Plaskett v. Bechtel Intern., Inc.

• Decision Date: 27 January 2003
• Docket Number: No. CIV.2002-0149.,CIV.2002-0149.
• Citation: 243 F.Supp.2d 334
• Parties: Ronald PLASKETT, Plaintiff, v. BECHTEL INTERNATIONAL, INC., Defendant.
• Court: U.S. District Court — Virgin Islands

243 F.Supp.2d 334

Ronald PLASKETT, Plaintiff, v. BECHTEL INTERNATIONAL, INC., Defendant.

No. CIV.2002-0149.

District Court, Virgin Islands, D. St. Croix.

January 27, 2003.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Lee J. Rohn, Law Offices of Lee J. Rohn, Christiansted, VI, for Plaintiff.

Francis J. D'Eramo, Nichols, Newman, Logan & D'Eramo, P.C, Christiansted, VI, for Defendant.

MEMORANDUM OPINION

FINCH, Chief Judge.

THIS MATTER comes before the Court on Defendant Bechtel International Inc.'s (hereinafter "Bechtel") Motion to Compel Arbitration. Plaintiff Ronald Plaskett opposes such motion.

I. Background

Bechtel hired Plaintiff Ronald Plaskett to work as a warehouse aide in the Hovensa refinery in St. Croix, Virgin Islands on June 26, 2000. Complaint, ¶ 4. On August 21, 2000, Plaskett entered into an Hourly Employment Agreement (hereinafter "Agreement") with Bechtel. Mot. to Compel, Ex. A. The Agreement addresses many aspects of the employment relationship, including compensation, overtime, insurance, vacation, sick pay, increases and promotions, and discipline. It also contains four paragraphs regarding arbitration. Agreement, ¶¶ 16-20.

Plaskett alleges the following facts as the basis for this suit: Plaskett was promoted to warehouse supervisor in February 2002. Complaint, ¶ 5. According to Plaskett, his supervisor demanded that he unfairly reprimand and retaliate against predominantly black employees at the Bechtel warehouse. Id., ¶¶ 6-10. Plaskett complained about such directions. Id., ¶ 8. He ultimately refused to follow his supervisor's instruction to give an unwarranted reprimand. Id., ¶11. Shortly thereafter, Plaskett was terminated due to a pretextual reduction in force. Id., ¶ 12. Plaskett claims that Bechtel paid him less and gave him fewer benefits than white employees from the continental United States. Id., ¶ 13.

II. The Court's Role

A. The Court Determines Whether The Parties Formed an Agreement to Arbitrate

Under section 2 of the Federal Arbitration Act (FAA), 9 U.S.C. §§ 1-16, the court must determine whether the parties entered into a valid arbitration agreement. See Great Western Mortgage Corp. v. Peacock, 110 F.3d 222, 228 (3d Cir.1997). "In conducting this inquiry the district court decides only whether there was an agreement to arbitrate, and if so, whether the agreement is valid." Id.

For example, in general, consideration is required to form a contract. Restatement (Second) of Contracts § 17. Therefore, the question of whether there is adequate consideration is for the Court. See Blair v. Scott Specialty Gases, 283 F.3d 595, 603 (3d Cir.2002).

"When both parties have agreed to be bound by arbitration, adequate consideration exists and the arbitration agreement should be enforced." Id. Plaskett argues that he is bound to arbitrate any disputes that he has with Bechtel concerning his employment, but that Bechtel is not equally bound, and therefore, the Agreement lacks consideration. Plaskett reaches this conclusion through his interpretation of paragraph 16 of the Agreement which provides:

Any controversy or claim arising out of or relating in any way to this Agreement, to the breach of this Agreement, and/or to Employee's employment with Employer, or to the suspension or termination of Employee's employment with Employer ... shall be resolved by arbitration and not in a court or before an administrative agency.... Employee and the Company agree that Employee's sole remedy for any controversy or claim arising out of or in any way relating to (1) this Agreement; (2) to the breach of this Agreement; and/or (3) to Employee's employment with Employer or to the suspension or termination of Employee's employment with Employer shall be in accordance with the terms of this Agreement. Plaskett asks the Court to read the last sentence of paragraph 16 in isolation. Read in this manner, the sentence implies that only the employee is bound to arbitrate. The rules of contract interpretation require the Court to construe the writing as a whole. Restatement (Second) of Contracts § 202(2). Reading paragraph 16 as a whole, the Court finds that the first sentence binds both parties to arbitrate their controversies and claims concerning the employment relationship and that the last sentence merely emphasizes that the employee has no other recourse but arbitration. This interpretation, which gives an effective meaning to all the terms, is preferred. Id., § 203(a). The Court finds that both parties provided consideration in that they both agreed to be bound by arbitration and that there is, therefore, mutuality of obligation. Cf. Blair, 283 F.3d at 603 (holding that a contract need not have mutuality of obligation as long as it is supported by consideration).

Plaskett claims that the consideration is illusory because Bechtel has retained the right to unilaterally modify the Agreement. See Restatement (Second) of Contracts § 77 (indicating that an illusory promise is not consideration). However, Plaskett has failed to identify any term in the Agreement that provides Bechtel with the right to modify the Agreement unilaterally. On the contrary, the parties can only amend the Agreement via "a written document signed by both Employee and the Company." Agreement, ¶ 23.

Thus, the Court finds that the parties entered into an Agreement that includes arbitration provisions. The arbitration provisions provide consideration for the Agreement, in that both parties agreed to be bound by arbitration. Even if the Court ultimately concludes that the parties' agreement to arbitrate is unenforceable, the arbitration provisions still constitute consideration for the Agreement. Restatement (Second) of Contracts § 78 ("[A] rule of law [that] renders a promise ... unenforceable does not prevent it from being consideration").

B. The Court Decides Whether the Arbitration Provisions are Unconscionable.

Although the FAA manifests a "liberal federal policy favoring arbitration agreements." EEOC v. Waffle House, Inc., 534 U.S. 279, 289, 122 S.Ct. 754, 151 L.Ed.2d 755 (2002) (quotation omitted), arbitration provisions may be attacked under "such grounds as exist at law or in equity for the revocation of a contract." 9 U.S.C. § 2. Attacks must relate specifically to an arbitration provision and not to the validity of an agreement incorporating arbitration provisions. See Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 403-04, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967).

The Court applies general contract principles of territorial law in determining whether an arbitration agreement is enforceable. See Doctor's Associates, Inc. v. Casarotto, 517 U.S. 681, 686-87, 116 S.Ct. 1652, 134 L.Ed.2d 902 (1996). In the Virgin Islands, the Restatement (Second) of Contracts expresses the applicable principles of contract law. See 1 V.I.C. § 4.

A term of an arbitration provision that is unconscionable is unenforceable. See Restatement (Second) of Contracts § 208. Inequality in bargaining power is a factor that the Court considers in determining whether an arbitration provision or a term of such provision is unconscionable. See Restatement (Second) of Contracts § 208, cmt. d. "Mere inequality in bargaining power, however, is not a sufficient reason to hold that arbitration agreements are never enforceable in the employment context." Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 33, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991).

According to the Restatement (Second) of Contracts, even gross inequality of bargaining power does not automatically render an arbitration provision unconscionable. "[G]ross inequality of bargaining power, together with terms unreasonably favorable to the stronger party, may confirm indications that the transaction involved elements of deception or compulsion, or may show that the weaker party had no meaningful choice, no real alternative, or did not in fact assent or appear to assent to the unfair terms." Restatement (Second) of Contracts § 208, cmt. d; see also Worldwide Underwriters Ins. Co. v. Brady, 973 F.2d 192, 196 (3d Cir.1992) ("Unconscionability requires a two-fold determination: that the contractual terms are unreasonably favorable to the drafter and that there is no meaningful choice on the part of the other party regarding acceptance of the provisions.").

The Court's role is to determine whether an arbitration provision or a term of such provision is unconscionable in light of all the material facts. See id., § 208, cmt. f. A Court may refuse to enforce the arbitration provision or may enforce the arbitration provision without the unconscionable term. See id, § 208.

A finding that an arbitration provision is unenforceable because it is unconscionable does not violate and is not preempted by the FAA. The Supreme Court has specifically mentioned unconscionability as a generally applicable contract defense that may be raised without contravening section 2 of the FAA. Doctor's Associates, Inc., 517 U.S. at 687, 116 S.Ct. 1652.

III. Whether the Terms of the Arbitration Provisions Are Unconscionable

A. Elimination of Attorney's Fees is Unconscionable in that It Unreasonably Favors Bechtel by Preventing Plaskett from Vindicating His Statutory Rights.

1. Attorney's Fees in Title VII Cases

For a claim under a federal statute, such as Title VII, to be appropriate for arbitration, the plaintiff must be able to vindicate his statutory cause of action in the arbitral forum. See Gilmer, 500 U.S. at 26. Under Title VII, attorney's fees should ordinarily be awarded to a prevailing plaintiff. 42 U.S.C. § 2000e-5(k); see Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 416-18, 98 S.Ct. 694, 54 L.Ed.2d 648 (1978). A plaintiff may not be forced "to surrender the statutorilymandated rights and benefits that Congress intended them to possess." Graham Oil Co. v. ARCO Products Co., a Div. of Atlantic Richfield Co., 43 F.3d 1244, 1247 (9th Cir.1994). Courts have refused to enforce...