Wilson v. CPB Foods, LLC

Filing 16

MEMORANDUM OPINION AND ORDER Signed by Judge Claria Horn Boom on 12/11/2018 granting 13 Motion to Stay Proceedings and Compel Arbitration. Plaintiff Greg Wilson SHALL prosecute his claims in accordance with the parties' Arbitration Agreement. The matter is STAYED pending further proceedings to enforce any award of the arbitrator. cc: Counsel (JM)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
LOUISVILLE DIVISION
GREG WILSON,

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Plaintiff,
v.
CPB FOODS, LLC,
Defendant.
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Civil Action No. 3:18-CV-014-CHB

MEMORANDUM OPINION AND
ORDER COMPELLING
ARBITRATION

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When Plaintiff Greg Wilson (“Wilson”) began working as a general manager at a
restaurant owned by Defendant CPB Foods, LLC (“CPB”), he was provided with numerous
policies to review that comprised the CPB Foods Handbook (the “Handbook”). One of these
policies was an agreement to arbitrate (“Arbitration Agreement”) any claims or disputes against
CPB that arose from his employment. Despite acknowledging receipt of this Arbitration
Agreement, however, Wilson filed suit in federal court alleging violations of the Americans with
Disabilities Act, as amended (“ADA”) 42 U.S.C. §§ 12101, et seq. Wilson does not dispute that
he was provided a copy of this Arbitration Agreement, nor does he dispute that he signed a
receipt acknowledging that he had been provided a copy of this agreement and that he had read
and understood its terms. He argues, however, that this agreement should not be enforced
against him since this lawsuit falls outside of the scope of the Arbitration Agreement at issue, or,
in the alternative, because CPB has waived its reliance on this agreement. Because the Court
finds that this action fits squarely within the scope of the Arbitration Agreement, and that CPB
has not waived its right to enforcement, the Court will grant CPB’s Motion to Stay Litigation and
Compel Arbitration (“Motion to Compel”). [R. 13]

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I.

Background
CPB owns two Golden Corral restaurants in Louisville, Kentucky. [R. 1, at ¶ 4, R. 6, at ¶

5]. Plaintiff Greg Wilson was a general manager of one of these stores. [R. 1, at ¶ 5] When he
was hired in April 2015, CPB provided Wilson with a copy of the Arbitration Agreement, which
provides, in relevant part, that if Wilson is
unable to resolve any such complaints or disputes to [his] satisfaction internally,
the resolution of all disputes that arise between [Wilson] and CPB Foods will
be through formal, mandatory arbitration before a neutral arbitrator.
Because of, among other things, the delay and expense which result from the use
of the court systems, any legal or equitable claims or disputes arising out of or in
connection with your employment, the terms and conditions of your employment,
or termination of employment with CPB Foods will be resolved by binding
arbitration instead of a court of law or equity. This applies to all disputes involving
legally protected rights (e.g., local, state and federal statutory, contractual or
common law rights) regardless of when the statute was enacted or the common law
doctrine was recognized (e.g., either before or after this arbitration agreement and
policy became effective). This agreement does not limit your ability to pursue
any external administrative remedy (such as with the EEOC).
This policy substitutes one legitimate dispute resolution form (arbitration) for
another (litigation), thereby waiving any right of either party to have a dispute
resolved in court. This substitution involves no surrender, by either party, of any
substantive statutory or common law benefits, protection or defense for individual
claims. You do, however, waive the right to commence or be a party to any
representative, collective or class action.
[R. 13-7, Ex. 6 (emphasis in original)] Wilson electronically signed the Handbook
Acknowledgement Form 1, indicating he had read, understood, and agreed to follow all policies
that were provided to him when he was hired, including the Arbitration Agreement. [R. 13-5, Ex.
5]

1

At the top of this Handbook Receipt Form the date reads “May 2015.” However, Wilson’s electronic signature
indicates he signed on October 3, 2016. Neither party contest in any meaningful way that Wilson signed the
Handbook, however. This discrepancy in dates does not create a factual issue that the Court must therefore resolve.

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While he was a manager, Wilson suffered from a series of Transient Ischemic Attacks
(“TIAs”) that Wilson alleges were brought on as a result of a severe anxiety disorder. [R. 1, at ¶¶
5-9] Wilson claims that CPB regarded him as having a disability in violation of the ADA as a
result of this anxiety disorder. In his Complaint, Wilson alleges that his demotion and
termination were a result of this severe anxiety disorder, and therefore qualify as adverse
employment actions under the ADA. Id. at ¶¶ 14-26.
The parties attempted to resolve this matter prior to Wilson filing suit but were
unsuccessful. See [R. 14, at p. 2] Wilson filed a charge with the EEOC on April 28, 2017. Id.
On July 20, 2017, the EEOC requested that the parties engage in mediation. Wilson alleges that
CPB failed to respond to this request. Id. On December 27, 2017, the EEOC issued Wilson a
Notice of Right to Sue (“Right to Sue Letter”), and Wilson filed suit in this Court on January 8,
2018, alleging discriminatory demotion and discharge in violation of the ADA. [R. 1]
In its Answer to Wilson’s Complaint, CPB asserted various affirmative defenses. [R. 6]
It also preserved other affirmative defenses contained in the Federal Rules of Civil Procedure
and reserved the right to add additional affirmative defenses. Id. at ¶¶ 39, 40. The parties
conducted the required Rule 26 Conference pursuant to Fed. R. Civ. P. 26(f) and submitted a
report from this planning meeting. Fed. R. Civ. P. 26; [R. 9]. Thereafter, Wilson submitted his
initial disclosures, and the Court issued a Scheduling Order. [R. 11] The parties engaged in a
period of discovery, and Wilson’s deposition was scheduled. CPB cancelled this deposition
shortly before it was scheduled to take place, however, citing the parties’ Arbitration Agreement
(which CPB turned over in the course of discovery). Wilson argues that this was the first time
CPB ever produced the Arbitration Agreement, and the first time that Wilson was able to see a
copy. [R. 14, at p. 4] CPB provided no justification for why it failed to raise this Arbitration

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Agreement at the onset of litigation. Instead, CPB filed this Motion to Stay Litigation and
Compel Arbitration. [R. 13]
II.

Analysis
A. Arbitration Standard
In this Circuit, “[i]n order to show that the validity of the agreement is ‘in issue,’ the

party opposing arbitration must show a genuine issue of material fact as to the validity of the
agreement to arbitrate,” a showing that mirrors the summary judgment standard. Great Earth
Cos. v. Simons, 288 F.3d 878, 889 (6th Cir. 2002). Therefore, district courts in Kentucky
evaluate a motion to compel arbitration as one for summary judgment under Fed. R. Civ. P.
56(c). See Freeman v. Easy Mobile Labs, Inc., No. 1:16-CV-00018-GNS, 2016 WL 4479545, at
*1 (W.D. Ky. Aug. 24, 2016) (citing Arnold v. Rent-a-Center, Inc., No. 11-18-JBC, 2011 WL
1810145, at *2 (E.D. Ky. May 12, 2011) (“This court will treat the motion to compel arbitration
as one for summary judgment…”); Weddle Enters., Inc. v. Treviicos-Soletanche, J.V., No.
1:14CV-00061-JHM, 2014 WL 5242904, at *2 (W.D. Ky. Oct. 15, 2014) (“A motion to dismiss
based on the existence of a valid arbitration agreement is not evaluated under the usual Fed. R.
Civ. P. 12(b)(6) standard. Instead, courts apply the standard applicable to motions for summary
judgment.”) (internal citation omitted) (citation omitted). “In order to show that the validity of
the agreement is in issue, the party opposing arbitration must show a genuine issue of material
fact as to the validity of the agreement to arbitrate.” Great Earth Cos., 288 F.3d at 889 (internal
quotation marks omitted) (citation omitted).
B. FAA Overview
The Federal Arbitration Act (“FAA”) was enacted “to ensure judicial enforcement of
privately made agreements to arbitrate.” Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 219

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(1985). The statute “embodies [a] national policy favoring arbitration . . .” Richmond Health
Facilities v. Nichols, 811 F.3d 192, 195 (6th. Cir. 2016) (citing Seawright v. Am. Gen. Fin.
Servs., Inc., 507 F.3d 967, 972 (6th Cir. 2007)). The FAA applies to written agreements to
arbitrate disputes that arise out of contracts involving transactions in interstate commerce. 2
Under its terms, such agreements “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. § 2. The FAA
“leaves no place for the exercise of discretion by a district court, but instead mandates that a
district court shall direct the parties to proceed to arbitration on issues as to which an arbitration
agreement has been signed.” Byrd, 470 U.S. at 218 (emphasis in original).
When a party invokes the FAA and asks a federal court to dismiss or stay a case and
compel arbitration, the Court must determine whether the parties agreed to arbitrate the dispute
at issue. Stout v. J.D. Byrider, 228 F.3d 709, 714 (6th Cir. 2000). This requires an examination
of the contract language in light of the strong federal policy favoring arbitration, resolving any
ambiguities in the contract or doubts as to the parties' intentions in favor of arbitration. Id.
Courts should engage in the following four-step inquiry: (1) determine whether the parties
agreed to arbitrate; (2) determine the scope of that agreement; (3) if federal statutory claims are
asserted, the Court must consider whether Congress intended those claims to be non-arbitrable;
and (4), if the Court concludes that some, but not all, of the claims in the action are subject to

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The Federal Arbitration Act (“FAA”) applies only to “[a] written provision in any maritime transaction or a contract
evidencing a transaction involving commerce. ” 9 U.S.C. § 2 (emphasis added). In Allied Bruce–Terminix Companies,
Inc. v. Dobson, the United States Supreme Court had occasion to interpret the phrase “evidencing a transaction
involving commerce.” 513 U.S. 265 (1995). First, the Court concluded that the word “involving” was the “functional
equivalent of ‘affecting.’ ” Id. at 273–74. Next, the Court adopted a “transaction in fact” interpretation of the phrase
“evidencing a transaction.” Id. at 277-78. The Court ‘read[ ] the Act’s language as insisting that the ‘transaction’ in
fact ‘involv[e]’ interstate commerce, even if the parties did not contemplate an interstate commerce connection.” Id.
at 281.

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arbitration, it must determine whether to stay the remainder of the proceedings pending
arbitration. Id.
C. Motion to Compel Arbitration
i. Agreement to Arbitrate
Arbitration agreements are fundamentally contracts. As such, courts must “review the
enforceability of an arbitration agreement according to the applicable state law of contract
formation.” Seawright, 507 F .3d at 972; see also Arthur Andersen LLP v. Carlisle, 556 U.S.
624, 630–31 (2009) (“[S]tate law,” therefore, is applicable to determine which contracts are
binding under § 2 and enforceable under § 3 “if that law arose to govern issues concerning the
validity, revocability, and enforceability of contracts generally.”) (quoting Perry v. Thomas, 482
U.S. 483, 493, n. 9 (1987)).
The Arbitration Agreement in this case states that if employees at the Golden Corral are
unable to resolve complaints or disputes that arise with their employer internally, “the resolution
of all disputes that arise . . . will be through formal, mandatory arbitration before a neutral
arbitrator.” [R. 13-7, Ex. 6] The Arbitration Agreement cites the delay and expense that are
usually associated with the use of the court systems as justification for both employees and CPB
to use arbitration instead. Id. Wilson electronically signed the Handbook Acknowledgement
Form, indicating he had read, understood, and agreed to follow all policies, including the
Arbitration Agreement. [R. 13-5, Ex. 5]
Still, Wilson alleges he has “no recollection of even seeing this Arbitration Agreement”
but “will take [CPB] at its word that this document was electronically presented to him and he
consented to it in exchange for employment with CPB [ ].” [R. 14, at p. 6] Thus, Wilson does
not dispute that the Arbitration Agreement is valid and that the parties agreed to arbitrate. Id.

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Because neither party disputes the validity of the Arbitration Agreement, the Court finds that
both parties “agreed to arbitrate,” and there is no “genuine issue” regarding the validity of the
arbitration agreement. Fed. R. Civ. P. 56; Great Earth Cos., 288 F.3d at 889; Stout, 228 F.3d at
714.
ii. Scope of Arbitration Agreement
Wilson contends that his cause of action falls outside the scope of the parties’ Arbitration
Agreement. [R. 14, at pp. 6-7] Wilson’s argument can be summarized as follows: the parties’
Arbitration Agreement allows CPB’s employees to pursue their administrative remedies (and
specifically mentions the EEOC). Wilson pursued his administrative remedies with the EEOC
prior to filing suit in federal court. Therefore, once the EEOC process had concluded, and he had
been issued a Right to Sue Letter, his lawsuit fell outside of the scope of the parties’ Arbitration
Agreement. According to Wilson, the EEOC Right to Sue Letter qualifies as “an exception
carved out by the very language of the Agreement.” Id. The Court disagrees. To conclude
otherwise would circumvent the plain meaning of the parties’ Arbitration Agreement.
In analyzing the scope of the Arbitration Agreement, the Court acknowledges the wellestablished rule that “doubts regarding arbitrability must be resolved in favor of arbitration.”
Fazio v. Lehman Bros., 340 F.3d 386 (6th Cir. 2003) (citing Moses H. Cone Mem'l Hosp. v.
Mercury Constr. Corp., 460 U.S. 1, 24–25 (1983), superseded by statute on other grounds).
Bearing this rule in mind, the Court find that the claims at issue here fit squarely within the
Arbitration Agreement. Wilson makes claims against CPB for adverse employment actions
based upon an alleged disability in violation of the ADA. The clear language of the Arbitration
Agreement covers “all disputes that arise between [Wilson] and CPB [ ] . . . . This applies to all
disputes involving legally protected rights (e.g., local, state and federal statutory, contractual or

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common law rights) regardless of when the statute was enacted, or the common law doctrine was
recognized . . . [R. 13-7, Ex. 6] Wilson simply misconstrues the Arbitration Agreement. While
the Arbitration Agreement does say that an employee is free to pursue administrative remedies
(such as the EEOC), the very next line says “[t]his policy substitutes one legitimate dispute
resolution form (arbitration) for another (litigation), thereby waiving any right of either party to
have a dispute resolved in court.” Id. Thus, while the Arbitration Agreement allows an employee
to file charges with the EEOC against CPB, it is clear that a party must arbitrate claims instead of
filing suit in court. The provision Wilson cites to cannot be read as a “carveout” to the
Arbitration Agreement as a whole, allowing employees to file charges in federal court at the
conclusion of the administrative process. CPB’s reading is correct - the Right to Sue Letter was
not an end-run-around the parties’ valid Arbitration Agreement. [R. 15, at pp. 2-4] While
nothing in the Arbitration Agreement precluded Wilson from pursuing his administrative
remedies, the language is clear that once those remedies were exhausted, his sole remedy was
arbitration. He could not file an action in state or federal court. The Right to Sue Letter is not a
means to circumvent the parties’ agreement; it simply represents the end of the administrative
process for Wilson. The scope of the agreement covers all the claims at issue.
iii. Federal Statutory Claims Asserted
The plaintiff’s claims are based on violations of the ADA. The Supreme Court has held
that federal statutory claims such as the ADA may be subject of arbitration agreements that are
enforceable pursuant to the FAA since the agreement “only determines the choice of forum.”
E.E.O.C. v. Waffle House, Inc., 534 U.S. 279, 295, n. 10 (2002) (“In these cases we recognized
that by agreeing to arbitrate a statutory claim, a party does not forgo the substantive rights
afforded by the statute; it only submits to their resolution in an arbitral, rather than a judicial,

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forum.”) (internal citations and quotations omitted). Therefore, the Court finds that Congress
did not intend for Wilson’s claims arising under ADA to be non-arbitrable.
iv. All Claims Subject to Arbitration
As explained above, all of Wilson’s claims are arbitrable claims. Hence there are no nonarbitrable claims for the Court to consider.
D. Waiver
Wilson next argues that even if this action falls within the scope of the parties’
Arbitration Agreement, CPB waived reliance on the agreement by choosing to participate in this
litigation. [R. 14, at pp. 7-10] Wilson argues that he made CPB aware of his intent to proceed
with litigation in April 2017, and at no time did the defendant mention its intent to compel
arbitration. Id. Wilson points out that CPB did not raise the issue of arbitration during the EEOC
filing, nor during the brief discovery period after filing this suit. All of this, according to Wilson,
amounts to a waiver of CPB’s rights to assert arbitration. Id. The Court declines to find a waiver
on the facts presented here. CPB did not delay long and Wilson cannot point to any actual
prejudice he faced during the time when he filed his federal lawsuit.
A party waives arbitration by “engaging in two courses of conduct: (1) taking actions that
are completely inconsistent with any reliance on an arbitration agreement; and (2) ‘delaying its
assertion to such an extent that the opposing party incurs actual prejudice.’” Hurley v. Deutsche
Bank Trust Co., 610 F.3d 334, 338 (6th Cir. 2010) (quoting O.J. Distrib., Inc. v. Hornell Brewing
Co., 340 F.3d 345, 355 (6th Cir. 2003)). Both elements must be found to establish waiver. Shy v.
Navistar Int’l Corp., 781 F.3d 820, 827-28 (6th Cir. 2015). While the Sixth Circuit has declined
to sharply define what conduct suffices to establish waiver, it “typically involves a defendant's
failure to timely invoke arbitration after being sued or its interference with a plaintiff's pre-

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litigation efforts to arbitrate.” Highlands Wellmont Health Network, Inc. v. John Deere Health
Plan, Inc., 350 F.3d 568, 574 (6th Cir. 2003). Finally, there is a strong presumption in favor of
arbitration that “works against finding waiver in cases other than those with the most compelling
fact patterns.” JPD, Inc. v. Chronimed Holdings, Inc., 539 F.3d 388, 393 (6th Cir. 2008).
Wilson argues that CPB was on notice that he intended to file a lawsuit against it in April
2017. See [R. 14, at p.8] Wilson further argues that CPB never raised the defense of arbitration
during this time, even when Wilson began pursuing his administrative remedies with the EEOC.
Wilson conflates CPB’s silence during this time period with a waiver of its right to enforce
arbitration. The agreement did not preclude Wilson from pursuing his administrative remedies,
and specifically mentions the EEOC as an example of one such avenue for pursuing his
substantive rights. See [R. 13-7, Ex. 6] The agreement only restricted the parties’ choice of
forum for enforcing their rights to arbitration rather than federal or state court. Id. Moreover, a
party does not waive its arbitration claims by refusing to arbitrate prior to the commencement of
litigation. See JPD, 539 F.3d at 394; see also Highlands, 350 F.3d at 574. CPB’s silence during
the pre-litigation phase of this suit, therefore, could be seen as “the typical posturing that may
occur where one party is attempting to ‘stare down’ the other party in the hope that the other
party will simply give up.” Id. (citations omitted). It is also not convincing that CPB’s alleged
failure to participate in mediation after Wilson had filed a charge with the EEOC amounted to
waiver, since CPB had already mediated once before unsuccessfully. It is equally as plausible
that CPB did not respond since it may have perceived a weakness in Wilson’s claims, and
elected not to participate at that time. Navistar, 781 F.3d at 829 (finding no waiver when a party
refused to arbitrate, prior to the commencement of litigation, on the grounds that its opponent’s
claims were substantively weak).

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Next, Wilson argues that since this instant suit was filed, CPB has not raised the
Arbitration Agreement in a timely manner. [R. 14, at p. 8] A party waives its right to arbitrate
only by failing to assert that right in a timely fashion and instead participating in litigationrelated activities. See O.J. Distrib., Inc., 340 F.3d at 357 (finding waiver where defendant
engaged in negotiations with the plaintiff for approximately 15 months-while at the same time
denying the existence of the agreement which contained the arbitration provision-before
asserting its right to arbitrate); General Star National Insurance Co. v. Administratia
Asigurarilor de Stat, 289 F.3d 434, 438 (6th Cir. 2002) (finding waiver where defendant failed to
assert right to arbitrate after waiting 17 months before attempting to enforce arbitration clause);
See also Manasher v. NECC Telecom, 310 F. App'x 804, 806 (6th Cir. 2009) (holding that the
defendant had waived its right to arbitrate by engaging in discovery and motion practice for a
year before moving to compel arbitration).
Here, Wilson filed the instant action on January 8, 2018. [R. 1] CPB filed its Answer on
January 24, 2018. [R. 6] The parties exchanged discovery throughout April 2018. On April 30,
2018, Wilson’s counsel requested an extension of time of a month to respond to CPB’s discovery
requests. [R. 13-1, at p. 2; 13-2, 13-3] CPB served its discovery responses, including a copy of
the parties’ Arbitration Agreement, on Wilson June 20, 2018. [R. 13-1, at p. 2] However, after
making arrangements for the plaintiff’s deposition in late July 2017, CPB cancelled, citing for
the first time its right to enforce the Arbitration Agreement. [R. 14, at p. 3] A total of five
months elapsed since the case had been filed. While the Court agrees that these actions are
inconsistent with reliance upon the parties’ Arbitration Agreement, the Court does not find
enough time passed between these inconsistent actions and when CPB ultimately relied on the
Arbitration Agreement to render its reliance on the agreement untimely. The case was still in its

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infancy, and only written discovery had been exchanged. It cannot be said that CPB waived
reliance on the Arbitration Agreement at this early stage. But see, e.g., Hurley v. Deutsche Bank
Tr. Co. Americas, 610 F.3d 334, 338–39 (6th Cir. 2010) (finding waiver where two years had
passed since plaintiffs initiated the lawsuit and defendants submitted their motion to compel
arbitration, defendants had responded to actions taken by plaintiffs but also filed multiple
dispositive and non-dispositive motions of their own, including motions to dismiss, motions for
summary judgment, and a motion to change venue). Wilson points out that CPB waited until
July 2018 to produce the parties’ Arbitration Agreement “for the first time.” [R. 14, at pp. 3, 4,
8.] However, Wilson does not dispute that he was provided with a copy of this agreement when
he was hired, and he does not dispute that he read and understood it. Id. at p. 6, see also [R. 13-6,
Ex. 5]. Since it is unclear whether Wilson actually raises this issue in his response, the Court
accepts his statement that he neither disputes being presented with the parties’ agreement, nor
that he acknowledged reading and understanding it when he was hired. Id.
Wilson next argues that there was prejudice because of CPB’s delay in relying on the
Arbitration Agreement in its Motion to Compel. [R. 14, at p. 3] Without pointing to any specific
prejudice, Wilson simply states that “the litigation wheels have been set in motion and there is a
litigation schedule already in place.” Id. His arguments fail. There are many ways to establish
prejudice, such as showing that a party waited until a statute of limitations expired to invoke
arbitration, see O.J. Distrib., Inc., 340 F.3d at 358, or showing harm to a party due to lengthy
delays and costly discovery, see Johnson Assocs. Corp. v. HL Operating Corp., 680 F.3d 713,
720-21 (6th Cir. 2012). Wilson admits that while “this scenario may not be as egregious as that
in Johnson Associates Corp. v. HL Operating Corp., 680 F.3d 713, 720 (6th Cir. 2012), Plaintiff
still incurs actual prejudice here.” Id. The Court agrees that this case is distinguishable from

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those cases finding prejudice from a delay. However, Wilson has suffered no discernible
prejudice in the delay in this case.
For the reasons set forth above, and with the Court being otherwise sufficiently advised,
IT IS HEREBY ORDERED as follows:
1.

Defendant CPB Foods, LLC’s Motion to Stay Proceedings and Compel Arbitration

[R. 13] is GRANTED.
2.

Plaintiff Greg Wilson SHALL prosecute his claims in accordance with the parties’

Arbitration Agreement.
3.

The matter is STAYED pending further proceedings to enforce any award of the

arbitrator.

December 11, 2018

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