Valdiviezo v. Phelps Dodge Hidalgo Smelter, Inc., CIV 96-785 PHX RCB.

• Decision Date: 29 September 1997
• Docket Number: No. CIV 96-785 PHX RCB.,CIV 96-785 PHX RCB.
• Citation: 995 F.Supp. 1060
• Parties: Antonia M. VALDIVIEZO, a single woman, Plaintiff, v. PHELPS DODGE HIDALGO SMELTER, INC., a Delaware corporation; Thurman Shannon and Elaine Shannon, husband and wife, Defendants.
• Court: U.S. District Court — District of Arizona

Page 1060

995 F.Supp. 1060

Antonia M. VALDIVIEZO, a single woman, Plaintiff, v. PHELPS DODGE HIDALGO SMELTER, INC., a Delaware corporation; Thurman Shannon and Elaine Shannon, husband and wife, Defendants.

No. CIV 96-785 PHX RCB.

United States District Court, D. Arizona.

September 29, 1997.

Charles Anthony Shaw, Prescott, AZ, Glynn W. Gilcrease, Jr., Tempe, AZ, for Plaintiff.

Michael D. Moberly, Ryley, Carlock & Applewhite, Phoenix, AZ, for Defendant Phelps Dodge Hidalgo Smelter, Inc.

Ronald J. Stolkin, Fennemore, Craig, Tucson, AZ, for Defendants, Shannon.

ORDER

BROOMFIELD, Chief Judge.

Plaintiff Antonia M. Valdiviezo ("Valdiviezo") has filed a sexual harassment claim against Defendants Phelps Dodge Hidalgo Smelter, Inc. ("Phelps Dodge") and Thurman Shannon ("Shannon"). Pending before the court are Defendants' motions for summary judgment. Oral arguments were heard on Monday, July 28, 1997. At that time, the court took the matter under advisement. The court now rules.

I. BACKGROUND

Plaintiff Valdiviezo has been employed by Phelps Dodge since May 14, 1991. [Valdiviezo Deposition at 12, Exh. to Defendants' Statement of Facts ("DSOF")]. Upon the commencement of her employment, she received and signed for a copy of Phelps Dodge's Employee Handbook (the "Handbook"). [Valdiviezo Deposition at 95-96, Exh. 2 to Plaintiff's Statement of Facts ("PSOF")]. The receipt and acknowledgment form she signed states:

I have received a copy of the Phelps Dodge Hidalgo Smelter Employees Handbook, revised January, 1991.

I agree to read the handbook and become familiar with its contents. I also agree that I will follow the policies, procedures, rules and regulations of the Company.

[Exh. 1 to PSOF].

Among the procedures provided for in the Handbook was a multi-step "problem-solving procedure" for resolving complaints by employees. [Exh. 3 to PSOF at 33-36]. The procedure culminates in a hearing before a professional arbitrator or, in most cases, before a five person Appeal Board selected jointly by Phelps Dodge and the affected employee. [Exh. 3 to PSOF at 35]. The Handbook also provides that the problem solving procedure constitutes the "sole and exclusive procedure for the processing and resolution of any controversy, complaint, misunderstanding or dispute that may arise concerning any aspect of [the employee's] employment or termination from employment." [Exh. 3 to PSOF at 57].

On May 16, 1995, Valdiviezo reported to company management that she had been sexually harassed by her immediate supervisor, Defendant Shannon. [Valdiviezo Deposition, Exh. to DSOF at 66-67, 69]. Thereafter, Phelps Dodge investigated Valdiviezo's allegations and concluded that, while Shannon made one verbal sexual advance toward her, there was inconclusive evidence that Shannon touched her in an inappropriate manner. [Smith Affidavit ¶¶ 6-9]. At the conclusion of its investigation, Phelps Dodge counseled Shannon, both verbally and in writing, about his conduct and advised him that any future violation of the company's Equal Employment Opportunity ("EEO") policy could result in his immediate discharge. [Smith Affidavit ¶ 10; Exh. C to Smith Affidavit]. The company also informed Valdiviezo, both verbally and in writing, of its findings. [Smith Affidavit ¶ 11; Exh. D to Smith Aff.; Valdiviezo Deposition at 83, 86-89]. Valdiviezo was dissatisfied with the company's response [Smith Affidavit ¶ 12; Valdiviezo Deposition at 89-90], and, as a result, she filed a five count complaint before this court alleging: (1) unlawful sexual harassment under Title VII of the Civil Rights Act of 1964 ("Title VII"), 42 U.S.C. §§ 2000e et seq. and under the New Mexico Human Rights Act ("NMHRA"); (2) negligence; (3) breach of contract and of the implied covenant of good faith and fair dealing; (4) assault and battery; and (5) intentional infliction of emotional ... distress.¹

Now, Defendants have moved for summary judgment arguing: (1) Valdiviezo is required to arbitrate her claims; (2) there was no Title VII violation; (3) Valdiviezo cannot state a § 1981 or § 1983 claim; and (4) Valdiviezo cannot state a breach of the implied covenant of good faith and fair dealing claim under New Mexico law. The parties have stipulated that the court, for now, should only consider the arbitration issue. Nevertheless, in its response, Valdiviezo conceded that she could not state a § 1981 or § 1983 claim against either defendant, a Title VII claim against Shannon or a breach of contract and breach of the implied covenant of good faith and fair dealing claim against Phelps Dodge. Accordingly, the court will grant Defendants' motion for summary judgment as to these claims, and the remainder of this order will be limited to a discussion of the arbitration issue.

II. STANDARD OF REVIEW

Summary judgment is appropriate where no genuine issue exists as to any material fact and where the moving party is entitled to judgment as a matter of law. Fed. R.Civ.P. 56(c). In determining whether to grant summary judgment, the court will view the facts and inferences in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. Ltd. v. Zenith Radio Corp., 475 U.S. 574, 577, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).

However, the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment. The requirement is that there be no genuine issue of material fact. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A "material fact" is any factual dispute that might affect the outcome of the case under the governing substantive law. Id. 477 U.S. at 248. A factual dispute is "genuine" if the evidence is such that a reasonable jury could resolve the dispute in favor of the nonmoving party. Id.

Moreover, the moving party is entitled to judgment as a matter of law if the nonmoving party has failed to make a sufficient showing on an essential element of her case with respect to which she has the burden of proof. Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The moving party need not support its motion with affidavits or other similar material negating essential elements of the nonmoving party's claim. Id.

Finally, a nonmoving party cannot rest upon mere allegations or denials in the pleadings or papers. Anderson, 477 U.S. at 250. Instead, the nonmoving party must set forth specific facts showing that there is a genuine issue for trial. Id. If the nonmoving party's evidence is merely colorable or is not significantly probative, a court may grant summary judgment. Id. at 249-50 ("[T]he mere existence of a scintilla of evidence in support of plaintiff's position will be insufficient.").

III. DISCUSSION

In moving for summary judgment, Defendants² argue that Valdiviezo was required, under the terms of the Handbook, to arbitrate her claims and that the court should enforce this arbitration agreement under the Federal Arbitration Act ("FAA"), 9 U.S.C. § 2. For her part, Valdiviezo argues (1) that the arbitration contract is unenforceable; (2) that the arbitration contract, even if enforceable, does not cover her assault and battery and intentional infliction of emotional distress claims; (3) that she did not "knowingly agree" to arbitrate her Title VII and NMHRA claims; and (4) that Defendants' "problem solving procedure" conflicts with the social policies of Title VII and NMHRA. The court will consider these arguments in turn.

A. IS THE ARBITRATION CONTRACT ENFORCEABLE?

The FAA provides that arbitration contracts "shall be valid, irrevocable, and enforceable, save upon grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. In determining whether there exist grounds for the revocation of the contract, the Supreme Court has held that state law is applicable "if that law arose to govern issues concerning the validity, revocability, and enforceability of contracts generally." Doctor's Associates, Inc. v. Casarotto, 517 U.S. 681, 116 S.Ct. 1652, 1655, 134 L.Ed.2d 902 (1996) (emphasis added); Perry v. Thomas, 482 U.S. 483, 492 n. 9, 107 S.Ct. 2520, 96 L.Ed.2d 426 (1987).

Here, Valdiviezo argues that under state law the arbitration agreement is unenforceable (1) because it lacks mutual assent and (2) because it lacks consideration — two legal principles which apply to contracts generally. The court considers these arguments separately.

1. Does the arbitration agreement lack mutual assent?

To constitute a contract, under either Arizona or New Mexico law,³ a writing must manifest mutual assent, i.e., the parties' intent to be bound. Keith Equip. Co. v. Casa Grande Cotton Fin., Co., 187 Ariz. 259, 928 P.2d 683, 685 (App.1996); Garcia v. Middle Rio Grande Conservancy Dist., 121 N.M. 728, 918 P.2d 7, 10 (1996). See also Restatement (Second) of Contracts §§ 17-19. Valdiviezo argues that the Handbook does not manifest mutual assent since it expressly provides that it is not a contract and that Phelps Dodge may change the terms therein at any time. Specifically, the Handbook provides:

This employee handbook sets out policies and guidelines and is provided to you for your orientation and information. It is not a contract of employment as to any occupational position, period of time, or any other matter, and nothing contained in it should be viewed as such. This handbook may be changed at any time should the Company deem it appropriate. ...

[Exh. 3 to PSOF at 1] (emphasis added). In support of this argument, she cites to Heurtebise v. Reliable Bus. Computers, Inc., 452 Mich. 405, 550 N.W.2d 243 (1996), reh'g denied, 453 Mich. 1204, 554 N.W.2d 10 (1996), cert. denied, ___ U.S. ___, 117 S.Ct. 1311, 137 L.Ed.2d 474 (1997). In Heurtebise, the Michigan Supreme Court found an arbitration agreement unenforceable for lack of mutual assent because it was contained in a handbook which expressly stated that it was...