Stepp v. Ncr Corp.

• Decision Date: 09 July 2007
• Docket Number: No. 3:02CV203.,3:02CV203.
• Parties: David R. STEPP, Plaintiff, v. NCR CORPORATION, Defendant.
• Court: U.S. District Court — Southern District of Ohio

494 F.Supp.2d 826

David R. STEPP, Plaintiff, v. NCR CORPORATION, Defendant.

No. 3:02CV203.

United States District Court, S.D. Ohio, Western Division.

July 9, 2007.

David Donald Kammer, Tobias, Kraus & Torchia, Cincinnati, OH, for Plaintiff.

Timothy Robert Butler, NCR Corporations Dayton, OH, Rebecca Beata Jacobs, Ulmer & Berne, Columbus, OH, Thomas H. Barnard, Jr. Ulmer & Berne LLP, Cleveland, OH, Defendant.

DECISION AND ENTRY OVERRULING DEFENDANT'S MOTION TO DISMISS AND COMPEL ARBITRATION OR IN THE ALTERNATIVE STAY THE ACTION (DOC CONFERENCE CALL SCHEDULED TO ESTABLISH TRIAL DATE AND OTHER DATES

RICE, District 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 David Stepp was employed by Defendant NCR Corporation ("NCR"), beginning in July of 1968. In October of 2000, Stepp was removed from his position and the position was transferred to another part of the company. Plaintiff believed he would be transferred with the position, and applied for it when it was offered to the public. Plaintiff was informed he would not be transferred with the position, and he was neither interviewed for nor offered it. He was terminated on October 13, 2001.

Believing that the defendant's refusal to transfer him or to hire him into his old position, and his termination were due to age-based animus on the part of NCR, Stepp, who was 51 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 the 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 or in the Alternative Stay the Action (Doc. # 3), arguing that the Court should enforce Stepp's purported agreement to forgo litigation in favor of submitting his discrimination dispute to arbitration. Stepp, in his Memorandum in Opposition (Doc. # 13), raises five objections to NCR's argument that the arbitration agreement is binding upon him: (1) it is unenforceable because no contract to arbitrate was ever formed; (2) it is unenforceable because NCR offered no consideration; (3) it is unenforceable because it contains a prohibitive fee-shifting¹ clause; (4) it is unenforceable because it is unconscionable; (5) and, it should not be enforced because it does not allow for the full vindication of Plaintiff's statutory rights. (Doc. # 13).

For the reasons which follow, the Court Defendant's Motion to Dismiss and Compel Arbitration, or in the Alternative, Stay the Action is OVERRULED.

I. STANDARD FOR RULING ON A MOTION TO DISMISS AND COMPEL ARBITRATION OR IN THE ALTERNATIVE, STAY THE ACTION

It must be noted first that NCR's Motion is not one 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 plaintiff's 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, who 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 in order 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. However, 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 petitions 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, Raasch v. NCR Corp., 254 F.Supp.2d 847 (S.D.Ohio 2003). 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 Stepp.

Stepp began his employment with NCR in 1968. (Doc. # 3 at 1) On September 21, 2001, he was notified by NCR that his employment would be terminated effective October 13, 2001. (Doc. # 3 at 2). Several years earlier, in 1996, NCR mailed notices to all its employees in the United States that it had initiated an employment-dispute policy, under which certain workplace disputes were subject to mandatory arbitration. (Doc. # 3 at 2). NCR did not ask its employees for their express consent to this new policy. (Doc. # 3)

The official name of NCR's arbitration policy, which became effective on October 1, 1996, is Addressing Concerns Together ("ACT"). (Doc # 3, Ex. 2-3) 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. (Doc # 3, Ex. 1 at pp. 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 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. at 5)

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 5-6) 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 5-6)

ACT expressly states that it applies to "concerns involving," among other things, "involuntary termination" and "treatment that is perceived as unequal or discriminatory." (Doc. # 3 Ex. 3 at p. 4) 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.)

III. ANALYSIS

As noted, Stepp has raised five 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. His arguments are that ACT: (1) is unenforceable because no contract to arbitrate was ever formed; (2) is unenforceable because NCR offered no consideration; (3) is unenforceable because it contains a prohibitive fee-shifting clause; (4) is unenforceable because it is unconscionable; (5) and, should not be enforced because it does not allow for the full vindication of Plaintiff's statutory rights. (Doc. # 13). In this Analysis, the Court will first set forth the law on arbitration, and then will address in turn Stepp's objections to ACT's validity in relationship to his claims.

A. THE STATE OF THE LAW CONCERNING COMPELLED ARBITRATION

At common law, parties to binding arbitration agreements could revoke their submission to same prior to any award being granted. See Juhasz v. Costanzo, 144 Ohio App.3d 756, 761 N.E.2d 679, 684-85 (2001); Kelm v. Kelm, 73 Ohio App.3d 395, 597 N.E.2d 535, 539 (1992). While arbitration awards were enforceable, see, e.g., Brennan v. Brennan, 164 Ohio St. 29, 128 N.E.2d 89, 94 (1955) (noting that binding arbitration awards were held enforceable in Ohio, except where obtained by fraud or the like, at least as...