McWilliams v. Logicon, Inc., 97-3190

• Decision Date: 01 May 1998
• Docket Number: No. 97-3190,97-3190
• Citation: 143 F.3d 573
• Parties: 73 Empl. Prac. Dec. P 45,390, 8 A.D. Cases 225, 12 NDLR P 266, 98 CJ C.A.R. 2192 Harry H. McWILLIAMS, II, Plaintiff-Appellant, v. LOGICON, INC., a Delaware corporation; Logicon Technical Services, Inc., a California corporation, Defendants-Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 573

143 F.3d 573

73 Empl. Prac. Dec. P 45,390, 8 A.D. Cases

225, 12 NDLR P 266,

98 CJ C.A.R. 2192

Harry H. McWILLIAMS, II, Plaintiff-Appellant, v. LOGICON, INC., a Delaware corporation; Logicon Technical

Services, Inc., a California corporation,

Defendants-Appellees.

No. 97-3190.

United States Court of Appeals, Tenth Circuit.

May 1, 1998.

Before SEYMOUR, BRORBY, and BRISCOE, Circuit Judges.

BRORBY, Circuit Judge.

Plaintiff Harry H. McWilliams II appeals the district court's order granting Defendants Logicon, Inc.'s and Logicon Technical Services, Inc.'s motion to stay his employment discrimination lawsuit pending arbitration. We exercise jurisdiction pursuant to 9 U.S.C. § 16(a)(1)(D) and 28 U.S.C. § 1291 and affirm. ¹

Mr. McWilliams was employed by Logicon, Inc. and Logicon Technical Services, Inc. (collectively, "Logicon") as a "work area controller" from 1989 through part of 1995. Logicon designs and conducts computer simulated military exercises for the United States military.

When first hired in 1989, Mr. McWilliams executed an acceptance of employment letter supplied by Logicon in which he agreed "any controversies, claims, and/or disputes arising out of the termination of [his] employment with [Logicon], shall be settled exclusively through binding arbitration ... pursuant to the Federal Arbitration Act." In 1990, Mr. McWilliams accepted a transfer by executing a similar acceptance letter containing the same arbitration clause. Logicon terminated Mr. McWilliams on May 9, 1995.

Mr. McWilliams filed suit against Logicon in federal district court on December 13, 1995, alleging that during the course of his employment with Logicon, he suffered from a number of disabling conditions for which he requested accommodation, and that Logicon discriminatorily terminated his employment as a result of his disabling conditions in violation of the Americans with Disabilities Act, 42 U.S.C. § 12101 et seq.

Logicon responded to Mr. McWilliams' complaint on January 3, 1996, with a motion requesting the court dismiss the complaint for lack of subject matter jurisdiction or, in the alternative, stay litigation pending arbitration pursuant to the clauses contained in the above-referenced acceptance letters. ² The district court entered an order granting a stay pending arbitration on July 9, 1996 and at Mr. McWilliams' request, appointed a former state court judge as arbitrator. On May 23, 1997, the district court entered judgment on the arbitration award in favor of Logicon. This appeal followed.

We review the district court's ruling regarding the arbitrability of Mr. McWilliams' claims de novo. Armijo v. Prudential Ins. Co., 72 F.3d 793, 796 (10th Cir.1995). The issues presented are straightforward: (1) whether Mr. McWillliams' Americans with Disabilities Act claims are subject to binding arbitration in accordance with the Federal Arbitration Act; and (2) if Mr. McWilliams' claims are subject to arbitration, whether Logicon waived its right to compel arbitration by waiting until after Mr. McWilliams filed suit to invoke the arbitration agreement.

Arbitrability

Mr. McWilliams posits two reasons why his claims against Logicon are not arbitrable. He first asserts the Federal Arbitration Act does not apply to him because of its express exemption for "workers engaged in foreign or interstate commerce." 9 U.S.C. § 1. Curiously, however, he concludes this argument by suggesting the nature of his employment relationship was "something less than contractual," and therefore "the alleged arbitration clause [is] not worthy of enforcement." Second, Mr. McWilliams argues the arbitration clause at issue is limited in scope to claims or disputes "arising out of the termination" of his employment. By characterizing his claims as arising "mainly from Logicon's denial of reasonable accommodation during the course of his employment," not from his termination, Mr. McWilliams attempts to insulate his complaint from the scope of the arbitration clause.

Mr. McWilliams cannot have his cake and eat it too--he either had an employment contract potentially within the ambit of the Federal Arbitration Act's "workers engaged in interstate commerce" exemption, ³ or he did not. For purposes of considering his first argument, we therefore will assume, without deciding, the requisite employment contract existed between Mr. McWilliams and Logicon. The question then becomes whether we should construe the exemption broadly to include all contracts of employment affecting commerce, or limit its application to that class of workers, such as transportation workers, who actually are engaged in the movement of goods in foreign or interstate commerce.

Many courts have considered this precise issue, however, the Tenth Circuit has not.

Of the courts that have addressed the intended scope of the workers engaged in interstate commerce exemption, all but one ⁴ have concluded the exceptions specified in 9 U.S.C. § 1 extend only to those individuals employed directly in the channels of commerce itself. See, e.g., Cole v. Burns Int'l Sec. Servs., 105 F.3d 1465, 1470-71 (D.C.Cir.1997); Great Western Mortgage Corp. v. Peacock, 110 F.3d 222, 227 (3d Cir.). cert. denied, --- U.S. ----, 118 S.Ct. 299, 139 L.Ed.2d 230 (1997); Rojas v. TK Communications, Inc. 87 F.3d 745, 747-48 (5th Cir.1996); Asplundh Tree Expert Co., 71 F.3d at 596-601; Miller Brewing Co. v. Brewery Workers Local Union No. 9, AFL-CIO, 739 F.2d 1159, 1162 (7th Cir.1984), cert. denied, 469 U.S. 1160, 105 S.Ct. 912, 83 L.Ed.2d 926 (1985); Erving v. Virginia Squires Basketball Club, 468 F.2d 1064, 1069 (2d Cir.1972); Dickstein v. duPont, 443 F.2d 783, 785 (1st Cir.1971); see also Paladino v. Avnet Computer Tech., Inc., 134 F.3d 1054, 1069-61 (11th Cir.1998) (Cox, J. and Tjoflat, J. concurring). We agree with the majority of our sister circuits that a narrow construction of 9 U.S.C. § 1 to include only employees actually engaged in the channels of foreign or interstate commerce comports with both the text and history of the Federal Arbitration Act. A narrow construction of the § 1 exclusion also furthers the modern federal policy favoring arbitration. See Armijo, 72 F.3d at 797. We therefore follow the prevailing trend among courts to hold that the workers engaged in interstate commerce exclusion does not encompass all employment contracts, just those of employees actually engaged in the channels of interstate commerce.

The products and services Logicon provides to the United States military undoubtedly affect interstate commerce at some level. Logicon and its employees cannot, however, be said to directly affect the channels of commerce. Thus, applying the rule we have adopted here today, we hold Mr. McWilliams' claims are not insulated from the Federal Arbitration Act.

Mr. McWilliams' argument that his claims fall outside the scope of the arbitration clause fares no better. The allegations and relief requested in Mr. McWilliams' complaint can be fairly interpreted to arise from Logicon's termination of Mr. McWilliams' employment. Such interpretation obviously furthers the strong federal policy favoring arbitration. It also comports with cases from this circuit and the Supreme Court that apply the presumption in favor of arbitrability even where a party's claims are founded on statutory rights. See Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 26, 111 S.Ct. 1647, 1652, 114 L.Ed.2d 26 (1991); Armijo, 72 F.3d at 797. As the district court noted, there is nothing in the Americans with Disabilities Act that prohibits arbitration of claims asserted under that Act. In fact, the Act encourages arbitration of Americans with Disabilities disputes, where appropriate. See 42 U.S.C. § 12212. For these reasons, and because all...