Gaines v. KBR, Inc.

Filing 9

MEMORANDUM AND ORDER: IT IS HEREBY ORDERED that defendant's motions to compel arbitration [# 4 , 6 ] are GRANTED, and plaintiff must submit all of Count I and the portions of Count II relating to compliance with the settlement agreement to arb itration. IT IS FURTHER ORDERED that this case is stayed pending completion of the arbitration, and the parties must file a notice to the court within ten days of the conclusion of arbitration. Signed by District Judge Catherine D. Perry on July 25, 2012. (BRP)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
CARLOS GAINES,
Plaintiff,
vs.
KBR, INC.,
Defendant.

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Case No. 4:12CV391 CDP

MEMORANDUM AND ORDER
Plaintiff Carlos Gaines was employed by defendant KBR, Inc. as a fuel lab
technician. He previously filed a charge of discrimination with the Equal
Employment Opportunity Commission (EEOC), which the parties resolved
through a settlement agreement. Gaines then filed this suit, alleging breach of that
agreement, as well as retaliation under Title VII of the Civil Rights Act of 1964
and 42 U.S.C. § 1981. KBR seeks to compel arbitration of Gaines’s breach of
contract and § 1981 claims, pursuant to a clause in the settlement agreement
requiring arbitration. Based on the broad scope of the arbitration clause in the
settlement agreement, I will grant KBR’s motion to compel arbitration.
Background
Gaines was employed by KBR as a fuel lab technician. He is an AfricanAmerican male, and he previously filed an employment discrimination charge
against KBR with the EEOC, alleging discrimination on the basis of his race. On

September 21, 2009, he and KBR executed a binding settlement agreement, in
which Gaines agreed to release all claims he had against KBR. In exchange for
that release, KBR agreed, among other things, to reinstate Gaines as a fuel lab
technician, and to allow him to apply for a position as a senior fuel lab technician
and evaluate his application in good faith. That settlement agreement contained an
arbitration provision that reads as follows:
If one or more disputes arise with regard to the interpretation and/or
performance of this agreement or any of its provisions, the parties
agree and designate Ronald G. Wiesenthal as binding arbitrator of
any dispute in the language of this Settlement Agreement or release or
other closing documents executed in accordance with this Agreement,
and the parties agree that the party shall pay their pro rata share of the
arbitrator’s fee at the time of the arbitration.
(Doc. #1, Exh. A). Gaines began working again as a fuel lab technician, but in
September 2010, KBR terminated Gaines’s employment on the grounds that he
failed to process certain fuel tests as “urgent,” instead treating them as “routine.”
Gaines filed this case on March 5, 2012. In Count I, a breach of contract
claim, Gaines alleges that KBR breached its obligations under the parties’
settlement agreement. In Count II, labeled “Title VII and 42 U.S.C. § 1981
Retaliation,” Gaines includes allegations related to numerous incidents of
retaliation. KBR now seeks an order compelling Gaines to arbitrate his breach of
contract and 42 U.S.C. § 1981 claims, pursuant to the arbitration provision in the
settlement agreement. Gaines has not responded to the motion to compel
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arbitration, and the time for doing so has passed. Based on the broad language in
the arbitration clause, I will grant the motion.
Discussion
The Federal Arbitration Act (FAA), 9 U.S.C. § 1 et seq., “limits a district
court’s initial role in any challenge to an arbitration agreement to deciding
whether ‘the making of the agreement for arbitration or the failure to comply
therewith’ is at issue.” MedCam, Inc. v. MCNC, 414 F.3d 972, 974 (8th Cir. 2005)
(quoting 9 U.S.C. § 4). The Eighth Circuit “has refined this inquiry to asking 1)
whether the agreement for arbitration was validly made and 2) whether the
arbitration agreement applies to the dispute at hand, i.e., whether the dispute falls
within the scope of the arbitration agreement.” Id. (emphasis in original).
Because Gaines has not responded to the motion, he does not dispute the first
issue: whether the agreement for arbitration was validly made.1 Thus, the only
question is whether the arbitration clause in the settlement agreement applies to
Gaines’s breach of contract and § 1981 claims.

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Even if he had challenged the validity of the agreement, Gaines admits in his complaint
to executing the contract and does not express any concern as to its validity in that pleading. In
fact, the settlement agreement, which he admits personally signing, contains provisions that
support the validity and voluntariness of this agreement. Paragraph 2 states, “The parties hereto
acknowledge that each has the authority to execute this document to be fully binding on behalf of
the person or entity indicated.” Paragraph 8 declares, “Each signatory to this settlement has
entered into same freely and without duress after having consulted with professionals of his or
her choice.” (Doc. #1, Exh. A).
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The FAA expresses “a congressional declaration of a liberal federal policy
favoring arbitration agreements.” Moses H. Cone Mem’l Hosp. v. Mercury Const.
Corp., 460 U.S. 1, 24 (1983). The district should resolve any doubts in favor of
arbitration and should compel arbitration “unless it may be said with positive
assurance that the arbitration clause is not susceptible of an interpretation that
covers the asserted dispute.” MedCam, 414 F.3d at 975 (internal citations and
quotation marks omitted).
The Eighth Circuit has analyzed the scope of similar phrases contained in
arbitration clauses, such as those covering “all disputes arising under” the
agreement, see PRM Energy Sys., Inc. v. Primenergy, L.L.C., 592 F.3d 830, 83637 (8th Cir. 2010), and disputes “arising out of or relating to” the agreement, see
CD Partners, LLC v. Grizzle, 424 F.3d 795, 800 (8th Cir. 2005). When an
agreement contains broad arbitration clauses, such as these, a district court can
compel arbitration “as long as the underlying factual allegations simply ‘touch
matters covered by’ the arbitration provision.” PRM Energy, 592 F.3d at 837.
The Eighth Circuit has further explained that “[b]roadly worded arbitration clauses
. . . are generally construed to cover tort suits arising from the same set of
operative facts covered by a contract between the parties to the agreement.” CD
Partners, 424 F.3d at 800.

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The similarly broad language used in the settlement agreement at issue in
this case – which mandates arbitration “[i]f one or more disputes arise with regard
to the interpretation and/or performance of [the] agreement” – should be construed
as broadly as those phrases analyzed above. There is no other limiting language
present in this arbitration clause. Therefore, if Gaines’s breach of contract and §
1981 claims “arise with regard to the interpretation and/or performance” of the
settlement agreement between the parties, the motion must be granted.
In Count I, Gaines raises several allegations concerning KBR’s failure to
comply with its obligations set forth in the settlement agreement. Specifically, he
alleges that KBR treated him in a retaliatory and hostile fashion when he returned
to work, and that it failed to pay him as a senior fuel lab technician or to evaluate
in good faith his efforts to become a senior fuel lab technician. He also claims that
KBR failed to deliver drafts of any further settlement documents to him as
required by the agreement, and that it manufactured a false and pretextual reason
for his employment termination. Gaines also alleges that by taking these actions,
KBR breached the covenant of good faith and fair dealing that attaches to all
contracts in Missouri. All of these allegations relate directly to the “performance
of this agreement,” such that they are covered under the arbitration clause. In light
of the national policy favoring arbitration and the broad language contained in this

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settlement agreement, I conclude that Gaines’s breach of contract claim must be
referred to arbitration.
Gaines’s employment discrimination claims alleged in Count II of his
complaint are not set forth as clearly as his breach of contract claim. He claims
that he was terminated for pursuing his charge of racial discrimination with the
EEOC, evidenced by a KBR manager’s alleged statement that Gaines was
terminated to “teach[] [him] a lesson for getting a lawyer.” He also claims that the
proffered basis for his termination was pretextual because a similarly situated
white employee who also failed to process certain fuel tests as “urgent” was not
terminated. Gaines also alleges that KBR retaliated against him by refusing to
employ him as a senior fuel lab technician, and that it thereby also retaliated
against him by failing to comply with the terms of the settlement agreement.
Finally, he claims that after his termination, KBR refused to release his
employment and security clearance information to another employer with whom
Gaines was seeking employment. In the complaint, he does not specify whether he
is raising each of these various allegations under 42 U.S.C. § 1981 or Title VII.
KBR only seeks to arbitrate those claims contained in Count II of Gaines’s
complaint that arise under 42 U.S.C. § 1981. In support of that argument, KBR
relies on the single allegation in Gaines’s complaint that, on its face, relates
directly to the settlement agreement: “Defendant KBR, Inc. retaliated against
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plaintiff in that defendant KBR, Inc. failed to make a good faith effort to comply
with the terms of the Binding Settlement Agreement and never evaluated in good
faith plaintiff’s efforts to become a senior lab technician.” (Compl. at ¶ 13).
However, Gaines raises several other allegations in his employment discrimination
claim, none of which relates directly to the settlement agreement. In fact, some of
Gaines’s other allegations relate to separate incidents of alleged discrimination,
unrelated to the subject matter of the settlement agreement.
As mentioned above, the complaint does not clearly explain the statutory
basis for each of Gaines’s employment discrimination allegations, and KBR does
not describe precisely which aspects of Gaines’s § 1981 claim it believes are
arbitrable under this settlement agreement. Thus, to the extent that Count II
encompasses claims of employment discrimination relating directly to the
“interpretation and/or performance” of the agreement, I will refer it to arbitration.
Arbitration is not required for all other instances of alleged discrimination that are
not related to the settlement agreement. However, I will exercise my discretionary
power to stay the remainder of the case – Gaines’s remaining claims under 42
U.S.C. § 1981 and Title VII – until the conclusion of that arbitration to conserve
judicial resources and ensure consistency in the proceedings between these parties.
See Contracting Nw., Inc. v. City of Fredericksburg, Iowa, 713 F.2d 382, 387 (8th
Cir. 1983) (holding that a district court has “the inherent power to grant [a] stay in
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order to control its docket, conserve judicial resources, and provide for a just
determination of the cases pending before it”).
Accordingly,
IT IS HEREBY ORDERED that defendant’s motions to compel
arbitration [#4, 6] are GRANTED, and plaintiff must submit all of Count I and the
portions of Count II relating to compliance with the settlement agreement to
arbitration.
IT IS FURTHER ORDERED that this case is stayed pending completion
of the arbitration, and the parties must file a notice to the court within ten days of
the conclusion of arbitration.

___________________________________
CATHERINE D. PERRY
UNITED STATES DISTRICT JUDGE
Dated this 25th day of July, 2012.

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