserving the arbitration agreement to which the parties were bound. Gambardella asserts that construing the agreement to allow for attorney's fees would constitute ex post "blue penciling" of the agreement, which she contends is poor public policy.

The agreement in this case provides: "You and Pentec, Inc. shall each bear respective costs for legal representation at any such arbitration." Gambardella, 218 F. Supp.2d at 244 n. 5. While the agreement's complete silence on the subject of shifting these fees and costs to the non-prevailing party is in contrast with Title VII's explicit provisions on this issue,³ the agreement does not affirmatively foreclose the possibility of attorney's fees. Compare, e.q., Spinetti v. Service Corp. Int'l, 324 F.3d 212, 215 (3rd Cir. 2003) (agreement provided that "[e]ach party may retain legal counsel and shall pay its own costs and attorney's fees, regardless of the outcome of the arbitration") (emphasis added); Armendariz v. Foundation Health Psychcare Servs., Inc., 6 P.3d 669, 675 (Cal. 2000) (agreement limited available remedies to back pay and explicitly excluded "any other remedy, at law or in equity, including but not limited to reinstatement and/or injunctive relief").

In contrast to the silence of the Gambardella/Pentec agreement, the agreements at issue in each case⁴ cited by the Court's original ruling (save one) were either unambiguous in their contravention of Title VII or had actually been interpreted by the arbitrator in a manner inconsistent with Title VII.⁵ The agreement in McCaskill, identical to the Spinetti agreement quoted above, affirmatively foreclosed the possibility of an award of attorney's fees to a prevailing party by providing that each party would be responsible for its own attorney's fees "regardless of the outcome of the arbitration."⁶ The arbitration rules in Hooters provided that "attorney's fees can only be awarded upon a showing of frivolity or bad faith of the unsuccessful litigant," 39 F. Supp.2d at 599, which is a higher standard than Title VII's guarantee of presumptive attorney's fees.⁷ While the arbitration provision in DeGaetano itself did not foreclose an attorney's fee award to a prevailing party, the arbitrator had refused to award such fees, which the district court thereafter added as part of its confirmation of the arbitration award. The arbitration provision in Gourlev expressly required that "[a]ll documents to be considered by the arbitrator shall be filed at the hearing" and reiterated that "[t]here shall be no post-hearing briefs," 178 F. Supp.2d at 1204, which the Gourlev court concluded would preclude prevailing plaintiffs from ever seeking a post-hearing award of attorney's fees.

This silence on the availability of an award of attorney's fees to a prevailing claimant also distinguishes the Gambardella/Pentec arbitration agreement from those in the cases relied on by Gambardella in opposing the instant motion, each of which contained an express provision which the court found to be unlawful.⁸ The arbitration agreements in Cooper and Popovich adopted the rules of the American Arbitration Association, which each court found to expressly and unlawfully require a claimant to bear certain prohibitive costs, Cooper, 199 F. Supp.2d at 781; Popovich, 2002 WL 449003 at *1, and the Shankle and Perez agreements themselves specified (unlawfully, according to the both courts) that an employee would be liable for one-half of the costs of arbitration, Shankle, 163 F.3d at 1232; Perez, 253 F.3d at 1285.⁹ The agreement in Armendariz could not have been clearer, providing that a successful claimant's "exclusive" remedies were "limited to a sum equal to the wages I would have earned from the date of any discharge until the date of the arbitration award [and] I shall not be entitled to any other remedy, at law or in equity, including but not limited to reinstatement and/or injunctive relief." 6 P.3d at 675. Thus, in every case cited by Gambardella in opposition to defendants' motion, the offending provisions of the arbitration agreements at issue were explicit and were not open to differing interpretations.

Defendants point to the Third Circuit's decision in Spinetti, supra, which severed the provision of the arbitration agreement which expressly precluded award of attorney's fees and costs to prevailing party¹⁰ and enforced the remainder of agreement, reflecting the opinion that "[y]ou don't cut down the trunk of a tree because some of its branches are sickly," 324 F.3d at 214. While courts have differed on whether to sever an express provision contravening Title VII and enforce the remainder of the arbitration agreement (e.q., Spinetti) or not (Cooper, Shankle, Perez, Armendariz and Popovich), the Court need not reach that question here. Viewing the canons of contract construction as requiring the arbitration agreement sub judice to be read as to (if possible) make the agreement lawful, construe ambiguity in the agreement against the drafter, and serve the public interest, the silence on prevailing claimant attorney's fees must be construed to allow for a presumptive entitlement to such fees as part of a successful claimant's award, thus paralleling Title VII's provisions. So viewed, the arborist-like decision is not implicated in this case.

First, an agreement should be construed, when possible, to render it lawful rather than unlawful. See Cole v. Burns Int'l Sec. Servs., 105 F.3d 1465, 1485-1486 (D.C. Cir. 1997) (silence in an arbitration agreement as to certain costs construed to render the agreement valid and enforceable: "It is well understood that, where a contract is unclear on a point, an interpretation that makes the contract lawful is preferred to one that renders it unlawful.") (citations omitted); accord Restatement (Second) of Contracts § 203(a) ("an interpretation which gives a reasonable, lawful, and effective meaning to all the terms is preferred to an interpretation which leaves a part unreasonable, unlawful, or of no effect").

Second, ambiguity in agreements should be construed against the drafter. See Hartford Elec. Applicators of Thermalux, Inc. v. Alden, 169 Conn. 177, 182 (1975) (citing Ravitch v. Stollman Poultry Farms, Inc. 165 Conn. 135 (1973)). "If the language of the contract is susceptible to more than one reasonable interpretation, the contract is ambiguous." United Illuminating Co. v. Wisvest-Connecticut LLC, 259 Conn. 665, 671 (2002) (citing Lopinto v. Raines, 185 Conn. 527, 538 (1981)). As set out above, the language of this contract is subject to two reasonable interpretations: (1) that each party will bear attorney's fees and costs regardless of the outcome; or (2) that while attorney's fees are initially the burden of the party incurring them, a successful claimant may, in keeping with the substantive law of Title VII, recover such fees as part of an award. Construing the ambiguity against Pentec (undisputedly the drafter of this agreement) means adopting the second interpretation, as it is that interpretation which exposes Pentec to greater legal liability.¹¹

Finally, "[i]n choosing among the reasonable meanings of a promise or agreement or a term thereof, a meaning that serves the public interest is generally preferred." Restatement (Second) of Contracts § 207. While this rule "applies only to agreements which affect a public interest," id. § 207 cmt. a, "awarding attorney's fees to prevailing plaintiffs, and thereby encouraging ameliorative lawsuits, serve[s] broader policy goals" than simply "mak[ing] it easier for a plaintiff of limited means to bring a meritorious suit." DeGaetano, 983 F. Supp. at 465 (citations and internal quotations omitted). Rather, Title VII's attorney's fee provision effectuates Congressional policy against invidious discrimination in employment. See Johnson v. Georgia Highway Express, Inc., 488 F.2d...