Sides et al v. Macon County Greyhound Park, Inc.
MEMORANDUM OPINION AND ORDER GRANTING 19 motion to compel arbitration of the claims asserted by plfs Sides and Cobb; Sides and Cobb are bound by their contractual agreement to arbitrate any employment dispute with Victoryland, and their claims in t his lawsuit fall within the scope of that agreement; The claims of Sides and Cobb, as set forth in the Complaint, must be submitted to arbitration in Birmingham in accordance with the procedures of the American Arbitration Association. Signed by Honorable Judge Mark E. Fuller on 7/13/11. (Attachments: # 1 civil appeals checklist)(djy, )
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF ALABAMA
MYRA SIDES, et al.,
MACON COUNTY GREYHOUND PARK, )
CASE NO. 3:10-cv-895-MEF
(WO- Do Not Publish)
MEMORANDUM OPINION AND ORDER
Several former employees of the Macon County Greyhound Park, Inc. (“Victoryland”)
bring suit alleging that Victory failed to comply with the requirements of the Worker’s
Adjustment and Retraining Act of 1988, 29 U.S.C. § 2102, et seq. (“the WARN Act”). This
cause is presently before the Court on the Motion to Compel Arbitration of the Claims
Asserted by Plaintiffs Myra Sides and Sharon Cobb (Doc. # 19) filed on December 1, 2010
by Victoryland. At issue in this motion, which Plaintiffs have opposed, is whether Myra
Sides (“Sides”) and Sharon Cobb (“Cobb”) are compelled to arbitrate their claims under the
WARN Act against their former employer.
The Court has carefully considered the
submissions in support of and in opposition to this motion and finds that the motion is due
to be GRANTED.
FACTS AND PROCEDURAL HISTORY
On October 22, 2010, Sides, Cobbs, and several other former Victoryland employees
(collectively referred to as “Plaintiffs”) brought suit against Victoryland. The Plaintiffs seek
class action status for this action. On behalf of themselves and those Victoryland employees
who lost their jobs as part of a mass layoff, Plaintiffs seek damages and civil penaltieis
because they allege that Victoryland failed to provide notice as the WARN Act requires.
Prior to January of 2010, Victoryland operated a sizable recreational facility in Macon
County, Alabama. Victoryland offered live greyhound racing. It is alleged that prior to the
reduction of its workforce at issue in this lawsuit Victoryland employed approximately 2,000.
Victoryland is an Alabama corporation, but it engaged in interstate commerce by purchasing
materials for use in its business from vendors outside of Alabama, by advertising outside of
Alabama, and by allowing animals from outside of Alabama to participate in contests at its
Sides and Cobb applied for work with Victoryland in 2004. Cobb executed a
Statement of Applicant on March 10, 2004, as part of her application to become a
Victoryland employee. Sides executed a Statement of Applicant on March 30, 2004, as part
of her application to become a Victoryland employee.
The Statement of Applicants
contained the following language:
I agree that any controversy which may cause [sic] arise out of my employment
with [Victoryland] will be resolved by arbitration in Birmingham, Alabama,
in accordance with the procedures of the American Arbitration Association.
I understand that my rights and responsibilities under arbitration as well as
those of [Victoryland] are more fully set out in the employee handbook.
See Doc. 20. Despite this language in the Statement of Applicant, the Victoryland employee
handbook did not contain any information about arbitration. Victoryland hired Cobb and
Sides in March of 2004.
Some of Victoryland’s employees had employer provided health insurance coverage
and other benefits. Due to certain legal problems, Victoryland significantly curtailed its
operations. It terminated the employment of many of its employees in January 2010,
February 2010, and August of 2010. Plaintiffs were among the Victoryland employees who
lost their jobs. On February 26, 2010, Victoryland terminated Sides’s employment. She did
not receive any advance notice from Victoryland prior to the termination of her employment.
In August of 2010, Victoryland terminated Cobb’s employment. She did not receive any
advance notice from Victoryland prior to the termination of her employment. Plaintiffs
allege that they were entitled to a minimum of sixty days’ notice prior to the termination of
their employment, but that they did not receive it.
On October 22, 2010, Sides, Cobb, and four other former Victoryland employees filed
this lawsuit as a putative class action. The lawsuit alleges that Victoryland violated the
WARN Act. It seeks: class certification; the statutory penalty for each member of the
putative class; pre-judgment interest; post-judgment interest; attorneys’ fees; and costs.
Victoryland filed a motion to dismiss which is addressed in a separate opinion. It also
filed the instant motion seeking to compel arbitration of the claims of Sides and Cobb.
Plaintiffs oppose the motion.
JURISDICTION AND VENUE
The Court exercises subject matter jurisdiction over this action pursuant 28 U.S.C. §
1331 (federal question) because it arises under a federal statute which specifically gives this
Court the authority to hear claims under the WARN Act. See 29 U.S.C. § 2104(a)(5). The
Court finds adequate allegations to support personal jurisdiction. Venue is proper under 28
U.S.C. § 1391(b)(2) because a substantial part of the events or omissions giving rise to the
claims occurred in this judicial district.
Pursuant to the Federal Arbitration Act [“FAA”], a written arbitration “provision in
any . . . contract evidencing a transaction involving commerce .. . 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.A. § 2 (1991). The effect of Section 2 is “to create a body of federal
substantive law of arbitrability, applicable to any arbitration agreement within the coverage
of the Act.” Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S.1, 24 (1983).
Section 3 provides for the stay of proceedings in federal district courts when an issue in the
proceedings is referable to arbitration. See 9 U.S.C. § 3 (1991). Section 4 provides for
orders compelling arbitration when one party has failed, neglected, or refused to comply with
an arbitration agreement. See 9 U.S.C. § 4 (1991); Boyd v. Town of Hayneville, Ala., 144 F.
Supp. 2d 1272, 1275 (M.D. Ala. 2001).
The FAA establishes “‘a federal policy favoring arbitration.’” Shearson/American
Exp., Inc. v. McMahon, 482 U.S. 220, 226 (1987) (quoting Moses H. Cone Mem’l Hosp., 460
U.S. at 24 (1983)). Indeed, under the FAA, “any doubts concerning the scope of arbitrable
issues should be resolved in favor of arbitration.” Moses H. Cone Mem’l Hosp., 460 U.S.
at 24-25. Therefore, courts must rigorously enforce agreements to arbitrate. See Dean Witter
Reynolds, Inc. v. Byrd, 470 U.S. 213 (1985). The court must look to the intent of the parties
to determine which claims are arbitrable, and in so doing, the court looks to the wording of
the arbitration clause and gives all provisions of the contract their full effect. See Bullock
v. United Benefit Life Ins. Co., 165 F. Supp. 2d 1259, 1261 (M.D. Ala. 2001).
Section 4 of the FAA allows a “party aggrieved by the alleged failure, neglect, or
refusal of another to arbitrate under a written agreement” to petition the court “for an order
directing that such arbitration proceed.” 9 U.S.C. § 4. When a court is “satisfied that the
making of the agreement for arbitration or the failure to comply therewith is not in issue,”
the court is required to “make an order directing the parties to proceed to arbitration in
accordance with the terms of the agreement.” Id.
Thus, the issues before this Court are: whether the parties have agreed to arbitrate
claims of the sort Cobb and Sides have brought and whether any such agreement to
arbitration is unconscionable as a matter of law because of the unavailability of class relief
in arbitration. It is well established that arbitration is a creature of contract, and no party can
be compelled to submit a dispute to arbitration without having given prior contractual
consent to do so. See AT & T Tech., Inc. v. Communications Workers, 475 U.S. 643, 649
(1986). The party seeking to compel arbitration has the burden of proving the existence of
a contract calling for arbitration and proving that the contract evidences a transaction
substantially affecting interstate commerce. In this case, the later is not contested.1
The FAA “provides for ‘the enforcement of arbitration agreements within the full
reach of the Commerce Clause.’” Citizens Bank v. Alafabco, Inc., 123 S. Ct. 2037, 2040
(2003). The record before this Court makes it clear that the dealings between the parties
affected interstate commerce. See, e.g., Pitchford v. AmSouth Bank, 285 F. Supp. 2d 1286,
1290 (M.D. Ala. 2003). Consequently, the arbitration agreement is within the scope of the
When deciding whether parties agreed to arbitrate a certain matter, courts generally
should apply ordinary state-law principles that govern the formation of contracts. Baptist
Health Sys., Inc. v. Mack, 860 So. 2d 1265, 1273 (Ala. 2003). The requisite elements of a
contract under Alabama law include: an offer, an acceptance, consideration, and mutual
assent to the formation of a contract. Id. Assent must be manifested by something, and that
something is most often a signature; however, ratification may also manifest assent. Id.
Indeed, the Alabama Supreme Court has previously explained that a signature on a contract
functions to show mutuality and assent, but that does not mean that there are no other ways
to manifest mutuality and assent. Id. (citing Merrill Lynch, Pierce, Fenner & Smith, Inc. v.
Kilgore, 751 So. 2d 8, 11 (Ala. 1999).
Alabama law allows arbitration agreements between at-will employees and their
employers. Employers and their at-will employees may not have an “employment contract”
which governs their employment relationship as a whole, but that does not mean that they
cannot contractually agree to arbitrate disputes arising out of the employment relationship.
In this case counsel for Sides and Cobb appears to conflate employment contracts and
narrower arbitration agreements which govern only one aspect of the employer-employee
relationship namely, dispute resolution.
Thus, the first real and disputed issue is whether Victoryland has met its burden of
proving the existence of a contract calling for arbitration. Victoryland points to the language
contained in the Statement of Applicant which both Sides and Cobb executed in order to
secure employment with Victoryland. Sides and Cobb contend that the Statement of
Applicant does not constitute a contract calling for arbitration for three reasons: (1)
Victoryland did not sign the Statement of Applicant and the Statement of Applicant does not
impose a obligation to arbitrate upon both the applicant and Victoryland so there is no
mutuality of obligation; and (2) the Statement of Applicant is ambiguous both because of a
typo which obscures its meaning and because it conflicts with Victoryland’s employee
handbook. In the alternative, Cobb and Sides contend that even if there is an agreement to
arbitrate in the Statement of Applicant, it should not be enforced because it is unconscionable
because it limits class relief and deters enforcement of rights under the WARN Act.
A. Is the Statement of Applicant An Enforceable Agreement to Arbitrate
1. Mutuality of Assent and Consideration
Victoryland’s failure to sign the Statements of Applicant does not mean that the
Statements of Applicant do not constitute valid agreements to arbitrate between Victoryland
and Sides or Victoryland and Cobb. As previously explained, Alabama law does not require
that both parties to a contract sign it for it to be a binding contract. Indeed, other evidence
of assent to the terms of the agreement are acceptable. Here, Cobb and Sides both evidenced
their assent and agreement by signing the Statements of Applicant which contained an
agreement to arbitrate disputes with Victoryland. Victoryland prepared the written offer of
contract which was contained in the Statement of Applicant. Its decision to hire Sides and
Cobb after they signed the Statements of Applicant and is sufficient evidence of its assent
and agreement to be bound to the contractual offer it had extended. See, e.g., Gadsen
Budweiser Distributing Co., Inc. v. Holland, 807 So. 2d 528, 531 (Ala. 2001) (finding
mutuality of obligation existed between employer and at-will employee where employer
provided at-will employment to employee after employee accepted employer’s offer to enter
into an agreement to arbitrate employment disputes). In the circumstances of this case there
is also sufficient evidence that Victoryland intended to be bound by the contractual
arbitration agreement it extended in the Statement of Applicant.
2. Statement of Applicant Contains Error and Is Inconsistency with Handbook
Pointing to one error and one misstatement in the arbitration provision contained in
the Statements of Applicant they each signed, Sides and Cobb contend that the agreement is
too vague to be enforced. It is not seriously disputed that the Statement of Applicant
document is not well drafted. In determining whether a contract is ambiguous, the intent of
the parties, as that intent is manifested through the plain language of the contract, guides the
court. See Allied-Bruce Terminix Cos. v. Dobson, 684 SSO. 2d 102 (Ala. 1995). If the intent
of the parties is clear from the face of the complaint, the court must enforce the contract even
when the language read literally is nonsensical. See Sheet Metal Workers’ Int’l Ass’n Local
15, AFL-CIO v. Law Fabrication, LLC, 237 Fed. Appx. 543, 547-48 (11th Cir. 2007). The
glaring typo in the first sentence is an obvious error. So obvious that it does not in any way
obscure the obvious meaning of the sentence or the nature of the agreement between the
parties. Despite the typographical error, it is clear the parties agreed to arbitrate all disputes
arising out of the employment of Sides or Cobb with Victoryland. Moreover, the erroneous
indication in the Statements of Applicant that the employee handbook contains further
information about the rights and responsibilities of Victoryland and its employees regarding
arbitration does not render the agreement to arbitrate either vague or unenforceable.
B. Arbitration Agreement Is Not Void On Public Policy Grounds
Finally, Cobb and Sides contend that this Court should not order them to honor their
contractual agreement to arbitrate their WARN Act claims against Victoryland because the
WARN Act embodies a public policy which favors class actions and arbitration precludes
them from seeking class relief. The Court does not find the policy argument persuasive, nor
is it persuaded that the legal authorities on which Sides and Cobb rely require the result they
urge. Nothing in the arbitration agreement is unconscionable. Enforcement of the arbitration
agreement does not violate public policy.
The Court finds that the arguments submitted in support of the Motion to Compel
Arbitration of the Claims Asserted by Plaintiffs, Myra Sides and Sharon Cobb (Doc. # 19)
are well-taken. Accordingly, it is hereby ORDERED that the motion is GRANTED. Sides
and Cobb are bound by their contractual agreement to arbitrate any employment dispute with
Victoryland, and their claims in this lawsuit fall within the scope of that agreement. The
claims of Sides and Cobb, as set forth in the Complaint, must be submitted to arbitration in
Birmingham in accordance with the procedures of the American Arbitration Association.
DONE this the 13 day of July, 2011.
/s/ Mark E. Fuller
UNITED STATES DISTRICT JUDGE
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