HEWITT v. THE ROSE GROUP et al

Filing 12

MEMORANDUM ORDER THAT C0-DEFENDANTS APPLEBEE'S INTERNATIONAL, INC., APPLEBEE'S RESTAURANTS, LLC, APPLEBEE'S SERVICE, INC., AND DINEQUITY, INC. ARE DISMISSED WITHOUT PREJUDICE. THIS ACTION IS STAYED PENDING ARBITRATION IN ACCORDANCE WIT H THE TERMS SET OUT IN THE ARBITRATION AGREEMENT AND DISPUTE RESOLUTION PROGRAM BOOKLET; AND DEFENDANTS SHALL PAY ALL FEES AND COSTS ASSOCIATED WITH THE ARBITRATION WITH THE EXCEPTION OF THE $150 FILING FEE AND PLAINTIFF'S OWN ATTORNEYS' FEES AND EXPENSES. SIGNED BY HONORABLE GERALD A. MCHUGH ON 3/21/2016. 3/22/2016 ENTERED AND COPIES E-MAILED.(ahf)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA

ASHLEY HEWITT

Plaintiff,
v.

CIVIL ACTION
No. 15-5992

FILED

THE ROSE GROUP et al.

MAR 2 1 2016

Defendant.

MICHAELE. KUNZ, Clerk
-----1Dep Clerk

-

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MEMORANDUM ORDER
This 21st day of March, 2016, upon consideration of Defendants' Motion to Dismiss or
Stay and Compel to Arbitration, Plaintiffs' Response, and Defendants' Reply, it is hereby

ORDERED that:
1. Plaintiff having agreed she would voluntarily dismiss Co-Defendants Applebee's
International, Inc., Applebee's Restaurants, LLC, Applebee's Service, Inc., and
DineEquity, Inc. without prejudice, those Defendants are DISMISSED;
2. This action is ST AYED pending arbitration in accordance with the terms set out in the
arbitration agreement and Dispute Resolution Program Booklet; and
3. Defendants SHALL pay all fees and costs associated with the arbitration with the
exception of the $150 filing fee and Plaintiffs own attorneys' fees and expenses, as
provided in the arbitration agreement according to Defendants' representation to the
Court.

The reasons for this Order are as follows. Plaintiff Ashley Hewitt worked as a hostess
and server at an Applebee's restaurant in Folsom, Pennsylvania from January 2011 to January
2014. She was hired by "The Rose Group," which Defendants describe as "a restaurant

management company that owns and operates several Applebee's ... restaurants in
Pennsylvania." Mem. Sup. Pl. Mot. Compel at 2. When she was hired, she signed an agreement
that she would arbitrate certain claims arising from her employment rather than litigating them in
Court.
The Complaint alleges that Plaintiffs direct supervisor and restaurant manager Jason
Scott sexually harassed her throughout this entire period. It alleges that Hewitt complained of
the harassment and another restaurant manager falsely told Plaintiff she should not show up for
her shift. When Hewitt failed to show for the shift, according to the Complaint, her employment
was terminated.
Plaintiff filed her Complaint in Pennsylvania state court asserting violations of Title VII
of the Federal Civil Rights Act of 1964, state law assault and battery, the Pennsylvania Human
Relations Act, and state law negligence. Defendants removed the case to this Court and filed
their Motion to Dismiss or Stay and Compel to Arbitration pursuant to the Federal Arbitration
Act (FAA).
The FAA requires courts to stay claims covered by an enforceable arbitration agreement.
Alexander v. Anthony Intern., L.P., 341F.3d256, 263 (3d Cir. 2003) ("A party to a valid and

enforceable arbitration agreement is entitled to a stay of federal court proceedings pending
arbitration as well as an order compelling such arbitration"). A court considering a motion to
stay and compel arbitration must make "a two-step inquiry into (1) whether a valid agreement to
arbitrate exists and (2) whether the particular dispute falls within the scope of that agreement."
Trippe Mfg. Co. v. Niles Audio Corp., 401 F.3d 529, 532 (3d Cir. 2005).

The parties disagree about the controlling standard. Defendants ask the Court to apply
the standards for Federal Rule of Civil Procedure 12(b)(6) to their motion to compel. Plaintiff

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argues that when considering 12(b)(6) motions, courts may only rely on documents that are
integral or explicitly referenced in a complaint. Pl. Mem. Opp. Mot. Compel Arbitration at 5.
The Motion to Compel Arbitration can only be granted if the arbitration agreement is
enforceable, and the "validity and enforceability [of the arbitration agreement] regards a factual
context not referenced by the Complaint." Id. If the Court considers the arbitration agreement,
which Plaintiff does not discuss in its Complaint, Plaintiff contends, the Court must convert
Defendants' Motion to Dismiss into a Motion for Summary Judgement. Id.
The Third Circuit recently clarified the appropriate standard of review for courts to apply
in reviewing motions to compel arbitration:
To summarize, when it is apparent, based on "the face of a complaint, and
documents relied upon in the complaint," that certain of a party's claims "are
subject to an enforceable arbitration clause, a motion to compel arbitration should
be considered under a Rule 12(b)(6) standard without discovery's delay."
Somerset, 832 F.Supp.2d at 482. But ifthe complaint and its supporting
documents are unclear regarding the agreement to arbitrate, or if the plaintiff has
responded to a motion to compel arbitration with additional facts sufficient to
place the agreement to arbitrate in issue, then "the parties should be entitled to
discovery on the question of arbitrability before a court entertains further briefing
on [the] question." Id. After limited discovery, the court may entertain a renewed
motion to compel arbitration, this time judging the motion under a summary
judgment standard.

Guidotti v. Legal Helpers Debt Resolution, L.L.C, 716 F.3d 764, 776 (3d Cir. 2013).
Here, there is no lack of clarity regarding the agreement to arbitrate, and Plaintiff has not
produced any additional facts sufficient to place the agreement to arbitrate at issue. 1 Plaintiff
requests an opportunity to produce evidence that she cannot afford arbitration. Pl. Mem. Opp.
Mot. Compel at 7. However, the Dispute Resolution Program Booklet, which the Arbitration
Agreement explicitly integrates, states that Plaintiffs financial obligations for beginning

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It would frustrate the purposes of the Federal Arbitration Act if plaintiffs could avoid having their claims quickly
compelled to arbitration simply by failing to mention the existence of clearly applicable arbitration agreements in
their complaints.
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arbitration would be limited to a $150.00 filing fee and her own attorneys' fees. Defendants
contend that "[a]side from this minimal initial filing fee, the Rose Group pays for the remaining
cost of arbitration-excluding a plaintiffs attorneys' fees and litigation costs." Def. Reply Supp.
Mot. Compel at 7. In that regard, Plaintiff does not represent that she was given leave to proceed
in forma pauperis in state court, where this action began, and the filing fee she (or her counsel)

would have paid there is more than double the arbitration fee here. In light of that, I must
conclude that there is no reason to delay resolving this motion now under the 12(b)(6) standard,
without discovery.
Plaintiff attacks the agreement at issue by arguing it is unenforceable. Specifically, she
argues that (1) there was no consideration for the arbitration agreement, (2) it is insufficiently
specific because it does not identify the arbitration forum, and (3) the fee sharing provisions of
the agreement make arbitration so expensive that Plaintiff cannot afford to vindicate her statutory
rights. I address each of these arguments in turn.
First, the arbitration agreement is supported by adequate consideration. The Third Circuit
recognizes that mutual promises to arbitrate are sufficient. Blair v. Scott Specialty Gases, 283
F.3d 595, 603-04 (3d Cir. 2002) ("When both parties have agreed to be bound by arbitration,
adequate consideration exists and the arbitration agreement should be enforced.").
Second, the arbitration agreement is not invalid for failure to specify the arbitration
forum. Plaintiff is correct that in general, contracts will fail if they are not "sufficiently definite
to be enforced." Id. at 603. Under existing law, it is not clear whether failure to specify an
arbitration forum is a fatal omission for an arbitration agreement. But even if such a failure
were a basis to find an agreement invalid, the agreement here specifically incorporates the

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Dispute Resolution Program Booklet by reference, and the Booklet specifies that the arbitration
will proceed through the American Arbitration Association.
Third, the agreement's provisions for apportioning fees for arbitration do not render
Plaintiff unable to vindicate her statutory rights. Plaintiff cites Shankle v. B-G Maintenance
Mgmt. of Colorado, Inc., 163 F.3d 1230 (10th Cir. 1999), which held that a mandatory

arbitration agreement entered into as a condition of employment and that required an employee
to pay a portion of the arbitrator's fees is unenforceable under the FAA. See also Paladino v.
Avnet Computer Techs., Inc., 134 F.3d 1054, 1062 (I Ith Cir.1998) (finding that arbitration

agreement requiring employee to pay one-half of costs and "steep filing fees" is unenforceable);
Cole v. Burns Int'! Sec. Servs., 105 F.3d 1465, 1468 (D.C. Cir. 1997) (finding that "an employee

can never be required, as a condition of employment, to pay an arbitrator's compensation in order
to secure the resolution of statutory claims under Title VII").
I would find that argument compelling if it fit the facts presented here, but it does not.
Shankle dealt with a provision that required the plaintiff to pay half of the arbitrator's fees,

amounting to between $1,875 and $5000. Shankle, 163 F.3d at 1235. There is no such
requirement here. Defendants construe the agreement as providing that "Aside from this
minimal initial filing fee [of $150], the Rose Group pays for the remaining cost of arbitrationexcluding a plaintiffs attorneys' fees and litigation costs." Def. Reply Supp. Mot. Compel at 7.
I will accept that construction, but because I am concerned that the agreement might be less
specific than Defendants suggest, this Order specifically requires them to pay all associated costs
and fees aside from the initial $150, rendering any risk to the Plaintiff non-existent. See Green
Tree Fin. Corp.-Alabama v. Randolph, 531 U.S. 79, 90-91 (2000) (speculative risk of economic

burden does not suffice to invalidate arbitration agreement).

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Therefore, I find that the arbitration agreement is enforceable. The underlying premise
of Plaintiff's argument is that arbitration is far inferior to trial by jury as a method of resolving a
claim for sexual harassment. I agree. But the controlling law does not permit me to accept that
premise.
Under that law, Plaintiffs claims are covered by the arbitration agreement, with the result
that Defendants are entitled to a stay of these proceedings and an Order compelling Plaintiff to
arbitrate her claims.

~~__;;,/i/J
Gerald Austin McHugh
United States District Court Judge

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