Soto–fonalledas v. Casino

• Decision Date: 04 May 2011
• Docket Number: No. 10–1638.,10–1638.
• Citation: 640 F.3d 471,24 A.D. Cases 1165,112 Fair Empl.Prac.Cas. (BNA) 275
• Court: U.S. Court of Appeals — First Circuit
• Parties: Diana SOTO–FONALLEDAS, et al., Plaintiffs, Appellants,v.RITZ–CARLTON SAN JUAN HOTEL SPA & CASINO, Defendant, Appellee.

640 F.3d 471

112 Fair Empl.Prac.Cas. (BNA) 275

94 Empl. Prac. Dec. P 44,167

24 A.D. Cases 1165

Diana SOTO–FONALLEDAS, et al., Plaintiffs, Appellants,

v.RITZ–CARLTON SAN JUAN HOTEL SPA & CASINO, Defendant, Appellee.

No. 10–1638.

United States Court of Appeals, First Circuit.

Heard Feb. 10, 2011.Decided May 4, 2011.

Juan Rafael Gonzáles Muñoz, with whom Maria E. Margarida Franco, Gonzáles Muñoz Law Offices, PSC, Carlos M. Vergne, and Law Offices of Carlos M. Vergne were on brief, for appellants.Radamés A. Torruella, with whom Patricia M. Marvez–Valiente and McConnell Valdés LLC were on brief, for appellee.Before LYNCH, Chief Judge, BOUDIN and THOMPSON, Circuit Judges.LYNCH, Chief Judge.

On September 30, 2009, Diana Soto–Fonalledas (“Soto”), her husband, and their conjugal partnership filed an employment discrimination suit against the Ritz–Carlton San Juan Hotel, Spa & Casino in federal court. The complaint alleged discrimination on the basis of sex and disability and retaliation in violation of Title VII of the Civil Rights Act, 42 U.S.C. § 2000e et seq., the Americans with Disabilities Act, 42 U.S.C. § 12101 et seq., and various Puerto Rico laws.

The Ritz–Carlton filed a motion to dismiss and compel arbitration pursuant to the Federal Arbitration Act (“FAA”), 9 U.S.C. § 1 et seq., on the grounds that the dispute was covered by an arbitration agreement. Soto's opposition argued that the arbitration agreement invoked by the Ritz–Carlton was invalid and unenforceable on several grounds.

The district court granted the Ritz–Carlton's motion to compel arbitration and dismissed all of the claims in the complaint, without prejudice to Soto filing the claims under Puerto Rico law in Commonwealth courts. Soto–Fonalledas v. Ritz Carlton San Juan Hotel Spa & Casino, No. 09–2005, 2010 WL 1328944, at *4 (D.P.R. Mar. 26, 2010). Soto filed a timely appeal.

We affirm the judgment of the district court, albeit on different reasoning.

I.

In support of its motion to compel, the Ritz–Carlton argued that arbitration was required by its employment agreement, which it submitted in English together with a receipt for the Spanish version of the agreement that had been signed by Soto on August 8, 2001. Within days of filing its motion to compel, the Ritz–Carlton filed a copy of the Spanish version of the agreement mentioned in its motion, as instructed by the district court.

The Ritz–Carlton's employee agreement outlines the rights and obligations of its employees. One section of the agreement identifies a three step alternative dispute resolution process that employees must follow to resolve workplace incidents before filing a lawsuit or administrative action. The first step requires that the employee discuss the incident in an informal open door process with his or her supervisor, manager, division head, and general manager. Under the second step, the employee must, with some exceptions, request a more formal review of the matter by a panel of coworkers. The third step requires that the employee submit to arbitration claims of discrimination or termination on the basis of age, color, sex, religion, national origin, sexual orientation, marital status, or disability.

In Soto's opposition to the motion to compel arbitration, she did not challenge the Ritz–Carlton's claim that she had signed an agreement to arbitrate, but rather argued that the Ritz–Carlton had not met its burden of demonstrating that a “valid agreement” existed. Challenging the terms and conditions, rather than the existence, of the agreement, she argued that it was invalid and unenforceable because: (1) it deprived her of her Title VII and ADA remedies; (2) the Ritz–Carlton did not provide her with a copy of the governing AAA rules; (3) she did not receive consideration for the agreement; (4) the clause did not provide adequate notice that she was agreeing to arbitrate statutory employment discrimination claims; and (5) the contract imposed a probationary period that violated Puerto Rico law. Only some of these claims are asserted on appeal.

II.

Because abstract questions of “whether particular disputes do (or do not) come within the four corners of an expressly limited arbitration provision are legal in nature,” we review the district court's grant of the motion to compel arbitration de novo. Paul Revere Variable Annuity Ins. Co. v. Kirschhofer, 226 F.3d 15, 18–19 (1st Cir.2000). We “may affirm its order on any independent ground made manifest by the record.” InterGen N.V. v. Grina, 344 F.3d 134, 141 (1st Cir.2003).

A party who is seeking to compel arbitration must demonstrate “that a valid agreement to arbitrate exists, that the movant is entitled to invoke the arbitration clause, that the other party is bound by that clause, and that the claim asserted comes within the clause's scope.” Dialysis Access Ctr., LLC v. RMS Lifeline, Inc., 638 F.3d 367, 375 (1st Cir.2011) (quoting InterGen, 344 F.3d at 142) (internal quotation marks omitted). At issue here is only the first requirement—the validity of the agreement.

Under Section 2 of the FAA, a written provision in a contract “to settle by arbitration a controversy thereafter arising out of such contract ... 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. The Supreme Court has stated that “the FAA was designed to promote arbitration,” AT&T Mobility LLC v. Concepcion, ––– U.S. ––––, 131 S.Ct. 1740, 1749, 179 L.Ed.2d 742 (2011), and that “Section 2 embodies the national policy favoring arbitration and places arbitration agreements on equal footing with all other contracts,” Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 443, 126 S.Ct. 1204, 163 L.Ed.2d 1038 (2006).

In challenging the agreement's validity, Soto advances just three of the arguments that she made to the district court. She argues that the arbitration agreement is unenforceable because she did not receive any consideration for signing it; because she did not receive adequate notice of which claims would be subject to arbitration; and because the agreement deprives her of remedies granted by Title VII and the ADA.

Soto grounds her remedies-based argument on a certified English translation of the Spanish version of the arbitration agreement submitted for the first time on appeal. She argues that there is a material difference between certain language of the Spanish version—for which she admits signing a receipt—and the language of the English version on which the district court based its decision.¹

Although as a rule this court will not consider translations of documents provided on appeal that were not part of the record before the district court, Gonzalez–De–Blasini v. Family Dept., 377 F.3d 81, 88 (1st Cir.2004); Estades–Negroni v. Assocs. Corp. of N. Am., 359 F.3d 1, 3 (1st Cir.2004), we retain the discretion to waive this requirement, cf. United States v. Catalan–Roman, 585 F.3d 453, 464 n. 10 (1st Cir.2009); United States v. Colon–Munoz, 192 F.3d 210, 223 n. 22 (1st Cir.1999). Here, we waive the requirement in the interest of judicial economy. Taking Soto's newly offered English translation of the Spanish version of the agreement as the controlling document, we find as a matter of law that the claims made by Soto on the basis of this translation do not require reversal of the district court's judgment.

A. Validity of Consideration

The FAA represents “the fundamental principle that arbitration is a matter of contract,” Dialysis Access, 638 F.3d at 376 (quoting Rent–A–Center, W., Inc. v. Jackson, ––– U.S. ––––, 130 S.Ct. 2772, 2776, 177 L.Ed.2d 403 (2010)) (internal quotation mark omitted), and in general, “principles of state contract law control the determination of whether a valid agreement to arbitrate exists,” Campbell v. Gen. Dynamics Gov't Sys. Corp., 407 F.3d 546, 552 (1st Cir.2005). Under Puerto Rico contract law, “ ‘a bilateral obligation assumed by each one of the parties to the contract, has, as its consideration, the promise offered in exchange.’ Both parties must be bound based on ‘mutual consideration’ that yields either a benefit or a detriment to each party.” Adria Int'l Grp., Inc. v. Ferre Dev., Inc., 241 F.3d 103, 107 (1st Cir.2001) (citations omitted) (quoting United States v. Perez, 528 F.Supp. 206, 209 (D.P.R.1981)).

Soto argues that the district court erred in holding that, in return for signing the agreement, she received valid consideration in the form of an offer of continued employment. She argues that the Ritz–Carlton never made such an offer, and that in any event, it would not constitute valid consideration under Puerto Rico law. We need not address this issue, as the arbitration clause contains two sets of bilateral obligations that independently constitute valid consideration for the agreement.

The agreement expressly invokes one set of bilateral obligations. It states that in exchange for Soto's “agree[ment] that [she] will not initiate any legal action whatsoever” without first using each step in the company's alternative dispute resolution process, the Ritz–Carlton “agrees to suspend all jurisdictional prescriptive terms and limitations to file grievances and/or lawsuits” for the period that the process lasts. This waiver of defenses by the Ritz–Carlton for any claims covered by its alternative dispute resolution process constitutes valid consideration for Soto's promise to submit her discrimination claims against the Ritz–Carlton to arbitration.

Further, implicit in the arbitration agreement is a second set of bilateral obligations. Both parties are required to arbitrate Soto's claims, which constitutes independent mutual consideration. See Soto v. State Indus. Prods., Inc., 642 F.3d 67, 76–78 (1st Cir.2011) (holding that bilateral obligation to arbitrate constitutes mutual consideration under Puerto Rico law).²

B. Availability of Remedies Under the Arbitration Agreement

Although the...