Hudson v. BAH Shoney's Corp.

Decision Date11 April 2017
Docket NumberCase No. 3:16–cv–03016
Citation263 F.Supp.3d 661
Parties Tamika HUDSON, Plaintiff, v. BAH SHONEY'S CORPORATION, d/b/a Shoney's Restaurant, Defendant.
CourtU.S. District Court — Middle District of Tennessee

Kristy Bennett, Tressa Johnson, Johnson & Bennett, PLLC, Memphis, TN, for Plaintiff.

Charles K. Grant, Kathryn B. Yeager, Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, Nashville, TN, for Defendant.


ALETA A. TRAUGER, United States District Judge

Before the court is the Motion to Compel Arbitration and to Stay All Proceedings (Doc. No. 12) filed by defendant BAH Shoney's Corp.1 ("BAH" or "defendant"). Plaintiff Tamika Hudson has filed a Response opposing the motion (Doc. No. 22), along with a supporting Memorandum (Doc. No. 23) and Corrected Affidavit (Doc. No. 27). The defendant filed a Reply (Doc. No. 24). For the reasons set forth herein, the defendant's motion will be denied.


Plaintiff Tamika Hudson was hired on May 31, 2014 as a cashier at a Shoney's Restaurant operated by the defendant. She alleges that her supervisor subjected her to sexual harassment and a sexually hostile work environment beginning immediately after she was hired and continuing despite numerous complaints directly to her shift leader, assistant manager, and BAH's Human Resources Department. She filed an EEOC Charge on October 31, 2013, after which, she alleges, she was subjected to retaliation, culminating in her retaliatory discharge on March 19, 2014.

The plaintiff filed her Complaint on November 22, 2016 (Doc. No. 1), asserting claims of discrimination and retaliation under Title VII of the Civil Rights Act as amended, 42 U.S.C. §§ 2000e et seq. , and state law. In lieu of an answer, BHA has filed its Motion to Compel Arbitration and To Stay All Proceedings. (Doc. No. 12.)

In support of its motion, BAH submitted the Declaration of Catherine Hite (Doc. No. 14–1), currently BAH Executive Vice President and General Counsel of Shoney's; the Shoney's Restaurant Team Member Employee Handbook ("Employee Handbook") (Doc. No. 14–2); and an Employee Acknowledgment (Doc. No. 14–3) executed by the plaintiff on May 31, 2013. In her Declaration, Hite avers that, when BAH hires new employees, it provides them with a copy of the Employee Handbook, which contains the company's Arbitration Policy and Procedures ("Arbitration Policy"). (Hite Decl. ¶ 4; Employee Handbook § 108, Doc. No. 14–2, at 11–15.)

The second paragraph of the Arbitration Policy states, in boldface:

THIS IS A LEGALLY BINDING AGREEMENT: By accepting employment at BAH, and by continuing your employment with BAH, after you have been provided a copy of or otherwise received notice of this Arbitration Policy and Procedures, you and BAH consent to and accept all of the terms of the Arbitration Policy and Procedures. The terms of this Arbitration Policy and Procedures are conditions of your employment.

(Doc. No. 14–2, at 11.) The Arbitration Policy thereafter provides that proceeding under the Arbitration Policy "shall be the exclusive, final and binding method by which employment related legal disputes are resolved.... BAH and its employees shall have no right to litigate a dispute in any other forum." (Id. at 12.) More specifically, it provides that all claims "arising from or related to the employee's employment relationship with BAH," including—but not limited to—claims arising from allegations of discrimination based on sex, sexual harassment, and retaliation for exercising legal rights, must be resolved through arbitration. (Id. )

The Arbitration Policy states that the Arbitration Policy itself, as embodied in § 108 of the Employee Handbook, constitutes the complete agreement between employee and employer regarding arbitration. (Id. at 13.) The Arbitration Policy then describes the procedures governing arbitration and covers such matters as the allocation of fees, costs, and attorneys' fees, and appellate procedure. (Id. at 13–15.) Finally, the provision states that the Federal Arbitration Act ("FAA"), Title 9 of the United States Code, "will govern the interpretation, enforcement, and all other judicial proceedings under and/or with respect to this Arbitration Policy and Procedures." (Id. at 15.)

The Employee Acknowledgement is a one-page document consisting of four paragraphs. By signing it, a newly hired employee acknowledges receipt of the Employee Handbook and purportedly consents to be bound by BAH's Arbitration Policy contained therein:

Employee's Acknowledgment of Receipt of Shoney's Restaurants' Arbitration Policy and Procedures. I have been provided a copy of the Shoney's Restaurants' Arbitration Policy and Procedures contained in the Employee Handbook. The updated document is available for review on the Centernet. I understand that the Arbitration Policy and Procedures is a binding contract between me and BAH Shoney's Corp. d/b/a Shoney's Restaurants and that it is a condition of my employment and of my continued and future employment with BAH Shoney's Corp. d/b/a Shoney's Restaurants. I further understand that, by continuing my employment with BAH Shoney's Corp. d/b/a Shoney's Restaurants, I agree to submit to binding arbitration under Shoney's Restaurants' Arbitration Policy and Procedures of any and all claims, disputes or controversies that exist now or arise later between me and BAH....

(Doc. No. 14–3.) The Employee Acknowledgment submitted by BAH was signed by Tamika Hudson on May 31, 2013. (Id. )

In her Corrected Affidavit, the plaintiff describes the circumstances under which she was employed by BAH and signed the Employee Acknowledgment.2 She alleges that she filled out an application on May 25, 2013, at a time when she "needed any job and was desperate" to work to support herself and her newborn baby. (Doc. No. 27 ¶¶ 2–3.) As disclosed on her application, she has a tenth-grade education and has not received a diploma or GED.

The plaintiff does not indicate when she was notified that she was hired, but she began working on May 31, 2013. At the end of her first shift, she received a copy of the Employee Handbook and was asked to sign numerous documents, including the Employee Acknowledgment. She states: "I had to sign all the paper that they gave me that day in order to keep the job." (Id. ¶ 8.) She asserts that she did not know that she was signing an arbitration agreement, did not understand that she was giving up her right to go to court if she had a problem, and "did not have a lot of time" to look over the documents she was signing. (Id. ¶¶ 10–12.) She asserts that she did not have time to read all the documents, including the Employee Acknowledgment. (Id. ¶ 20.) No one mentioned arbitration as she signed the forms; the store manager did not tell her what was in the documents she was signing—she was just told to sign the papers. (Id. ¶¶ 10, 15.) She claims that BAH did not inform her orally or in writing that she was giving up her right to go to court and that she does not know what the word "forum" means. (Id. ¶¶ 17, 26.) The entire interview and paperwork-completion process took less than thirty minutes. She accepted a job making $8.25 per hour, which equates to approximately $17,000 annually, working 35 to 40 hours per week. (Id. ¶ 22.) The allegations in the plaintiff's affidavit are not rebutted by the defendant.

In her Complaint, the plaintiff alleges that, after she complained of sexual harassment, she was suspended without pay for approximately a month during the investigation into her claims and was later discharged in retaliation for having filed an EEOC charge.

A. Legal Standard

As noted above, the Arbitration Policy provides that it is to be governed by the FAA (Doc. No. 14–2, at 15), and the parties apparently do not dispute that the Arbitration Policy is governed by the FAA. Accord Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford Junior Univ. , 489 U.S. 468, 472, 109 S.Ct. 1248, 103 L.Ed.2d 488 (1989) (parties to an arbitration agreement are free to choose the terms under which they will arbitrate); Uhl v. Komatsu Forklift Co. , 512 F.3d 294, 303 (6th Cir. 2008) (concluding that, where the parties' choice-of-law provision referenced both the FAA and state law, the FAA governed).

Under the FAA, 9 U.S.C. §§ 1 – 16, when a litigant establishes the existence of a valid agreement to arbitrate, the district court must grant the litigant's motion to compel arbitration and to stay proceedings until the completion of arbitration. Glazer v. Lehman Bros., Inc. , 394 F.3d 444, 451 (6th Cir. 2005) (citing 9 U.S.C. §§ 3, 4 ). There is a strong presumption in favor of arbitration under the FAA, O.J. Distrib., Inc. v. Hornell Brewing Co. , 340 F.3d 345, 355 (6th Cir. 2003), as a result of which any doubts regarding arbitrability must be resolved in favor of arbitration. Fazio v. Lehman Bros., Inc. , 340 F.3d 386, 392 (6th Cir. 2003).

Generally, however, before the court can send a case to arbitration, it must first determine whether a valid agreement to arbitrate exists under state law. 9 U.S.C. § 2. An arbitration agreement may be voided for the same reasons for which any contract may be invalidated under state law, "provided the contract law applied is general and not specific to arbitration clauses." Fazio , 340 F.3d at 393. Likewise, "ordinary state-law principles that govern the formation of contracts" apply to the court's analysis. Id. at 394 (citing First Options of Chicago, Inc. v. Kaplan , 514 U.S. 938, 944, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995) ).

In addition, a party's waiver of the constitutional right to a jury trial inherent in any agreement to arbitrate, to be valid, must be knowing and voluntary. Hergenreder v. Bickford Senior Living Grp., LLC , 656 F.3d 411, 420 (6th Cir. 2011) (citing K.M.C. Co. v. Irving Trust Co. , 757 F.2d 752, 755 (6th Cir. 1985) ). The question of the validity of the waiver of the right to a jury trial is governed by federal and not state law. Id....

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    ...may be "voided for the same reasons for which any contract may be invalidated under [Tennessee] law." Hudson v. BAH Shoney's Corp. , 263 F. Supp. 3d 661, 667 (M.D. Tenn. 2017). Before allowing a case to be arbitrated, a court must therefore examine whether the contract is valid under the la......
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    ...agreement because the plaintiff had not knowingly and voluntarily waived her right to a jury trial. Hudson v. BAH Shoney's Corp., 263 F. Supp. 3d 661, 671 (M.D. Tenn. Apr. 11, 2017). However, until the Sixth Circuit adopts the fact-specific holding in Hudson, the Court is more inclined to f......
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    ...had not waived her right to a jury trial because based on five factors, there was not a knowing and voluntary waiver of the right.48 In Hudson v. BAH Shoney's Corp., the United States DistrictCourt for the Middle District of Tennessee completed a knowing and voluntary analysis and declined ......
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