Smith v. RJC, LLC

Filing 22

MEMORANDUM OPINION. Signed by Magistrate Judge John H England, III on 8/13/2018. (AFS)

FILED
2018 Aug-13 PM 01:03
U.S. DISTRICT COURT
N.D. OF ALABAMA

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
SHAYLA SMITH,
Plaintiff,
v.
RJC, LLC d/b/a DENNY’S RESTAURANT,
Defendant.

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Case No.: 2:18-cv-00830-JHE

MEMORANDUM OPINION
Plaintiff Shayla Smith (“Smith”) initiated this action against RJC, LLC d/b/a Denny’s
Restaurant (“RJC”) asserting violations of Title VII of the Civil Rights Act of 1964, 42 U.S.C. §
2000(e) et seq. (Doc. 1). Specifically, Smith contends RJC subjected her to a hostile work
environment (sexual harassment) and terminated her employment in retaliation for opposing
conduct made unlawful by Title VII. (Id.). RJC has moved to compel arbitration and dismiss this
action. (Docs. 5 & 6). Although Smith did not file a response before expiration of the extended
deadline (docs. 8, 18), Smith has informed the court she agrees her claims should be submitted to
arbitration (doc. 21). The motion is therefore ripe for review. For the reasons stated below, RJC’s
motion to compel arbitration and dismiss (doc. 5) is due to be GRANTED.
I.

Factual Background

RJC owns and operates a Denny’s Restaurant in Birmingham, Alabama, where Smith
worked in 2016 and 2017. (Doc. 1 at ¶¶ 13- 28; doc. 6-1 at ¶¶ 2-3). RJC and Smith entered into
an arbitration agreement that requires them to submit work-related claims to binding arbitration.
(Docs.6-1 at ¶¶ 4-6; doc. 6-2). Specifically, the agreement provided as follows:
Any and all claims between you and the Company that have been through Steps 1
and 2 above and are still not resolved are subject to arbitration except workers'

compensation claims, claims for unemployment benefits, and OSHA claims. This
includes without limitation: claims for breach of contract (express or implied),
negligent or intentional emotional distress, slander, defamation, negligent or
intentional misrepresentation, negligent or intentional interference with contract,
tort claims, harassment claims, discrimination claims, retaliation claims, wage
claims, wrongful discharge claims, and benefits claims. This mediation requirement
applies to any claim under any employment statute, including but not limited to,
any claim under Title VII of the Civil Rights Act of 1964 (Title VII), the
Immigration Reform and Control Act of 1986 (IRCA), the Americans With
Disabilities Act of 1990 (ADA), the Equal Pay Act of 1963 (EPA), the Age
Discrimination in Employment Act of 1967 (ADEA), the Employment Retirement
Income Security Act (ERISA), the Fair Labor Standards Act (FLSA), the Family
and Medical Leave Act (FMLA), any other analogous laws of the state in which
Employee works or worked for the Company, and any and all other federal, state
and local laws and regulations relating to employment.
EMPLOYEE
UNDERSTANDS THAT BY SIGNING THIS AGREEMENT, EMPLOYEE
IS GIVING UP THE RIGHT TO A JURY TRIAL. CLASS OR
COLLECTIVE ACTIONS SHALL NOT BE PERMITTED IN
ARBITRATION.
(Docs.6-1 at ¶¶ 4-6; doc. 6-2). This Arbitration Agreement Smith signed also provides as follows:
BY SIGNING THIS EMPLOYMENT DISPUTE RESOLUTION
AGREEMENT, EMPLOYEE IS AGREEING TO HANDLE ALL DISPUTES
HE OR SHE MAY HAVE WITH THE COMPANY THROUGH THIS
DISPUTE RESOLUTION PROGRAM INSTEAD OF THROUGH COURT
LITIGATION. BOTH THE EMPLOYEE AND THE COMPANY ARE
GIVING UP THE RIGHT TO HAVE A JURY OR JUDGE DECIDE ANY
DISPUTES BETWEEN THEM. CLASS OR COLLECTIVE ACTIONS
SHALL NOT BE PERMITTED IN ARBITRATION. I UNDERSTAND
THAT I AM GIVING UP MY RIGHT TO A JURY TRIAL WITH RESPECT
TO ANY CLAIMS I MAY HAVE AGAINST THE COMPANY.
(Doc. 6-1 at ¶ 6; doc. 6-2). Additionally, the Arbitration Agreement between RJC and Smith
contains specific arbitration rules based on the American Arbitration Association’s Employment
Dispute Resolution Rules (the “AAA Rules”). (Doc. 6-1 ¶¶ 5-6; doc. 6-2).
II.

Analysis

A. Smith’s Claims Should Be Resolved Through Arbitration
An arbitration agreement is specifically enforceable under the Federal Arbitration Act if
the following requirements are met: (1) the existence of a written agreement to arbitrate claims;
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(2) a nexus to interstate commerce; and (3) coverage of the claims by the arbitration clause. 9
U.S.C. § 2. Each of these elements is satisfied in this case
RJC has provided a written agreement to arbitrate claims. (Doc. 6-2). This Arbitration
Agreements was supported by adequate consideration, i.e., RJC’s reciprocal agreement to be
bound to arbitrate employment-related claims in exchange for Smith’s employment. See Wright v.
Circuit City Stores, Inc., 82 F. Supp. 2d 1279, 1284 (N.D. Ala. 2000) (finding consideration existed
by virtue of mutuality of agreement to arbitrate claims arising out of employment). Smith agreed
to be bound by the Arbitration Agreement by signing the agreement and accepting employment
with RJC, and adequate consideration existed for each of their acceptance of the terms set forth in
the Arbitration Agreement.

Additionally, the Arbitration Agreement lacks any aspects of

substantive unconscionability. Under Alabama law, an agreement is unconscionable when “(1)
terms [ ] are grossly favorable to a party that has (2) overwhelming bargaining power.” Scrutu v.
Int’l Student Exch., 523 F. Supp. 2d 1313, 1323 (S.D. Ala. 2007) (citation omitted). Here, there is
nothing to suggest the Arbitration Agreement is substantively unconscionable. See id. at n.11
(citing Patriot Mfg., Inc. v. Dixon, 399 F. Supp. 2d 1298, 1311 (S.D. Ala. 2005)).
Second the Arbitration Agreement has a nexus to interstate commerce.

RJC is

headquartered in California and operates restaurants in several states across the country and RJC
contracts for products for use at its Birmingham restaurant that are shipped in interstate commerce.
(Doc. 6-1 at ¶¶ 2, 7). Accordingly, the arbitration agreement has the requisite nexus to interstate
commerce required by the FAA. See Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460
U.S. 1, 24 (1983) (citing 9 U.S.C. § 2).
Finally, Smith’s Title VII employment claims are covered by the arbitration agreement, as
the arbitration agreement specifically provides that “[a]ny and all claims between you and the

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Company . . . are subject to arbitration. . . . This includes without limitation . . . any claim under
Title VII of the Civil Rights Act of 1964 . . . and any other analogous laws of the state . . . any and
all other federal, state, and local laws and regulations relating to employment.” (Docs.6-1 at ¶¶ 46; doc. 6-2).
Because there is a valid and enforceable arbitration agreement meeting the requirements
outlined above, RJC’s motion to compel arbitration is GRANTED.
B. This Action is Due to Be Dismissed
Although 9 U.S.C. § 3 speaks in terms of requiring a stay when an action is referred to
arbitration, the weight of authority from district courts within this Circuit (and other circuit courts
of appeals) supports a dismissal of an action when, due to an order compelling arbitration, there
are no substantive claims left pending before the district court. Halford v. Deer Valley Home
Builders, Inc., No. 2:07cv180-ID(WO), 2007 WL 1229339 at *3 (M.D. Ala. Apr. 25, 2007); see
also Clayton v. Woodmen of World Life Ins. Soc., 981 F. Supp. 1447, 1451 (M.D. Ala. 1997); Dale
v. Comcast Corp., 453 F. Supp. 2d 1367, 1378 (N.D. Ga. 2006) (citing Choice Hotels Int’l, Inc. v.
BSR Tropicana Resort, Inc., 252 F.3d 707, 709-10 (4th Cir. 2001)); Gilchrist v. Citifinancial
Servs., Inc., No. 6:06cv1727-ORL-31KRS, 2007 WL 177821, *4 (M.D. Fla. Jan. 19, 2007).
Furthermore, although the Eleventh Circuit has not directly addressed the propriety of dismissal
in lieu of a stay under 9 U.S.C. § 3, it has “frequently affirmed where the district court compelled
arbitration and dismissed the underlying case.” Gilchrist, 2007 WL 177821 at *4 (citing Samadi
v. MBNA Am. Bank, N.A., 178 Fed. Appx. 863 (11th Cir. 2006), cert. denied, 127 S. Ct. 494 (2006);
Caley v. Gulf Stream Aerospace Corp., 428 F.3d 1359 (11th Cir. 2005); Jackson v. Cintas Corp.,
425 F.3d 1313 (11th Cir. 2005)). Accordingly, because all the claims in this action are required to
be submitted to arbitration and Smith agrees the claims in this action should be resolved through

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arbitration, RJC’s motion to dismiss should be GRANTED, and this action will be dismissed
without prejudice.
III.

Conclusion

There is a valid and enforceable arbitration agreement that covers Smith’s Title VII claims,
and RJC’s motion to compel arbitration (doc. 5) is GRANTED. Furthermore, because all the
claims in this action are required to be submitted to arbitration, RJC’s motion to dismiss should be
GRANTED, and this action will be dismissed without prejudice. A separate order will be entered.
DONE this 13th day of August, 2018.

_______________________________
JOHN H. ENGLAND, III
UNITED STATES MAGISTRATE JUDGE

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