Topf v. Warnaco, Inc.

• Decision Date: 22 August 1996
• Docket Number: Civil No. 3:95CV2257 (PCD).
• Parties: Barry TOPF, Plaintiff, v. WARNACO, INC., Defendant.
• Court: U.S. District Court — District of Connecticut

942 F.Supp. 762

Barry TOPF, Plaintiff, v. WARNACO, INC., Defendant.

Civil No. 3:95CV2257 (PCD).

United States District Court, D. Connecticut.

August 22, 1996.

COPYRIGHT MATERIAL OMITTED

Stephen P. Horner, Stephen P. Horner & Associates, Westport, CT, for Plaintiff.

Toby M. Schaffer, Shapiro & Siegel, P.C., Stamford, CT, Stanley S. Arkin, Hyman L. Schaffer, Katherine E. Hargrove, Arkin, Schaffer & Kaplan, New York City, for Defendant.

RULING ON MOTION TO STAY THE ACTION AND COMPEL ARBITRATION AND MOTION FOR JURY TRIAL

DORSEY, Chief Judge.

Defendant moves to stay the action and compel arbitration pursuant to 9 U.S.C. §§ 3 and 4 of the Federal Arbitration Act (FAA). Plaintiff cross-moves for a jury trial on the issue of whether an arbitration agreement exists between the parties. For the reasons stated below, plaintiff's motion is denied and defendant's motion is granted.

I. FACTS

Warnaco is a manufacturer of men's and women's apparel. In August 1991, defendant offered employment to plaintiff as Vice President of Operations in Warnaco's Warner's division. On August 16, 1991, under the phrase "Accepted to and agreed to," plaintiff signed the offer letter, which provided in part: "This letter will confirm the key terms of our offer of employment to you. General terms of employment are stated in the Warnaco Job Application and Current Employee Handbook." (Silverstein Aff.Ex. A.)

On his first day of work, September 23, 1991, plaintiff received the referenced employee handbook ("handbook"). Under the heading "Arbitration of employment disputes," the handbook provides that "[a]ny controversy arising out of the employment relationship shall, on the request of either party, at any time following the termination of employment, be submitted to final and binding arbitration...." (Handbook at 23.)

Plaintiff signed the "Acknowledgement of Receipt of the Warnaco Employee Handbook," which provides in relevant part:

I [] understand that this Handbook is not and was not intended to serve as a contract between Warnaco and myself regarding the nature or duration of my employment with Warnaco, except that this Handbook is our entire agreement concerning each party's right to arbitrate employment disputes and to terminate the employment relationship with or without cause at any time, and that no one at Warnaco is authorized to make an exception to this understanding, except an officer of Warnaco who does so in writing.

(Handbook at 24.) Plaintiff was terminated on May 25, 1994.

Plaintiff filed this suit, alleging violations of the Rehabilitation Act of 1973, 29 U.S.C. § 791, et seq., the Age Discrimination in Employment Act of 1967 (ADEA), 29 U.S.C. § 621 et seq., the Americans with Disabilities Act of 1990 (ADA), 42 U.S.C. § 12101 et seq., and the Connecticut Fair Employment Practices Act (FEPA), CONN.GEN.STAT. § 46a-60 et seq., as well as several state law claims.

II. DISCUSSION

A. Standards of Review

The FAA, 9 U.S.C. §§ 1-14, reflects a "liberal federal policy favoring arbitration agreements" as a means of settling disputes. Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 941, 74 L.Ed.2d 765 (1983). See Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 25, 111 S.Ct. 1647, 1651, 114 L.Ed.2d 26 (1991); In re Salomon, Inc. Shareholders Derivative Litig., 68 F.3d 554, 557 (2d Cir.1995). This policy is reflected in the provision that any agreement to arbitrate in contracts affecting commerce are "valid, irrevocable, and enforceable, save upon such grounds as exist at law ... for the revocation of any contract." 9 U.S.C. § 2.¹

Parties may petition the federal courts to enforce agreements to arbitrate: "A party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement ... may [seek] an order directing that such arbitration proceed ..." 9 U.S.C. § 4. If the court finds the issue arbitrable, it must "stay the trial of the action until ... arbitration has been [made] in accordance with the terms of the agreement." 9 U.S.C. § 3. However, if "the making of the arbitration agreement be in issue, the court shall proceed ... to the trial thereof." 9 U.S.C. § 4.

Four issues must be considered when determining whether to stay proceedings and compel arbitration. First, whether the parties have made an agreement to arbitrate; second, the scope of the agreement; third, if federal statutory claims are involved, whether they are non-arbitrable; and fourth, whether to separate any arbitrable claims from those which are non-arbitrable. Genesco, Inc. v. T. Kakiuchi & Co., Ltd., 815 F.2d 840, 844 (2d Cir.1987). See Progressive Casualty Ins. Co. v. C.A. Reaseguradora Nacional de Venezuela, 991 F.2d 42, 45 (2d Cir.1993).

If an arbitration agreement is found to exist, the action must be stayed and arbitration compelled on all issues which the agreement covers. Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218, 105 S.Ct 1238, 1241, 84 L.Ed.2d 158 (1985). See also McMahan Sec. Co., L.P. v. Forum Capital Mkt, L.P., 35 F.3d 82, 86 (2d Cir.1994); Genesco, 815 F.2d at 844.

B. Validity of Arbitration Agreement

In determining the existence of an arbitration agreement, "ordinary principles of contract law" are to be used. Russolillo v. Thomson McKinnon Sec., Inc., 694 F.Supp. 1042, 1044 (D.Conn.1988). The law of the state which governs the contract, in this case, Connecticut, is applied. See First Options of Chicago, Inc. v. Kaplan, ___ U.S. ___, ___, 115 S.Ct. 1920, 1924, 131 L.Ed.2d 985 (1995).

A party moving for a jury trial under § 4 must show the existence of a genuine issue involving the making of the arbitration agreement. Almacenes Fernandez, S.A. v. Golodetz, 148 F.2d 625, 628 (2d Cir.1945). See also Manning v. Energy Conversion Devices, Inc., 833 F.2d 1096, 1103 (2d Cir.1987); In re Matter of Arbitration between Interbras Cayman Co. v. Orient Victory Shipping Co., 663 F.2d 4, 7 (2d Cir.1981). There are two requirements necessary to show the existence of such a genuine issue: first, the party must make an unequivocal denial that an arbitration agreement exists; and second, the party must show sufficient facts in support of their contention. Almacenes Fernandez, 148 F.2d at 628. See also Manning, 833 F.2d at 1103 ("party ... must submit sufficient evidentiary facts in support of ... claim ... to precipitate trial contemplated by 9 U.S.C. § 4."); Saturday Evening Post Co. v. Rumbleseat Press, Inc., 816 F.2d 1191, 1196 (7th Cir.1987) (party can only obtain a jury trial if "there is a triable issue concerning the existence ... of the agreement.").

What constitutes "sufficient facts" has not been clearly defined in the Second Circuit. Some cases have suggested that the mere showing of any factual issue between the parties is enough to warrant a jury trial. See, e.g. Manning, 833 F.2d at 1103; See also, e.g., Interbras Cayman Co., 663 F.2d at 7; Robert Lawrence Co. v. Devonshire Fabrics, Inc., 271 F.2d 402, 411 (2d Cir.1959), cert. granted, 362 U.S. 909, 80 S.Ct. 682, 4 L.Ed.2d 618, cert. dismissed, 364 U.S. 801, 81 S.Ct. 27, 5 L.Ed.2d 37 (1960). However, recent cases suggest that the factual issue shown must sustain a burden like that imposed in summary judgment. See, e.g. Doctor's Assoc., Inc. v. Stuart, 85 F.3d 975, 980 (2d Cir.1996) (noting party's failure to show facts sufficient as a matter of law). See also, e.g., Oppenheimer & Co., Inc. v. Neidhardt, 56 F.3d 352, 358 (2d Cir.1995) (comparing FED.R.CIV.P. 56(c), (e) to level of sufficient evidentiary facts needed for jury trial by 9 U.S.C. § 4). By this standard, the movant under § 4 would have to provide sufficient evidence in support of their claims such that a reasonable jury could return a verdict for them under applicable law. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986).

Decisions in other circuits involving jury trial motions under 9 U.S.C. § 4 support the "summary judgment" standard. The Fifth Circuit, noting that its caselaw "[had] not established the precise showing a party must make" in motioning for a jury trial under § 4, stated that the movant must make some showing "that under prevailing law, he would be relieved of his contractual obligation to arbitrate if his allegations proved true." Dillard v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 961 F.2d 1148, 1154 (5th Cir. 1992), cert. denied, 506 U.S. 1079, 113 S.Ct. 1046, 122 L.Ed.2d 355 (1993). See also ParKnit Mills, Inc. v. Stockbridge Fabrics Co. Ltd., 636 F.2d 51, 54, n. 9 (3d Cir.1980) (stating that when considering an argument about the existence of an agreement to arbitrate, the standard used is the same as in summary judgment); Saturday Evening Post Co., 816 F.2d at 1196 (examining request for a jury trial by § 4, the court stated that if the dispute "involves ... only legal questions, a jury trial would be pointless because [it] ... could not affect the judge's decision on whether to order arbitration.").

In addition, the policy behind the FAA suggests that the "summary judgment" standard should be applied. If parties could request and receive jury trials merely by showing evidence of any factual dispute about the existence of arbitration agreements, then this "would frustrate the very policies ... [that the FAA is] meant to promote" — the alternative resolution of disputes outside of the judicial forum. Cohen v. Wedbush, Noble, Cooke, Inc., 841 F.2d 282, 288 (9th Cir.1988). See Moses H. Cone Memorial Hosp., 460 U.S. at 24, 103 S.Ct. at 941.

Accordingly, the "summary judgment" standard will be applied to the motion for jury trial. Thus, plaintiff must show genuine factual issues regarding his allegations concerning the making of the arbitration agreement, such that a jury could find no agreement.

Plaintiff satisfies the first prong of the test. He unequivocally denies the existence of an arbitration agreement.

As to the second prong, plaintiff claims...