Santana v. ProEnergy Services, LLC
ORDER entered by Judge Nanette Laughrey. Santana's motion to strike [Doc. # 17] is DENIED, and ProEnergy's motion to compel arbitration [Doc. # 10] is GRANTED. The Court stays these proceedings pending the arbitration. (Kanies, Renea)
THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF MISSOURI
PROENERGY SERVICES, LLC,
Case No. 11-4059-CV-C-NKL
Pending before the Court is a Motion to Compel Arbitration Pursuant to Employment
Agreement [Doc. # 10] filed by Defendant ProEnergy Services, LLC (“ProEnergy”), and
Plaintiff’s Motion to Strike Exhibit A to Defendant’s Motion to Compel Arbitration, with
Supporting Suggestions [Doc. # 17] filed by Heather Santana (“Santana”). For the reasons
stated below, the Court denies Santana’s motion to strike, and grants ProEnergy’s motion to
On February 17, 2011, Santana filed a Complaint [Doc. # 1] against ProEnergy,
alleging claims of sexual harassment (Count I) and retaliation (Count II) in violation of Title
VII. ProEnergy filed its motion to compel arbitration on May 5, 2011, and attached to its
motion a copy of an employment agreement (“Agreement”) signed by Santana on July 7,
2007, and ProEnergy’s human resources manager, Theresa Patton, on July 23, 2007.
The Agreement declares:
THIS Employment Agreement (“Agreement”) is made and entered into this 23
day of July 2007 by and between ProEnergy Services, LLC, a Missouri limited
liability company, having an office at 2031 Adams Rd, Sedalia, Missouri
65301 (“ProEnergy”), and Melvin Nay an individual residing at 1434 S.
Sneed, Sedalia, MO 65301 (“Employee”).
[Doc. # 25-1, at 3 (Page 1 of Agreement)]. Theresa Patton, who prepared the Agreement,
failed to replace “Melvin Nay” with Santana’s name. [Doc. # 25-1, ¶ 5]. Santana resides at
1434 S. Sneed. [Doc. # 25-2, at 14]. The signature line for the “employee” on the
Agreement states “By: Heather Santana,” above which, is Santana’s signature. [Doc. # 25-1,
at 10 (Page 8 of Agreement)].
The Agreement indicates that “ProEnergy agrees to employ Employee, and Employee
accepts said employment with ProEnergy, upon the terms and conditions set forth in this
Agreement. The scope of services to be performed by Employee . . . shall be as further
described in the signed Assignment Offer Letter [(“Offer Letter”)] attached hereto and
incorporated by reference herein.” [Doc. # 25-1, at 3 (¶ 1 of Agreement)]. The Offer Letter
was dated July 3, 2007, addressed to Santana, and signed by Santana and ProEnergy’s Vice
President of sales, John Stevens. [Doc. # 25-1, at 12-13].
The Agreement includes an agreement to arbitrate (“Arbitration Provision”):
If a dispute, controversy or claim arises between the parties, including without
limitation any dispute, controversy or claim that arises out of or relates to this
Agreement or any other agreement or instrument between the parties, or the
breach, termination or invalidity of the Agreement or any such other
agreement or instrument, and including but not limited to a claim based on or
arising out of a claim for tortuous interference or other tortuous or statutory
claims arising before, during or after termination, and if said dispute cannot be
settled through direct discussions, the parties agree to first endeavor to settle
the dispute in an amicable manner by mediation administered by the American
Arbitration Association under its Employment Dispute Resolution Rules (the
“Rules”) as such pertain to mediation, before resorting to arbitration; . . . .
Thereafter, any unresolved dispute, controversy or claim arising between the
parties, including without limitation any dispute, controversy or claim that
arises out of or relates to this Agreement or any other agreement or instrument
between the parties, or breach thereof, and including but not limited to a claim
for tortuous interference or other tortuous or statutory claims arising before,
during or after termination, shall be settled by arbitration . . . .
[Doc. # 25-1, at 9 (¶ 20 of Agreement)].
Additionally, the Agreement states that three days’ written notice of termination shall
be given for any termination without cause. [Doc. # 25-1, at 8 (¶ 12 of Agreement)]. In
2009, ProEnergy terminated Santana’s employment without cause, but did not provide three
days’ prior written notice.
In its Motion, ProEnergy asserts that the Agreement is a valid agreement to arbitrate,
as it includes a valid Arbitration Provision, and that Santana’s Title VII claims fall under the
coverage of the Arbitration Provision.
A party may request arbitration of claims when parties have agreed in writing to an
arbitration and one party has instead filed its claim in a court. 9 U.S.C. § 4. If the Court
determines that the claims are referable to arbitration, then the Court must stay the arbitral
claims pending the arbitration. 9 U.S.C. § 3.
The federal courts recognize a strong national policy in favor of arbitration. The
presumption is that an arbitration agreement will be enforced. See Lyster v. Ryan’s Family
Steak Houses, Inc., 239 F.3d 943, 945 (8th Cir. 2001); see also Dobbins v. Hawk’s Enters.,
198 F.3d 715, 717 (8th Cir. 1999) (courts recognize a “broad principle of enforceability”
with respect to arbitration agreements) (quoting Southland Corp. v. Keating, 465 U.S. 1, 11
Under Eighth Circuit law, “[b]efore a party may be compelled to arbitrate under the
Federal Arbitration Act, the district court must engage in a limited inquiry to determine
whether a valid agreement to arbitrate exists between the parties and whether the specific
dispute falls within the scope of that agreement.” Houlihan v. Offerman & Co., Inc., 31 F.3d
692, 694-95 (8th Cir. 1994) (citation omitted). Moreover, “any doubts in construing contract
language on arbitrability ‘should be resolved in favor of arbitration.’” Telectronics Pacing
Sys., Inc. v. Guidant Corp., 143 F.3d 428, 430 (8th Cir. 1998) (quoting Moses H. Cone
Memorial Hosp. v. Mercury Constr. Corp, 460 U.S. 1, 24-25 (1983)).
Santana’s Motion to Strike the Agreement
As a preliminary matter, Santana argues that the Agreement, which was attached to
ProEnergy’s Motion to Compel, should be stricken because it is “unauthenticated and
without evidentiary foundation.” [Doc. # 17, at 1]. However, ProEnergy has submitted to
the Court two affidavits that attest to the authenticity of the Agreement: statements of (1)
Theresa Patton [Doc. # 26-2, at 1-2], a signatory of the document, and (2) Connie Childs
[Doc. # 26-1, at 1-2], who maintained the document in Santana’s employment file. The
Court also finds that ProEnergy has sufficiently identified the relevance of the Agreement
because ProEnergy bases its motion on the Arbitration Provision in the Agreement. For these
reasons, the Court denies Santana’s Motion to Strike.
Validity of Arbitration Agreement
State contract law governs the validity of an arbitration agreement. Faber v. Menard,
Inc., 367 F.3d 1048, 1052 (8th Cir. 2004) (citing Lyster, 239 F.3d at 946 (8th Cir. 2001); 9
U.S.C. § 2). Under Missouri law, “[t]he primary rule in the interpretation of a contract is to
ascertain the intention of the parties and to give effect to that intention.” Speedie Food Mart,
Inc. v. Taylor, 809 S.W.2d 126, 129 (Mo. Ct. App. 1991).
Parties to the Agreement
First, at issue in this case is whether the Agreement was made between Santana and
ProEnergy when the Agreement named a “Melvin Nay” in its text. On the Agreement’s face,
there appears to be uncertainty as to the identity of the “employee” who is party to the
Agreement. On the one hand, the name “Melvin Nay” is set forth as the “employee” on page
one of the Agreement. On the other hand, the address where the “employee” is said to reside
at is that of Santana’s residence; Santana’s name appears on the signature line on the last
page of the Agreement; and the Agreement was signed by Santana.
Despite this inconsistency on the Agreement’s face, however, the Court does not find
that an ambiguity exists. “A contract is ambiguous only when it is reasonably susceptible
of different constructions. In determining whether or not there is such an ambiguity as calls
for construction, the whole instrument must be considered. Writings made a part of the
contract by annexation or reference are to be considered in determining whether or not it is
ambiguous.” J. E. Hathman, Inc. v. Sigma Alpha Epsilon Club, 491 S.W.2d 261, 264 (Mo.
1973). Here, the Offer Letter, which was incorporated into the Agreement by reference, was
specifically addressed to Santana, and makes no reference to “Melvin Nay.” Additionally,
the Offer Letter to Santana states that the Agreement “sets forth the additional terms and
condition of your employment with ProEnergy.” [Doc. # 25-1, at 12 (emphasis added)].
This, coupled with the fact that Santana signed the Offer Letter, Santana’s residential address
is listed in the Agreement, the signature line for the “employee” lists Santana’s name, and
Santana signed the Agreement, leaves no room for the Agreement to be “reasonably
susceptible” to a conclusion other than that the Agreement was between Santana and
ProEnergy and that the Agreement’s terms are applicable to them and not to third parties.
Failure to Provide Arbitration Procedures
Santana argues that the Arbitration Provision in the Agreement is invalid because the
Agreement indicates that the rules of the American Arbitration Association are to govern
mediation and arbitration procedures identified in paragraph 20 of the Agreement, yet the
Agreement does not explicitly incorporate those rules into the contract. Santana adds that
a copy of such rules were not provided to Santana so that she could have a clear
understanding of all terms of the Agreement.
The Court finds that Santana’s arguments lack merit for the following reasons.
First, Santana fails to explain to the Court how the rules of the American Arbitration
Association are not “incorporated” by reference.
The Agreement clearly states that
“mediation [would be] administered by the American Arbitration Association under its
Employment Dispute Resolution Rules (“the Rules”),” and that remaining claims “shall be
settled by arbitration administered by the American Arbitration Association in accordance
with its Rules . . . . Any mediation or arbitration hereunder shall be pursuant to the
applicable Rules except to the extent modified in this Section 20.” [Doc. # 25-1, at 9 (¶ 20
of Agreement)]. Santana presents no case law, nor is the Court aware of any, that requires
a contract to use the word “incorporate” before referenced matters are in fact incorporated
into the contract. Indeed, the rules of the American Arbitration Association are clearly
incorporated into the Agreement by reference, consistent with paragraph 19 of the
Agreement, which states: “This Agreement, including all matters expressly incorporated
herein by reference, sets forth the entire agreement and understanding between the parties
. . . .” [Doc. # 25-1, at 9 (¶ 19 of Agreement (emphasis added))]. Second, because the
Agreement makes clear reference to the rules of the American Arbitration Association, there
is no doubt as to the identity of these rules. Livers Bronze, Inc. v. Turner Const. Co., 264
S.W.3d 638, 643 (Mo. Ct. App. 2008) (“Parties to a contract may incorporate contractual
terms by reference to a separate noncontemporaneous document . . . only if the contract
makes clear reference to the document and describes it in such terms that its identity may be
ascertained beyond doubt.”).
Moreover, Santana’s reliance on Rosenberg v. Merrill Lynch, Pierce, Fenner & Smtih,
Inc., 170 F.3d 1 (1st Cir. 1999), for the proposition that ProEnergy was required to provide
her a copy of the American Arbitration Association’s rules in order for the Agreement to be
valid, is misplaced. In Rosenberg, the arbitration agreement between Merrill Lynch and
Rosenberg defined the range of claims subject to arbitration as those that are required to be
arbitrated under the rules of the New York Stock Exchange (“NYSE”). In placing the burden
on Merill Lynch to have provided Rosenberg with a copy of the NYSE rules, the court
emphasized that Merrill Lynch “expressly represented” that Rosenberg would be advised of
those rules. Id. at 19. Indeed, the terms of the employment agreement required that Merrill
Lynch provide either a copy of the NYSE rules or information to the same effect to
Rosenberg. Id. at 20. Here, ProEnergy made no such representation that it would provide
Santana with a copy of the rules of the American Arbitration Association or the content
thereof. Moreover, there is no evidence that Santana asked ProEnergy for the rules and was
denied access to them, or that Santana could not have obtained access to the rules on her
Requirement that Arbitration Costs be Split and that Each Party
Bear Own Attorney’s Fees
Santana alternatively argues that even if the Agreement were validly entered into by
both parties, the Arbitration Provision cannot be enforced because it includes clauses that
require that arbitration costs be split and that each party bear its own attorney’s fees. The
Agreement presented to the Court by ProEnergy states: “[A]ny unresolved dispute,
controversy, or claim arising between the parties . . . shall be settled by arbitration . . . . All
fees and expenses of the arbitration (exclusive of filing fees for claims and counterclaims)
shall be borne by the parties equally.” [Doc. # 25-1, at 9 (¶ 20 of Agreement) (“fee-splitting
clause”)]. “Each party shall bear the expense of its own counsel, experts, witnesses, and
presentation of proofs.” [Doc. # 25-1, at 9 (¶ 20 of Agreement) (“attorney’s fees clause”)].
For the following reasons, the Court finds that both the fee-splitting clause and the attorney’s
fees clause do not render the Arbitration Provision unenforceable.
First, “[t]he party seeking to avoid arbitration should present specific evidence of
likely arbitrators’ fees and its financial ability to pay those fees so that the court can
determine whether the arbitral forum is accessible to the party. If the party does not meet its
burden, the district court must honor the arbitration agreement and compel arbitration.”
Faber v. Menard, Inc., 367 F.3d 1048, 1054 (8th Cir. 2004); see also Cicle v. Chase Bank
USA, 583 F.3d 549, 556 (8th Cir. 2009) (citing Green Tree Fin. Corp. v. Randolph, 531 U.S.
79, 92 (2000)). Here, Santana has provided to the Court no evidence of her current income,
and no evidence to support her contention that arbitration costs will “reach into five figures.”
[Doc. # 18, at 12]. Even if the Court relied on the Tenth Circuit Court of Appeals’ 1999
estimate that arbitration of employment discrimination cases cost between $1,875-$5000, see
Shankle v. B-G Maint. Mgmt. of Colo., Inc., 163 F.3d 1230, 1234 (10th Cir. 1999), without
any evidence of Santana’s income, the Court cannot conclude that the fee-splitting provision
is unconscionable as applied to her. Santana has not met her burden to show that she does
not have access to the arbitral forum.
Second, the Court notes that although Title VII claims can be subject to arbitration,
the Federal Arbitration Act’s presumption in favor of enforcing agreements to arbitrate is not
without limits. Shankle v. B-G Maint. Mgmt. of Colo., Inc., 163 F.3d 1230, 1234 (10th Cir.
“[A]n individual [who enters into an arbitration agreement] does not forgo
substantive rights provided by  statute, but merely submits their resolution to an alternate
forum.” Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 26 (1991). It is within the
court’s power to consider “whether legal constraints external to the parties’ agreement
foreclosed the arbitration of [statutory] claims.” Mitsubishi Motors Corp. v. Soler ChryslerPlymouth, Inc., 473 U.S. 614, 628 (1985).
A reasonable attorney’s fee is ordinarily awarded to a prevailing plaintiff in a Title VII
action. 42 U.S.C. 2000e-5(k). Here, the attorney’s fees clause “purports to forfeit
[plaintiff’s] statutory right to attorney’s fees, a remedy that we have already recognized is
essential to fulfill the remedial and deterrent functions of Title VII.” McCaskill v. SCI Mgmt.
Corp., 298 F.3d 677, 685 (7th Cir. 2002). However, the Eighth Circuit has held that, even
as applied to a claim under the ADEA, which permits recovery of attorney’s fees, an
attorney’s fee clause in an arbitration agreement is not so “substantively unfair and inimical
to the public good.” Faber v. Menard, Inc., 367 F.3d 1048, 1055 (8th Cir. 2004) (internal
quotation omitted). The court concluded, “We therefore follow the federal presumption in
favor of arbitration and conclude that the arbitrator should determine this remedial issue and
decide whether Faber has in fact waived his statutory right to recover attorneys’ fees or
whether an appropriate remedy may still include them.” Id. The Court finds no reason why
the same conclusion ought not apply to this case.
Thus, for the foregoing reasons, the Court finds that neither the fee-splitting or
attorney’s fees clauses render the Arbitration Provision of the Employment Agreement
unenforceable. It shall be for the arbitrator to decide an appropriate remedy for Santana,
which may or may not include attorney’s fees, should she prevail.
Alleged Breach of the Agreement by ProEnergy
Santana alternatively argues that even if the Agreement were validly entered into by
both parties, ProEnergy breached the Agreement when it failed to give her three days’ written
notice of her termination without cause, and therefore Santana has the right to repudiate the
Agreement. One of the circumstances courts examine to determine the materiality of an
alleged breach is “the extent to which the injured party can be adequately compensated for
the part of that benefit of which he will be deprived.” R.J.S. Security, Inc. v. Command
Security Svs., Inc., 101 S.W.3d 1 (Mo. Ct. App. 2003) (citing Restatement (Second) of
Contracts § 241 (1979)). Here, Santana’s employment was at-will and was subject to
termination at any time with or without cause. [Doc. # 25-1, at 3 (¶ 1 of Agreement)]. Thus,
the only benefit that Santana was deprived of due to the lack of notice is the compensation
she would have earned and the benefits she would have accrued for the three additional days
she would have been employed had she been properly notified. Santana can be adequately
compensated by ProEnergy for this loss. Thus, the Court does not find that ProEnergy’s
failure to provide Santana with three days’ notice of her termination of employment is a
material breach that would excuse Santana from further compliance with the Agreement.
Scope of Arbitration Provision
Having determined that there was an agreement to arbitrate, Santana’s claims are
arbitrable unless they are outside the scope of that agreement. See Houlihan, 31 F.3d at 69411
95. Santana argues that the Arbitration Provision does not explicitly apply to disputes arising
out of or related to the terms or conditions of employment, and therefore her Title VII
employment discrimination claims do not fall within its scope. However, Santana’s
argument mistakenly relies solely on the language following “including,” which lists
examples of types of disputes that would be subject to arbitration. Santana fails to pay heed
to the parent clause in the provision: “If a dispute, controversy or claim arises between the
parties . . . the parties agree to first endeavor to settle the dispute . . . by mediation. . . .
Thereafter, any unresolved dispute, controversy or claim arising between the parties . . . shall
be settled by Arbitration.” [Doc. # 25-1, at 9 (¶ 20 of Agreement (emphasis added))].
Because the Arbitration Provision applies to any “dispute, controversy or claim,” the Court
finds that the Arbitration Provision of the Employment Agreement applies to resolution of
Santana’s Title VII claims.
Accordingly, it is hereby ORDERED that Santana’s motion to strike [Doc. # 17] is
DENIED, and ProEnergy’s motion to compel arbitration [Doc. # 10] is GRANTED. The
Court stays these proceedings pending the arbitration.
s/ Nanette K. Laughrey
NANETTE K. LAUGHREY
United States District Judge
Dated: July 22, 2011
Jefferson City, Missouri
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