Owen v. Mbpxl Corp., C01-4030-MWB.

Citation173 F.Supp.2d 905
Decision Date20 November 2001
Docket NumberNo. C01-4030-MWB.,C01-4030-MWB.
PartiesLarry OWEN, Plaintiff, v. MBPXL CORPORATION d/b/a Excel Specialty Products, Defendant.
CourtUnited States District Courts. 8th Circuit. Northern District of Iowa

Jay E. Denne of Munger, Reinschmidt & Denne, Sioux City, IA, for Plaintiff.

Sarah J. Kuehl of Heidman, Redmond, Fredregill, Patterson, Plaza, Dykstra & Prahl, L.L.P., Sioux City, IA, for Defendant.

MEMORANDUM OPINION AND ORDER REGARDING DEFENDANT'S MOTION TO COMPEL ARBITRATION AND STAY PROCEEDINGS PENDING ARBITRATION AND REQUEST FOR EXTENSION OF TIME TO FILE ANSWER

BENNETT, Chief Judge.

                TABLE OF CONTENTS
                I. INTRODUCTION AND PROCEDURAL BACKGROUND ................................. 908
                     A. The Parties, The Arbitration Clause, And The Underlying Dispute...... 908
                     B. Procedural Background ............................................... 909
                 II. LEGAL ANALYSIS ......................................................... 911
                     A. The Federal Arbitration Act And Excel's Motion To Compel Arbitration
                          And Stay Proceedings ................................................... 911
                        1. History of the Federal Arbitration Act ........................... 911
                        2. What law governs the interpretation and construction of the
                             agreement? .......................................................... 912
                     B. The Validity Of The Dispute Resolution Plan.......................... 913
                        1. Elements of a valid contract under the Federal Arbitration Act
                             Ordinary principles of contract law ................................. 913
                        2. Bilateral and unilateral contracts................................ 914
                        3. Offer ............................................................ 918
                        4. Acceptance........................................................ 925
                        5. Implied Contract ................................................. 926
                     C. Who Determines Arbitrability? ....................................... 927
                III. CONCLUSION ............................................................. 930
                

In this employment discrimination litigation, the defendant has requested that the court compel arbitration and stay proceedings pursuant to the Federal Arbitration Act ("FAA"), 9 U.S.C. § 1 et seq. The defendant operates, among other businesses, a meat processing plant in Orange City, Iowa. The plaintiff was employed by the defendant for over twenty years, and the underlying claims in this action assert a violation of the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. § 623 et seq. The defendant, however, maintains that an arbitration agreement between the parties precludes the plaintiff from pursuing his claims in court. Consequently, the defendant seeks to compel arbitration. As a result, the court is called upon to determine (1) whether the parties have a valid agreement to arbitrate; and if so, (2) whether plaintiff's age discrimination claim falls within the scope of any such agreement. At the heart of this motion to compel arbitration and stay proceedings is whether the arbitration agreement is a valid contract, because the plaintiff denies receipt of the agreement and the defendant offers little in the way of proof of its communication of the agreement.

I. INTRODUCTION AND PROCEDURAL BACKGROUND
A. The Parties, The Arbitration Clause, And The Underlying Dispute

The plaintiff, Larry Owen ("Owen"), worked for the defendant, MBPXL Corporation, doing business as Excel Specialty Products ("Excel"), for over twenty years. He began his long career with Excel in January of 1980. He was a supervisor at Excel's Witchita, Kansas plant from 1984-1986. He was then transferred to Excel's Rockport, Missouri facility and worked there from 1986 until 1992. In 1992, Owen became the production supervisor in Excel's Fort Branch, Indiana plant. However, the Indiana facility closed in 1999, and Owen was transferred to Excel's processing plant in Orange City, Iowa in March, 1999. Owen remained at the Orange City, Iowa facility until July of 2000. Owen claims that he was constructively terminated from his position as a supervisor and resigned in July of 2000 after being denied several promotions and at least one pay raise because of his age. Specifically, Owen maintains that Excel hired younger, less experienced people for positions that Owen was qualified to perform in 1992, 1997, and in 1999; that his transfer to the Orange City, Iowa plant after the Indiana plant closed in 1999 was the product of a hostile and pervasive atmosphere of age discrimination and harassment; and that in June of 2000, during his annual review, Alec Gordon, Excel's General Manager, told Owen that "when we get up in years like us, raises are few and far between." Pl.'s Compl. ¶ 13.

In February of 1998, Excel adopted a Dispute Resolution Plan ("DRP" or "Plan"). The Plan outlines an internal grievance procedure and is purportedly an arbitration agreement, the validity of which is at issue in this case. The court will discuss the Plan's provisions more fully in Section II. On October 19, 1999, Excel presented the DRP to the employees at the Orange City facility. Excel asserts that Owen received a copy of the DRP and has produced a signed training session attendance sheet, which Excel claims demonstrates communication of the Plan to Owen. As stated in the Plan itself, employees were deemed to have accepted the plan if they continued employment for thirty days after its presentation. Def.'s Ex. A (Art. 7.8). In his initial resistance to the defendant's motion, Owen stated that he received a copy of the Plan attached to the defendant's motion to compel arbitration, but further stated that he did not recall signing a document stating that he agreed to its terms. (Owen Dep. ¶ 2). In his supplemental deposition, Owen contends he could not have received the Plan attached to the defendant's motion, the reasons for which will be discussed more fully below. Owen did, however, continue his employment with Excel for a period greater than thirty days after the date on which Excel contends it communicated the Plan to Owen, i.e., from October 1999 until July 2000.

The DRP's grievance procedure culminates with binding arbitration. Before reaching the arbitration stage, however, the DRP calls for several intermediate steps, beginning with contacting the Human Resource Manager. The next step involves informing the body established by the DRP to handle disputes, Dispute Solutions, Inc. ("DSI"). Owen made a complaint to DSI in March of 2000, which Excel claims is still pending. Owen bypassed the next steps, which require requesting reconsideration, placing the complaint before a review committee, participating in mediation, and finally, entering into binding-arbitration. The DRP explicitly states that failure to follow the steps in the order outlined in the agreement is grounds for an arbitrator to rule against an employee.

B. Procedural Background

On March 27, 2001, Owen filed his complaint alleging age discrimination pursuant to the ADEA, 29 U.S.C. § 623 et seq. Prior to filing this action, he filed a discrimination charge with the Iowa Civil Rights Commission ("ICRC") and the Equal Employment Opportunity Commission ("EEOC") and received a right-to-sue letter. Pl.'s Exs. A, B. This action was filed within 90 days of receipt of the letter and, therefore, is timely. Under both Counts I and II of Owen's complaint, which allege age discrimination and retaliation in violation of the ADEA, Owen seeks compensatory and punitive damages, costs, and attorney's fees. Pl.'s Compl.

On May 29, 2001, in lieu of answering Owen's complaint, Excel moved to compel arbitration and stay proceedings. Excel contends that Owen's age discrimination claim is governed by the arbitration agreement between the parties. Accordingly, it maintains that under both the agreement and the FAA, Owen is precluded from pursuing his claim in court and must instead submit his claim to arbitration. Excel requests that this court stay proceedings pursuant to 9 U.S.C. §§ 3-4, which states in pertinent part that "[a] party aggrieved by the alleged failure of another to arbitrate under a written agreement for arbitration may petition any United States district court for an order directing that such arbitration proceed in the manner provided for in such agreement ...", 9 U.S.C. § 4, and that a court "upon being satisfied that the issue involved in [a] suit or proceeding is referable to arbitration under [an] agreement [between the parties], shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement." 9 U.S.C. § 3. Alternatively, Excel moves for an extension of time to file an answer until twenty days after disposition of the present motion before the court. Furthermore, Excel requests that the court order Owen to pay Excel's attorney's fees under the terms of the parties' arbitration agreement, which provide that "[a]ny Party that files a lawsuit ... in any court shall be liable for the other Party's attorney's fees to compel compliance with this Plan." Def.'s Ex. A (Art. 6.4).

Owen filed his resistance to Excel's motion on June 22, 2001. He advances several arguments in support of his resistance. First, Owen challenges the validity of the arbitration agreement itself. Essentially, he claims that Excel did not communicate the Plan to him; consequently, he asserts that he could not have accepted Excel's offer to enter into an arbitration agreement. Furthermore, he maintains that his silence was not an effective acceptance of the DRP and, therefore, that the DRP does not constitute a legally enforceable contract. In the alternative, Owen contends that the DRP is not enforceable because the terms of the plan are too indefinite to constitute a valid offer under ordinary principles of contract law. And finally, Owen asserts that by not...

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