GARCIA, MD v. MAINEGENERAL HEALTH
Filing
21
ORDER ON DEFENDANTS MOTION TO COMPEL ARBITRATION granting 20 Motion for Leave to File; granting 9 Motion to Dismiss By JUDGE NANCY TORRESEN. (slg)
UNITED STATES DISTRICT COURT
DISTRICT OF MAINE
PETER GARCIA,
)
)
)
)
)
)
)
)
)
Plaintiff,
V.
MAINEGENERAL HEALTH,
Defendant.
Docket No. 1:18-cv-00019-NT
ORDER ON DEFENDANT’S MOTION TO COMPEL ARBITRATION
Before the Court is the Defendant’s motion to dismiss or stay the case and to
compel arbitration. (ECF No. 9.) For the reasons stated below, the motion to compel
arbitration is GRANTED and the case is DISMISSED.
BACKGROUND
Plaintiff Peter Garcia brings this employment discrimination action against
MaineGeneral Health (“MaineGeneral”). The Plaintiff alleges three counts: a
violation of the Americans with Disabilities Act, 42 U.S.C. § 12101 et seq. (“ADA”)
(Count I); a violation of the Age Discrimination in Employment Act, 29 U.S.C. § 621
et seq. (“ADEA”) (Count II); and a claim of retaliation because of his ADA and ADEA
claims (Count III). Compl. (ECF No. 1).
The parties entered a Physician Employment Agreement (the “Agreement”)
in June 2017, which called for the Plaintiff to be employed as a primary care physician
and medical director. See Compl. ¶¶ 13, 19; Pl.’s Attach. A (ECF No. 1-1); Agreement
(ECF No. 10-1). The Agreement provided that the Plaintiff’s two year term of
employment would begin after he became licensed to practice medicine in Maine.
Agreement 1, 9. A resident of Florida, the Plaintiff did not have a Maine medical
license when the Agreement was signed. See Compl. ¶¶ 4, 22.
The Plaintiff had not practiced clinical medicine for a number of years due to
bilateral sensorineural hearing loss, and so he was unable to produce letters from
other physicians attesting to his clinical competency, as required to receive a medical
license. Compl. ¶¶ 24-26; Pl.’s Attach. C at 3 (ECF No. 1-3). The Defendant agreed to
provide a preceptor program through which MaineGeneral physicians would observe
the Plaintiff in clinical practice and then provide the necessary letters to the Board
of Medicine. Compl. ¶ 27. A dispute between the parties arose as to the nature and
duration of the observation period that the Plaintiff would undergo. Compl. ¶¶ 28-33.
The Plaintiff also complained that the Defendant was communicating with the Board
of Medicine about a proposed program without including him on the messages.
Compl. ¶ 38; Pl.’s Attach. C at 5. Following a series of conversations between the
parties, the Defendant informed the Plaintiff on August 17, 2017, that it planned to
unilaterally cancel the contract. Compl. ¶ 71.
The Agreement contained a provision titled, “ARBITRATION AND WAIVER
OF JURY TRIAL.” Agreement 11. It provides
The parties agree to make a good faith attempt to resolve informally any
and all controversies, disputes, or claims between the parties, except as
specifically set forth herein. Failing such informal resolution, all such
controversies, disputes, or claims between the parties shall be resolved
by arbitration proceedings conducted in accordance with the Arbitration
Rules of the American Health Lawyers Association Alternative Dispute
Resolution Service (“AHLA-ADRS”). By agreeing to arbitration, the
parties specifically intend to irrevocably waive, to the extent permitted
by law, any rights that may be afforded to either party under any and
all statutory claims. The parties’ obligations to arbitrate shall be subject
to the following: . . .
6. This arbitration procedure shall be the exclusive means of settling
any and all controversies, disputes, or claims between the parties,
including statutory, common law, or otherwise; provided, however, that
the requirements hereof shall not apply to (i) any claims or threatened
claims involving professional medical malpractice, (ii) Medical Staff
corrective actions, as applicable, (iii) any decision not to renew this
Agreement, or (iv) claims involving the confidentiality of information, as
contained herein.
Agreement 11-12.
LEGAL STANDARD
The Federal Arbitration Act (the “FAA”) “reflects ‘a federal liberal policy
favoring arbitration agreements.’ ” Cullinane v. Uber Techs., Inc., 893 F.3d 53, 60 (1st
Cir. 2018) (quoting AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 346 (2011)).
“However, arbitration is a matter of contract and a party cannot be required to submit
to arbitration any dispute which he has not agreed so to submit.” Large v. Conseco
Fin. Servicing Corp., 292 F.3d 49, 52 (1st Cir. 2002) (quotation marks omitted). The
FAA provides that “[a] party aggrieved by the alleged failure, neglect, or refusal of
another to arbitrate under a written agreement for arbitration may petition any
United States district court . . . for an order directing that such arbitration proceed
in the manner provided for in such agreement.” 9 U.S.C. § 4. The FAA further
establishes that
A written provision in . . . a contract evidencing a transaction involving
commerce to settle by arbitration a controversy thereafter arising out of
such contract . . . shall be valid, irrevocable, and enforceable, save upon
grounds as exist at law or in equity for the revocation of any contract.
9 U.S.C. § 2.
Federal courts will grant a motion to compel arbitration pursuant to the FAA
when “(i) there exists a written agreement to arbitrate, (ii) the dispute falls within
the scope of that arbitration agreement, and (iii) the party seeking an arbitral forum
has not waived its right to arbitration.” Combined Energies v. CCI, Inc., 514 F.3d 168,
171 (1st Cir. 2008) (quoting Bangor Hydro-Elec. Co. v. New England Tel. & Tel. Co.,
62 F. Supp. 2d 152, 155 (D. Me. 1999)).
DISCUSSION
The Defendant argues that the factors required to compel arbitration are
present and the Court should dismiss, rather than stay, the case, because all of the
Plaintiff’s claims are arbitrable and dismissal makes any appeal more efficient. Def.’s
Mot. 3-5. The Plaintiff maintains that the motion should be denied. Considering the
Plaintiff’s Response along with his Surreply,1 I interpret his arguments as being three
fold: (1) that, because he never received his Maine license to practice medicine, no
valid instrument requiring arbitration ever came into existence; (2) that if such an
agreement was formed, it is unenforceable because it is unconscionable; and (3) that
the Defendant has waived its right to arbitrate by failing to act in good faith. Pl.’s
Resp. (ECF No. 12). I address each of the Plaintiff’s arguments in turn.
I am exercising my discretion to consider the Plaintiff’s Surreply largely because he is
a pro se litigant. See, e.g., Szillery v. Career Sys. Dev. Corp., No. CV-08-62-B-W, 2008 WL
2789492, at *3 (D. Me. July 17, 2008).
1
I.
Whether There Is an Enforceable Written Agreement to Arbitrate
“ ‘[A] court should not compel arbitration unless and until it determines that
the parties entered into a validly formed and legally enforceable agreement covering
the underlying claims(s).’ ” Nat’l Fed’n of the Blind v. The Container Store, Inc., 904
F.3d 70, 80 (1st Cir. 2018) (quoting Escobar-Noble v. Luxury Hotels Int’l of P.R., Inc.,
680 F.3d 118, 121 (1st Cir. 2012)). The FAA provides that written arbitration
agreements “shall be valid, irrevocable, and enforceable, save upon grounds as exist
at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. “ ‘When deciding
whether the parties agreed to arbitrate a certain matter . . . courts generally . . .
should apply ordinary state-law principles that govern the formation of contracts.’ ”
Grand Wireless, Inc. v. Verizon Wireless, Inc., 748 F.3d 1, 7 (1st Cir. 2014) (quoting
First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 944 (1995)). As provided for in the
Agreement, I apply Maine law to this dispute. Agreement 12.
A.
Whether a Contract was Formed
The Plaintiff argues that no contract came into existence because the condition
precedent to the Employment Agreement’s formation—his acquisition of a license to
practice medicine in Maine—never occurred. Pl.’s Resp. 5 (no enforceable contract
because “the hiring process was never complete and he never became an employee”).
According to the Plaintiff, since no contract was ever formed, there can be no
agreement to arbitrate. See Adams v. Suozzi, 433 F.3d 220, 226 (2d Cir. 2005) (“If the
contract embodying a purported arbitration agreement never existed, the arbitration
agreement itself does not exist.”). The Defendant responds that a contract may be
valid even where performance does not occur. Def.’s Reply 2 (ECF No. 17).
Generally speaking “[i]n the law of contracts, conditions may relate to the
existence of contracts or to the duty of immediate performance under them.” 13
Williston on Contracts § 38:4 (4th Ed.). Compare Curran v. Ruffing, 792 A.2d 1090,
1093 (Me. 2002) (“These provisions are condition precedents to the existence of a
binding contract.”), with Chamberlain v. Porter, 562 A.2d 675, 676-77 (Me. 1989) (sale
of property was condition precedent to seller’s duty to pay broker’s commission). The
Plaintiff would be correct that he has no duty to arbitrate if obtaining a medical
license was a condition precedent to the formation of the contract. The problem with
the Plaintiff’s argument is that it misses the subtle legal distinction between
conditions relating to formation and conditions relating to performance. Most
conditions precedent describe an event “which must occur before a party is obliged to
perform a promise made pursuant to an existing contract, a situation to be
distinguished conceptually from a condition precedent to the formation or existence
of the contract itself.” Oppenheimer & Co. v. Oppenheim, Appel, Dixon & Co., 660
N.E.2d 415, 418 (N.Y. 1995).
The conditional language of the Agreement appears in “Section VI,” captioned
“TERM OF EMPLOYMENT.” It reads:
Subject to . . . physician fulfillment of the required qualifications set
forth in Section III2 herein, the term of Physician’s employment
hereunder shall be for an initial term of 2 years, beginning on the later
of (a) July 1, 2017 or (b) the fulfillment of the conditions set forth in
Section III hereof (“Commencement Date”) and ending on the second
anniversary of such Commencement Date, and shall automatically
Section III, headed “QUALIFICATIONS,” provides in pertinent part that “Physician shall be
licensed to practice medicine in the State of Maine.” Agreement 1.
2
renew for subsequent one (1) year terms thereafter, unless terminated
earlier in accordance with the terms and conditions of this Agreement,
provided, however, if such conditions are not fulfilled on or prior to
August 1, 2017, Employer shall be entitled to terminate this Agreement
with no further obligation to Physician.
Agreement 9. The condition here triggers the Plaintiff’s start date and term of
employment, and the parties’ duties to perform. Agreement 9. The parties could have,
but did not, state that the Agreement does not come into effect until the condition is
fulfilled. See, e.g., Irving v. Town of Clinton, 711 A.2d 141, 142 (Me. 1998) (“This
contract is contingent upon voter approval.”).
The non-occurrence of the condition also has a legal effect under the contract.
If the Plaintiff does not acquire his license by August 1, 2017, the contract allows the
Employer to terminate the Agreement. Agreement 9. The language regarding
termination presupposes that the contract is already in existence.
The Complaint alleges that on August 17, 2017, General Counsel for the
Defendant notified the Plaintiff that it was “unilaterally cancelling the contract.”
Compl. ¶ 71. The termination of a contract does not mean that the parties are no
longer required to arbitrate disputes that arise under that contract. Nolde Bros. v.
Local No. 358, Bakery & Confectionery Workers Union, AFL-CIO, 430 U.S. 243, 252
(1977) (“[T]he parties’ obligations under their arbitration clause survive[] contract
termination when the dispute [is] over an obligation arguably created by the expired
agreement.”). Because I find that acquiring a Maine medical license is a condition
precedent to the parties’ performance, the Agreement—including its arbitration
clause—is enforceable.
B.
Whether the Agreement is Unconscionable
The Plaintiff has the burden to show that the arbitration clause is
unconscionable. Bose Corp. v. Ejaz, 732 F.3d 17, 23 (1st Cir. 2013). Although the
Supreme Judicial Court in Maine “has not yet ruled on an unconscionability challenge
to an employment (or any other) arbitration provision under Maine law,” it has
discussed the standard for unconscionability outside of arbitration. Brackett v. Gen.
Dynamics Armament, No. CIV. 10-176-P-H, 2010 WL 2628525, at *2 (D. Me. June 25,
2010). In Bither v. Packard, 98 A. 929, 933 (Me. 1916), the Law Court wrote that
contractual unconscionability would have to “shock the conscience, and amount in
itself to conclusive and decisive evidence of fraud.” See also Barrett v. McDonald
Investments, Inc., 870 A.2d 146, 155 (Me. 2005) (Alexander, J., concurring)
(suggesting factors of unconscionability for arbitration agreements).
“[A] party’s challenge to another provision of the contract, or to the contract as
a whole, does not prevent a court from enforcing a specific agreement to arbitrate.”
Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63, 70 (2010); see also Nat’l Fed’n of the
Blind, 904 F.3d at 81 (“A challenge to the validity of an entire contract containing an
arbitration provision must go to an arbitrator [and] a challenge to the validity of the
arbitration provision itself must be decided by the court.”).
The Plaintiff argues that the Agreement is unenforceable because it is
unconscionable, and he cites numerous factors in support of that claim. He claims
that: (1) the contract is one of adhesion between parties with unequal bargaining
power; (2) the Defendant exploited the Plaintiff’s family motivations to find
employment in the area; (3) the Defendant has greater resources to spend on
arbitration; (4) the Defendant has such strong ties to the state and the community
that arbitration in Augusta would not be fair; (5) the arbitration process will
eliminate the Plaintiff’s right to appeal; and (6) the arbitration provision’s prohibition
on punitive and exemplary damages deprives him of his statutory rights. Pl.’s
Surreply 5-6.
The existence of an adhesion contract, the parties’ unequal bargaining power,
and the exploitation of the Plaintiff’s family situation are all challenges to the validity
of the contract as a whole. Because they are not specific to the arbitration clause,
those claims must be brought to the arbitrator. See Nat’l Fed’n of the Blind, 904 F.3d
at 81.
The Plaintiff has not pleaded sufficient facts or presented an evidentiary record
to support a finding that the arbitration clause is unconscionable because of the
Defendant’s greater resources. Without evidence about either his resources or the
costs of arbitration, I cannot hold that the cost of arbitration is prohibitive. See Green
Tree Fin. Corp.-Alabama v. Randolph, 531 U.S. 79, 91 (2000). The parties’ relative
resources, standing alone, do not impact whether “the prospective litigant effectively
may vindicate [his or her] statutory cause of action in the arbitral forum.” Am. Exp.
Co. v. Italian Colors Rest., 570 U.S. 228, 235 (2013). The Plaintiff argues that the
difference in resources between the parties will “profoundly limit discovery,” but he
does not explain how that is so. Nor does he explain how any differences in resources
would curtail his ability to arbitrate in Maine any more than it would to litigate in
Maine. See Pl.’s Surreply 5.
As to the Defendant’s ties to the community, the Plaintiff presents no evidence
of an actual bias as to all arbitrators in the Augusta area, and the Plaintiff provides
no authority to support his claim that because a party is well-known in an area,
arbitration in that region would be unfair. Further undercutting this argument, the
Plaintiff has input into the identity of the arbitrator. Agreement 11 (providing that
parties shall jointly select arbitrator or shall each appoint an arbitrator and those
two arbitrators shall select a third arbitrator).
The limitations on the Petitioner’s right to appeal an arbitrator’s
determination do not make the arbitration clause unconscionable. They are fully
consistent with the FAA and are at play in every arbitration agreement. 9 U.S.C.
§§ 9-11; see Hall St. Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576, 586 (2008).
Finally, I consider whether the Agreement’s prohibition on punitive and
exemplary damages makes the arbitration provision unenforceable.3 The Plaintiff
does not develop this argument, having only raised it in his Surreply, and the
Defendant has not had an opportunity to respond to it. The First Circuit has
considered and rejected a similar argument. Anderson v. Comcast Corp., 500 F.3d 66,
71 (1st Cir. 2007). In Anderson, the First Circuit initially noted that a “remedy
stripping provision of [an] arbitration agreement pose[s] a question of arbitrability—
i.e., that the court rather than the arbitrator should decide in the first instance
I interpret this argument as an effective vindication challenge to the arbitration provision. See
Am. Exp. Co. v. Italian Colors Rest., 570 U.S. 228, 235 (2013) (An arbitration clause is only enforceable
“so long as the prospective litigant effectively may vindicate [his or her] statutory cause of action in
the arbitral forum.”).
3
whether the conflict between the arbitration agreement and the statute prevent[s]
[the plaintiff] from vindicating her statutory rights.” Anderson, 500 F.3d at 73 (citing
Kristian v. Comcast Corp., 446 F.3d 25, 47-48 (1st Cir. 2006)). Anderson addressed an
argument that the arbitration agreement’s prohibition against multiple damages
conflicted with the Massachusetts Consumer Protection Act, which allows multiple
damages to be awarded upon a finding that a willful or knowing violation occurred.
The First Circuit concluded that because the plaintiffs’ available remedies turned on
a question of fact, the issue belonged to the arbitrator in the first instance. Anderson,
500 F.3d at 75.
Here, the Plaintiff may be entitled to punitive damages under the ADA if, in
addition to proving a substantive ADA violation, he can show that the Defendant
“discriminate[d] in the face of a perceived risk that its actions [would] violate federal
law.” Kolstad v. Am. Dental Ass’n, 527 U.S. 526, 536 (1999). As in Anderson, this is a
factual determination left to the arbitrator, and it does not prevent enforcement of
the arbitration clause. See Anderson, 500 F.3d at 75.
For the forgoing reasons, I conclude that the parties entered into a validly
formed and legally enforceable agreement covering the Plaintiff’s claims.4 I thus
proceed to address the Plaintiff’s argument that the Defendant waived its right to
compel arbitration.
The Agreement calls for the arbitration of “all controversies, disputes, or claims between the
parties,” subject to a few exclusions not applicable to the instant dispute. The Plaintiff does not contend
that his claims fall outside the scope of the arbitration clause, and it appears that the dispute over the
failure to complete the Plaintiff’s hiring falls comfortably within the arbitration clause’s broad scope.
4
II.
Whether the Defendant Waived its Right to Arbitrate by Failing to Act
in Good Faith
The Plaintiff makes two arguments that are based on a waiver theory. First,
he contends that the Defendant did not act in good faith, as required by the
Agreement, and thus has waived its right to arbitrate. Second, he argues that the
Defendant could have sought arbitration long before it did and should not be allowed
to demand arbitration now.
The Plaintiff’s argument that the Defendant has waived arbitration by failing
to first make a good faith attempt to resolve the dispute informally, as the Arbitration
Provision requires, fails at the gate. Pl.’s Resp. 6-7. A similar argument was rejected
by the First Circuit in Dialysis Access Center, LLC v. RMS Lifeline, Inc., 638 F.3d 367
(1st Cir. 2011). There, the plaintiffs also asserted that they could not be required to
arbitrate because the defendant had not engaged in good faith negotiation to resolve
the dispute before seeking arbitration as the contract required. The First Circuit held
that the determination of whether the defendant had complied with the arbitration
clause’s “good faith negotiations” pre-condition to arbitration was an issue for the
arbitrator to decide. Dialysis Access Ctr., 638 F.3d at 383. Dialysis Access Center
controls this case.
The Plaintiff also argues that the Defendant waived its right to arbitrate by
failing to seek arbitration at an earlier time. “[A]rbitration clauses are not set in
cement: such clauses may be waived, either expressly or through conduct.” Joca-Roca
Real Estate, LLC v. Brennan, 772 F.3d 945, 946-47 (1st Cir. 2014). To determine if a
conduct-based waiver has occurred, I examine “whether there has been an undue
delay in the assertion of arbitral rights and whether, if arbitration supplanted
litigation, the other party would suffer unfair prejudice.” Id. at 948. In making this
determination I consider
the length of the delay, the extent to which the party seeking to invoke
arbitration has participated in the litigation, the quantum of discovery
and other litigation-related activities that have already taken place, the
proximity of the arbitration demand to an anticipated trial date, and the
extent to which the party opposing arbitration would be prejudiced.
Id. I find that none of these factors support a finding of waiver. The First Circuit has
held that an employer does not waive its right to arbitration by failing to file a motion
to compel during the pendency of EEOC proceedings. Marie v. Allied Home Mortg.
Corp., 402 F.3d 1, 16 (1st Cir. 2005). Here, the Defendant moved for arbitration
shortly after the action was filed and before discovery. See Def.’s Mot. A trial schedule
has not been set and there has been no delay to prejudice the Plaintiff.5
III.
Dismiss or Stay
Having concluded that the Plaintiff’s claims against the Defendant are
arbitrable, the remaining question is whether to dismiss or stay the action. The
Defendant has requested dismissal and a stay in the alternative. Def.’s Mot. 5. In the
First Circuit, federal courts have discretion to either dismiss or stay when all the
issues before the court are arbitrable. Baker v. Securitas Sec. Servs. USA, Inc., 432 F.
Supp. 2d 120, 127 (D. Me. 2006) (citing Bercovitch v. Baldwin Sch., Inc., 133 F.3d 141,
Plaintiff quotes at length from Brennan v. King, 139 F.3d 258 (1st Cir. 1998), to argue
that he “does not need to request arbitration.” Pl.’s Resp. 9 (ECF No. 12). While it may be true
that Plaintiff does not have to request arbitration, he has signed an Agreement with a valid
arbitration clause. If the other side moves to compel arbitration of a dispute that falls within
the scope of the clause, as has happened here, I must either dismiss or stay the case pending
arbitration. I fail to see how Brennan helps the Plaintiff at all.
5
156 n.21 (1st Cir. 1998)). But see Katz v. Cellco P’ship, 794 F.3d 341, 345 (2d Cir.
2015) (concluding the FAA requires a stay and noting a circuit split on the issue).
The advantages of dismissal are well established:
“Any post-arbitration remedies sought by the parties will not entail
renewed consideration and adjudication of the merits of the controversy
but would be circumscribed to a judicial review of the arbitrator’s award
in the limited manner provided by law. This course of action will also
make the arbitrability issue immediately appealable and will avoid the
litigation expenses and delay if the arbitration conducted were vacated
by a later appeal.”
Baker, 432 F. Supp. 2d at 127 (quoting Boulet v. Bangor Sec. Inc., 324 F. Supp. 2d
120, 127 (D. Me. 2004)).
In light of the foregoing, I conclude that dismissal is appropriate.
CONCLUSION
For the reasons stated above, the Court GRANTS the Plaintiff’s motion for
leave to file a Surreply and GRANTS the Defendant’s motion to dismiss and compel
arbitration.
SO ORDERED.
/s/ Nancy Torresen
United States Chief District Judge
Dated this 20th day of November, 2018.
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?