Giddings v. Media Lodge, Inc.

• Decision Date: 13 March 2018
• Docket Number: 4:17–CV–04068–RAL
• Citation: 320 F.Supp.3d 1064
• Parties: Caleb GIDDINGS, Plaintiff, v. MEDIA LODGE, INC., IA Tech, LLC, Adams Keegan, Inc., Adams Keegan–GA, LLC, and Jeff Siegel, Defendants.
• Court: U.S. District Court — District of South Dakota

320 F.Supp.3d 1064

Caleb GIDDINGS, Plaintiff,

v.MEDIA LODGE, INC., IA Tech, LLC, Adams Keegan, Inc., Adams Keegan–GA, LLC, and Jeff Siegel, Defendants.

4:17–CV–04068–RAL

United States District Court, D. South Dakota, Southern Division.

Signed March 13, 2018

Matthew Crotty, Pro Hac Vice, Crotty & Son Law Firm, PLLC, Michael B. Love, Pro Hac Vice, Michael Love Law Firm, Spokane, WA, Stephanie E. Pochop, Johnson Pochop & Bartling Law Office, Gregory, SD, Sarah J. Evans, Pro Hac Vice, Brown & Sterling, P.S., Fall City, WA, for Plaintiff.

Christopher E. Hoyme, Jackson Lewis P.C., Jessica C. Kallstrom–Schreckengost, Pro Hac Vice, Omaha, NE, Brendan V. Johnson, Timothy W. Billion, Robins Kaplan LLP, Sioux Falls, SD, Erica V. Mason, Pro Hac Vice, Sul Ah Kim, Pro Hac Vice, Constangy, Brooks & Smith & Prophete, LLP, Atlanta, GA, for Defendants.

OPINION AND ORDER GRANTING MOTION TO STAY CASE AND COMPEL ARBITRATION

ROBERTO A. LANGE, UNITED STATES DISTRICT JUDGE

Plaintiff Caleb Giddings, a Senior Airman in the United States Air Force Reserves, worked for GunUp Publishing, Inc. (GunUp) in South Dakota. When GunUp merged with Media Lodge, Inc. (Media Lodge) in the spring of 2015, Giddings accepted a job as Media Lodge's director of sales. Shortly thereafter, Giddings left to serve active duty for five-plus months with the Air Force. After returning from active duty, Giddings allegedly was demoted by and then terminated from Media Lodge without cause. Giddings sued Media Lodge, Media Lodge's Chief Executive Officer (CEO) Jeff Siegel, and Media Lodge's majority owner IA Tech, LLC (IA Tech) (collectively "Defendants"),¹ alleging that they violated the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA). Doc. 41. Defendants filed a motion arguing that the Federal Arbitration Act (FAA) and the arbitration clause in Giddings' Employment Agreement require this Court to stay or dismiss Giddings' case and compel arbitration. Doc. 18. For the reasons explained below, this Court grants Defendants' motion to compel arbitration under the arbitration clause, but stays the case rather than dismissing it.

I. Facts

GunUp was an internet media and marketing company that catered to firearms enthusiasts, manufacturers, and retailers. Doc. 24 at ¶ 5. Giddings and his then-wife Shelley (Shelley) worked for GunUp in South Dakota, and Giddings was a minority share owner of GunUp. Doc. 24 at ¶¶ 5–7. Media Lodge is an electronic media marketing company, has employees in several states, and sells electronic advertising services throughout the country. Doc. 21 at ¶ 3. Media Lodge's content targets outdoor enthusiasts who are interested in hunting, shooting, fishing, and other outdoor activities. Doc. 21 at ¶ 3.

In 2014, Media Lodge CEO Siegel and Daniel Hall, GunUp's CEO, began negotiating a merger between GunUp and Media Lodge. Doc. 25–1 at 4; Doc. 29. These negotiations included discussions about Hall, Giddings, and Shelley coming to work for Media Lodge. Doc. 25–1 at 4; Docs. 29–29–7. GunUp and Media Lodge executed a merger agreement on March 31, 2015. Doc. 41 at ¶ 17; Doc. 25–5 at 18. The next day, Giddings, Shelley, and Hall signed employment agreements with Media Lodge. Doc. 21 at ¶ 5–7; Doc. 21–1; Doc. 24 at ¶ 6; Doc. 25–1 at 4–5. Giddings's Employment Agreement contained the following arbitration clause:

Binding Arbitration . In the event any disagreement arises under this Agreement, the disagreement shall be settled by binding arbitration pursuant to the Rules of the American Arbitration Association. The arbitration shall be governed by the United States Arbitration Act, 9 U.S.C. §§ 1 – 16, and judgment upon the award rendered by the arbitrator may be entered by any court having jurisdiction thereof. The place of arbitration shall be Atlanta, Georgia, there shall only be one arbitrator selected by the parties, and the arbitrator shall not be empowered to award damages in excess of actual damages, although the arbitrator shall be empowered to award injunctive relief. The parties hereto hereby waive all defenses in connection to any arbitration hereunder or the enforcement of any arbitration award rendered pursuant hereto.

Doc. 21–1 at 6.

Giddings went on mandatory active duty with the United States Air Force from late April 2015 until September 30, 2015. Doc. 41 at ¶ 21. Giddings alleges that when he returned to work upon completing his service, Media Lodge violated USERRA by failing to properly reemploy him, demoting him without just cause, and terminating him without just cause. Doc. 41 at ¶¶ 49–75. Giddings seeks compensatory, general, and liquidated damages from Defendants for these alleged USERRA violations. Doc. 41. Since filing his suit, Giddings has relocated to Florida. Doc. 41 at ¶ 2. This Court held a hearing on the motions in this case in late 2017.

II. The FAA and Standard of Review

Congress enacted me FAA to counter judicial aversion to arbitration and ensure that courts treat arbitration agreements just like any other contract. Volt Info. Scis., Inc. v. Bd. of Trs. Leland Stanford Junior Univ., 489 U.S. 468, 478, 109 S.Ct. 1248, 103 L.Ed.2d 488 (1989). The key language of the FAA states that a written agreement to arbitrate in a contract involving interstate commerce "shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. The FAA applies here because the Employment Agreement, including the arbitration clause, is in writing and because the Agreement concerned Giddings's work with Media Lodge, a company that is engaged in interstate commerce. Doc. 21 at ¶ 3; CarMax Auto Superstores Cal. LLC v. Hernandez. 94 F.Supp.3d 1078, 1100–02 (CD. Cal. 2015) ; Connell v. Meritor Sav. Bank, No. CIV. A. 90-5916, 1991 WL 25715, at *2 (E.D. Pa. Feb. 27, 1991) ; see also Allied–Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 273–74, 115 S.Ct. 834, 130 L.Ed.2d 753 (1995) (adopting a broad reading of the phrase "involving commerce" in 9 U.S.C. § 2 ). The FAA provides two mechanisms for enforcing an arbitration agreement: a stay of proceedings under § 3 when an issue in the case is "referable to arbitration" and an order compelling arbitration under § 4 when a party has refused to adhere to an arbitration agreement. 9 U.S.C. §§ 3, 4. Because both Giddings and Defendants have filed affidavits with attached exhibits, this Court will apply the summary judgment standard when ruling on the motion to compel arbitration, viewing the evidence and resolving genuine issues of material dispute in the nonmoving party's favor. Neb. Mach. Co. v. Cargotec Sols. LLC, 762 F.3d 737, 741–42 (8th Cir. 2014).

III. Analysis

A. Delegation Provision and Waiver Thereof

Ordinarily, a court considering a motion to compel arbitration must decide two threshold issues, sometimes referred to as "questions of arbitrability:" 1) whether a valid arbitration agreement exists between the parties; and 2) whether the dispute falls within the scope of the arbitration agreement. Faber v. Menard. Inc., 367 F.3d 1048, 1052 (8th Cir. 2004) ; Daisy Mfg. Co., Inc. v. NCR Corp., 29 F.3d 389, 392 (8th Cir. 1994). Questions of arbitrability are for the court to decide "[u]nless the parties clearly and unmistakably provide otherwise." Howsam v. Dean Witter Reynolds. Inc., 537 U.S. 79, 83, 123 S.Ct. 588, 154 L.Ed.2d 491 (2002) (alteration in original) (quoting AT & T Techs., Inc. v. Commc'ns Workers, 475 U.S. 643, 649, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986) ). However, just as parties can agree to arbitrate the merits of a dispute, they can also agree to submit questions of arbitrability to the arbitrator. Rent–A–Center. W., Inc. v. Jackson, 561 U.S. 63, 68–69, 130 S.Ct. 2772, 177 L.Ed.2d 403 (2010). Thus, although there is a presumption that courts will decide questions of arbitrability, these questions must be sent to arbitration if the parties clearly and unmistakably expressed their intent to do so. Howsam, 537 U.S. 79 at 83–84, 123 S.Ct. 588 ; see also Rent–A–Center, 561 U.S. at 69 n.1, 130 S.Ct. 2772. Agreements to arbitrate questions of arbitrability have come to be known as "delegation provisions." See Rent–A–Center, 561 U.S. at 68, 130 S.Ct. 2772.

Both parties addressed questions of arbitrability to this Court in briefing and at oral argument. That is, neither party argued or even addressed a claimed delegation provision being in the arbitration clause. However, under Eighth Circuit precedent, this arbitration clause arguably could be read as containing a delegation provision intending to submit questions of arbitrability to the arbitrator. The arbitration clause provides that "[i]n the event any disagreement arises under this Agreement, the disagreement shall be settled by binding arbitration pursuant to the Rules of the American Arbitration Association [‘AAA’]." Doc. 21–1 at 6. The AAA Employment Arbitration Rules and Mediation Procedures, in turn, provide for the arbitrator to rule on questions of arbitrability. See AAA Employment Arbitration Rules and Mediation Procedures, Rule 6² ("The arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope or validity of the arbitration agreement."). When an arbitration provision incorporates rules that authorize an arbitrator to decide issues of arbitrability, the Eighth Circuit deems that incorporation to constitute "a clear and unmistakable expression of the parties' intent to leave the question of arbitrability to an arbitrator." Fallo v. High–Tech Inst., 559 F.3d 874, 878 (8th Cir. 2009) ; see also Green v. SuperShuttle Int'l, Inc., 653 F.3d 766, 769 (8th Cir. 2011) ("By incorporating the AAA Rules, the parties agreed to allow the arbitrator to determine threshold questions of arbitrability."). The arbitration clause in Fallo contained language similar to the arbitration clause here, stating that disputes "shall be settled by arbitration in accordance with the...