Patterson v. Asbury SC Lex LLC
ORDER DISMISSING CASE. Signed by Honorable Mary Geiger Lewis on 12/29/2016. (dsto, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
ASBURY SC LEX, L.L.C., d/b/a Lexus of
CIVIL ACTION NO. 6:16-1666-MGL
MEMORANDUM OPINION AND ORDER
GRANTING DEFENDANT’S MOTION TO DISMISS
AND TO COMPEL ARBITRATION
This is a diversity action. Plaintiff Daniel Patterson brings a state claim of wrongful
termination in violation of public policy against Defendant Asbury SC Lex, L.L.C. The Court has
jurisdiction over the matter under 28 U.S.C. § 1332.
Pending before the Court is Defendant’s motion to dismiss and compel arbitration, or in the
alternative, its motion to stay and compel arbitration (collectively, motion). Having considered
Defendant’s motion, Plaintiff’s response, and Defendant’s reply, the Court will grant the motion to
dismiss and compel arbitration.
FACTUAL AND PROCEDURAL HISTORY
Plaintiff commenced working with Defendant in December 2012. Defendant terminated
Plaintiff’s employment on December 22, 2015. Plaintiff signed an “Arbitration Agreement,”
(agreement) dated December 2, 2010, setting forth, in relevant part, the following:
This Agreement between [Plaintiff] and [Defendant] is intended to
provide the exclusive means of resolving all Disputes, as defined
below, which may arise between them. In consideration for their
mutual promises, both parties, by entering into this Agreement, give
up their right to trial by court or by jury. This Agreement is not a
contract of employment but arises out of the individual’s employment
or prospective employment that involves interstate commerce. This
Agreement is to be enforced under the Federal Arbitration Act
(“FAA”). In the event . . . it is determined . . . the FAA does not
apply, then this Agreement shall be enforced under the appropriate
state arbitration act.
2. DISPUTES SUBJECT TO ARBITRATION: a) Disputes subject
to arbitration are all Disputes between the parties which may
otherwise be brought in a court or before a governmental agency,
whether or not arising out of or related to the Individual's application
for employment, employment, or termination of employment with the
Company, and whether or not arising before, during or after any
employment relationship between the parties. Also subject to
arbitration are disputes involving any person or entity whose
liability or right of recovery derives from a Dispute that is covered by
this Agreement (e.g., partner, agent, subsidiary or parent corporation,
affiliate, shareholder, successor or assign of a party).
(b) Such Disputes include, but are not limited to, claims of refusal to
hire, wrongful termination, breach of contract, defamation, assault,
battery, violation of public policy, negligent retention, negligent
supervision, negligent entrustment, invasion of privacy, retaliation,
wrongful imprisonment, infliction of emotional distress, any other
tort, contract, equitable, statutory, or constitutional claim, breaches
of any duty owed by an employee to an employer, and claims against
an employee, officer, director or agent of the Company who has
agreed to arbitrate a claim which would directly or indirectly subject
either party to liability. Disputes also include any claims of
discrimination or harassment prohibited by applicable law, including
statutory and/or common law claims of discrimination or harassment
on the basis of age, race, national origin, religion, disability,
sex/gender, color or citizenship. Further, Disputes include claims
related to payment of wages and compensation, polygraph
examinations, layoffs due to plant closings, health, retirement or
pension benefits, veterans' rights, obtaining or using credit reports,
drug testing, whistle blowing activity and leaves of absence. Class
actions and requests for declaratory relief are also covered by this
ECF No. 5-1 at 1.
Plaintiff filed this action in the Greenville County Court of Common Pleas. In the complaint,
Plaintiff makes a claim of wrongful termination in violation of public policy. Defendant removed
the case to this Court and then, in lieu of filing an answer, filed its motion to dismiss and compel
arbitration. Plaintiff filed a response to the motion, to which Defendant filed its reply. The Court,
having been fully briefed on the relevant issues, is prepared to adjudicate Defendant’s motion.
STANDARD OF REVIEW
The Federal Arbitration Act (FAA) provides a federal district court with the authority to
enforce an arbitration agreement by compelling parties to arbitrate their dispute. 9 U.S.C. § 4 (“A
party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written
agreement for arbitrator refusal of another to arbitrate under a written on may petition any United
States district court which, save for such agreement, would have jurisdiction under Title 28 . . . for
an order directing that such arbitration proceed in the manner provided for in such agreement.”).
States are vested with the same authority. See Moses H. Cone Mem'l Hosp. v. Mercury Constr.
Corp., 460 U.S. 1, 25 (1983). Section 2 of the FAA applies to any “contract evidencing a
transaction involving commerce to settle by arbitration a controversy thereafter arising out of such
contract,” and it provides that the written agreements to arbitrate contained in such contracts “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. The United States Supreme Court has also noted a strong
federal policy favoring arbitration. See Cone, 460 U.S. at 24-25.
The Fourth Circuit Court of Appeals recognized the FAA's strong federal policy favoring
arbitration agreements in Adkins v. Labor Ready, Inc., 303 F.3d 496 (4th Cir. 2002), where the court
stated, “A district court . . . has no choice but to grant a motion to compel arbitration where a valid
arbitration agreement exists and the issues in a case fall within its purview.” Id. at 500 (citing
United States v. Bankers Ins. Co., 245 F.3d 315, 319 (4th Cir. 2001)). The court further stated: “In
the Fourth Circuit, a litigant can compel arbitration under the FAA if he can demonstrate (1) the
existence of a dispute between the parties, (2) a written agreement that includes an arbitration
provision [that] purports to cover the dispute, (3) the relationship of the transaction, which is
evidenced by the agreement, to interstate or foreign commerce, and (4) the failure, neglect or refusal
of the defendant to arbitrate the dispute.” Id. at 500-01 (citation omitted) (internal quotation marks
omitted). Because “arbitration constitutes a more efficient dispute resolution process than litigation
. . . '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.’” Id. at 500 (quoting Volt Info.
Sciences, Inc. v. Bd. of Tr. of Leland Stanford Junior Univ., 489 U.S. 468, 475-76 (1989)) (citing
Hightower v. GMRI, Inc., 272 F.3d 239, 241 (4th Cir. 2001)).
For this Court to hear the dispute and rule on Defendant’s motion, the Court must have
subject matter jurisdiction under 28 U.S.C. § 1332. Importantly, the FAA alone does not supply
jurisdiction to the Court, because although it is a federal law, “it does not create any independent
federal question jurisdiction under 28 U.S.C. § 1331.” Cone, 460 U.S. at 25 n.32. Rather, the
Supreme Court has held that “there must be diversity of citizenship or some other independent basis
for federal-question jurisdiction before the order [compelling arbitration] can issue.” Id. (citing
Commercial Metals Co. v. Balfour, Guthrie, & Co., 577 F.2d 264, 268-69 (5th Cir. 1978)). A
federal district court has subject matter jurisdiction through diversity of citizenship when the action
is between citizens of different states and the amount in controversy is greater than $75,000. 28
U.S.C. § 1332(a).
CONTENTIONS OF THE PARTIES
Defendant contends Plaintiff entered into a valid agreement, and his claims are covered by
the agreement. Plaintiff argues the agreement is not a contract, both because the agreement states
it is not and because there was no consideration.
DISCUSSION AND ANALYSIS
Defendant maintains Plaintiff entered into a valid agreement, and his claims are covered by
the agreement. Plaintiff counters the agreement is not a contract because, one, the agreement states
it is not a contract and, two, there was no consideration. Defendant has the better arguments.
As the Court already observed, “In the Fourth Circuit, a litigant can compel arbitration under
the FAA if he can demonstrate '(1) the existence of a dispute between the parties, (2) a written
agreement that includes an arbitration provision [that] purports to cover the dispute, (3) the
relationship of the transaction, which is evidenced by the agreement, to interstate or foreign
commerce, and (4) the failure, neglect or refusal of the defendant to arbitrate the dispute.’” Adkins,
303 F.3d at 500-01. Plaintiff takes issue with just the second element: “a written agreement that
includes an arbitration provision [that] purports to cover the dispute[.]” Id.
Plaintiff’s argument the agreement is not a contract because it states it is not is without merit.
In reviewing the agreement, the Court notes it states it is “not a contract of employment.” ECF No.
5-1 at 1. Whether it is a “contract of employment” or a contract between the parties involves two
distinct things. It appears Defendant stated the agreement was “not a contract of employment” to
make clear the agreement was not meant to alter the at-will employment status of Plaintiff.
Plaintiff’s stance the agreement is not a contract because there was no consideration fares
no better. “[N]o consideration is required above and beyond the agreement to be bound by the
arbitration process for any claims brought by” Plaintiff. Atkins, 303 F.3d at 501. Hence, because
there exists an agreement between Plaintiff and Defendant they are to resolve any claims brought
by Plaintiff through the arbitration process, the Court holds the agreement is supported by sufficient
consideration. As to Plaintiff’s argument the “arbitration rules . . . can be changed at any time by”
Defendant such that there is insufficient consideration: the agreement “can be changed only in
writing signed by” Plaintiff and an officer of Defendant. ECF No. 5-1 at 2. Thus, this argument
must also fail.
The only thing left for the Court to decide under the second element of the Adkins framework
is whether Plaintiff’s claim is covered by the agreement. Defendant contends it is; and Plaintiff
neglects to make any argument to the contrary. The Court agrees with Defendant. According to the
dictates of the agreement, “Disputes [to be arbitrated] include, but are not limited to, . . . wrongful
termination [and] violation of public policy[.]” ECF No. 5-1 at 1.
Plaintiff’s argument regarding whether there was privity between Plaintiff and Defendant
is contained in a brief footnote in his response to Defendant’s motion and thus, only summarily
argued. He also makes a brief statement there are no arbitration rules in this matter. Suffice it to
say the Court holds these claims to be wholly without merit.
Having satisfied the four Adkins requirements discussed herein, Defendant is able to compel
arbitration under the FAA. The Fourth Circuit has held a dismissal of a lawsuit, instead of a stay,
is an appropriate remedy when all of the issues presented in the lawsuit are arbitrable. Choice
Hotels Int., Inc. v. BSR Tropicana Resort, Inc., 252 F.3d 707, 709-10 (4th Cir. 2001)
(“Notwithstanding the terms of § 3, . . . dismissal is a proper remedy when all of the issues presented
in a lawsuit are arbitrable.”). Accordingly, because the only issue in Plaintiff’s suit is arbitrable, the
Court will dismiss the action and compel arbitration.
Based on the foregoing discussion and analysis, Defendant’s motion to dismiss and compel
arbitration is GRANTED.
IT IS SO ORDERED.
Signed this 29th day of December, 2016, in Columbia, South Carolina.
s/ Mary Geiger Lewis
MARY GEIGER LEWIS
UNITED STATES DISTRICT JUDGE
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