NAZAROVA v. DUKE UNIVERSITY
Filing
27
MEMORANDUM OPINION AND ORDER signed by CHIEF JUDGE WILLIAM L. OSTEEN, JR. on 3/2/2017, for the reasons set forth above, ORDERED that Defendant's Motion to Compel Arbitration or, in the Alternative, to Dismiss the Complaint for Lack of Subjec t Matter Jurisdiction (Doc. 11 ) is GRANTED and that Plaintiff's Motion to Strike Defendant's Motion to Compel (Doc. 20 ) and Motion for Leave to File Suplemental [sic] Complaint (Doc. 21 ) are DENIED. FURTHER ORDERED that this action is STAYED until arbitration has been had in accordance with the terms of the dispute resolution agreement. The Clerk shall mark the case as inactive. Within 30 days of completion of the arbitration, the parties shall file a joint report advising the court of completion of the arbitration and whether further proceedings in this court are required. (Butler, Carol)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
MUZHGAN I. NAZAROVA,
Plaintiff,
v.
DUKE UNIVERSITY,
Defendant.
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1:16CV910
MEMORANDUM OPINION AND ORDER
OSTEEN, JR., District Judge
Presently before this court are Duke University’s (“Duke”
or “Defendant”) Motion to Compel Arbitration or, in the
Alternative, to Dismiss the Complaint for Lack of Subject Matter
Jurisdiction (Doc. 11) as well as pro se Plaintiff Muzhgan I.
Nazarova’s (“Nazarova” or “Plaintiff”) Motion to Strike
Defendant’s Motion to Compel (Doc. 20) and Motion for Leave to
File Suplemental [sic] Complaint (Doc. 21). For the following
reasons, Duke’s motion will be granted and Nazarova’s motions
will be denied.
I.
DEFENDANT’S MOTION TO COMPEL ARBITRATION OR, IN THE
ALTERNATIVE, TO DISMISS THE COMPLAINT FOR LACK OF SUBJECT
MATTER JURISDICTION
A.
Background
1.
Facts
“Nazarova’s religion is Islam, and her national origin is
Azerbaijan.” (Complaint (“Compl.”) (Doc. 2) ¶ 10.) Plaintiff
“began employment at Defendant’s Library in Durham, North
Carolina as a Catalog Librarian for Slavic Resources on or about
October 1, 2012.” (Id. ¶ 8.) Natalie Sommerville was Plaintiff’s
supervisor and Amy Turner was her trainer. (Id. ¶¶ 11, 12.)
“In or about February 2014 Nazarova began to experience
numerous derogatory religion and national origin-based comments
from Turner. Specifically, Turner repeatedly called Nazarova a
‘cultural Muslim’ and made derogatory statements about Nazarova
being a foreigner who was lacking in her ability to speak
English.” (Id. ¶ 13.) “On or about February 24th, 2014, Nazarova
complained about Turner’s derogatory comments about her religion
and national origin to Sommerville[] and subsequently to Human
Resources Manager Kim Burhop-Service [] on or about May 7th,
2014.” (Id. ¶ 14.) Plaintiff alleges “no investigation of
Nazarova’s complaints was performed, nor was any action taken
against Turner.” (Id.)
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“Nazarova received negative comments on her performance
review from Sommerville about her inability to accept
performance feedback from others” on two separate occasions –
May 8, 2014, and September 5, 2014. (Id. ¶ 15.) Also on
September 5, 2014, “Nazarova was informed by Sommerville that
she was not recommending her for a tenured position with the
University.” (Id. ¶ 17.)
“Nazarova filed a charge of discrimination and retaliation
with the University’s Office of Institutional Equity [] on or
about September 6, 2014.” (Id.) Also during September 2014,
“Nazarova filed an EEOC charge of discrimination” and “met with
the University Librarian Deborah Jakubs [] and Associate
University Librarian for Collections Robert Byrd [] and raised
her concerns about discriminatory and retaliatory actions
against her.” (Id. ¶ 18.) Plaintiff alleges that neither party
took any action in response to her claims. (Id.)
“In or about November 2014, Turner and Sommerville revoked
Nazarova’s cataloging ‘independence’ status.” (Id. ¶ 19.) “On or
about December 17, 2014, Nazarova received a letter from Jakubs,
informing Nazarova that she was not selected for the continuing
appointment and was being placed on a two-year probationary
status as a result of [the] recommendation of Sommerville and
Turner.” (Id. ¶ 20.) Nazarova filed another “EEOC charge of
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discrimination and retaliation” against Duke “on or about
March 27, 2015.” (Id. ¶ 21.) She also alleges that “[s]oon after
filing this charge, Nazarova began experiencing regular
hostility and a lack of cooperation from her coworkers.” (Id.)
In April 2015, Plaintiff alleges that “Sommerville
intensified her scrutiny of Nazarova’s cataloging duties, and
attributed errors to Nazarova” in a discriminatory way. (Id.
¶ 22.) In July 2015, Sommerville and Burhop-Service refused to
provide Nazarova with access to the Duke’s “Aleph” Report
tracking system, which would be able to substantiate her alleged
“error rates.” (Id. ¶ 23.) In August 2015, Sommerville put
Nazarova on a “Performance Improvement Plan” that was allegedly
more strict than the standard applied to other employees. (Id.
¶ 24.) In November 2015, “Nazarova received a written warning
from Sommerville,” which she alleges was incorrect. (Id. ¶ 27.)
Plaintiff received a second allegedly incorrect written warning
for similar errors in February 2016. (Id. ¶ 29.)
“Because of the discrimination and retaliation against
Nazarova by the University, and the ongoing hostility from
coworkers, Nazarova felt compelled to resign, and submitted her
notice of resignation on or about March 14, 2016.” (Id. ¶ 32.)
“Nazarova filed an additional charge of discrimination and
retaliation [] on March 28, 2016.” (Id. ¶ 30.)
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2.
Claims
Plaintiff brings her first claim under Title VII, alleging
discrimination and disparate treatment due to religion and
national origin under 42 U.S.C. § 2000e. (Id. ¶¶ 33-41.)
Plaintiff alleges that she “was not selected for the continuing
appointment as a Catalogue Librarian” and that she “was held to
significantly stricter standards and scrutiny of her work” due
to her race and religion. (Id. ¶¶ 36-38.) Plaintiff claims “lost
wages, salary, benefits, and emotional distress” as well as
punitive damages. (Id. ¶¶ 39-40.)
Plaintiff’s second claim is a Title VII retaliation claim.
(Id. ¶¶ 42-53.) Plaintiff alleges that, as she reported the
aforementioned racial and religious discrimination through
appropriate University and EEOC channels, she experienced
various forms of backlash. (Id.) Plaintiff claims “lost wages,
salary, benefits, and emotional distress, mental pain,
suffering, stress, grief, worry and mental anguish” as well as
punitive damages. (Id. ¶ 51.)
Plaintiff’s third claim is a Title VII constructive
discharge claim. (Id. ¶¶ 54-61.) Plaintiff alleges that the sum
total of the situation caused her “working conditions [to
become] so intolerable, a reasonable employee encountering like
conditions would have been compelled to resign her employment.”
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(Id. ¶ 58.) Plaintiff claims “lost wages, salary, benefits, and
emotional distress, mental pain, suffering, stress, grief, worry
and mental anguish” as well as punitive damages. (Id. ¶ 58.)
B.
Discussion
Defendant moves to compel arbitration or, in the
alternative, to dismiss the complaint for lack of subject matter
jurisdiction. (See Doc. 11.) In support of this motion,
Defendant has filed the affidavit of Denise Evans, which
contains Duke’s Dispute Resolution Process and the “Candidate
Certification” form containing the arbitration agreement and
bearing Plaintiff’s signature.1 (Def.’s Mem. in Supp. of Mot. to
Compel (“Def.’s Br.”), Decl. of Denise Evans (“Evans Decl.”)
(Doc. 12-1), Ex. A attached to Decl. at 5-10, Ex. B attached to
Decl. at 11-12.) Defendant contends these two documents control
Plaintiff’s rights as an employee and compel arbitration.
(Def.’s Br. (Doc. 12) at 2-10.)
The Fourth Circuit has provided that “we may consider a
document submitted by the movant that was not attached to or
expressly incorporated in a complaint, so long as the document
was integral to the complaint and there is no dispute about the
document’s authenticity.” Goines v. Valley Cmty. Servs. Bd., 822
F.3d 159, 166 (4th Cir. 2016). Here, neither party contests the
validity of either document. Further, these documents
purportedly control Plaintiff’s right to continue this
litigation or Defendant’s right to compel arbitration. As such,
this court finds that consideration of the referenced documents
is proper.
1
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Defendant initially notes that “although not required by
the FAA or North Carolina law, the agreement with Plaintiff is
in writing and signed.” (Def.’s Br. (Doc. 12) at 7.) “Duke
required Plaintiff to agree to submit employment-related
grievances to the DRP [Dispute Resolution Process] as a
condition of employment,” to which “Plaintiff agreed by signing
the written agreement and by reporting to work and continuing
employment up to the time of her resignation on or about
March 14, 2016.” (Id. at 7-8.) Defendant further argues that
“the arbitration agreement binds both Plaintiff and Duke to
arbitrate claims within its scope.” (Id. at 8.)
Plaintiff does not dispute the veracity of these documents,
but instead contends: (1) that her agreement with Duke is a
contract of adhesion, (2) that the agreement is unconscionable,
and (3) that Duke materially breached the agreement. (Pl.’s
Resp. in Opp’n to Def.’s Mot. to Compel Arbitration (“Pl.’s
Resp.”) (Doc. 16) at 1-2.)
The Federal Arbitration Act (“FAA”) governs the resolution
of private disputes through arbitration. 9 U.S.C. § 1 et seq.
Section 2 of the FAA provides:
A written provision in any maritime transaction or a
contract evidencing a transaction involving commerce
to settle by arbitration a controversy thereafter
arising out of such contract or transaction, or the
refusal to perform the whole or any part thereof, or
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an agreement in writing to submit to arbitration an
existing controversy arising out of a contract,
transaction, or refusal, shall be valid, irrevocable,
and enforceable, save upon such grounds as exist at
law or in equity for the revocation of any contract.
9 U.S.C. § 2. Courts must compel arbitration when a valid
arbitration agreement exists because the FAA’s provisions are
mandatory. See 9 U.S.C. § 2; see also Dean Witter Reynolds, Inc.
v. Byrd, 470 U.S. 213, 218 (1985) (“Thus, insofar as the
language of the Act guides our disposition of this case, we
would conclude that agreements to arbitrate must be
enforced . . . .”). In order to compel arbitration under the
FAA, a party must show: (1) that a dispute between the parties
exists, (2) that a contract between the parties includes an
arbitration provision which would seem to cover the dispute, (3)
that the contract or transaction at issue involves interstate or
foreign commerce, and (4) that one party refuses to arbitrate
the dispute. See Adkins v. Labor Ready, Inc., 303 F.3d 496,
500-01 (4th Cir. 2002).
With regards to the four factors outlined in Adkins, the
parties in the present case only contest the existence of “a
written agreement that includes an arbitration provision which
purports to cover the dispute.” Id. at 500-01. As such,
Defendant must show that the contract includes an arbitration
provision which covers the dispute in this case. See id. “It is
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for the court, not the arbitrator, to decide in the first
instance whether the dispute is to be resolved through
arbitration . . . [and the court] engage[s] in a limited review
to ensure that the dispute is arbitrable – i.e., that a valid
agreement to arbitrate exists between the parties and that the
specific dispute falls within the substantive scope of that
agreement.” Hooters of Am., Inc. v. Phillips, 173 F.3d 933, 93738 (4th Cir. 1999) (internal punctuation and quotation marks
omitted).
1.
A Valid Agreement to Arbitrate Exists
Defendant has filed the “Candidate Certification” form
containing the arbitration agreement. (Evans Decl., Ex. B (Doc.
12-1) at 12.) Plaintiff does not contest the Candidate
Certification form or the fact that she signed it.
Plaintiff alleges2 that she had a meeting with one of Duke’s
human resources specialists in order to complete her “new hire
paperwork,” but that the employee “was in a hurry to get to
another meeting, presented the Plaintiff with various forms
Plaintiff alleges a number of new facts throughout her
response, which often intertwine with her legal arguments. (See
Pl.’s Resp. (Doc. 16) at 2-15.) While these facts should be
included in the complaint, this court has considered many of
these facts where relevant due to the liberal standard of review
afforded a pro se plaintiff and the potential for amendment to
the complaint.
2
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without explaining them to her and barely [gave] her a chance to
look through the documents [ ] as she was signing.” (Pl.’s
Resp.) (Doc. 16) at 2-3.)
Plaintiff further alleges that the “new hire paperwork” was
presented to her on a “take it or leave it basis” without the
opportunity to negotiate the terms of her employment. (Id. at
4.) She alleges that “[b]ecause the complete terms, such as
Duke’s requirement of being bound by the DRP procedures, do not
appear in the text of the actual arbitration agreement but
rather appear in a different location and were not expressly
stated to the Plaintiff at the time of signing it, the agreement
is not a full contract.” (Id. at 5.)
Plaintiff argues that Duke’s Exempt Staff Member Dispute
Resolution Procedure (“DRP”) “lacks consideration for the
Plaintiff and is [u]nfair” as it prevents staff members from
filing a formal grievance for “disagreement with performance
evaluation rating” or “as [a] result of a job classification or
reclassification,” instead suggesting that “[t]he staff member
should discuss these circumstances with his or her supervisor’s
supervisor.” (Id. at 6-7.) Plaintiff argues that this
shortcoming in the system exposed her to the alleged retaliation
in the present lawsuit. (Id. at 7.)
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Plaintiff argues that, “by not disclosing important
information about the conditions of the job offer,” Duke “gained
an enormous advantage in ‘bargaining power’,” which forced the
Plaintiff “into a very stressful and psychologically vulnerable
situation where [she had] to make a very tough but [] instant
choice [] between signing or leaving their job offer.” (Id. at
8-9.)
Plaintiff also alleges that “[t]he so-called agreement to
arbitrate uses very fine print . . . and [] is lodged in the
midst of the intensely clumped text of other six clauses, which
purposefully confuses the eye and misleads the applicant into
not seeing the arbitration clause.” (Id. at 9-10.)
Plaintiff alleges that, despite working at Duke for two
years, she was never given any training regarding the DRP and
never received a “Duke Staff Handbook.” (Id. at 11-12.)
Plaintiff alleges that when she finally did receive the handbook
on a later date, “Somerville [sic] was busy and rushed through
the process of reviewing the Policies with the Plaintiff, in
particular the DRP section of the handbook.” (Id. at 12.)
Plaintiff’s material breach theory is based on her argument
that Defendant’s alleged failure to take appropriate action in
response to her workplace complaints constitutes a material
breach of contract. (Id. at 12-15.)
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“In determining whether the parties executed a valid
agreement to arbitrate, courts generally apply ordinary statelaw principles that govern the formation of contracts.” Sydnor
v. Conseco Fin. Servicing Corp., 252 F.3d 302, 305 (4th Cir.
2001). As such, this court turns to North Carolina contract law.
“North Carolina has a strong public policy favoring the
settlement of disputes by arbitration. Our strong public policy
requires that the courts resolve any doubts concerning the scope
of arbitrable issues in favor of arbitration.” Johnston Cty. v.
R.N. Rouse & Co., 331 N.C. 88, 91, 414 S.E.2d 30, 32 (1992).
North Carolina law has long recognized that “[o]ne who
signs a written contract without reading it, when he can do so
understandingly, is bound thereby unless the failure to read is
justified by some special circumstance.” Davis v. Davis, 256
N.C. 468, 472, 124 S.E.2d 130, 133 (1962). Further, the signing
party bears the responsibility to understand the agreement for
him or herself, “[i]f unable to read or write, he must ask that
the paper be read to him or its meaning explained.” Williams v.
Williams, 220 N.C. 806, 18 S.E.2d 364, 366 (1942); see Sch.
Comm. of Providence Twp. v. Kesler, 67 N.C. 443, 444 (1872).
In this state it is held that one who signs a paperwriting is under a duty to ascertain its contents, and
in the absence of a showing that he was wilfully
misled or misinformed by the defendant as to these
contents, or that they were kept from him in
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fraudulent opposition to his request, he is held to
have signed with full knowledge and assent as to what
is therein contained.
Williams, 18 S.E.2d at 366.
On August 17, 2012, Plaintiff signed the Candidate
Certification form. (Evans Decl., Ex. B (Doc. 12-1) at 12.) The
form states that:
I hereby agree that any dispute or controversy arising
out of or related to my employment or termination by
Duke University . . . shall be subject to final and
binding resolution through the applicable grievance or
dispute resolution procedure, as may be periodically
amended and which is available upon request from the
department of Human Resources.
Id.
A plaintiff, who “sign[ed] a paper-writing,” was “under a
duty to ascertain its contents.”
Williams, 18 S.E.2d at 366. In
another Middle District of North Carolina case involving the
DRP, another court has observed that “the signer of a document
is charged with full knowledge of its contents and with assent
to the terms contained therein.”
Armstrong v. Duke Univ., No.
1:04CV01206, 2006 WL 213952, at *4 (M.D.N.C. Jan. 27, 2006)
(citations omitted).
As such, this court finds that Plaintiff
is responsible for the contents of the Candidate Certification
form, including the agreement to arbitrate, regardless of font
size or page formatting.
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Plaintiff’s arguments regarding the unconscionability of
her employment contract’s formation are unpersuasive.3 As
discussed above, Plaintiff raises a number of arguments
regarding the alleged disparity in bargaining power between her
and Defendant. (Pl.’s Resp. (Doc. 16) at 7-9.)
“An inquiry into unconscionability requires that a court
consider all the facts and circumstances of a particular case,
and if the provisions are then viewed as so one-sided that the
contracting party is denied any opportunity for a meaningful
choice, the contract should be found unconscionable.” Tillman v.
Commercial Credit Loans, Inc., 362 N.C. 93, 102, 655 S.E.2d 362,
369 (2008) (internal punctuation and quotation marks omitted).
“A party asserting that a contract is unconscionable must prove
both procedural and substantive unconscionability.” Id., 655
S.E.2d at 370.
“[U]nconscionability is an affirmative defense, and the
party asserting it has the burden of proof.” Tillman v.
Commercial Credit Loans, Inc., 362 N.C. 93, 102, 655 S.E.2d 362,
As an aside, other courts in the Middle District of North
Carolina have specifically held that Duke’s DRP is enforceable
and, by implication, not unconscionable. See Armstrong v. Duke
Univ., No. 1:04CV01206, 2006 WL 213952, at *4 (M.D.N.C. Jan. 27,
2006); Martin v. Vance, 133 N.C. App. 116, 514 S.E.2d 306
(1999); Futrelle v. Duke Univ., 127 N.C. App. 244, 488 S.E.2d
635 (1997).
3
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369 (2008). “Procedural unconscionability involves ‘bargaining
naughtiness’ in the formation of the contract and is equated
with the words ‘unfair surprise’ . . . and with the phrase ‘lack
of meaningful choice.’” Rite Color Chem. Co. v. Velvet Textile
Co., 105 N.C. App. 14, 20, 411 S.E.2d 645, 648 (1992) (internal
punctuation and quotation marks and citation omitted).
“Procedural unconscionability includes “fraud, coercion, undue
influence, misrepresentation, [and] inadequate disclosure.” King
v. King, 114 N.C. App. 454, 458, 442 S.E.2d 154, 157 (1994).
Plaintiff’s allegations are not sufficient to plausibly state a
claim of procedural unconscionability as Plaintiff fails to
allege “fraud, coercion, undue influence, misrepresentation,
inadequate disclosure.” Id.
“Substantive unconscionability, on the other hand, involves
the harsh, oppressive, and one-sided terms of a contract from
which a party seeks relief. Such terms are generally
characterized as being unreasonably favorable to the other party
to the contract.” Rite Color, 105 N.C. App. at 20, 411 S.E.2d at
648-49 (internal quotation marks and citations omitted). As
discussed below, the agreement was supported by mutual
consideration - both parties are bound to arbitrate any
disputes. Plaintiff is unable to plausibly allege any
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“one-sided” terms. As such, Plaintiff cannot allege substantive
unconscionability.
Plaintiff’s argument that the DRP somehow lacks
consideration is unpersuasive because “no consideration is
required above and beyond the agreement to be bound by the
arbitration process for any claims brought by the employee [and
the defendant]’s promise to arbitrate its own claims is a
fortiori adequate consideration for this agreement.”
Adkins,
303 F.3d at 501 (internal quotation marks and punctuation and
citation omitted); see O’Neil v. Hilton Head Hosp., 115 F.3d
272, 274 (4th Cir. 1997); Johnson v. Circuit City Stores, 148
F.3d 373, 378 (4th Cir. 1998).
These holdings are consistent with North Carolina law,
because “[w]here each party agrees to be bound by an arbitration
agreement, there is sufficient consideration to uphold the
agreement.” Martin v. Vance, 133 N.C. App. 116, 122, 514 S.E.2d
306, 310 (1999); Howard v. Oakwood Homes Corp., 134 N.C. App.
116, 119, 516 S.E.2d 879, 881 (1999). “This Court has
established that mutual promises to submit a dispute to
arbitration constitute adequate consideration.” King v. Bryant,
225 N.C. App. 340, 346, 737 S.E.2d 802, 807 (2013).
This court finds that Plaintiff and Defendant’s agreement
to arbitrate was supported by mutual consideration because “the
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mutual promise to abide by the provisions of the DRP and to
relinquish the right to pursue certain disputes in court is
sufficient consideration to support the DRP agreement.” Howard,
134 N.C. App. at 120, 516 S.E.2d at 882.
Plaintiff’s argument that the agreement to arbitrate is
somehow incomplete or unenforceable because the Candidate
Certification Form did not contain the actual substance of the
DRP is also unpersuasive. The Fourth Circuit has held that “[b]y
continuing employment with GMRI for three months after [the
plaintiff] knew that the terms of the DRP would apply to him,
[he] demonstrated acceptance of the DRP. Therefore, [the
plaintiff] is bound by its final, binding arbitration
provisions.” Hightower v. GMRI, Inc., 272 F.3d 239, 243 (4th
Cir. 2001); see also King v. Oakwood Home, Inc., No. Civ.
1:99CV00549, 2000 WL 1229753, at *5 (M.D.N.C. Aug. 3, 2000)
(“Continued employment with actual notice of the implementation
of a dispute resolution program evidences an employee’s mutual
assent to a binding arbitration agreement contained therein.”).
The parties agree that, in December of 2014, Plaintiff received
and reviewed the DRP, returning and signing an Acknowledgement
of Receipt on December 19, 2014. (Doc. 19 at 4.)
This court
finds that Plaintiff consented to the DRP because she continued
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to work from this date to the date of her resignation after
learning of the DRP.
This court finds that Plaintiff and Defendant’s agreement
to arbitrate was not unconscionable and that Plaintiff and
Defendant had a valid and enforceable arbitration agreement.
2.
The Arbitration Provision Covers the Present
Disputes
Plaintiff agreed to arbitrate “any dispute or controversy
arising out of or related to [her] employment or termination by
Duke University.” (Evans Decl., Ex. B (Doc. 12-1) at 12.) The
Fourth Circuit has “consistently held that an arbitration clause
encompassing all disputes ‘arising out of or relating to’ a
contract embraces ‘every dispute between the parties having a
significant relationship to the contract regardless of the label
attached to a dispute.’” Wachovia Bank, Nat’l Ass’n v. Schmidt,
445 F.3d 762, 767 (4th Cir. 2006) (quoting Am. Recovery Corp. v.
Computerized Thermal Imaging, Inc., 96 F.3d 88, 93 (4th Cir.
1996)). “In determining whether such a significant relationship
exists, a court must review the factual allegations underlying the
particular claim and evaluate the connection between those
allegations and the contract containing the arbitration clause.”
Great Am. Ins. Co. v. Hinkle Contracting Corp., 497 F. App’x 348,
354 (4th Cir. 2012). “The interpretation of arbitration agreements
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is governed by state rules of contract interpretation.” NCR
Corp. v. Jones, 157 F. Supp. 3d 460, 463–64 (W.D.N.C. 2016),
appeal dismissed (May 9, 2016) (citing Rota–McLarty v. Santander
Consumer USA, Inc., 700 F.3d 690, 699 (4th Cir. 2012)). As such,
this court must determine whether the facts alleged in the
Complaint “arise out of or relate to” Plaintiff’s employment under
North Carolina state law, which this court already determined is
covered by a valid arbitration agreement.
Plaintiff alleges a number of facts regarding her
employment at Duke and acts arising during the course of her
employment. (Compl. (Doc. 2) ¶¶ 13-30.) Each of Plaintiff’s
claims – Title VII Discrimination, Title VII Retaliation, and
Constructive Discharge – factually relate to her employment.
(Compl. (Doc. 2) ¶¶ 33-61.)
“An arbitration clause is a contractual term, and general
rules of contract interpretation must be applied to determine a
clause’s applicability to a particular dispute.” Liberty Mut.
Fire Ins. Co. v. KB Home, No. 5:13-CV-831-BR, 2015 WL 4877835,
at *4 (E.D.N.C. Aug. 14, 2015).
“North Carolina has a strong public policy favoring
arbitration.” Red Springs Presbyterian Church v. Terminix Co. of
North Carolina, 119 N.C. App. 299, 303, 458 S.E.2d 270, 273
(1995). “Interpreting a contract requires the court to examine
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the language of the contract itself for indications of the
parties’ intent at the moment of execution.” State v. Philip
Morris USA Inc., 359 N.C. 763, 773, 618 S.E.2d 219, 225 (2005).
“If the plain language of a contract is clear, the intention of
the parties is inferred from the words of the contract.” Walton
v. City of Raleigh, 342 N.C. 879, 881, 467 S.E.2d 410, 411
(1996). “Courts look . . . to the relationship of the claim to
the subject matter of the arbitration clause.” Collie v. Wehr
Dissolution Corp., 345 F. Supp. 2d 555, 562–63 (M.D.N.C. 2004)
(citing Rodgers Builders, Inc. v. McQueen, 76 N.C. App. 16, 24,
331 S.E.2d 726, 731 (1985)) (collecting cases regarding “other
courts’ application of analogously broad arbitration agreements
to various tort and contract claims”) (internal punctuation and
quotation marks omitted).
Here, the plain language of the contract is clear – the
parties intended to arbitrate “any dispute or controversy
arising out of or related to [Plaintiff’s] employment or
termination by Duke University.” (Evans Decl., Ex. B (Doc. 12-1)
at 12.) North Carolina courts apply the same “significant . . .
relationship” test analyzed above. See Fontana v. Se.
Anesthesiology Consultants, P.A., 221 N.C. App. 582, 589, 729
S.E.2d 80, 86 (2012). This court finds that Plaintiff’s claims
bear a significant relationship to the subject matter of the
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arbitration clause, which was her employment and disputes
related to her employment. Id.; see Collie, 345 F. Supp. 2d at
263. Further, “in applying general state-law principles of
contract interpretation to the interpretation of an arbitration
agreement within the scope of the Arbitration Act, due regard
must be given to the federal policy favoring arbitration, and
ambiguities as to the scope of the arbitration clause itself
resolved in favor of arbitration.” Cara’s Notions, Inc. v.
Hallmark Cards, Inc., 140 F.3d 566, 569 (4th Cir. 1998)
(internal quotation marks and citation omitted).
When faced with similar employment claims, courts have
found that the claims arise out of or relate to a plaintiff’s
employment and are thus subject to arbitration. See, e.g.,
Johnson, 148 F.3d at 379; Greene v. Durham Reg’l Hosp., No.
1:10CV824, 2014 WL 6634597, at *4 (M.D.N.C. Nov. 24, 2014),
report and recommendation adopted, 1:10CV824, 2015 WL 12752918
(M.D.N.C. Feb. 18, 2015); Nereim v. Premara Fin., Inc., No.
3:14-cv-00096-FDW-DSC, 2014 WL 2882692, at *3 (W.D.N.C. June 25,
2014); Thomas v. Right Choice MWM, Inc., No. 3:13-cv-00512-FDWDSC, 2014 WL 1632946, at *2 (W.D.N.C. Apr. 23, 2014).
Finally, “[t]he Arbitration Act establishes that, as a
matter of federal law, any doubts concerning the scope of
arbitrable issues should be resolved in favor of
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arbitration . . . .” Moses H. Cone Mem’l Hosp. v. Mercury
Constr. Corp., 460 U.S. 1, 24–25 (1983); Cara’s Notions, 140
F.3d at 569; Am. Recovery Corp., 96 F.3d at 92.
Because the agreement between Plaintiff and Defendant
included a valid arbitration clause that covered all the alleged
facts in the Complaint, this court concludes that arbitration is
proper.
II.
PLAINTIFF’S MOTION FOR LEAVE TO FILE SUPPLEMENTAL COMPLAINT
A.
Background
Plaintiff moved for leave to supplement her Complaint (Doc.
21) and attached the proposed Supplemental Complaint (Doc.
21-1). Defendant responded opposing the motion (Doc. 25) and
Plaintiff replied (Doc. 26).
1.
Supplemental Facts
In her Supplemental Complaint, Plaintiff alleges that
“Nazarova executed a Duke Confidentiality agreement as part of
the condition of her employment, the terms of which shall be
complied with by all Duke Staff.” (Supplemental Complaint
(“Suppl. Compl.”) (Doc. 21-1) ¶ 8.1.) She also alleges that her
new employer, the Library of Congress, contacted Defendant, at
which time “Defendant . . . described Nazarova’s employment with
Duke to [the Library of Congress] as unfavorable” and disclosed
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information allegedly in violation of the Confidentiality
Agreement. (Id. ¶¶ 32.1, 32.2.)
As a result, “Nazarova received a Memorandum [] from [the
Library of Congress] demanding a response and detailed
explanation as to why her employment with Duke[] was described
by the Defendant as being not entirely favorable and was told to
describe what corrective actions she received as part of her
employment with Duke.” (Id. ¶ 32.3.)
Plaintiff supplemented her second claim (retaliation) to
include the allegedly retaliatory action by Defendant during its
communication with the Library of Congress.
(Id. ¶ 47.1.)
Plaintiff also added a fourth claim for breach of
Defendant’s Confidentiality Agreement. (Id. ¶¶ 62-65.)
Plaintiff alleges that the breach “caused her injuries including
but not limited [to] emotional distress, mental pain, suffering,
stress and worry about maintain her new job” as well as punitive
damages.” (Id. ¶¶ 63-64.)
B.
Standard of Review
Federal Rule of Civil Procedure 15(d) provides “[o]n motion
and reasonable notice, the court may, on just terms, permit a
party to serve a supplemental pleading setting out any
transaction, occurrence, or event that happened after the date
of the pleading to be supplemented.” The Fourth Circuit has
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outlined that “the standards used by a district court in ruling
on a motion to amend or on a motion to supplement are nearly
identical.” Franks v. Ross, 313 F.3d 184, 198 (4th Cir. 2002).
“Rule 15(d) motions are to be evaluated under the same standards
used to evaluate motions to amend pleadings under Rule 15(a),
which generally states that leave to amend shall be freely
granted when justice requires unless there are valid reasons for
denying leave, such as undue delay, bad faith, or futility.”
Estate of Williams-Moore v. All. One Receivables Mgmt., Inc.,
335 F. Supp. 2d 636, 644 (M.D.N.C. 2004); see Lindsay v. Glick,
1:15CV596, 2016 WL 1650771, at *2 (M.D.N.C. Apr. 22, 2016);
Redfear v. Smith, No. 1:08CV904, 2010 WL 4054324, at *8
(M.D.N.C. Oct. 12, 2010), report and recommendation adopted,
1:08CV904, 2011 WL 1213157 (M.D.N.C. Mar. 29, 2011).
C.
Discussion
Defendant argues that “all of Plaintiff’s claims are
subject to a valid and enforceable arbitration agreement.”
(Doc. 25 at 3.) Defendant also argues that “[e]ven if this Court
were to consider Plaintiff’s motion, the proposed additional
claims fall within the scope of the parties’ arbitration
agreement.” (Id.) Finally, Defendant argues that “Plaintiff’s
motion should be denied on grounds of futility.” (Id. at 4.)
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Plaintiff replies that “none of her claims are subject to a
valid and enforceable agreement.” (Doc. 26 at 4.)4 Plaintiff
argues that “[a]t the time of the incident the Plaintiff was no
longer employed by Duke and was not bound by the arbitration
agreement or DRP terms.” (Id. at 6.)
In addition to the above analysis concerning the coverage
of the arbitration agreement, the Fourth Circuit has outlined
that “when an arbitration clause is invoked after the
contractual relationship between the parties has ended, the
parties’ intent governs whether the clause’s authority extends
beyond the termination of the contract.” Zandford v. PrudentialBache Sec., Inc., 112 F.3d 723, 727 (4th Cir. 1997); see
Virginia Carolina Tools, Inc. v. Int’l Tool Supply, Inc., 984
F.2d 113, 119 (4th Cir. 1993); In re Startec Glob. Commc’ns
Corp., 300 B.R. 244, 250 (Bankr. D. Md. 2003). Here, Plaintiff
agreed to arbitrate “any dispute or controversy arising out of
or related to my employment or termination by Duke University.”
(Evans Decl., Ex. B (Doc. 12-1) at 12) (emphasis added).
Because the parties included any potential disputes arising out
All citations in this Memorandum Opinion and Order to
documents filed with the court refer to the page numbers located
at the bottom right-hand corner of the documents as they appear
on CM/ECF.
4
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of Plaintiff’s termination by Duke, this court concludes that
the parties intended the arbitration clause extend beyond the
end of her employment.
In Zandford v. Prudential-Bache Securities, Inc., 112 F.3d
723 (4th Cir. 1997), the Fourth Circuit adopted the “significant
aspects” test. See Webb v. Harris, 378 F. Supp. 2d 608, 612
(M.D.N.C. 2005) (applying the Zandford court’s adoption of the
test in an employment context). “In applying Morgan’s
‘significant aspects’ test, some courts have elaborated that the
proper question is whether resolution of the claim depends upon
evaluation of a party’s performance . . . during the time of the
contractual relationship.” Zandford, 112 F.3d at 729 (internal
quotation marks omitted). Further, “defamation respecting an
employee’s job performance [has] been held arbitrable . . .
because they necessarily involve an evaluation of the employer’s
or the employee’s performance during their employment
relationship.” Id.; Webb, 378 F. Supp. at 612 (“A review of
reported decisions reveals that tort claims for post-termination
defamation have consistently been held to “arise out of
employment” and thus, be deemed arbitrable, because such claims
frequently involve an evaluation of the former employee’s work
performance.”). The court finds this logic persuasive, as
Plaintiff alleges “Defendant purposefully and unnecessarily
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disclosed sensitive information such as employee records and
more specifically disciplinary actions on file with Duke for
Nazarova to her new employer . . . .” (Suppl. Compl. (Doc. 21-1)
¶ 47.1.)
Plaintiff’s allegations are that Defendant disclosed
information regarding her time as an employee at Duke, which
would seemingly include comments or evaluation of her job
performance. (See id.) This court concludes that any such
communications “meet the test, hence are arbitrable.” Zandford,
112 F.3d at 729.
As discussed above, all of Plaintiff’s “Supplemental Facts”
contained in Section II(A)(1) “aris[e] out of or relate[] to
[her] employment or termination by Duke University.” (Evans
Decl., Ex. B (Doc. 12-1) at 12.)
As such, even if Plaintiff
could make a sufficient showing to supplement her pleadings
under Federal Rule of Civil Procedure 15(d), her potential new
claims are properly covered by the arbitration agreement and
subject to arbitration.
For this reason, Plaintiff’s Motion for
Leave to File Suplemental [sic] Complaint (Doc. 21) will be
denied as futile. See Estate of Williams-Moore, 335 F. Supp. 2d
at 644.
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III. PLAINTIFF’S MOTION TO STRIKE DEFENDANT’S MOTION TO COMPEL
ARBITRATION OR, IN THE ALTERNATIVE TO STRIKE THE EVIDENCE
Plaintiff moves to strike “Exhibit B,” which was attached
to Defendant’s Motion to Compel, on the ground that it includes
her birth date and social security number in violation of
Federal Rule of Civil Procedure 5.2. (Doc. 20 at 1-2.)
Defendant responded that the disclosure of Plaintiff’s
personal information was inadvertent and described the steps it
took to remedy the situation, which included filing an
appropriately redacted version of the exhibit in question.
(Doc. 24 at 1-2.)
In light of the fact that Defendant’s error was inadvertent
and quickly remedied when brought to its attention, this court
sees no basis for sanctions and thereby will deny Plaintiff’s
motion to strike.
IV.
CONCLUSION
For the reasons set forth above, IT IS HEREBY ORDERED that
Defendant’s Motion to Compel Arbitration or, in the Alternative,
to Dismiss the Complaint for Lack of Subject Matter Jurisdiction
(Doc. 11) is GRANTED and that Plaintiff’s Motion to Strike
Defendant’s Motion to Compel (Doc. 20) and Motion for Leave to
File Suplemental [sic] Complaint (Doc. 21) are DENIED.
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IT IS FURTHER ORDERED that this action is STAYED until
arbitration has been had in accordance with the terms of the
dispute resolution agreement.
The Clerk shall mark the case as inactive. Within 30 days
of completion of the arbitration, the parties shall file a joint
report advising the court of completion of the arbitration and
whether further proceedings in this court are required.
This the 2nd day of March, 2017.
_______________________________________
United States District Judge
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