Raasch v. Ncr Corp., C-3-02-272.

Citation254 F.Supp.2d 847
Decision Date22 January 2003
Docket NumberNo. C-3-02-272.,C-3-02-272.
PartiesRex RAASCH, Plaintiff, v. NCR CORPORATION, Defendant.
CourtUnited States District Courts. 6th Circuit. United States District Courts. 6th Circuit. Southern District of Ohio

Randolph Harry Freking, Megan E. Clark, Freking & Betz, Cincinnati, OH, for Plaintiff.

C. Mark Kingseed, Randall M. Comer, Dinsmore & Shohl LLP, Dayton, OH, for Defendant.

DECISION AND ENTRY SUSTAINING DEFENDANT'S MOTION TO DISMISS AND COMPEL ARBITRATION (DOC. #7); TERMINATION ENTRY

RICE, Chief Judge.

The question presented herein is whether an employer can enforce a mandatory arbitration policy imposed upon an at-will employee, where the employer had stated upon the initiation of the policy that the employee's continued employment with the company, along with the acceptance of any future pay raises, promotions, bonuses, and the like, would constitute his acceptance of that policy.

Plaintiff Rex Raasch was employed by Defendant NCR Corporation ("NCR") beginning in 1975. He was terminated in February, 2002. Believing that his termination was due to age-based animus on the part of NCR, Raasch, who was 55 years old at the time he was terminated, brought the underlying Complaint (Doc. # 1), pleading therein three causes of action: (1) age discrimination in violation of the Age Discrimination in Employment Act, 29 U.S.C. § 621, et seq. ("ADEA"); (2) age discrimination in violation of Ohio Rev. Code § 4112.14; and (3) age discrimination in breach of Ohio's public policy against same.

Pointing to a binding arbitration agreement initiated by NCR in October, 1996, which listed disputes stemming from an employee's involuntary termination on its enumerated list of disputes subject to its provisions, NCR has filed a Motion to Dismiss and Compel Arbitration (Doc. # 7), arguing that this Court should enforce Raasch's purported agreement to forgo litigation in favor of submitting his discrimination dispute to arbitration. Raasch, in his Memorandum in Opposition (Doc. # 10), raises four objections to NCR's argument that the arbitration agreement is binding upon him: (1) it is unenforceable because there is a lack of mutuality of obligation between the parties; (2) it is unenforceable because it contains a prohibitive fee-shifting clause; (3) it is unenforceable because NCR offered no consideration in return for his willingness to be bound by its terms; and (4) it is unenforceable because it operates as a contract of adhesion.

For the reasons which follow, the Court shall sustain Defendant's Motion.

I. Standard for Ruling on NCR's Motion to Dismiss and Compel Arbitration

It must be noted first that NCR's Motion to Dismiss and Compel Arbitration is not a motion which comes within the ambit of Rule 12(b) of the Federal Rules of Civil Procedure, which allows a defendant to move to dismiss on, among other things, grounds that the court lacks subject matter jurisdiction or that the plaintiffs claim fails to state a claim upon which relief can be granted. Instead, the standard for ruling on NCR's Motion is defined by the Federal Arbitration Act, 9 U.S.C. § 1, et seq. ("FAA"), which provides that a party to an arbitration agreement that is aggrieved by another party's refusal to submit an arbitrable dispute to arbitration may petition any federal district court which would otherwise have jurisdiction over the underlying matter to compel arbitration. 9 U.S.C. § 4; see also 28 U.S.C. § 1331 (original federal question jurisdiction) & 28 U.S.C. § 1332 (original diversity jurisdiction). The FAA then contemplates a stay of the proceedings in federal court, as compared to dismissal of the action, "until such arbitration has been had in accordance with the terms of the agreement." Id. § 3. Be that as it may, where "the terms of the agreement" dictate that the arbitrator's decision is final and binding, the federal courts have held that dismissal is appropriate on that basis, once it has been determined that arbitration indeed must be compelled. See, e.g., Arnold v. Arnold Corp.-Printed Communications for Business, 920 F.2d 1269, 1276 (6th Cir.1990); Orcutt v. Kettering Radiologists, Inc., 199 F.Supp.2d 746 (S.D.Ohio 2002).

II. Factual Background

In evaluating motions or petition to compel arbitration, courts treat the facts as they would in ruling on a summary judgment motion, construing all facts and reasonable inferences that can be drawn therefrom in a light most favorable to the non-moving party. See, e.g., Goodman v. ESPE America, Inc., 2001 WL 64749, at *1 (E.D.Pa. Jan. 19, 2001). Accordingly, the Court will look to the pleadings and other documentation attached thereto by the parties to lay the factual foundation, and construe those facts, and reasonable inferences that can be drawn therefrom, in a light most favorable to Raasch.

Raasch began his employment with NCR in 1975. (Compl.118.) While working at NCR, he was promoted at least four times, and received a number of plaudits for his job performance, including the "Best of the Best" team award in 1998. (Id.¶ ¶ 10 & 11.) In June, 2001, he was presented with a reduction-in-force package (presumably a severance package), which he refused to sign. (Id ¶ 13.) Under the terms of the reduction-in-force package, Raasch, had he agreed to it, would have had to waive any legal claim he had against NCR. (Raasch Aff., attached to Doc. # 10, ¶ 8.) On November 1, 2001, on the stated basis that his quality of work was deficient, NCR placed Raasch on a 60-day Performance Improvement Plan. (Compl. ¶¶ 14-16.) On December 15, 2001, prior to the expiration of the 60-day improvement plan period, he was presented with a settlement agreement and general release of claims, and was informed that if he did not sign it, he would be terminated without any severance benefits. (Id. 20.) He did not sign the agreement, and was terminated on February 1, 2002. (Id. 22.) At the same time, younger employees with less seniority were retained by NCR, while two other employees over the age of 50 were also terminated. (Id 27.) After being without a job for about six months after his termination from NCR, Raasch moved with his family to Iowa, where he is currently employed. (Raasch Aff. 11 10-13.)

Several years earlier, in 1996, in his twenty-first year of employment at NCR, Raasch had received notice that NCR had initiated an employment-dispute policy, under which certain workplace disputes were subject to mandatory arbitration. (Id. 113.) NCR had not asked him for his express consent to the arbitration policy, but he did understand that the only way to avoid its effect was to resign. (Id. 1114 & 5.)

The official name of NCR's arbitration policy, which became effective on October 1, 1996, is Addressing Concerns Together ("ACT"). (Doc. # 7 at Ex. 2, at 1.)1 ACT does not immediately require arbitration of a dispute, but, rather, requires the resolution of such to unfold pursuant to a three-stage sequence. The first stage contemplates an informal resolution of the employee's grievance, either with his manager or someone else in his chain of command, or with the Human Resources Department or some other confidential advisor, depending on the nature of the dispute. (Id. at 3-4.) Stage 1 also contemplates that in instances of purported poor performance, an employee may be placed on a Personal Improvement Plan ("PIP"). (Id. at 4.) The employee may appeal the PIP decision within 48 hours to the highest manager in his chain of command, but barring this manager's disapproval with the decision, he must comply. (Id.)

Stage 2 contemplates a written appeal of any Stage 1 decision, including any demotion or termination that results from an employee's failure to meet the terms of her PIP. (Id. at 4-5.) The appeal is to be made to an NCR Leadership Team panel, which shall consist of the Senior Vice President of the Human Resources Department, the Senior Vice President of the Law Department, and the Senior Vice President of the division in which the employee works or had worked. (Id.)

Finally, at Stage 3, ACT contemplates that any dispute not resolved at Stage 1 or 2 shall be submitted to an arbitration panel of the American Arbitration Association (AAA), to be conducted in a neutral location and in accordance with the rules of the AAA. (Id. at 5, 6.) The appealing employee may retain legal counsel, and is entitled to depose two lay individuals and any expert witness expected to testify at the arbitration hearing. (Id. at 6, 7.) Filing and arbitration fees are to be shared equally unless the arbitrator reverses the Leadership Team panel's decision, in which case NCR is solely responsible. (Id. at 6-7.) Because Raasch's counsel values his claim at approximately $500,000 to $1 million, the parties can expect the costs and fees to amount to in excess of $8,000, according to the current fee schedule published by the AAA. (Clark Aff., attached to Doc. # 10, 4);2 see also AAA's "National Rules for the Resolution Employment Disputes," available at JSPssid =15729> (rules effective as of Nov. 1, 2002).

ACT expressly states that it applies to "concerns involving," among other things, "a performance improvement plan," "involuntary termination," and "treatment that is perceived as unequal or discriminatory." (Doc. # 7 at Ex. 2, at 2.) With respect to Stage 3, the arbitration stage, it states:

U.S. employees' agreement to all of the ACT policy provisions, including arbitration, will be expressed in one or more of the following ways, effective October 1, 1996:

* By continuing employment with NCR

* By accepting any transfers, promotions, merit increases, bonuses or any other benefits of employment^]

(Id. at 5.)3

III. Analysis

As noted, Raasch has raised four objections to NCR's Motion to Dismiss and Compel Arbitration, all premised on arguments that ACT is invalid insofar as he and his discrimination claims are concerned: (1) the purported agreement to be bound by ACT lacked mutuality of obligation; (2) it...

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