PERAZA v. RENT-A-CENTER

Filing 15

MEMORANDUM OPINION AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE signed by MAG/JUDGE L. PATRICK AULD on 1/8/2014; that Defendant's Motion to Dismiss (Docket Entry 9 ) be granted in that the Court should order Plaintiff to submit his claims to arbitration in accordance with the terms of the Arbitration Agreement and should dismiss this case. (Sheets, Jamie)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

JUAN CARLOS PERAZA,

)
)
)
)
)
)
)
)
)

Plaintiff,
v.
RENT-A-CENTER,
Defendant.

1:13CV881

MEMORANDUM OPINION AND RECOMMENDATION
OF UNITED STATES MAGISTRATE JUDGE
The instant matter comes before the undersigned United States
Magistrate Judge for a recommended ruling on Defendant’s Motion to
Dismiss (Docket Entry 9).

(See Docket Entry dated Dec. 13, 2013.)

For the reasons that follow, the instant Motion should be granted.
I.
Plaintiff,

proceeding

Background
pro

se,

brought

this

suit

against

Defendant for unlawful employment discrimination and retaliation
based on Plaintiff’s race and national origin in violation of Title
VII of the Civil Rights Act of 1964, as amended.
at

2-4.)

The

Complaint

alleges

that,

while

(Docket Entry 2
employed

with

Defendant, Plaintiff complained that his supervisors discriminated
against Hispanic customers. (Id. at 2-3.) It further asserts that
Defendant did nothing to correct any such discriminatory behavior
and, additionally, that Plaintiff’s supervisor began to retaliate
against Plaintiff after his complaints by writing him up for
tardiness and leaving early.

(Id. at 3.)

According to the

Complaint, the supervisor did not similarly discipline other, nonHispanic employees for the same conduct.
reported

the

supervisor’s

behavior

to

(Id.)
the

After Plaintiff
Human

Department, Defendant terminated his employment.

Resources

(Id. at 4.)

Based on these allegations, Plaintiff requests “neutral references
from [Defendant], in order to get a new job,” “payback” (presumably
“back pay”), and compensatory damages.

(Id. at 5.)

Defendant thereafter filed the instant Motion requesting that
the Court dismiss this case and order Plaintiff to arbitration
pursuant to an Arbitration Agreement Plaintiff signed in the course
of his employment with Defendant or, alternatively, that the Court
stay these proceedings and compel arbitration.
10 at 13.)

(See Docket Entry

Plaintiff responded (Docket Entry 12) and Defendant

replied (Docket Entry 13).
II.
The

Federal

establishes
agreements.”

“a

Discussion

Arbitration
liberal

Act

federal

(“FAA”),
policy

9

U.S.C.

favoring

§§

1-16,

arbitration

Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp.,

460 U.S. 1, 24 (1983).

Under the FAA, “[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 such grounds as exist at law or equity for the revocation of
any contract.”

9 U.S.C. § 2.

The FAA “mandates that district

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courts shall direct the parties to proceed to arbitration on issues
as to which an arbitration agreement has been signed. . . .

Thus,

. . . agreements to arbitrate must be enforced . . . .”

Dean

Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218 (1985) (emphasis
in original).

In determining whether to compel arbitration, a

court should consider:
“(1) the existence of a dispute between the parties,
(2) a written agreement that includes an arbitration
provision which purports to cover the dispute, (3) the
relationship of the transaction, which is evidenced by
the agreement, to interstate or foreign commerce, and
(4) the failure, neglect or refusal of [a party] to
arbitrate the dispute.”
Adkins v. Labor Ready, Inc., 303 F.3d 496, 500-01 (4th Cir. 2002)
(quoting Whiteside v. Teltech Corp., 940 F.2d 99, 102 (4th Cir.
1991)).
In this case, Defendant has come forward with undisputed
evidence that Plaintiff executed an Arbitration Agreement when he
began his employment with Defendant.

(See Docket Entry 9-1 at 3,

5-9; see also Docket Entry 12 at 1 (setting out Plaintiff’s
acknowledgement that he signed “Arbitration Documents”).)1

The

Arbitration Agreement states that “[Defendant] and [Plaintiff]
mutually consent to the resolution by arbitration of all claims or

1

All pin citations refer to the pagination in the footer
appended to each document by the CM/ECF system. Given the absence
of any dispute as to Plaintiff’s execution of the Arbitration
Agreement, this case does not present “the issue [of] whether any
agreement between the parties ‘was ever concluded,’” Rent-A-Center,
West, Inc. v. Jackson, 130 S. Ct. 2772, 2778 n.2 (2010).
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controversies

[],

past,

present

or

future,

including

without

limitation, claims arising out of or related to [Plaintiff’s]
application

for

employment,

termination

of

[Plaintiff’s]

(Docket Entry 9-1 at 5.)
Arbitration

Agreement

assignment/employment,
assignment/employment

and/or
.

.

.

the
.”

The types of claims covered by the

include

“tort

or

statutory

claims

for

discrimination (including, but not limited to race, sex, sexual
harassment, sexual orientation, religion, national origin, age,
workers’ compensation, marital status, medical condition, handicap
or disability) . . . and claims for violation of any federal, state
or other governmental law, statute, regulation, or ordinance,
except claims excluded in the section of this Agreement entitled
‘Claims Not Covered by the Agreement.’”

(Id.)2

As Defendant points out, “Plaintiff also agreed to arbitrate
gateway issues of arbitrability.” (Docket Entry 10 at 2.) In this
respect, the Arbitration Agreement states that “[t]he Arbitrator,
and not any federal, state, or local court or agency, shall have
exclusive

authority

to

resolve

any

dispute

relating

to

the

interpretation, applicability, enforceability or formation of this
Agreement including, but not limited to any claim that all or any

2

The section of the Arbitration Agreement entitled “Claims
Not Covered by the Agreement” states that claims for “workers’
compensation benefits, state disability insurance benefits and
unemployment compensation benefits are not covered by this
Agreement.” (Docket Entry 9-1 at 5.) It also excludes “[c]laims
brought in small claims court . . . so long as such claims are
brought only in that court.” (Id.)
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part of this Agreement is void or voidable.”
7.)

(Docket Entry 9-1 at

Plaintiff’s initials appear on each page of the Arbitration

Agreement and his signature appears on the final page.

(Id. at 5-

9.)
The United States Supreme Court has “recognized that parties
can agree to arbitrate ‘gateway’ questions of arbitrability,’ such
as whether the parties have agreed to arbitrate or whether their
agreement covers a particular controversy.”

Rent-A-Center, West,

Inc. v. Jackson, 130 S. Ct. 2772, 2777 (2010).
An agreement to arbitrate a gateway issue is simply an
additional, antecedent agreement the party seeking
arbitration asks the federal court to enforce, and the
FAA operates on this additional arbitration agreement
just as it does on any other. The additional agreement
is valid under § 2 “save upon such grounds as exist at
law or in equity for the revocation of any contract,” and
federal courts can enforce the agreement by staying
federal litigation under § 3 and compelling arbitration
under § 4.
Id. at 2777-78.
Under Section 2, two types of challenges exist to the validity
of an arbitration agreement: the first “challenges specifically the
validity of the agreement to arbitrate” and the second “challenges
the contract as a whole, either on a ground that directly affects
the entire agreement . . . or on the ground that the illegality of
one

of

the

invalid.”

contract’s

provisions

renders

the

whole

contract

Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440,

444 (2006).

When an arbitration agreement includes an agreement,

like the one present in the instant case, to arbitrate gateway
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issues, only the first type, a challenge to the validity of the
agreement to arbitrate such issues, “is relevant to a court’s
determination

whether

the

arbitration

agreement

enforceable.”

Jackson, 130 S. Ct. at 2778.

at

issue

is

In other words, “[i]f

a party challenges the validity under § 2 of the precise agreement
to arbitrate [gateway questions], [the Court] must consider the
challenge before ordering compliance with that agreement under
§ 4.”

Id.

However, where the specific agreement to arbitrate

gateway issues remains unchallenged, the Court “must treat it as
valid under § 2, and must enforce it under §§ 3 and 4, leaving any
challenge to the validity [or applicability] of the Agreement as a
whole for the arbitrator.”

Id. at 2779.

In opposition to the instant Motion, Plaintiff argues that he
“never got a copy of the documents that [he] signed (‘Arbitration
Documents’) where it was [sic] the information about the letter
[required to initiate the arbitration process] and the address
where it was supposed to be sent . . . .”

(Docket Entry 12 at 1.)

In addition, Plaintiff appears to contend that this case should
remain before this Court, “not only because it is a discrimination
employment matter, but [because] it is also discrimination against
a minority group (Hispanic/Latinos) that has been victims [sic] of
abuses (with overcharges and false information) because lack of
language (English), and fear to [sic] retaliation.”

(Id. at 2.)

Neither of these contentions challenge the validity of the Parties’

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agreement to arbitrate gateway issues.

Rather, both relate to the

enforceability and applicability, respectively, of the Arbitration
Agreement as a whole, challenges which Plaintiff agreed to allow
the Arbitrator to resolve (see Docket Entry 9-1 at 7).
thus lacks jurisdiction to hear any such challenges.

This Court

As a result,

the Court should grant Defendant’s instant Motion and should
dismiss this case.3
III.

Conclusion

Plaintiff agreed to submit the types of challenges he raises
here

to

arbitration

and

has

identified

no

lawful

basis

to

circumvent that process.
IT IS THEREFORE RECOMMENDED that Defendant’s Motion to Dismiss
(Docket

Entry

9)

be

granted

in

that

the

Court

should

order

Plaintiff to submit his claims to arbitration in accordance with
the terms of the Arbitration Agreement and should dismiss this
case.

/s/ L. Patrick Auld
L. Patrick Auld
United States Magistrate Judge
January 8, 2014

3

“[D]ismissal is a proper remedy when all of the issues
presented in a lawsuit are arbitrable.” Choice Hotels Int’l, Inc.
v. BSR Tropicana Resort, Inc., 252 F.3d 707, 709-10 (4th Cir. 2001)
(citing Alford v. Dean Witter Reynolds, Inc., 975 F.2d 1161, 1164
(4th Cir. 1992)).
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