Gayfer Montgomery Fair Co. v. Austin

• Decision Date: 27 June 2003
• Parties: GAYFER MONTGOMERY FAIR CO. d/b/a Dillard's v. Pinkey Burns AUSTIN.
• Court: Alabama Supreme Court

870 So.2d 683

GAYFER MONTGOMERY FAIR CO. d/b/a Dillard's v. Pinkey Burns AUSTIN.

1012159.

Supreme Court of Alabama.

June 27, 2003.

Timothy A. Palmer and Brian R. Bostick of Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Birmingham, for appellant. Raymond L. Jackson, Jr., and Lisa E. Boone of Jackson Law Offices, P.C., Auburn, for appellee.

HARWOOD, Justice.

On March 15, 2002, Pinkey Burns Austin sued Gayfer Montgomery Fair Co. d/b/a Dillard's ("Dillard's"), her employer, seeking workers' compensation benefits and damages for retaliatory discharge. Dillard's is a Delaware corporation that owns and operates department stores throughout the United States; its principal place of business is in Arkansas. Dillard's filed a motion to dismiss Austin's retaliatory-discharge claim and to compel arbitration of that claim.¹ In support of this motion, Dillard's filed three affidavits of Diane Ledbetter, operations manager for the Auburn store, where Austin was employed, dated, respectively, April 9, 2002, May 17, 2002, and June 11, 2002; a copy of the "Rules of Arbitration" of Dillard's ("the Rules"); and a copy of Austin's signed "Acknowledgment of Receipt of Rules for Arbitration" ("the Acknowledgment"). Austin filed a response opposing the motion and submitted her own affidavit as evidentiary support for her opposition. Dillard's then filed in the United States District Court for the Middle District of Alabama a petition to compel arbitration. Subsequently, Dillard's filed a motion in the trial court seeking a protective order and requesting a stay of the proceedings in that court pending a ruling by the federal district court on the petition to compel arbitration, which Austin opposed. Dillard's attached to this motion a copy of its petition to the federal district court to compel arbitration and a copy of the "Charge of Discrimination" Austin had filed with the Equal Employment Opportunity Commission ("the EEOC").² After a hearing, the trial court entered an order denying the motion for a protective order and for a stay filed by Dillard's and denying the motion to compel arbitration filed by Dillard's. That order stated:

"A Hearing was held on May 21, 2002 on [Dillard's] Motion to Compel Arbitration, at which both parties submitted briefs to the Court. The Court took [Dillard's] Motion to Compel Arbitration under advisement. Upon considering the parties' Motions, briefs, and arguments, the Court is of the opinion that [Dillard's] Motion for Protective Order and Request for Stay of this Proceeding is due to be Denied. The Alabama Supreme Court stated, `A court should refuse to enforce an arbitration agreement where the record supports a determination of unconscionability.' Ex parte Napier, 723 So.2d 49, 52 (Ala.1998). The Court finds this Arbitration Agreement unconscionable, as [Austin] was injured at work prior to being required to sign the Arbitration Agreement. Generally, applicable contract defenses, such as fraud, duress or unconscionability, may be applied to invalidate arbitration agreements without contravening § 2 of the Federal Arbitration Act. Ex parte Colquitt, 808 So.2d 1018 (Ala.2001), citing Doctor's Associates, Inc. v. Casarotto, 517 U.S. 681, 686-87, 116 S.Ct. 1652, 134 L.Ed.2d 902 (1996). [Dillard's] should not be allowed to arbitrate the wrongful termination claim since [Austin] had incurred the work injury, which is the subject matter of this suit, prior to being compelled to sign the Arbitration Agreement. Furthermore, the Court finds that the above-styled case is in line with Sisters of the Visitation v. Cochran Plastering Co., 775 So.2d 759 (Ala. 2000)[, abrogated by Citizens Bank v. Alafabco, Inc., 539 U.S. 52, 123 S.Ct. 2037, 156 L.Ed.2d 46 (2003) ]."³

According to Dillard's, the federal district court thereafter "declined jurisdiction over [its] petition because the state court chose to rule on its state court motion."

On August 20, 2002, Dillard's appealed to this Court, presenting the following five issues:

"I. Whether arbitration agreements between employers and employees are unconscionable per se?

"II. Whether there was substantial record evidence presented by the plaintiff to support a finding of unconscionability?

"III. Whether the trial court's holding impermissibly places arbitration agreements on different footing than other contractual terms in violation of United States Supreme Court precedent?

"IV. Whether the employment of a Sales Associate by a nationwide retailer to sell goods received from other states to customers from Alabama and other states involves interstate commerce?

"V. Whether the trial court should have stayed this action so that the issues could have been definitely resolved by the United States District Court as to both her state claims and the federal claims she is pursuing under the Americans with Disabilities Act?"

The standard of review for the denial of a motion to compel arbitration is well-settled. As stated in SouthTrust Bank v. Ford, 835 So.2d 990, 993 (Ala. 2002) (quoting American General Finance, Inc. v. Morton, 812 So.2d 282, 284 (Ala. 2001)):

"`This Court reviews the denial of a motion to compel arbitration de novo. Green Tree Fin. Corp. v. Vintson, 753 So.2d 497, 502 (Ala.1999); Patrick Home Ctr., Inc. v. Karr, 730 So.2d 1171, 1172 (Ala.1999). The party seeking to compel arbitration has the initial burden of proving the existence of a contract calling for arbitration and proving that the contract evidences a transaction substantially affecting interstate commerce. TranSouth Fin. Corp. v. Bell, 739 So.2d 1110, 1114 (Ala.1999).... "[A]fter a motion to compel arbitration has been made and supported, the burden is on the nonmovant to present evidence that the supposed arbitration agreement is not valid or does not apply to the dispute in question." Jim Burke Auto., Inc. v. Beavers, 674 So.2d 1260, 1265 n. 1 (opinion on application for rehearing) (Ala.1995).'"

I. Facts

The record reveals that Austin worked as a sales associate for Dillard's at its Auburn store from August 1998 until January 2002. Ledbetter's May 17, 2002, affidavit states, in relevant part:

"4. Dillard's purchases clothing items and many other products and services from vendors throughout the United States. The merchandise that is sold in the Auburn store is purchased in other states and is transported to the Auburn store through a warehouse in Valdosta, Georgia. Most, if not all, of the clothing items sold in the Auburn store are purchased by Dillard's buyers in states other than Alabama and are shipped to the Auburn and other Dillard's stores throughout the United States for sale to the public.

"5. Many of the customers who shop in Dillard's Store Number 273 [the Auburn store] are residents of other states. Auburn is only approximately 30 miles away from the Georgia state line and the store regularly has customers who are Georgia residents. Further, during football game weekends, we have customers in the store who are residents from the states of visiting teams ... Ms. Austin's work as a Sales Associate affected Dillard's business activities, including its interstate activities and its interstate sales of merchandise. Ms. Austin was paid by Dillard's to wait on customers from states other than Alabama.

"6. Dillard's regularly purchases and receives goods and services from numerous out-of-state vendors and Ms. Austin regularly used these goods in her job.... Dillard's purchases Intimate Apparel products from Jodee (Florida), The Olga Company (Illinois), Donna Karan Intimates (New Jersey), Eileen West (North Carolina), Bali (Tennessee), and Vanity Fair Mills (Texas), as well as Burma, India and Hong Kong. As a sales associate, [Austin] and all other Dillard's Sales Associates are expected to deal with customers and to help Dillard's sell its merchandise to the public. Ms. Austin worked for Dillard's in the Women's Shoe Department, in the Intimate Apparel Department, and she also worked for a period of time answering the telephone for the Auburn store.

"7. Ms. Austin's work in answering the telephone for the store also involved interstate activities. The store would often receive calls from out-of-state customers. The store regularly receives calls from Dillard's stores in other states inquiring about particular merchandise; Dillard's corporate personnel in Little Rock, Arkansas; Dillard's division personnel in St. Petersburg, Florida; and Dillard National Bank personnel in Gilbert, Arizona. Ms. Austin was responsible for initially handling each of these telephone calls when she was responsible for answering the telephone for the store.

"8. Ms. Austin waited and conducted business on Dillard's behalf with customers from states other than Alabama during her employment with Dillard's. A recent example is a Dillard's charge transaction rung on 01/11/02 at 12:56 p.m.—a sale in the amount of $58.05 to a West Point, Georgia customer.

". . . .

"10. Ms. Austin's paycheck was paid to her with funds from an out-of-state bank—Regions Bank in Little Rock, Arkansas. Further, Ms. Austin's workers compensation insurance was provided through Liberty Mutual of Irving, Texas. Ms. Austin made claims and received benefits from this interstate insurance carrier."

Austin originally worked in the shoe department at Dillard's, but, as stated in her complaint, on April 21, 2000, she "was injured when she struck her right elbow against a steel post while retrieving a pair of shoes from the shoe store room." Austin gave Dillard's notice of her injury that day. Austin's complaint also states, in pertinent part:

"9. [Her] doctor, Dr. Richard Herrick, M.D., has diagnosed [Austin] with ... compressive neuropathies, right carpal tunnel syndrome, epicondylitis, bilateral cubital tunnel syndrome, and myofacial pain/fibromyalgia. Dr. Herrick attributes the cause of these conditions to [her] workplace injury on April 21, 2000.

"10. Dr. Herrick has imposed permanent workplace restrictions on [Austin] as a

...