King v. Commemorative Brands, Inc.
OPINION & ORDER: The Court grants the motion to compel arbitration (DN 9 ) and dismisses this case without prejudice. cc: Counsel, TB (JM)
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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
COMMEMORATIVE BRANDS, INC.
* * * * *
MEMORANDUM OPINION & ORDER
Jacquelyn King sued her former employer, Commemorative Brands, for age
discrimination, wrongful termination, and disability discrimination—all under
Kentucky law. Complaint (DN 1-1) at 4–8. She also alleged that Commemorative
Brands interfered with her rights under the Family and Medical Leave Act. Id. at 8–
9. Commemorative Brands removed to federal court on the basis of diversity
jurisdiction. Notice of Removal (DN 1).
Commemorative Brands then moved to compel arbitration. Motion to Compel
(DN 9). King filed nothing in response. Despite the lack of opposition, the Court
must still ensure that Commemorative Brands “met its burden of establishing that it
was entitled to dismissal because of the arbitration agreement.” Gesenhues v. Radial,
Inc., No. 19-5932, 2020 WL 1815738, at *2 (6th Cir. Mar. 23, 2020); see also Carver v.
Bunch, 946 F.2d 451, 455 (6th Cir. 1991) (court must ensure defendant has met its
burden before granting unopposed motion under Fed. R. Civ. P. 12(b)(6)). Because it
has, the Court grants the motion to compel.
The Federal Arbitration Act governs any arbitration agreement “evidencing a
transaction involving commerce.” 9 U.S.C. § 2. And it “defines ‘commerce’ to include
‘commerce among the several States.” Citizens Bank v. Alafabco, Inc., 539 U.S. 52,
56 (2003) (quoting 9 U.S.C. § 1). The Supreme Court has interpreted “involving
commerce” as the equivalent of “affecting commerce,” which ordinarily “signal[s] the
broadest permissible exercise of Congress’ Commerce Clause Power.” Id. at 56–57
(citing, e.g., Wickard v. Filburn, 317 U.S. 111 (1942) and Katzenbach v. McClung, 379
U.S. 294 (1964)).
Under these expansive precedents, King’s contract with Commemorative
Brands amounts to “a transaction involving commerce” whose arbitration agreement
(DN 9-1) is subject to the FAA. The agreement concerns King’s employment with
Commemorative Brands, a company that engages in interstate commerce (as Balfour)
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by selling “class rings, yearbooks, letter jackets and graduation regalia.” Motion at
2; see also Compl. ¶ 2; Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 119 (2001)
(FAA applicable to employment contracts and exempts “only contracts of employment
of transportation workers”).
The 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 contracts.” 9 U.S.C. § 2. “Before compelling an unwilling party to arbitrate,”
however, “the court must engage in a limited review to determine whether … a valid
agreement to arbitrate exists between the parties and that the specific dispute falls
within the substantive scope of that agreement.” Javitch v. First Union Securities,
Inc., 315 F.3d 619, 624 (6th Cir. 2003).
Commemorative Brands has shown a valid arbitration agreement. Courts
“review the enforceability of an arbitration agreement according to the applicable
state law of contract formation.” Seawright v. Am. Gen. Fin. Servs., Inc., 507 F.3d
967, 972 (6th Cir. 2007). Commemorative Brands attached a written contract, signed
by King, in which both parties “mutually consent to” arbitration of “all claims or
controversies … that CBI may have against [King] or that [King] may have against
CBI.” Arbitration Agreement at 1. Under Kentucky law, a contract requires “offer
and acceptance, full and complete terms, and consideration.” Commonwealth v.
Morseman, 379 S.W.3d 144, 149 (Ky. 2012) (quotation omitted). The parties’ contract
meets all three requirements, at least based on the record before the Court. King’s
signature indicates she accepted Commemorative Brand’s offer, the contract appears
full and complete, and “an arbitration clause requiring both parties to submit equally
to arbitration constitutes adequate consideration.” Kruse v. AFLAC Int’l, Inc., 458 F.
Supp. 2d 375, 385 (E.D. Ky. 2006). And King hasn’t opposed any of this.
Her claims, moreover, fall within the scope of the agreement. The arbitration
agreement explicitly covers “claims for discrimination (including, but not limited to,
… age … or disability),” “claims for violation of any federal, state, or other
governmental law,” and claims for “wrongful discharge.” Arbitration Agreement at
1. King’s four claims fit within these categories. See Compl. at 4–9. And such claims,
even claims under federal statutes, are arbitrable. 14 Penn Plaza LLC v. Pyett, 556
U.S. 247, 274 (2009) (statutory claims, such as the ADEA, are arbitrable). So the
record indicates that the parties have a valid arbitration agreement whose scope
covers the claims asserted here.
Having determined that Commemorative Brands met its burden, the Court
must determine whether to dismiss or stay pending arbitration. “[U]pon being
satisfied that the issue involved in such suit or proceeding is referable to arbitration
under such an agreement,” the FAA directs courts, “on application of the parties[, to]
stay the trial of the action until such arbitration has been had.” 9 U.S.C. § 3. The
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Sixth Circuit has held that where a party seeks a stay, the district court must grant
one. Arabian Motors Grp. WLL v. Ford Motor Co., 19 F.4th 938, 941 (6th Cir. 2021)
(“The Act’s command that a district court ‘shall on application of one of the parties
stay the trial of the action’ conveys a mandatory obligation.”). But it left open whether
the district court could dismiss without prejudice—instead of entering a stay—where
“both parties request a dismissal” or “neither party asks for a stay.” Id. at 942.
Here, neither party requests a stay. Commemorative Brands seeks dismissal
but acknowledges that § 3 allows the court to stay the case. Motion at 6–7. King
hasn’t sought a stay. In light of that, the Court will not stay the action. See Ross v.
Subcontracting Concepts, LLC, No. 20-12994, 2021 WL 6072593, at *8 (E.D. Mich.
Dec. 31, 2021) (dismissing without prejudice because no party sought a stay);
Anderson v. Charter Commc’ns, Inc., 860 F. App’x 374, 380 (6th Cir. 2021) (noting
unpublished Sixth Circuit decisions allowing district courts to dismiss rather than
stay). Because King’s claims are arbitrable and neither party seeks a stay, the Court
grants the motion to compel arbitration (DN 9) and dismisses this case without
August 2, 2022
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