Patterson v. Tenet Healthcare, Inc.

• Decision Date: 12 May 1997
• Docket Number: No. 96-2587,96-2587
• Citation: 113 F.3d 832
• Parties: 73 Fair Empl.Prac.Cas. (BNA) 1822, 70 Empl. Prac. Dec. P 44,677, 65 USLW 2733, 12 IER Cases 1434 Deborah PATTERSON, Appellant, v. TENET HEALTHCARE, INC., Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 832

113 F.3d 832

73 Fair Empl.Prac.Cas. (BNA) 1822,

70 Empl. Prac. Dec. P 44,677, 65 USLW 2733,

12 IER Cases 1434

Deborah PATTERSON, Appellant, v. TENET HEALTHCARE, INC., Appellee.

No. 96-2587.

United States Court of Appeals,

Eighth Circuit.

Submitted Jan. 15, 1997.

Decided May 12, 1997.

Ronald F. Bunn, Columbia, MO, argued, for appellant.

Rowdy Meeks, Kansas City, MO, argued (Toni H. Blackwood, on the brief), for appellee.

Before WOLLMAN and FLOYD R. GIBSON, Circuit Judges, and MONTGOMERY, ¹ District Judge.

WOLLMAN, Circuit Judge.

Deborah Patterson appeals from the district court's ² order dismissing her employment discrimination claims against her former employer, Tenet Healthcare, Inc. (Tenet). We affirm.

I.

Patterson became employed in 1989 as a medical technologist at Columbia Regional Hospital, which is owned and operated by Tenet. On March 5, 1993, she received a copy of Tenet's employee handbook and signed an arbitration clause set forth on the last page of the handbook.

On July 26, 1993, and again on January 18, 1994, Patterson filed charges with the Equal Employment Opportunities Commission (EEOC) and Missouri Commission on Human Rights (MCHR) after receiving treatment she believed to be discriminatory and retaliatory. On December 8, 1994, Patterson filed a grievance through Tenet's internal grievance apparatus, the "Fair Treatment Procedure." Patterson's grievance proceeded through investigation and discussion to a hearing before the Fair Treatment Committee. Patterson was terminated nine days prior to the hearing, and she amended her grievance to include her termination. Her grievance was ultimately denied.

Patterson did not submit her claim to the final step of the Fair Treatment Procedure, binding arbitration, and instead filed suit in the district court, alleging violations of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq. (Title VII), and the Missouri Human Rights Act, Mo.Rev.Stat. § 213.010 et seq. (MHRA). Finding that Patterson had agreed to arbitrate, that the Federal Arbitration Act (FAA) governed Patterson's claims arising out of her employment with Tenet, and that these claims were arbitrable, the district court dismissed Patterson's complaint. On appeal, Patterson argues that she did not agree to arbitrate and that the FAA does not govern her claims.

II.

We first consider whether Patterson and Tenet agreed to arbitrate. Under the FAA, ordinary contract principles govern whether parties have agreed to arbitrate, see Daisy Mfg. Co., Inc. v. NCR Corp., 29 F.3d 389, 392 (8th Cir.1994), principles that in this case are derived from Missouri law. See First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943-45, 115 S.Ct. 1920, 1924, 131 L.Ed.2d 985 (1995). Two portions of the handbook are at issue in determining whether such a contract exists. Page 3 provides:

[This handbook] is not intended to constitute a legal contract with any employee or group of employees because that can only occur with a written agreement executed by a facility Executive Director and an AMI [ ³] Senior Executive Officer. As regards the Fair Treatment Procedure, AMI is committed to accepting the obligation to support and assure access to the binding arbitration procedure for solving disputes, if necessary. Situations may arise from time to time which, in the Company's judgement require procedures or actions different than those described in this document or other written policies. Since the Company maintains the sole and exclusive discretion to exercise the customary functions of the management in all areas of employment and Company operations, the judgement of management shall be controlling in all such situations. Employees have access to a grievance procedure described in this document that affords the opportunity to have any employment related disputes submitted to binding arbitration.

Page 31 of the handbook contains the following heading:

IMPORTANT!

Acknowledgment Form

Upon receipt, please sign and present the acknowledgment form of this handbook to the Human Resources Department.

....

... No written agreement concerning employment terms or conditions is valid unless signed by a facility executive director, and senior officer of AMI, and no written statement or agreement in this handbook concerning employment is binding, since provisions are subject to change, and as all AMI employees are employed on an "at will" basis.... The company reserves the right to amend, supplement, or rescind any provisions of this handbook as it deems appropriate in its sole and absolute discretion.

I understand AMI makes available arbitration for resolution of grievances. I also understand that as a condition of employment and continued employment, I agree to submit any complaints to the published process and agree to abide by and accept the final decision of the arbitration panel as ultimate resolution of my complaint(s) for any and all events that arise out of employment or termination of employment.

The district court found that this arbitration clause, which Patterson signed, created a binding contract to arbitrate.

Under Missouri law, employee handbooks generally are not considered contracts, because they normally lack the traditional prerequisites of a contract. See Johnson v. McDonnell Douglas Corp., 745 S.W.2d 661, 662 (Mo.1988) (en banc). An employer's unilateral act of publishing a handbook is not a contractual offer to the employee. See id. Rather, a contract is only formed with the traditional elements of offer, acceptance, and consideration. See id. at 662-63.

Patterson points to the statement on page 3 of the handbook that "[the handbook] is not intended to constitute a legal contract," and to the statement on page 31 that "no written statement or agreement in this handbook concerning employment is binding," as evidence that the handbook did not create a binding contract.

We conclude, however, that the arbitration clause is separate from the other provisions of the handbook and that it constitutes an enforceable contract. See Amicizia Societa Navegazione v. Chilean Nitrate & Iodine Sales Corp., 274 F.2d 805, 808-09 (2d Cir.1960) (citing Robert Lawrence Co. v. Devonshire Fabrics, Inc., 271 F.2d 402 (2d Cir.1959)) (arbitration clause may constitute separate and enforceable contract). First, the arbitration clause is separate and distinct. It is set forth on a separate page of the handbook and introduced by the heading, "IMPORTANT! Acknowledgment Form." This page is removed from the handbook after the employee signs it and is stored in a file. In addition, there is a marked transition in language and tone from the paragraph preceding the arbitration clause to the arbitration clause itself. Although the preceding paragraph discusses the company's reservation of its "right to amend, supplement, or rescind" any handbook provisions, the arbitration clause uses contractual terms such as "I understand," "I agree," I "agree to abide by and accept," "condition of employment," "final decision," and "ultimate resolution." We believe that the difference in language used in the handbook and that employed in the arbitration clause would sufficiently impart to an employee that the arbitration clause stands alone, separate and distinct from the rest of the handbook. The reservation of rights language refers to the handbook provisions relating to employment, not to the separate provisions of the arbitration agreement.

III.

The next question is whether the FAA governs the agreement to arbitrate. The purpose of the FAA "was to reverse the longstanding judicial hostility to arbitration agreements ... and to place arbitration agreements upon the same footing as other contracts." Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 24, 111 S.Ct. 1647, 1651, 114 L.Ed.2d 26 (1991). The FAA provides that an agreement to arbitrate disputes arising out of contracts involving maritime or 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. Section 1 of the FAA, however, exempts from FAA enforcement "contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce." 9 U.S.C. § 1. The district court held that section 1 exempts only those employees directly engaged in the movement of maritime or interstate commerce and therefore found that the FAA governed Patterson's claims.

We have not heretofore addressed the question whether section 1 of the FAA should be interpreted broadly or narrowly. We are persuaded by the reasoning of those circuits which have held that section 1 applies only to contracts of employment for those classes of employees that are engaged directly in the movement of interstate commerce. See Great Western Mortgage Corp v. Peacock, 110 F.3d 222, 227 (3d Cir.1997) (reaffirming Tenney Engineering, Inc. v. United Elec. Radio & Mach. Workers of Amer., Local 437, 207 F.2d 450, 452 (3d Cir.1953) (en banc)); Cole v. Burns Int'l Sec. Servs., 105 F.3d 1465, 1472 (D.C.Cir.1997); Rojas v. TK Communications, Inc., 87 F.3d 745, 748 (5th Cir.1996); Asplundh Tree Expert Co. v. Bates, 71 F.3d 592, 600-601 (6th Cir.1995); Miller Brewing Co. v. Brewery Workers Local Union No. 9, AFL-CIO, 739 F.2d 1159, 1162 (7th Cir.1984); 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). Only the Fourth Circuit has interpreted section 1 broadly. See United Elec. Radio & Machine Workers of Amer. v. Miller Metal Prods., 215 F.2d 221, 224 (4th Cir.1954). That ruling, however, was explicitly limited to the collective bargaining context. See id.

As the District of Columbia Circuit has explained, two well-established canons of statutory construction compel a narrow interpretation. See Cole, 105 F.3d at 1470. The first canon counsels avoiding a reading which...