Mugnano-Bornstein v. Crowell

• Decision Date: 22 May 1997
• Docket Number: MUGNANO-BORNSTEIN,No. 96-P-204,96-P-204
• Court: Appeals Court of Massachusetts
• Parties: , 73 Fair Empl.Prac.Cas. (BNA) 1116 Josephinev. Robert CROWELL & another. 1

Page 242

677 N.E.2d 242

42 Mass.App.Ct. 347, 73 Fair Empl.Prac.Cas.

(BNA) 1116

Josephine MUGNANO-BORNSTEIN v. Robert CROWELL & another. ¹

No. 96-P-204.

Appeals Court of Massachusetts,

Essex.

Argued Jan. 9, 1997.

Decided March 21, 1997.

Further Appellate Review Denied May 22, 1997.

Christopher P. Litterio, Boston, for defendants.

Joseph J. Machera, Revere (Dana A. Curhan, Boston, with him) for plaintiff.

Before WARNER, C.J., KAPLAN and IRELAND, JJ.

WARNER, Chief Justice.

The defendants, Robert Crowell and Shearson Lehman Hutton, appeal from a Superior Court order denying their motion to confirm an arbitration award and allowing the plaintiff's motion to vacate the stay of judicial proceedings previously imposed and restore the case to the jury trial list. ²

On November 20, 1989, the plaintiff, Josephine Mugnano-Bornstein, completed and signed an employment application containing an agreement to arbitrate any "controversy arising out of or in connection with [her] compensation, employment or termination of employment" with Shearson. ³ She was subsequently hired as a wire operator and worked in that capacity until being fired for insubordination in November, 1990.

The plaintiff commenced this action in the Superior Court on November 6, 1992, alleging sexual harassment and gender discrimination in violation of G.L. c. 93 and c. 151B, and common law claims for intentional infliction of emotional distress and defamation. ⁴ In her complaint, she claimed that Crowell, her supervisor at Shearson, continually berated and harassed her after she became pregnant and experienced complications that caused her frequently to be absent from work. She further alleged that Crowell subjected her to additional harassment and humiliation in front of coworkers after she reported the situation to Shearson's human resources office. Finally, she claimed that Shearson failed to take adequate steps to remedy the situation and also that it was vicariously liable for Crowell's actions.

The defendants responded to the plaintiff's complaint by filing a motion to compel arbitration under the terms of the employment application and requesting a stay of the court proceedings pending arbitration. The judge allowed the motion, ruling that the agreement to arbitrate contained in the application for employment was enforceable. The plaintiff filed a petition requesting leave to take an interlocutory appeal, which was denied by a single justice of this court.

On November 4 and 21, 1994, hearings were held before a three-member arbitration panel of the American Stock Exchange. ⁵ By unanimous decision dated December 28, 1994, the plaintiff's claims were denied and the case was dismissed. Shearson, however, was ordered to pay the plaintiff's costs of arbitration.

The plaintiff subsequently filed a motion in the Superior Court requesting that the previously imposed stay be vacated and the case restored to the jury trial list. The defendants opposed the motion and moved for confirmation of the arbitration award and dismissal of the case. Both parties filed memoranda supporting their positions. The judge denied the defendants' motion, vacated the stay and restored the case to the trial list. Citing Prudential Ins. Co. v. Lai, 42 F.3d 1299 (9th Cir.1994), cert. denied, --- U.S. ----, 116 S.Ct. 61, 133 L.Ed.2d 24 (1995), decided after the original order compelling arbitration, the judge ruled that "an employee must knowingly agree to arbitrate discrimination claims under G.L. c. 151B in order to waive her right to trial," and that the plaintiff "could not have known that she was waiving her statutory right to a trial on her sexual harassment and discrimination claims" when she signed the application for employment containing the arbitration agreement. ⁶

On appeal, Crowell and Shearson maintain that the judge erred by refusing to confirm the arbitration award in the absence of a motion to vacate, modify or correct the award. They further argue that the judge's reliance on Lai was misplaced, first, because the requirement of a knowing waiver of the statutory remedies afforded by Title VII and analogous State statutes has not been adopted in other jurisdictions and second, because the arbitration clause at issue here is far more specific than the agreement considered in Lai.

The Federal Arbitration Act (FAA), 9 U.S.C. §§ 1 et seq. (1988), created a "body of federal substantive law of arbitrability, applicable to any arbitration agreement within [its] coverage." Martin v. Norwood, 395 Mass. 159, 161-162, 478 N.E.2d 955 (1985), quoting from Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 941, 74 L.Ed.2d 765 (1983). Where an arbitration agreement falls within the purview of the FAA, the act governs the arbitrability of the dispute in State or Federal court. ⁷ See Carpenter v. Pomerantz, 36 Mass.App.Ct. 627, 628 n. 3, 634 N.E.2d 587 (1994), citing Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. at 24, 103 S.Ct. at 941. Section 2 of the FAA "provides that a dispute is arbitrable if it falls within the scope of a written arbitration agreement that is otherwise valid and enforceable." ⁸ Carpenter v. Pomerantz, 36 Mass.App.Ct. at 628, 634 N.E.2d 587.

Whether a particular agreement calls for arbitration is to be determined by applying general principles of contract law. See Mobil Oil Corp. v. Local 8-766, Oil, Chemical & Atomic Workers Intl. Union, 600 F.2d 322, 325 (1st Cir.1979). "[A] party cannot be required to submit to arbitration any dispute which he has not agreed ... to submit." Local 285, Serv. Employees Intl. Union, AFL-CIO v. Nonotuck Resource Assocs., Inc., 64 F.3d 735, 738 (1st Cir.1995).

"[Q]uestions of arbitrability, [however,] must be addressed with a healthy regard for the federal policy favoring arbitration" as an alternative over litigation. Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. at 24, 103 S.Ct. at 941. Moreover, under the FAA, any doubts regarding arbitrability should be resolved in favor of coverage " 'unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute.' " Peerless Pressed Metal Corp. v. International Union of Elec., Radio and Mach. Workers, AFL-CIO, 451 F.2d 19, 20 (1st Cir.1971), cert. denied, 414 U.S. 1022, 94 S.Ct. 445, 38 L.Ed.2d 313 (1973), quoting from United Steelworkers of America v. Warrior & Gulf Nav. Co., 363 U.S. 574, 582-583, 80 S.Ct 1347, 1353, 4 L.Ed.2d 1409 (1960). Commercial Union Ins. Co. v. Gilbane Bldg. Co., 992 F.2d 386, 388 (1st Cir.1993). See Barnstead v. Ridder, 39 Mass.App.Ct. 934, 935, 659 N.E.2d 753 (1996). This policy obtains whether the issue being considered involves "the construction of the contract language itself or an allegation of waiver, delay, or a like defense to arbitrability." Commercial Union Ins. Co. v. Gilbane Bldg. Co., supra, quoting from Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. at 25, 103 S.Ct. at 941.

Pursuant to the FAA, statutory claims may be the subject of an enforceable arbitration agreement. Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 26, 111 S.Ct. 1647, 1652, 114 L.Ed.2d 26 (1991). In Gilmer, the Supreme Court decided that a claim under the Age Discrimination in Employment Act of 1967 (ADEA) was subject to compulsory arbitration pursuant to a valid arbitration agreement. Id. at 35, 111 S.Ct. at 1656-1657. Several Federal Courts have agreed that employees may waive the remedies afforded under Title VII and analogous State anti-discrimination statutes pursuant to a valid arbitration agreement. ⁹ See, e.g., Alford v. Dean Witter Reynolds, Inc., 939 F.2d 229 (5th Cir.1991); Willis v. Dean Witter Reynolds, Inc., 948 F.2d 305 (6th Cir.1991); Mago v. Shearson Lehman Hutton, Inc., 956 F.2d 932 (9th Cir.1992); Bender v. A.G. Edwards & Sons, Inc., 971 F.2d 698 (11th Cir.1992). See also Scott v. Farm Family Life Ins. Co., 827 F.Supp. 76 (D.Mass.1993).

The plaintiff here concedes that the reasoning of Gilmer is generally applicable to claims brought pursuant to Title VII and G.L. c. 151B. She urges us to adopt the reasoning of Prudential Ins. Co. v. Lai, however, and maintains that the arbitration agreement she signed cannot be characterized as a knowing waiver of the statutory right to a jury trial of her sexual harassment and gender discrimination claims because it is unclear as to whether such claims are subject to arbitration.

The plaintiff agreed to arbitrate "any controversy arising out of or in connection with [her] employment or termination of employment...." She argues that the clause is vague and ambiguous because it does not specifically refer to sexual harassment or gender discrimination claims. We are not persuaded. There can be no doubt that the plaintiff's dispute with Crowell and Shearson arose out of her employment and subsequent termination from Shearson. In her complaint, she alleged that the defendants sexually harassed and discriminated against her, inflicted emotional distress upon her and defamed her in the workplace, all because she was frequently absent as a result of her pregnancy. Moreover, the fact that an arbitration agreement is comprehensive in scope does not render it invalid. Rather, where an arbitration clause is as broad as the one at issue here, "there is a strong presumption of arbitrability." Carpenter v. Pomerantz, 36 Mass.App.Ct. at 630, 634 N.E.2d 587, citing AT & T Technologies, Inc. v. Communications Workers of America, 475 U.S. 643, 650, 106 S.Ct. 1415, 1419, 89 L.Ed.2d 648 (1986).

Even if we were to adopt the reasoning of Lai and impose a requirement that any waiver of the statutory remedies afforded to plaintiffs under G.L. c. 151B must be made knowingly, we think the arbitration clause at issue here would pass muster. Unlike the clause considered in Lai, the agreement signed by the plaintiff specifically referred to...