Fortson v. Quality Restaurant Concepts (MAG+)
MEMORANDUM OPINION AND ORDER re 25 Order, 31 Motion to Lift the Stay and to Enforce the Settlement, 33 Response, and 34 Reply. After careful consideration of the parties arguments, the court finds that the court, not the arbitrator, must dec ide whether the parties reached a valid settlement agreement. It is for this court to decide whether the parties reached a valid settlement agreement. An order setting this case for a hearing on Defendant's motion to enforce the settlement agreement will be entered separately. Signed by Chief Judge William Keith Watkins on 5/12/2015. (dmn, )
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF ALABAMA
CONCEPTS, dba APPLEBEE’S,
CASE NO. 2:13-CV-426-WKW
MEMORANDUM OPINION AND ORDER
In a prior Order, the court ordered Plaintiff Lorraine Fortson and her former
employer, Quality Restaurant Concepts, to arbitrate Plaintiff’s dispute with respect
to the termination of her employment and stayed this action until the conclusion of
the arbitration proceedings. (Doc. # 25.) Pending is Defendant’s Motion to Lift
the Stay and to Enforce the Settlement. (Doc. # 31.) Plaintiff responded in
opposition (Doc. # 33), asserting that she did not agree to settle her termination
dispute, and Defendant replied to the contrary (Doc. # 34).
submissions did not address, however, whether this court or the arbitrator should
decide whether the parties reached a valid settlement agreement; therefore, the
court ordered additional briefing on this threshold issue.
In the briefing, Plaintiff advocates that the issue is for the arbitrator to
decide, while Defendant contends that the issue is for the court. (Docs. # 36–37.)
After careful consideration of the parties’ arguments, the court finds that the court,
not the arbitrator, must decide whether the parties reached a valid settlement
On June 18, 2013, Plaintiff filed this lawsuit, alleging that Defendant
terminated her employment because of her age in violation of the Age
Discrimination in Employment Act (“ADEA”), 29 U.S.C. §§ 621–24. Defendant
moved to compel arbitration of the claim based upon its Internal Dispute
Resolution Policy, which contains an Arbitration Agreement.1 On January 21,
2014, the court granted Defendant’s motion to compel arbitration of Plaintiff’s
ADEA claim and stayed this action.
Thereafter, the parties resorted first to Defendant’s internal dispute review
(“IDR”), which by agreement must precede arbitration. After the completion of
the IDR, but prior to formal arbitration, the parties engaged in settlement talks
through a series of informal emails. The gist of those emails is that Plaintiff
inquired whether Defendant would be “interested in some resolution” of the
dispute surrounding her termination whereby her personnel file would reflect that
her separation from Defendant’s employment was the result of a voluntary
The “Internal Dispute Resolution Policy” contains both an internal dispute resolution
policy and an employment arbitration policy. For ease of reference, the policy here is referred to
as the “Arbitration Agreement.”
resignation, not a termination. (Doc. # 31-1, at 2.) Defendant responded seeking
clarification as to whether that proposal would include a release, to which Plaintiff
replied, “[T]hat is an accurate description of the proposal.” (Doc. # 31, at 3.)
Defendant subsequently “agree[d] to this proposal as clarified” by the earlier
email. (Doc. # 31, at 3.) Defendant mailed Plaintiff a copy of a settlement
document, consisting of three, single-spaced, type-written pages. (Doc. # 33-1,
at 2–4.) Plaintiff’s counsel refused to tender the document to his client for her
signature, however, indicating that Plaintiff “ha[d] decided not to accept the
resignation proposal at this time,” that Plaintiff “ha[d] always sought a financial
component to a settlement,” and that the settlement document contained additional
terms not discussed between the parties. (Doc. # 31-5, 31-6, at 2–3.)
The parties dispute whether the emails and exchanges culminated in a valid
settlement agreement of the underlying arbitrable dispute relating to Plaintiff’s
termination. Defendant says that they did, but Plaintiff says that they did not. As a
result of this disagreement, Plaintiff initiated the arbitration process under the
Arbitration Agreement’s provisions, while Defendant filed the present motion in
this court to lift the stay and enforce the alleged settlement agreement.
Defendant’s motion to enforce the settlement agreement rests here only if the issue
of whether the parties entered into a valid settlement agreement is not within the
scope of the Arbitration Agreement.
The Arbitration Agreement provides that, “[w]ith the exceptions listed
below, binding arbitration is the final, exclusive, and required forum for the
resolution of all employment-related disputes which are based on a legal claim.” It
defines a “dispute” as follows:
A dispute is based on a legal claim and is subject to [arbitration] if it
arises [out of]2 or involves a claim under any federal, state, or local
statute, regulation, or common law doctrine regarding or relating to
employment discrimination, terms or conditions of employment, or
termination of employment including, but without limitation: . . . the
Age Discrimination in Employment Act.
(Doc. # 36-1, at 3.)
The exceptions referenced above include the following
The Policy does not require that [Defendant] initiate the arbitration
process with respect to any dispute. In addition, [Defendant] is not
required to follow the steps of either IDR [Internal Dispute
Resolution] or the Policy before initiating or implementing any
disciplinary action, or before asserting any claim, demand, or action
against an employee for breach of any restrictive covenant, wrongful
demand, or action against an employee for breach of any restrictive
covenant, wrongful disclosure of confidential information, or any
other actions which may constitute a breach of contract, a breach of a
common law duty, or a breach or violation of either civil or criminal
Although not mentioned by the parties, the Arbitration Agreement contains a
typographical error, omitting a necessary word or phrase after “arises.” It seems that either the
word “under” or the phrase “out of” should follow the word “arises.” The court need not decide
whether the parties intended to insert the phrase “arises out of” or “arises under” because in the
context of arbitration agreements, the Eleventh Circuit has not differentiated between the two
phrases. Gregory v. Electro-Mech. Corp., 83 F.3d 382, 386 (11th Cir. 1996) (“This Court has
not drawn a distinction between the words ‘arising under’ and ‘arising out of.’”). For purposes
of this opinion, the court will refer to the contract language as “arises out of,” but, as the
discussion will reveal, resolution of the present controversy does not turn upon an interpretation
or application of the phrase “arises out of.”
(Doc. # 36-1, at 4.)3
II. LEGAL STANDARD
The Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1, et seq., which
generally governs the validity of arbitration agreements, evinces a “liberal federal
policy favoring arbitration agreements.” Hill v. Rent-A-Center, Inc., 398 F.3d
1286, 1288 (11th Cir. 2005) (quoting Moses H. Cone Mem. Hosp. v. Mercury
Constr. Corp., 460 U.S. 1, 24 (1983)). “There is a presumption of arbitrability in
the sense that ‘[a]n order to arbitrate the particular grievance should not be denied
unless it may be said with positive assurance that the arbitration clause is not
susceptible of an interpretation that covers the asserted dispute. Doubts should be
resolved in favor of coverage.’” AT & T Tech., Inc. v. Commc’ns Workers of Am.,
475 U.S. 643, 651 (1986) (quoting United Steelworkers of Am. v. Warrior & Gulf
Nav. Co., 363 U.S. 574, 582–83 (1960)).
However, because the FAA is “‘at bottom a policy guaranteeing the
enforcement of private contractual arrangements,’” the court must “look first to
whether the parties agreed to arbitrate, not to general policy goals, to determine the
scope of the agreement.” E.E.O.C. v. Waffle House, Inc., 534 U.S. 279, 294 (2002)
(quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614,
625 (1985)). Hence, where the parties have entered into an arbitration agreement,
The “Policy,” as quoted above, is the Arbitration Agreement.
the court must ensure that the dispute falls within the scope of the agreement
before it compels an unwilling party to arbitrate. See World Rentals & Sales, LLC
v. Volvo Constr. Equip. Rents, Inc., 517 F.3d 1240, 1245 (11th Cir. 2008) (“We . . .
must determine whether the dispute between the [parties] falls within the scope of
that arbitration clause.”).
Under the FAA, “a party cannot be required to submit to arbitration any
dispute which he has not agreed so to submit.” United Steelworkers of Am., 363
U.S. at 582; see also Chastain v. Robinson-Humphrey Co., 957 F.2d 851, 854
(11th Cir. 1992). The FAA does not “prevent parties who do agree to arbitrate
from excluding certain claims from the scope of their arbitration agreement,” Volt
Info. Scis., Inc. v. Bd. of Trustees, 489 U.S. 468, 478 (1989), but the “parties must
clearly express their intent to exclude categories of claims from their arbitration
agreement.” Paladino v. Avnet Computer Techs., Inc., 134 F.3d 1054, 1057 (11th
Cir. 1998); see also Goldberg v. Bear, Stearns & Co., 912 F.2d 1418, 1419 (11th
Cir. 1990) (“[P]arties will not be required to arbitrate when they have not agreed to
“When deciding whether the parties agreed to arbitrate a certain matter . . . ,
courts generally . . . should apply ordinary state-law principles that govern the
formation of contracts.” First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 944
(1995); see also In re Checking Account Overdraft Litig. MDL No. 2036, 674 F.3d
1252, 1255 (11th Cir. 2012) (“[I]nterpretation of an arbitration agreement is
generally a matter of state law.”). Under Alabama law, “[a]rbitration provisions
are to be treated like any other contractual provision.” Serv. Corp. Int’l v. Fulmer,
883 So. 2d 621, 633 n.15 (Ala. 2003). Finally, the gateway “question whether the
parties have submitted a particular dispute to arbitration, i.e., the ‘question of
arbitrability,’ is ‘an issue for judicial determination [u]nless the parties clearly and
unmistakably provide otherwise.’” Howsam v. Dean Witter Reynolds, Inc., 537
U.S. 79, 83 (2002) (quoting AT & T Tech., Inc., 475 U.S. at 649); see also Oxford
Health Plans LLC v. Sutter, 133 S. Ct. 2064, 2068 n.2 (2013) (observing that
“gateway matters,” such as “whether a concededly binding arbitration clause
applies to a certain type of controversy,” are for the courts to decide (citation and
internal quotation marks omitted)).
The issue is whether the dispute concerning the validity of the alleged
settlement agreement is within the scope of the Arbitration Agreement. This
gateway issue is for the court to decide, not the arbitrator, because the Arbitration
Agreement does not “clearly and unmistakably provide otherwise.” AT & T Tech.,
Inc., 475 U.S. at 649. Resolution of the gateway issue is important because it
determines who decides the issue of whether the parties entered into a valid
settlement agreement. If the issue of whether the parties entered into a valid
settlement is within the scope of the Arbitration Agreement, then the arbitrator
must decide it. If it is not, then the issue is for the court to decide.
Plaintiff argues that the dispute about the validity of the settlement
agreement is for resolution in the arbitral forum because the alleged settlement
agreement seeks to resolve the arbitrable issue surrounding the termination of
Plaintiff’s employment. In other words, Plaintiff contends that the arbitrator must
decide whether the parties entered into a valid settlement agreement because that
agreement relates to an arbitrable employment dispute.
though, that the Arbitration Agreement expressly contemplates only employeeinitiated actions and explicitly excepts from its coverage all employer-initiated
actions and, in particular, employer-initiated actions for breach of contract.
Defendant asserts that its motion to enforce the alleged settlement agreement is
both an employer-initiated action and a claim for breach of contract and, therefore,
does not fall within the scope of the Arbitration Agreement.
The court’s analysis must begin with the contractual language in the
Arbitration Agreement, as interpreted under Alabama law, and all provisions of the
agreement, including its exceptions, must be given their full meaning.
Brewbaker Motors, Inc. v. Belser, 776 So. 2d 110, 112 (Ala. 2000) (“When
interpreting a contract, a court should give the terms of the contract their clear and
plain meaning and should presume that the parties intended to do what the terms of
the agreement clearly state.”); see id. (“[T]his Court will interpret the terms of a
contract to give effect to all terms used.” (citation and internal quotation marks
omitted)). The parties agreed to arbitrate “a legal claim” that “arises [out of] or
involves a claim . . . relating to employment discrimination,” including a claim
under “the Age Discrimination in Employment Act.” (Doc. # 36-1, at 3.) While
the agreement provides that “binding arbitration is the final, exclusive, and
required forum for the resolution of all employer-related disputes which are based
on a legal claim,” it expressly qualifies the scope of arbitrable coverage with
enumerated exceptions. (Doc. # 36-1, at 3 (“With the exceptions listed below,
. . .”).)
One of the exceptions easily resolves the present controversy. Namely, the
Arbitration Agreement “does not require that [Defendant] initiate the arbitration
process with respect to any dispute.” (Doc. # 36-1, at 4.) The Eleventh Circuit has
held that the word “any” means “all” in the context of an arbitration agreement.
Anders v. Hometown Mortg. Servs., Inc., 346 F.3d 1024, 1028 (11th Cir. 2003).
Although Anders was examining a contract provision that required arbitration of
“any dispute,” as opposed to here where the contract provision excludes arbitration
of “any dispute” under specified conditions, the court discerns no reason, and none
has been offered, for interpreting the contract terms differently simply because
they fall within an arbitration agreement’s exclusionary provisions, rather than its
See Goldberg, 912 F.2d at 1419–20 (explaining, in the
context of interpreting an arbitration agreement’s exclusionary provisions, that
“courts are not to twist the language of the contract to achieve a result which is
favored by federal policy but contrary to the intent of the parties,” but rather courts
are “simply require[d]” under the FAA “to enforce privately negotiated agreements
to arbitrate, like other contracts, in accordance with their terms” (citation and
internal quotation marks omitted)).
Here, Defendant has a new dispute with Plaintiff.
contends that it entered into a valid settlement agreement with Plaintiff and that
Plaintiff has refused to acknowledge the agreement. As a result of this dispute,
Defendant has initiated a claim in this action against Plaintiff to enforce the alleged
settlement agreement. The Arbitration Agreement is clear: It expressly excludes
from binding arbitration “any dispute” that Defendant initiates.
comprehensive; it includes “all” Defendant-initiated disputes. Accordingly, “any
dispute” necessarily encompasses the claim that Defendant has initiated in this
action to enforce the alleged settlement agreement. Giving effect to the plain terms
of the Arbitration Agreement, which expressly “do[ ] not require that [Defendant]
initiate the arbitration process with respect to any dispute” (Doc. # 36-1, at 4), the
court finds that the parties “clearly express[ed]” their intent to exclude the present
dispute from the agreement.4 Paladino, 134 F.3d at 1057.
Plaintiff’s argument that the arbitrator must decide the issue of whether the
settlement agreement is valid because it “resolved an underlying employmentrelated dispute already subject to an arbitration agreement” relies upon Niro v.
Fearn International, Inc., 827 F.2d 173 (7th Cir. 1987), a federal labor case
involving a collective bargaining agreement. The argument finds some support in
Niro, which held that “a settlement agreement is an arbitrable subject when the
underlying dispute is arbitrable . . . .” Id. at 175. It is true, in this case, that the
underlying dispute concerning Plaintiff’s termination is arbitrable, and a prior
Order directed the parties to arbitrate that dispute.
But the Seventh Circuit
qualified its holding in Niro by adding “except in circumstances where the parties
expressly exclude the settlement agreement from being arbitrated.” Id. Plaintiff
acknowledges this second part of Niro’s holding but contends that none of the
exceptions in the Arbitration Agreement apply because there is no mention of the
“enforceability of a settlement agreement of an employee-related dispute.” (Doc.
# 36, at 2.) But the parties here did mention it and did so expressly. They
Based upon this finding, it is not necessary to address Defendant’s additional argument
that the present dispute is a dispute about the alleged Settlement Agreement, not a dispute about
a legal claim that relates to employment discrimination. Nor is it necessary to address
Defendant’s argument that it is not required to arbitrate under the provision that excepts
employer-initiated claims against employees for breach-of-contract.
excepted from the Arbitration Agreement “any dispute” initiated by the employer.
The Arbitration Agreement need not enumerate every dispute that falls within “any
dispute” and to do so would be impractical. To reiterate, “any” means “all,” and
the Arbitration Agreement’s exception for “any dispute” initiated by Defendant
could not be clearer. Significantly, the controlling terms of the agreement in Niro
contained no exclusions. To the contrary, the agreement required arbitration of
“any dispute . . . between the Company and the Union or between the Company
and any of its employees . . . .” Niro, 827 F.2d at 175 n.1. Plaintiff’s argument for
finding that the validity of the alleged settlement agreement is an arbitrable subject
lacks persuasiveness. 5
“[P]arties will not be required to arbitrate when they have not agreed to do
so.” Goldberg, 912 F.2d at 1419.
The Arbitration Agreement provides a clear
exception to arbitration; namely, it “does not require that [Defendant] initiate the
arbitration process with respect to any dispute.” (Doc. # 36-1, at 4.) Defendant
has brought a claim that the parties entered into a valid settlement agreement and
seeks to enforce that alleged settlement agreement.
In short, Defendant has
initiated a dispute within the meaning of the Arbitration Agreement’s express
The court also asked the parties to address whether Merrill Lynch, Pierce, Fenner &
Smith, Inc. v. Poore, No. 03–0228, 2003 WL 21294995 (E.D. Pa. Feb. 20, 2003), is a sufficiently
analogous case. Upon consideration of the parties’ briefing, the court finds that Merrill Lynch,
Pierce, Fenner & Smith is distinguishable because the pertinent arbitration provisions in that
case did not contain any exceptions like the one here.
exclusion provision. It may be said, therefore, with “positive assurance” that the
Arbitration Agreement “is not susceptible of an interpretation that covers the
asserted dispute.” AT & T Tech., Inc., 475 U.S. at 650. “Where the parties to an
arbitration agreement specifically have excepted a certain type of claim from
mandatory arbitration, it is the duty of federal courts to enforce such limitations.”
Oldroyd v. Elmira Sav. Bank, FSB, 134 F.3d 72, 76 (2d Cir. 1998). Accordingly, it
is for this court to decide whether the parties reached a valid settlement agreement.
An order setting this case for a hearing on Defendant’s motion to enforce the
settlement agreement will be entered separately.
So ORDERED this 12th day of May, 2015.
/s/ W. Keith Watkins
CHIEF UNITED STATES DISTRICT JUDGE
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?