Glenwright v. Carbondale Nursing Home, Inc. et al
MEMORANDUM (Order to follow as separate docket entry) re 11 MOTION to Dismiss or in the Alternative, Summary Judgment filed by Carbondale Nursing Home, Inc., Genesis Health Care, Inc. Signed by Honorable Malachy E Mannion on 3/23/17. (bs)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF PENNSYLVANIA
CIVIL ACTION NO. 3:16-0926
CARBONDALE NURSING HOME,
INC. d/b/a Carbondale Nursing
Home and Rehabilitation Center
and GENESIS ELDERCARE
NETWORK SERVICES, INC.,
Currently before the court is a motion to dismiss or, in the alternative,
compel arbitration, (Doc. 11), filed by the defendants. The defendants’ motion
was filed in response to the plaintiff’s (“Glenwright’s”) amended complaint,
(Doc. 16). Their motion seeks dismissal of Glenwright’s claims or, in the
alternative, enforcement of an arbitration agreement between Glenwright and
defendant Carbondale Nursing Home, Inc. (“Carbondale”). Based on the
foregoing, the defendants’ motion is GRANTED IN PART and DENIED IN
PART. Glenwright must arbitrate her claims against Carbondale. The claims
against defendant Genesis Eldercare Network Services, Inc. (“Genesis”) may
proceed and Genesis will be allowed to file a renewed motion at the close of
Glenwright was employed by Carbondale, a healthcare facility, for
approximately six (6) years as a registered nurse and supervisor. Genesis is
the managing entity of Carbondale. At some point before or during her
employment, Glenwright signed an arbitration agreement with Carbondale.
(Doc. 24-9). Glenwright does not dispute that she signed this agreement. (Doc.
24, ¶3; see also Doc. 24-9, at 3). The agreement provides as follows:
[A]ny . . . dispute arising out of the [employee’s] employment or the
termination of . . . employment (including, but not limited to claims
of unlawful termination based on race, sex, age, national origin,
disability, breach of contract or any other bias prohibited by law)
[will be submitted] . . . exclusively to binding arbitration under the
Federal Arbitration Act.
(Doc. 24-9, at 1). The agreement also states that the employee’s dispute must
be initiated by the employee delivering a written request for arbitration within
one year from the date of the alleged incident. (Id.). If the employee does not
submit a timely request, the agreement states the employee’s “right to raise
any claims arising out of the [employee’s] termination” will have been waived.
(Id.). In addition, in two instances, the agreement provides that the employee
will be responsible for his or her own legal costs and half the cost of arbitration.
(Doc. 24-9, at 2–3).
Glenwright’s employment was terminated, effective May 20, 2014.
Leading up to her termination, on December 10, 2012, Glenwright suffered an
injury at work. She filed a workers’ compensation claim for this injury in
February of 2013 and was unable to work until August of 2013. Glenwright’s
work injury exacerbated her arthritis and degenerative knee condition. When
she returned to work she required accommodations for these disabilities,
including adjustments to her duties and work schedule. She was granted her
requested accommodations from August of 2013 until her termination. After
seeking accommodations, Glenwright alleged that she was assigned to
“menial and physically challenging job duties that she had rarely been required
to perform in the past.” (Doc. 16, at ¶20). She described this as “unwarranted
discipline” designed to “force her out of the workplace.” (Id. ¶21).
On May 14, 2014, Glenwright was informed that her workplace could no
longer accommodate her injuries. She was notified that her employment would
be terminated, effective May 20, 2014, if she did not apply for a leave of
absence. Glenwright notified her workplace, verbally and in writing, that she
would not request a leave of absence because she did not need one and
requested the continuance of her existing accommodations. No further
accommodations were provided.
On October 9, 2014, Glenwright filed a charge with the Equal
Opportunity Employment Commission (“EEOC”) asserting claims under the
Americans with Disabilities Act of 1990 (“ADA”), 42 U.S.C. §12101 et seq. and
she dual-filed claims under the Pennsylvania Human Relations Act (“PHRA”),
43 PA. STAT. §951 et seq. with the Pennsylvania Human Relations
Commissions (“PHRC”). (Doc. 24-8). These charges listed Carbondale as the
respondent, but did not list Genesis explicitly. On May 18, 2016, Glenwright
filed a complaint in this court. (Doc. 1). At that time, Glenwright was still in the
process of exhausting her administrative remedies with respect to her ADA
and PHRA claims; thus, her complaint did not contain those claims. Within her
complaint, Glenwright notified the court that she intended to file an amended
complaint once she completed the administrative process. (Doc. 1, at ¶2 n. 1).
On August 11, 2016, Glenwright filed an unopposed motion to
amend/correct her complaint. (Doc. 9). On August 12, 2016, the court granted
the motion, (Doc. 10), and the amended complaint was docketed that same
day.1 (Doc. 16). Her amended complaint included claims under Section 504 of
the Rehabilitation Act of 1973, 29 U.S.C. §701 et seq. (Counts I–II), claims
under the Family Medical Leave Act of 1993, 29 U.S.C. §2601 et seq. (Counts
In addition to adding her claims under the ADA and PHRA, Glenwright’s
amended complaint also changed the name of one defendant. Her original
complaint listed the defendants as Carbondale and an entity named Genesis
Healthcare, Inc. (See Doc. 1). The amended complaint kept Carbondale as a
defendant and changed Genesis Healthcare, Inc. to Genesis Eldercare
Network Services, Inc., the current co-defendant. (See Doc. 16). This change
was likely in response to the Rule 7.1 disclosure statement filed by Genesis
Healthcare, Inc., (Doc. 6), identifying Genesis Eldercare Network Services, Inc.
as the corporate parent of Genesis Healthcare, Incorporated. Carbondale has
no corporate parent. (See Doc. 5).
III–IV), a wrongful discharge claim under Pennsylvania law (Count V), claims
under the ADA (Counts VI–VIII), and claims under the PHRA (Counts IX–XI).
On August 16, 2016, the defendants filed the current motion with a
supporting brief. (Doc. 11, Doc. 12). In addition, the defendants filed a
statement of facts with the underlying arbitration agreement attached as an
exhibit. (Doc. 13). The defendants’ motion seeks dismissal based on the
limitations period provided for in the arbitration agreement. In the alternative,
the defendants request that this court compel arbitration. As another
alternative argument, the defendants argue that this court lacks subject-matter
jurisdiction over the claims against Genesis because Glenwright failed to
exhaust her administrative remedies with respect to Genesis. On September
27, 2016, after requesting and receiving two extensions of time, Glenwright
filed her brief in opposition, contesting the validity of the agreement, among
other arguments. (Doc. 23). She also filed a counter statement of facts with
several exhibits attached. (Doc. 24). On October 17, 2016, after requesting
and receiving an extension of time, the defendants filed a reply brief. (Doc. 27).
On September 19, 2016, after the defendants’ motion had been filed, the
court held a telephone case management conference with the parties. (See
Doc. 18). Immediately thereafter, the court issued a scheduling order setting
various case management deadlines, including a February 13, 2017 deadline
for fact discovery. (Doc. 20). No supplemental briefs or exhibits have been
provided to the court during the course of this discovery. On February 8, 2017,
the plaintiff filed an unopposed motion seeking to extend the original
deadlines, which the court granted. (See Docs. 28–29). Thus, to date, the
parties are still in the process of discovery.
Motion to Compel Arbitration
In Guidotti v. Legal Helpers Debt Resolution, L.L.C., 716 F.3d 764 (3d
Cir. 2013), the Third Circuit Court of Appeals clarified the appropriate standard
to be applied to a motion to compel arbitration that is filed prior to the benefit
of discovery. The court held that where the affirmative defense of arbitrability
is apparent on the face of the complaint or those documents relied upon in the
complaint the standard under Federal Rule of Civil Procedure 12(b)(6) should
be applied. Id. at 773–74. In those cases, the Federal Arbitration Act (“FAA”),
9 U.S.C. §1 et seq., would favor speedy resolution of the motion without the
delay of discovery. Id. at 773.
“[A] more deliberate pace is required” when either (1) the complaint and
documents referenced therein do not establish with “requisite clarity” that the
parties agreed to arbitrate or (2) “the opposing party has come forth with
reliable evidence that is more than a ‘naked assertion . . . that it did not intend
to be bound,’ even though on the face of the pleadings it appears that it did.”
Id. at 774 (quoting Somerset Consulting, LLC v. United Capital Lenders, LLC,
832 F. Supp. 2d 474, 479 (E.D. Pa. 2011) and Par-Knit Mills, Inc. v.
Stockbridge Fabrics Co., Ltd, 636 F.2d 51, 55 (3d Cir. 1980)). In those
instances the motion should be resolved according to the standard provided
by Federal Rule of Civil Procedure 56. Id.
When the issue of arbitrability is not apparent on the face of the
complaint, normally, “the motion to compel arbitration must be denied pending
further development of the factual record.” Id. “[A] restricted inquiry into the
factual issues will be necessary to properly evaluate whether there was a
meeting of the minds on the agreement to arbitrate, and the non-movant must
be given the opportunity to conduct limited discovery.” Id. (internal citations
and quotations omitted). After this, the appropriate standard to be applied is
the standard provided by Rule 56.
Here, the issue of arbitrability is not apparent on the face of Glenwright’s
amended complaint or any documents cited within or attached to the
amended complaint. The defendants’ arguments are entirely premised on the
arbitration agreement attached to the motion to compel arbitration. Glenwright
contests the validity of this agreement. Normally, a plaintiff would be “entitled
to discovery on the question of arbitrability before [this] court entertains further
briefing” on the issue. Guidotti, 716 F.3d at 776 (quoting Somerset, 832 F.
Supp. 2d at 482). However, at this stage of the litigation, the parties have
already engaged in several months of discovery. Despite this, Glenwright has
not submitted or attempted to submit any supplemental briefing or exhibits to
further her arguments with respect to the issue of arbitrability. Denying the
defendants’ motion in its entirety at this time solely to provide additional time
for discovery would be inefficient, especially where the allowance of discovery
to engage in the arbitrability analysis is, typically, quite limited.
Further, on February 8, 2017, Glenwright requested more time for
discovery generally. (Doc. 28). The court granted her request. (Doc. 29). The
court will not further extend the discovery deadline. Instead, the court will rule
on the defendants’ motion using the summary judgment standard set forth in
Federal Rule of Civil Procedure 56 in light of the briefing, exhibits, and
statements of facts submitted by all parties.
Rule 56 Summary Judgment Standard
Rule 56 allows a court to enter summary judgment “if the movant shows
that there is no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” FED. R. CIV. P. 56(a); see also Celotex
Corp. v. Catrett, 477 U.S. 317 (1986). A factual dispute is genuine if a
reasonable jury could find for the nonmovant, and is material if it will affect the
outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986); Aetna Cas. & Sur. Co. v. Ericksen, 903 F. Supp. 836, 838 (M.D. Pa.
1995). In support of their argument, the movant and nonmovant must point to
“particular parts of materials in the record, including depositions, documents,
electronically stored information, affidavits or declarations, stipulations
(including those made for purposes of the motion only), admissions,
interrogatory answers, or other materials” or show that the other party’s
evidence does “not establish the absence or presence of a genuine dispute.”
FED. R. CIV. P. 56(c)(1)(A), (B).
The movant can also meet the Rule 56 standard by showing that “on all
the essential elements of its case on which it bears the burden of proof at trial,
no reasonable jury could find for the nonmoving party.” In re Bressman, 327
F.3d 229, 238 (3d Cir. 2003). The nonmoving party must then “do more than
simply show that there is some metaphysical doubt as to material facts.” Boyle
v. Cnty. of Allegheny, 139 F.3d 386, 393 (3d Cir. 1998) (quoting Matsushita
Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986)). In
assessing the parties’ arguments, “the court must draw all reasonable
inferences in favor of the nonmoving party, and it may not make credibility
determinations or weigh the evidence.” Guidotti, 716 F.3d at 772 (quoting
Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000)).
Administration Exhaustion—Rule 12(b)(1)
In addition to seeking dismissal or arbitration based on the arbitration
agreement, the defendants’ motion challenges this court’s subject-matter
jurisdiction under Federal Rule of Civil Procedure 12(b)(1). The defendants
allege that Glenwright failed to exhaust her administrative remedies with
respect to Genesis. “A motion to dismiss under Rule 12(b)(1) challenges the
jurisdiction of the court to address the merits of the plaintiff’s complaint.” Vieth
v. Pennsylvania, 188 F. Supp. 2d 532, 537 (M.D. Pa. 2002). The failure to
exhaust administrative remedies is a jurisdictional issue and the appropriate
device to raise this issue is a motion to dismiss under Rule 12(b)(1). See
Batchelor v. Rose Tree Media Sch. Dist., 759 F.3d 266, 271 (3d Cir. 2014).
A Rule 12(b)(1) dismissal is not a judgment on the merits, but only a
determination that the court lacks the authority to hear the case. Swope v.
Central York Sch. Dist., 796 F. Supp. 2d 592, 599 (M.D. Pa. 2011). Because
the district court is a court of limited jurisdiction, the burden of establishing
jurisdiction always rests upon the party asserting it. See Kokkonen v.
Guardian Life. Ins. Co. of America, 511 U.S. 375, 377 (1994).
An attack on the court’s jurisdiction may be either “facial” or “factual” and
the “distinction determines how the pleading must be reviewed.” Constitution
Party of Pennsylvania v. Aichele, 757 F.3d 347, 357 (3d Cir. 2014). A facial
attack tests the sufficiency of the pleadings, while a factual attack challenges
whether a plaintiff’s claims fail to comport factually with jurisdictional
prerequisites. Id. at 358; see also S.D. v. Haddon Heights Bd. of Educ., 833
F.3d 389, 394 n. 5 (3d Cir. 2016). If the defendant brings a factual attack, the
district court may look outside the pleadings to ascertain facts needed to
determine whether jurisdiction exists. Id.
Reviewing a facial attack, a district court must accept the allegations
stated in a plaintiff’s complaint and review “only whether the allegations on the
face of the complaint, taken as true, allege facts sufficient to invoke the
jurisdiction of the district court.” Taliaferro v. Darby Twp. Zoning Bd., 458 F.3d
181, 188 (3d Cir. 2006) (internal quotation marks omitted). “Thus, a facial
attack calls for a district court to apply the same standard of review it would
use in considering a motion to dismiss under Rule 12(b)(6), i.e., construing the
alleged facts in favor of the nonmoving party. This is in marked contrast to the
standard of review applicable to a factual attack, in which a court may weigh
and ‘consider evidence outside the pleadings.’” Aichele, 757 F.3d at 358
(quoting Gould Elecs., Inc. v. United States, 220 F.3d 169, 176 (3d Cir. 2000))
(internal citation omitted).
The court construes the defendants’ motion as a factual attack of
jurisdiction. An attack on jurisdiction based on a failure to exhaust remedies
that is filed prior to answering the complaint is usually, “by definition, a facial
attack” on the pleadings unless the defendant has offered factual averments
in support of its motion. Haddon Heights, 833 F.3d at 394 n. 5. Here, all
parties have provided statements of facts inclusive of various factual
averments. In addition, all parties have provided the court with an abundance
of exhibits to support their arguments. The court will look to these exhibits in
making its determination.
THE ARBITRATION DISPUTE
The parties dispute the validity of the arbitration agreement signed by
Glenwright. In particular, Glenwright argues that the agreement is
unconscionable under Pennsylvania law and that Carbondale waived its rights
under the agreement. Also at issue is whether Genesis may compel
arbitration, assuming the agreement is valid. The court finds that the
arbitration agreement is valid when the fee provisions have been severed
from the agreement. The court also finds that the decision of whether
Carbondale has waived the provision in the agreement requiring a written
request for arbitration within one year of her termination is a question for the
arbitrator and not this court. Finally, the court cannot determine at this stage
whether Genesis should be deemed a party to the agreement as noted below
and will allow Genesis to file a renewed motion, if appropriate, after the
completion of discovery.
“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.” Alexander v. Anthony Int’l, L.P., 341 F.3d 256,
263–64 (3d Cir. 2003); see also 9 U.S.C. §§3, 4. Judicial review over a
dispute regarding arbitration is, initially, limited to a two-part inquiry.
CardioNet, Inc. v. Cigna Health Corp., 751 F.3d 165, 172 (3d Cir. 2014). First,
the court must determine whether “a valid agreement to arbitrate exists,” and,
second, whether “the particular dispute falls within the scope of the
agreement.” Kirleis v. Dickie, McCamey & Chilcote, P.C., 560 F.3d 156, 160
(3d Cir. 2009); see also id. Here, the parties primary dispute falls within the
first inquiry. Glenwright does not dispute that her employment related claims
are included in the scope of the arbitration agreement.
The initial question of whether the parties validly agreed to arbitrate is
presumed to be a question for the court unless the parties clearly and
unmistakably indicate otherwise. Guidotti, 716 F.3d at 773. Generally, there
is a “liberal federal policy favoring arbitration” and a “fundamental principle that
arbitration is a matter of contract.” AT&T Mobility, 131 S. Ct. at 1745 (quoting
Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983)
and Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63, 67 (2010)). However,
“before a party to a lawsuit can be ordered to arbitrate and thus be deprived
of a day in court, there should be express, unequivocal agreement to that
effect.” Guidotti, 716 F.3d at 773 (quoting Par-Knit Mills, 636 F.2d at 54).
Thus, the presumption in favor of arbitration is only applied once the court has
determined that the parties “have consented to and are bound by the
arbitration [agreement].” Griswold v. Coventry First LLC, 762 F.3d 264, 271
(3d Cir. 2014). Their agreement may be declared unenforceable by the court
“upon such grounds as exist at law or in equity for the revocation of any
contract.” 9 U.S.C. §2; see also AT&T Mobility, LLC v. Concepcion, 131 S. Ct.
Glenwright argues that the arbitration agreement is invalid because it is
unconscionable, particularly because it requires the employee to bear his or
her own legal fees and costs and half the cost of arbitration.2 The arbitration
agreement states that Carbondale and the employee “shall each bear
respective costs for legal representation at any such arbitration.” (Doc. 24-9,
at 2). It further states, “The parties, if any, shall share the cost of the arbitrator
and court reporter, equally.” (Id.). Later, in the Acknowledgment signed by
Glenwright, the agreement again states, “I agree that I will be entitled to legal
representation at my own cost, during arbitration.” (Id. at 3). The defendants
argue that the agreement is not unconscionable under Pennsylvania law and,
in the alternative, that the fee provisions can be severed. The court finds that
the fee provisions are unconscionable, but that this does not render the entire
agreement unconscionable. The unconscionable provision can be severed to
save the parties’ agreement to arbitrate.
Glenwright has not argued, nor has she presented any evidence to
show, that the fee provisions are prohibitive of her ability to “fully and
effectively” vindicate her rights. See Spinetti v. Serv. Corp. Int’l, 324 F.3d 212,
214 (3d Cir. 2003). A litigant arguing the inability to vindicate his or her rights
based on a fee provision in the agreement bears the burden of showing the
likelihood of high costs and must establish, beyond speculation, the existence
of and inability to pay these costs. See Green Tree Fin. Corp.-Ala. v.
Randolph, 531 U.S. 79, 91–92 (2000); Alexander v. Anthony Int’l, L.P., 341
F.3d 256, 268–69 (3d Cir. 2003); Spinetti, 324 F.3d at 216–17. Here,
Glenwright argues that the fee provisions are unconscionable based on the
possible limitation of remedies available to her and, thus, the agreement as a
whole is unconscionable and cannot be enforced.
A court should “generally apply state contract principles to determine
whether an arbitration agreement is unconscionable.” Quilloin v. Tenet
HealthSystem Phila., Inc., 673 F.3d 221, 230 (3d Cir. 2012). In Pennsylvania,
an agreement is unconscionable if it is both substantively and procedurally
unconscionable. Id. (citing Salley v. Option One Mortg. Corp., 925 A.2d 115,
119 (2007)). Glenwright’s argument for unconscionability of the contract is
based on the alleged unconscionability of the fee provisions in the agreement.
The court agrees that the provisions are unconscionable, but disagrees that
this renders the entire contract unconscionable and, therefore, unenforceable.
“Provisions requiring parties to be responsible for their own expenses,
including attorneys’ fees, are generally unconscionable because restrictions
on attorneys’ fees conflict with federal statutes providing fee-shifting as a
remedy.” Id. at 230–231(collecting cases). This generalization is only
applicable when the provision requires the litigant to bear legal fees and costs
regardless of the outcome of the arbitration and disallows fee-shifting. See id.
at 231; Alexander v. Anthony Int’l, L.P., 341 F.3d 256, (3d Cir. 2003) (fee
provision substantively unconscionable under Virgin Islands law where the
agreement substantially limited the available remedies to plaintiffs); Spinetti,
324 F.3d at 214–15 (addressing a provision that required the litigant to bear
costs regardless of the outcome of arbitration). If the agreement is ambiguous
with respect to the arbitrator’s ability to fashion an appropriate award, this
ambiguity must be addressed by the arbitrator in the first instance. See
Quillion, 673 F.3d at 231. In Quillion, the Third Circuit found an ambiguity with
respect to the employee’s ability to obtain fees as a remedy where explicit
provisions in the parties’ agreement contradicted each other as to the
availability or non availability of fees and costs. Id.
Here, the arbitration agreement at issue unambiguously provides that
the employee will bear his or her own legal costs and half of the costs of
arbitration. It states so in two instances. Unlike the agreement in Quillion,
there is no provision that states that all remedies available in a court of law
would be available to Glenwright in arbitration, or some similar provision to
that effect. Thus, there is no ambiguity in the language of the agreement and
it is clear that Glenwright must bear her respective legal fees and half the
costs of arbitration. This is so despite the existence of a fee-shifting remedy
available to her in this court. This is clearly unconscionable under Quillion.
See 673 F.3d at 230–31.
Although the court finds that the fee provisions are unconscionable, the
court also finds that these provisions are severable. In Pennsylvania, where
an essential term in a contract is illegal, the entire contract is unenforceable.
Spinetti, 324 F.3d at 214 (citing Deibler v. Chas. H. Elliott Co., 81 A.2d 557,
560–61 (Pa. 1951)). In Spinetti v. Service Corporation International, the Third
Circuit, applying Pennsylvania law, explained that a clause can be stricken
from an agreement so long as it does not constitute “an essential part of the
agreed upon exchange.” Id. (quoting RESTATEMENT (SECOND) OF CONTRACTS
§184(1) (1981)). This is true even if there is no specific clause in the
agreement allowing for severance of the agreement. Id. at 221–22. The
Spinetti court affirmed the district court’s decision to sever unenforceable fee
provisions in an employment arbitration agreement. Id. The court found that
the essence of the agreement was to settle employment disputes, and not the
language regarding fees. Id. at 214. “[P]rovisions regarding payment of
arbitration costs and attorney’s fees represent only a part ‘of [the] agreement
and can be severed without disturbing the primary intent of the parties to
arbitrate their disputes.’” Id. (quoting the district court) (alteration in original).
In line with Spinetti, the court is able to sever the fee provisions in the
parties’ arbitration agreement without disturbing the intent of the parties to
arbitrate their employment-related disputes. Thus, any argument that the
unconscionable fee provision renders the entire agreement unconscionable
is legally unsound. The court will enforce the agreement without the fee
provisions and allow the parties to arbitrate their claims.
Moreover, Glenwright has not argued, nor has she shown, that the
agreement is procedurally unconscionable, which this court would be required
to find in order to deem the entire agreement unconscionable. “A contract is
procedurally unconscionable where ‘there is a lack of meaningful choice in the
acceptance of the challenged provision[.]’” Quillion, 673 F.3d at 235 (quoting
Salley, 925 A.2d at 119) (alteration in original). “Under Pennsylvania law, a
contract is generally considered to be procedurally unconscionable if it is a
contract of adhesion.” Id. However, more than a mere disparity of bargaining
power is needed to find procedural unconscionability. Id. The court should
consider factors including: “the take-it-or-leave-it nature of the standardized
form of the document[,] the parties’ relative bargaining positions, and the
degree of economic compulsion motivating the adhering party[.]” Id. at 235–36
(quoting Salley, 925 A.2d at 125) (alteration in original) (internal quotation
Glenwright has not offered any arguments indicating that the arbitration
agreement as a whole is procedurally unconscionable. Accordingly, the court
finds that the agreement as a whole is valid, but will sever the unconscionable
Having found a valid arbitration agreement between Carbondale and
Glenwright, the court must next determine whether the agreement has been
waived, and, if not, whether the case must be dismissed because Glenwright
failed to follow the procedural requirements in the agreement. Glenwright
argues that Carbondale “waived its rights under [the] policy,” including the one
year limitations period, because Carbondale did not notify her of the
arbitration agreement at any time during the underlying administrative
proceedings. (Doc. 23, at 7). The court finds that whether Carbondale waived
the clause requiring written notification of the dispute within a year is an issue
for the arbitrator to decide, not this court. Accordingly, the court will compel
arbitration with respect to Carbondale and allow the arbitrator to determine
whether or not Glenwright’s claims fail because she did not submit a written
request for arbitration in time.
“[W]aiver of the right to arbitrate based on litigation conduct remains
presumptively an issue for the court to decide.” Ehleiter v. Grapetree Shores,
Inc., 482 F.3d 207, 219 (3d Cir. 2007). “Consistent with the strong preference
for arbitration in federal courts, waiver [of the right to compel arbitration] is not
to be lightly inferred, and waiver will normally be found only where the
demand for arbitration came long after the suit commenced and when both
parties had engaged in extensive discovery.” Nino, 609 F.3d at 208 (quoting
PaineWebber Inc. v. Faragalli, 61 F.3d 1063, 1068–69 (3d Cir. 1995)).
“[H]owever, a court may refuse to enforce an arbitration agreement where, for
example, the alleged defaulting party has acted inconsistently with the right
to arbitrate, and [the court] will not hesitate to hold that the right to arbitrate
has been waived where a sufficient showing of prejudice has been made by
the party seeking to avoid arbitration.” Id. (internal quotation marks and
citations omitted). The list of factors relevant to this inquiry include the
 the timeliness or lack therof of a motion to arbitrate . . .[; 2] the
degree to which the party seeking to compel arbitration has
contested the merits of its opponent’s claims;  whether that
party has informed its adversary of the intention to seek arbitration
even if it has not yet filed a motion to stay the district court
proceedings;  the extent of its non-merits motion practice;  its
assent to the court’s pretrial orders; and  the extent to which
both parties have engaged in discovery.
Id. at 208–209 (quoting Hoxworth v. Blinder, Robinson & Co., Inc., 980 F.2d
912, 926–27 (3d Cir. 1992)) (internal citations omitted) (alterations in original).
All of the above factors need not be present and the existence of prejudice is
the “touchstone for determining whether the right to arbitrate has been waived
by litigation conduct.” Id. at 209 (quoting Ehleiter, 482 F.3d at 219).
Here, Glenwright’s sole argument for waiver is premised on the
defendants’ failure to raise the arbitration agreement during the underlying
administrative proceedings. She does not address any litigation conduct in
this court as a basis for her waiver argument. The Third Circuit has not directly
addressed whether a failure to raise the issue of arbitration in administrative
proceedings constitutes a waiver. The Third Circuit has recognized that a
defendant is not required to raise every legal defense or argument before the
EEOC. Petruska v. Gannon Univ., 462 F.3d 294, 308 (3d Cir. 2006) (citing
Marie v. Allied Home Mortg. Corp., 402 F.3d 1, 15 (1st Cir. 2005) (holding that
appellee did not waive right to raise arbitration defense in district court by
failing to raise it before EEOC)). Several federal courts addressing this issue
have come to the conclusion that failure to raise the arbitration agreement in
administrative proceedings does not constitute a waiver of the right to compel
arbitration. See, e.g., Volpe v. Jetro Holdings, No. 08-3521, 2008 WL
4916027, at *6–7 (E.D. Pa. Nov. 14, 2008) (collecting cases); see also Esaka
v. Nanticoke Health Servs., Inc., 752 F. Supp. 2d 476, 484 (D. Del. 2010). The
court is persuaded by the reasoning in these cases and sees no reason to
come to a different conclusion.
Further, in light of the factors provided for waiver, generally, the court
cannot conclude that Glenwright will be prejudiced by Carbondale’s failure to
raise the arbitration issue. The only argument that Glenwright can assert to
show possible prejudice is the requirement requiring employees to submit
their written request for arbitration within one year from the date of termination
or alleged incident in dispute. (Doc. 24-9, at 1). The court is not able to
conclude that this procedural requirement has been waived and will leave that
issue for the arbitrator.
“‘[P]rocedural questions which grow out of the dispute and bear on its
final disposition’ are presumptively not for the judge, but for an arbitrator, to
decide.” Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84 (2002)
(quoting John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543, 557 (1964))
(emphasis in original). Thus, “waiver, delay, or like defenses arising from noncompliance with contractual conditions precedent to arbitration” are
presumptively for the arbitrator. Ehleiter, 482 F.2d at 219. In comparison,
waiver based on active litigation in court implicates the “court’s authority to
control judicial procedures and to resolve issues . . . arising from judicial
conduct” and is, presumptively, an issue for the court. Id. (emphasis in
The Third Circuit’s reasoning in Ehleiter further supports a finding that
conduct in the administrative proceeding is not sufficient to find waiver of the
right to compel arbitration in this judicial proceeding. It also leads to the
conclusion that the waivability of a particular clause requiring a written request
for arbitration within a period of time is an issue for the arbitrator to decide and
not this court. Accordingly, the court will compel arbitration and enforce
Carbondale’s agreement with Glenwright to arbitrate all employment related
disputes, absent the severed fee provisions. It is for the arbitrator to determine
whether Carbondale waived the written notification requirement in the parties’
The court must next determine if Genesis is covered by the arbitration
agreement. While it is clear that Carbondale is a party to the agreement, the
parties dispute whether Genesis is a party. (See Doc. 23, at 3 n. 1). Genesis
is not a signatory to the agreement. (See Doc. 24-9 (referencing Carbondale
only)). In a footnote, Glenwright asserts that Genesis cannot rely on the
agreement because Genesis is not a signatory. (Id.). Also in a footnote, the
defendants appear to assert that they should be treated as one and the same
for purposes of arbitration due to Glenwright’s own arguments as provided in
her brief; overall, their argument is unclear. (Doc. 27, at 8 n.3). At this stage,
a genuine dispute still exists as to whether Genesis and Glenwright agreed to
arbitrate claims and whether Genesis may compel Glenwright to arbitrate.
“[A] court may only compel a party to arbitrate where that party has
entered into a written agreement to arbitrate that covers that dispute.” DuPont
de Nemours & Co. v. Rhone Poulenc Fiber & Resin Intermediates, S.A.S., 269
F.3d 187, 194 (3d Cir. 2001) (quoting Bel-Ray Co., Inc. v. Chemrite (Pty) Ltd.,
181 F.3d 435, 444 (3d Cir. 1999)). “[W]hen asked to enforce an arbitration
agreement against a non-signatory to an arbitration clause, [the court] ask[s]
‘whether he or she is bound by that agreement under traditional principles of
contract and agency law.’” Id. at 194–95 (quoting Bel-Ray Co., 181 F.3d at
444). These principles may include “assumption, piercing the corporate veil,
alter ego, incorporation by reference, third-party beneficiary theories, waiver[,]
and estoppel.” Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 631 (2009).
First, however, a court must look to state law to determine if the particular
principle being argued is recognized and thereafter apply it to the parties
dispute. Id. at 632; Flintkote Co. v. Aviva PLC, 769 F.3d 215, 220 (3d Cir.
Pennsylvania law allows nonsignatories to be bound to an arbitration
agreement. Griswold, 762 F.3d at 271–72 (citing Dodds v. Pulte Home Corp.,
909 A.2d 348, 351 (Pa. Super. Ct. 2006)). Particularly, Pennsylvania
recognizes the agency/principle theory of binding nonsignatories to an
agreement. Provensano v. Ohio Valley Generally Hosp., 121 A.3d 1085, 1097
(Pa. Super. Ct. 2015) ( “[I]f the principle is bound by an arbitration agreement,
its agents, employees and representatives are generally likewise bound and
can enforce the arbitration agreement, even as non-signatories to the
agreement.”) (collecting cases); see also Pritzker v. Merrill Lynch, Pierce,
Fenner & Smith, Inc., 7 F.3d 1110, 1122 (3d Cir. 1993) (“Where the parties to
[an arbitration] clause unmistakably intend to arbitrate all controversies which
might arise between them, their agreement should be applied to claims
against agents or entities related to the signatories.”).
The agency relationship may be created by estoppel, among other
traditional ways of establishing the relationship. See Walton v. Johnson, 66
A.3d 782, 786, 788 (Pa. Super. Ct. 2013). The Third Circuit has also
interpreted Pennsylvania law to allow nonsignatories to be bound by equitable
estoppel, a separate but related concept to agency by estoppel. See Griswold,
762 F.3d at 271–73. In addition, a nonsignatory may be bound under the thirdparty beneficiary doctrine in Pennsylvania. See Smay v. E.R. Stuebner, Inc.,
864 A.2d 1266, 1271 (Pa. Super. Ct. 2004).
Here, the defendants have not made clear how Genesis, a
nonsignatory, may bind Glenwright, a signatory, to the arbitration agreement.
The entirety of the defendants’ argument is located in a footnote. (Doc. 27, at
8 n. 3). The footnote references the doctrines of agency and estoppel.
However, later in their briefing, the defendants assert that they should be
treated separately for purposes of administrative exhaustion. (See Doc. 12, at
14–15; id.). The defendants’ argument for administrative exhaustion purposes
is inconsistent with their argument that Genesis is Carbondale’s “agent.”
With respect to estoppel, the defendants cite to a non-precendential,
state trial court decision applying the principle of equitable estoppel,
specifically. (Doc. 27, at 8 n. 3 (citing Barletto v. Heuschel, 21 Pa. D. & C. 5th
376, 402–403 (Ct. Com. Pl. 2011)). It is not clear that equitable estoppel is
applicable here. In the context of a nonsignatory attempting to bind a signatory
to an arbitration agreement, equitable estoppel applies only where “the claims
[against the nonsignatory] were intimately founded in and intertwined with the
underlying contractual obligations” that contain the arbitration clause. Griswold,
762 F.3d at 272. The signatory cannot rely on contract obligations for their
claims against the true signatory but then refuse to arbitrate against the
nonsignatory based on those same claims. The Third Circuit has described
this as the nonsignatory “voluntarily pierc[ing] its own veil” to compel
arbitration. E.I. DuPont de Nemours & Co. v. Rhone Poulenc Fiber & Resin
Intermediates, S.A.S., 269 F.3d 187, 201 (3d Cir. 2001). This principle is
applied where there is some underlying agreement forming the basis of the
plaintiff’s claims. Glenwright’s claims are not based on the agreement at issue,
but are based on violations of federal and state statutory law. The defendants
have not shown that equitable estoppel would be appropriate in this context.
More importantly, the parties have not clarified the exact relationship
between Genesis and Carbondale. Glenwright describes Genesis as the
managing entity for Carbondale. (Doc. 16, ¶8). Genesis concedes this is true,
though the defendants dispute whether Genesis was Glenwright’s “employer.”
(See Doc. 13, ¶2; Doc. 24, ¶2). It appears from the record that Genesis and
Carbondale are, in fact, separate entities. Carbondale and Genesis’s
subsidiary, an initial defendant in this action, filed a separate Rule 7.1
disclosure statement. (Doc. 5, Doc. 6). Carbondale has no parent corporation,
though it is unclear if Genesis and Carbondale are affiliated entities in any
way. (See Doc. 5). At this stage it is not clear if Genesis can be deemed an
agent of Carbondale and, thus, may compel arbitration against Glenwright. It
is not even clear if this is the defendants’ argument.
The defendants have not shown “that there is no genuine dispute as to
any material fact and the movant is entitled to judgment as a matter of law”
with respect to Genesis’ ability to compel arbitration. FED. R. CIV. P. 56(a). Nor
is the court persuaded that “no reasonable jury” could find that Glenwright did
not agree to arbitrate with Genesis. In re Bressman, 327 F.3d at 238. The
parties have not provided the court with enough facts to make this
determination and the court is unable to rely on the parties’ footnotes.3 At this
Arguments raised in passing that are not squarely argued are, typically,
deemed waived. See Johnson v. Metlife Bank, N.A., 883 F. Supp. 2d 542, 550
n.4 (E.D. Pa. 2012) (citing John Wyeth & Brother, Ltd. v. CIGNA Int’l Corp.,
119 F.3d 1070, 1076 n. 6 (3d Cir. 1997)). In this instance, the parties have
failed to properly address this issue and rely solely on sparse arguments in
footnotes. This renders the court unable to “make an informed ruling” on the
stage, the court will deny the motion with respect to Genesis without prejudice
and allow Genesis to file a renewed motion after the completion of fact
discovery, if appropriate. At that time, hopefully, the court would be able to
properly address the parties true arguments.
Next, the defendants argue that this court lacks jurisdiction over the
ADA and PHRA claims against Genesis because Glenwright failed to name
Genesis as a party in the underlying administrative proceedings before the
EEOC and PHRC. Glenwright argues that Genesis did not need to be named
because both entities represented to her that “for all intents and purposes,
[they were] one entity.” (Doc. 23, at 9). She also argues that they were “joint
employers.” (Id.). The court cannot determine at this stage whether the
administrative charge naming Carbondale as respondent is sufficient with
respect to Genesis because the parties have not clarified the relationship
between Genesis and Carbondale. The defendants’ motion will be denied
without prejudice at this stage of the litigation.
A plaintiff alleging claims under the ADA and PHRA must exhaust his
or her administrative remedies before filing a complaint in court. Churchill v.
Star Enters., 189 F.3d 184, 190 (3d Cir. 1999). Typically, the plaintiff may only
bring suit against the named party in the administrative proceeding. Schafer
v. Bd. of Pub. Educ. Of Sch. Dist., 903 F.2d 243, 251 (3d Cir. 1990). An
exception exists, however, when the unnamed party received notice and has
a “shared commonality of interest with the named party.” Id. at 252 (citing
Glus v. G.C. Murphy Co., 629 F.2d 248, 251 (3d Cir. 1980), vacated on other
grounds by 451 U.S. 935 (1981)).4 The court must consider following four
factors in making this determination:
Whether the role of the unnamed party could through reasonable
effort by the complainant be ascertained at the time of the filing of
the EEOC complaint;
Whether, under the circumstances, the interests of the named
party are so similar to the unnamed party that for purposes of
obtaining voluntary conciliation and compliance it would be
unnecessary to include the unnamed party in the EEOC
Whether the unnamed party’s absence from the EEOC
proceedings resulted in actual prejudice to the interests of the
unnamed party; and
Whether the unnamed party has in some way represented to the
complainant that its relationship with the complainant is to be
through the named party.
Id. at 252 n. 7. This is not a mechanical test and no one factor is dispositive.
Glus, 629 F.2d at 251.
It is unclear at this stage what the relationship is between Carbondale
and Genesis other than Genesis being a “managing entity.” Glenwright has
provided the court with various exhibits to show that Carbondale and Genesis
This articulation has been described as “a shorthand version of the
four-part test stated in Glus.” Dixon v. Phila. Housing Auth., 43 F. Supp. 2d
543, 546 (E.D. Pa. 1999).
represented to her that “for all intents and purposes, [they were] one entity”
but this alone is insufficient. (Doc. 23, at 9). Further, if Genesis is a party to
the arbitration agreement, the exhaustion argument may become moot.
Glenwright’s exhibits include the following:
An employee handbook provided to Glenwright that is labeled
“Genesis Employee Handbook for Managed Centers,” (Doc.24-1);
Paystubs listing “Genesis Healthcare” as the payor, (Doc. 24-2);
Performance appraisals labeled “Genesis Healthcare Corporation
Non-Management Performance Appraisal,” (Doc. 24-3);
A leave of absence form provided by “Genesis Healthcare,” (Doc.
The position statement offered by Carbondale in the underlying
EEOC proceeding whereby Carbondale stated that “Genesis
Healthcare, the managing entity of [Carbondale], offered Nurse
Glenwright a leave of absence so she could maintain
employment,” (Doc. 24-5, at 7).
Glenwright uses the above information to argue that there is sufficient
commonality of interests between Carbondale and Genesis based on their
representations to her. This is not enough to clarify the true relationship
between Genesis and Carbondale and it is not enough for this court to decide
the defendants’ motion using the factors enumerated in Schafer and Glus.
The court cannot weigh the first factor at this stage. Glenwright’s
administrative charge does not mention Genesis, even in passing. Genesis’
direct role in the firing is not clear from the charge alone. However, depending
on the relationship between Genesis and Carbondale and each entities’ role
with respect to employee matters, Genesis may have been able to easily
ascertain it was included as a party in the administrative charge.
Similarly, the court cannot weigh the second factor at this stage. The
claims against the parties are identical and their alleged role in the underlying
events that took place are intertwined. However, at some point, in order to
hold Genesis liable, a legal determination must be made that Genesis was
either an agent of Carbondale, part of an integrated enterprise, or a joint
employer.5 Although Genesis did play a role in the underlying allegations as
the managing entity for Carbondale, the court cannot state that the parties
share a commonality of interest in this action until the exact relationship
between the defendants is determined.
The third and fourth factors do weigh in favor of Glenwright at this stage.
Genesis has not alleged any prejudice based on Glenwright’s failure to name
the entity in the administrative charge. In addition, based on her exhibits it
appears that Glenwright viewed Carbondale and Genesis as one and the
same. This conclusion may have been reasonable based on the
representations made to her during her employment. Genesis was named as
the entity on Glenwright’s employee handbook; Genesis was named as the
payor on her paystubs; and Genesis was named in her performance
See N.L.R.B. v. Browning-Ferris Indus. of Pa., Inc., 691 F.2d 1117,
1122 (3d Cir. 1982) (distinguishing the “single employer” and “joint employer”
concepts); see also 42 U.S.C. §12111(5)(A) (defining the term “employer” to
include any “agent” of the employer).
appraisals. By listing itself as an entity on various employee documents,
Genesis was representing to Glenwright that its relationship with her would be
through Carbondale. Schafer, 903 F.2d at 252 n. 7.
Although the third and fourth factor weigh in favor of Glenwright, the
court finds it necessary to determine the exact relationship between the
parties before making a finding on the defendants’ administrative exhaustion
argument. Clarity regarding the relationship of the parties would also resolve
the pending arbitration issue with respect to Genesis and may make the
administrative exhaustion argument moot. Though normally the jurisdictional
determination is given initial consideration, a few courts have held that a valid
arbitration agreement may waive the administrative exhaustion requirement.
See, e.g., Virk v. Maple-Gate Anesthesiologists, P.C., 80 F. Supp. 3d 469,
478–80 (W.D.N.Y. 2015), affirmed and vacated in part by 657 F. App’x 19 (2d
Cir. 2016) (collecting and analyzing cases). This would be for an issue for the
arbitrator to decide, but it would make the current jurisdictional issue moot.
Virk, 657 F. App’x at 23. Accordingly, the defendants’ motion to dismiss based
on lack of subject-matter jurisdiction will be denied at this time to allow further
factual development. The administrative exhaustion issue will be determined
after the court’s finding regarding Genesis’ ability to compel arbitration as a
nonsignatory to the arbitration agreement.
The defendants’ motion, (Doc. 11), is GRANTED IN PART and
DENIED IN PART. The defendants’ motion is GRANTED IN PART with
respect to Carbondale. The claims against Carbondale will not be dismissed.
Instead, Glenwright will be compelled to arbitrate her claims against
Carbondale. The court will sever the fee provisions in the parties’ agreement
as these provisions are unenforceable. The defendants’ motion is DENIED
WITHOUT PREJUDICE with respect to Genesis. Genesis may file a renewed
motion, if appropriate and made in good faith, after the completion of fact
discovery. A separate order shall follow.
s/ Malachy E. Mannion
MALACHY E. MANNION
United States District Judge
DATED: March 23, 2017
O:\Mannion\shared\MEMORANDA - DJ\CIVIL MEMORANDA\2016 MEMORANDA\16-0926-01.wpd
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