Bodine v. Cook's Pest Control Inc et al
MEMORANDUM OPINION. Signed by Judge R David Proctor on 6/18/2015. (AVC)
2015 Jun-18 PM 04:43
U.S. DISTRICT COURT
N.D. OF ALABAMA
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
COOK’S PEST CONTROL, INC., et al.,
Case No.: 2:15-cv-00413-RDP
This case is before the court on Defendants’ Amended Motion to Dismiss, Without
Prejudice, or, in the Alternative, Motion to Stay Action and to Compel Arbitration (Doc. 6), filed
April 6, 2015. The Motion has been fully briefed. (See Docs. 4, 7, 11, 13). Quite simply:
This is another arbitration dispute in which the parties are litigating whether or
not they should be litigating. The familiar scenario is that the parties agree in
writing to arbitrate any disputes between them, but then one party files a lawsuit
taking the position that the agreement to arbitrate is inapplicable, invalid, or
unenforceable for one reason or another.
Anders v. Hometown Mortgage Servs., Inc., 346 F.3d 1024, 1026 (11th Cir. 2003) (Carnes, J.).
Here, Plaintiff contends the agreement to arbitrate is invalid because it is tainted by certain
provisions that conflict with federal law. For the reasons outlined below, however, the court
concludes that Defendants’ Motion (Doc. 6) is due to be granted.
On March 10, 2015, Plaintiff filed this action against Defendants Cooks Pest Control,
Inc. and Max Fant for violations of the Uniform Services Employment and Reemployment
Rights Act of 1994 (“USERRA”), 38 U.S.C. § 4301 et seq. and Alabama state law. Specifically,
Plaintiff asserts that: (1) Defendants subjected him to discrimination and harassment on account
of his membership in the armed services, (2) Defendants failed to adequately train and supervise
their agents and employees, and (3) Defendants conduct was so egregious as to support a claim
of intentional infliction of emotional distress.
On April 16, 2015, Defendants filed the current Motion. (Doc. 6).1 Defendants seek to
compel Plaintiff to submit all of his disputes to binding arbitration, in accordance with an
Employment Agreement (the “Agreement”) that Plaintiff entered into with Defendant on
September 17, 2012. (See Doc. 2, at 10). In Article VII (“Alternative Dispute Resolution”) of
the Agreement, the parties agree to submit “all disputes, controversies or claims of any kind and
nature between the parties” to arbitration upon the failure of good faith negotiations and
mediation. (Id. at 10 (emphasis omitted)).
In addition, three other clauses in the Agreement are relevant herein.
Agreement purports to limit the employee’s arbitration costs to “no more than $150,” except that
“the arbitrator may as part of his final decree reapportion the fees, including attorney’s fees, and
costs between the parties as allowed by applicable law . . . .” (Id. at 13 (“Article VII.D”)).
Second, the Agreement attempts to impose a six month limitations period on claims brought
pursuant to the employment relationship. (Id. at 14 (“Article VII.E”)). Finally, the agreement
contains a severability clause that states in relevant part: “If any term or provision of this
Agreement shall be invalid or unenforceable to any extent or application, then the remainder of
this Agreement shall be valid and enforceable to the fullest extent and the broadest application
permitted by law.” (Id. at 14 (emphasis added)).
On April 8, 2015, Defendants filed their first Motion to Dismiss, Without Prejudice, or, in the Alternative,
Motion to Stay Action and to Compel Arbitration (Doc. 2), but that Motion was terminated after Defendants filed
their amended and corrected motion (Doc. 6), which is the subject of this Order.
Plaintiff challenges the enforceability of the parties’ arbitration clause. The parties do not
dispute that, under USERRA, the arbitration clause contains provisions purporting to unlawfully
limit the applicable statute of limitations and unlawfully apportion certain fees and costs to
Plaintiff.2 However, the parties’ Agreement also contains a severability provision. Although
Plaintiff argues that the two offensive provisions referenced above operate to invalidate the
entire arbitration clause, Defendants respond by pointing out that the Agreement allows for
severance of invalid provisions, which permits the court to enforce the remainder of the
arbitration clause. Defendants have the better end of the argument.
Section 2 of the Federal Arbitration Act (“FAA”) provides that arbitration agreements
“shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity
for the revocation of any contract.” Paladino v. Avnet Computer Technologies, Inc., 134 F.3d
1054, 1057 (11th Cir. 1998) (quoting FAA, 9 U.S.C. § 2 (1994)). The Supreme Court has long
interpreted that statutory pronouncement as “a congressional declaration of a liberal federal
policy favoring arbitration agreements.” Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp.,
460 U.S. 1, 24 (1983). The FAA was enacted “to reverse the longstanding judicial hostility to
arbitration agreements . . . and to place arbitration agreements upon the same footing as other
contracts.” EEOC v. Waffle House, Inc., 534 U.S. 279, 289 (2002) (quoting Gilmer v.
Interstate/Johnson Lane Corp., 500 U.S. 20, 24 (1991)).
Defendants do not defend the legality of either provision. Furthermore, Defendants have agreed to
stipulate that (1) “the provision purporting to limit the statute of limitations in the arbitration agreement, as applied,
is of no force or effect,” and “pursuant to 38 U.S.C. § 4327(b), all claims alleged in Plaintiff’s Complaint arising
from or related to Plaintiff’s USERRA action are timely,” and (2) although the requirement to pay $150 is “not an
unreasonable limitation on Plaintiff’s USERRA rights. . . . Defendants agree to bear any and all costs associated
with any arbitration, mediation, or negotiation of this matter, as outlined in the terms of the arbitration agreement.”
(Doc. 7, at 2-3).
To this end, agreements to arbitrate are akin to forum-selection clauses. Cunningham v.
Fleetwood Homes of Ga., Inc., 253 F.3d 611, 617 (11th Cir. 2001) (citing Scherk v. AlbertoCulver Co., 417 U.S. 506, 519 (1974)). It is well settled that a party agreeing to arbitrate
statutory claims “does not forgo the substantive rights afforded by the statute; [rather, the party]
only submits to their resolution in an arbitral, rather than a judicial, forum.” Mitsubishi Motors
Corp. v. Soler Chrysler-Plymouth Inc., 473 U.S. 614, 628 (1985). Federal statutory claims are
generally arbitrable. See Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 28 (1991). The
parties agree there is no exception to this general rule simply because a claim is made under
USERRA. (See Doc. 11, at 6 (“Defendants focus a large portion of their Reply on addressing the
argument that USERRA claims, generally, are subject to arbitration. However, Plaintiff has
asserted no argument to the contrary.”)); see also Garrett v. Circuit City Stores, Inc., 449 F.3d
672, 676 (5th Cir. 2006) (upholding arbitration clause for USERRA claim); Landis v. Pinnacle
Eye Care, LLC, 537 F.3d 559, 564 (6th Cir. 2008) (same). Although the parties in this case
agree that USERRA claims may be arbitrable, they disagree about whether the arbitration clause
they signed is invalid on the ground that it contains provisions which conflict with the
substantive protections of USERRA. Therefore, the disposition of this motion turns on this
question – should the court enforce the severability portion of the Agreement and surgically
lance the unlawful portions of the arbitration clause (as opposed to voiding the entire arbitration
Binding Alabama and Eleventh Circuit precedents make clear that the severability clause
at issue in this case operates to strike the offensive portions of the Agreement, thereby saving the
arbitration clause from being voided in its entirety. In the context of other, similar federal
statutory remedial schemes, the Eleventh Circuit has made clear “[w]hether the severability
provision is to be given effect is a question of state law, because in placing arbitration
agreements on an even footing with all other contracts, the FAA makes general state contract law
controlling.” Jackson v. Cintas Corp., 425 F.3d 1313, 1317 (11th Cir. 2005) (quoting Anders,
346 F.3d at 1032).
“Alabama law favors severability, and gives full force and effect to
severability clauses.” Anders, 346 F.3d at 1032.
In Anders, the court addressed the severability of offensive provisions in an arbitration
agreement and applied Alabama law. 346 F.3d at 1024. The Anders court found that “even if
the remedial restrictions within the arbitration agreement in this case are invalid, as [the plaintiff]
argues, the parties must still arbitrate.” Id. at 1031. Other Alabama decisions have reached
similar conclusions. See, e.g., Ex parte Thicklin, 824 So. 2d 723, 735 (Ala. 2002) (enforcing an
arbitration provision after severing an illegal prohibition on punitive damages); Ex parte Celtic
Life Ins. Co., 834 So. 2d 766, 769 (Ala. 2002) (same; holding also there is a “general ‘duty of the
court to preserve so much of a contract as may properly survive its invalid and ineffective
provisions’ ” (quoting 17A C.J.S. Contracts § 297 (1999))). Like the Agreement in this case, the
arbitration agreements in Thicklin and Celtic Life included severability clauses. Thicklin, 824 So.
2d at 734; Celtic Life, 834 So. 2d at 768.
Plaintiff relies heavily on Paladino v. Avnet Computer Techs., Inc., which held that “the
presence of an unlawful provision in an arbitration agreement may serve to taint the entire
arbitration agreement, rendering the agreement completely unenforceable, not just subject to
judicial reformation.” 134 F.3d at 1058 (citations omitted). However, since Paladino, and as
another court in this Circuit has observed, the Eleventh Circuit has made “the critical observation
that implicit in the Paladino decision is the fact that either the agreement did not contain a
severability clause or severability was never raised.” Penberthy v. AT&T Wireless Servs., Inc.,
354 F. Supp. 2d 1323, 1328 (M.D. Fla. 2005); see Jackson, 425 F.3d at 1317 (noting that
Paladino was “inapposite because there was no mention in that appeal of severability as a
possible remedy.” (citation omitted)); Anders, 346 F.3d at 1031-32 (“Nothing in the Paladino
decision indicates that there was a severability provision in that agreement to arbitrate. . . . If the
severability provision is given effect, it means that in this case, unlike in Paladino, the remainder
of the arbitration agreement survives any invalidity of its remedial restrictions.”)). The parties’
severability clause makes this case is more like Jackson and Anders, and unlike Paladino.
In this case, the Agreement clearly and explicitly contemplates severability.3 Therefore,
in view of the clear and well-settled Alabama law favoring severability, as well as the FAA’s
requirement that arbitration agreements be treated no less favorably than other contracts under
state law, the severability clause in this case should be applied to prevent any invalid provisions
from destroying the entire agreement to arbitrate. See Anders, 346 F.3d at 1032 (applying
Alabama law to sever unlawful provisions of arbitration clause); see also Jackson, 425 F.3d at
1317 (reaching the same conclusion under Georgia law). In this way, the court is able to both
preserve as much of the parties’ agreement as possible, while also upholding the “liberal federal
policy favoring arbitration agreements.” Anders, 346 F.3d at 1029 (quoting Moses H. Cone
Mem’l Hosp., 460 U.S. at 24).
Defendants base their severability argument on Paragraph VIII’s language suggesting that certain
provisions “are separate and severable, and the unenforceability of any specific covenant shall not affect the validity
of any other covenant set forth herein.” (See Doc. 7, at 4 (quoting Doc. 2, at 14)). However, Defendants selectively
quote from that provision, which limits severability to “the covenants and restrictions contained in Article V and
Article VI” (pertaining to “Restrictive Covenants” and “Nondisclosure” respectively). The unlawful provisions
disputed on this Motion (Doc. 6) are located in Article VII (“Alternative Dispute Resolution”).
Nevertheless, the Agreement also states: “If any term or provision of this Agreement shall be invalid or
unenforceable to any extent or application, then the remainder of this Agreement shall be valid and enforceable to
the fullest extent and the broadest application permitted by law.” (Doc. 2, at 14 (emphasis added)). Accordingly,
this provision is sufficiently broad to permit the court to strike the offensive portions of the Agreement without
undermining the validity of the remaining innocuous provisions.
Specifically, because both parties agree the Agreement’s six month limitations provisions
are unlawful, that provision is due to be severed. Furthermore, to the extent the fee provisions
could ever be deemed unreasonable, the fee provisions are also due to be severed.4
accordance with Defendants’ stipulation, Defendants are to bear any and all costs associated with
any arbitration, mediation, or negotiation of this matter. (Doc. 7, at 3). Therefore, the court
concludes that because these impermissible portions of the Agreement are due to be severed, the
Agreement (as judicially revised) is not otherwise invalid. As a result, consistent with the
Agreement, Plaintiff’s claims are to be submitted to arbitration.
For the foregoing reasons, Defendants’ Motion (Doc. 6) is due to be granted.
Accordingly, the case is due to be dismissed without prejudice and Plaintiff is compelled to
submit his claims to arbitration. In so doing, the court strikes the two above-referenced offensive
provisions from the Agreement.
A separate order will be entered.
DONE and ORDERED this June 18, 2015.
R. DAVID PROCTOR
UNITED STATES DISTRICT JUDGE
The court notes that when this case was filed, Plaintiff submitted a filing fee. However, USERRA
provides that a court may not charge a filing fee to a claimant who files suit under that statute. Accordingly, the
court has refunded the filing fee to Plaintiff. (Doc. 16). Similarly, here, there is no basis for charging Bodine in
connection with the arbitration expenses that amount to an arbitration filing fee.
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