Giddings v. Media Lodge, Inc. et al

Filing 65

OPINION AND ORDER GRANTING MOTION TO STAY CASE AND COMPEL ARBITRATION., Motions terminated: 18 MOTION to Dismiss Proceedings and Compel Arbitration filed by Jeff Siegel, IA Tech, LLC, Media Lodge, Inc.. Signed by U.S. District Judge Roberto A. Lange on 3/13/18. (SLW)

UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH DAKOTA
SOUTHERN DIVISION

4:17-CV-04068-RAL

CALEB GIDDINGS,
Plaintiff,

OPINION AND ORDER GRANTING
MOTION TO STAY CASE AND COMPEL

vs.

ARBITRATION

MEDIA LODGE,INC., lA TECH,LLC,
ADAMS KEEGAN,INC., ADAMS KEEGANGA,LLC, and JEFF SIEGEL,
Defendants.

Plaintiff Caleb Giddings, a Senior Airman in the United States Air Force Reserves,
worked for GunUp Publishing, Inc. (GunUp) in South Dakota. When GunUp merged with

Media Lodge, Inc. (Media Lodge) in the spring of 2015, Giddings accepted a job as Media

Lodge's director of sales. Shortly thereafter, Giddings left to serve active duty for five-plus
months with the Air Force. After returning from active duty, Giddings allegedly was demoted

by and then terminated from Media Lodge without cause. Giddings sued Media Lodge, Media
Lodge's Chief Executive Officer (CEO) Jeff Siegel, and Media Lodge's majority owner lA

Tech, LLC (lA Tech) (collectively "Defendants")', alleging that they violated the Uniformed
Services Employment and Reemployment Rights Act of 1994(USERRA). Doc. 41. Defendants
filed a motion arguing that the Federal Arbitration Act (FAA) and the arbitration clause in
'Giddings also named Adams Keegan, Inc. and Adams Keegan-GA, LLC as defendants in his
lawsuit. This Court will be issuing a separate opinion addressing the motion to dismiss by the
Adams Keegan defendants. Giddings had no agreement to arbitrate with the Adams Keegan
defendants, and the Adams Keegan defendants have filed no motion to compel arbitration.
1

Giddings' Employment Agreement require this Court to stay or dismiss Giddings' case and
compel arbitration. Doc. 18. For the reasons explained below, this Court grants Defendants'
motion to compel arbitration under the arbitration clause, but stays the case rather than
dismissing it.
I.

Facts

GunUp was an internet media and marketing company that catered to firearms
enthusiasts, manufacturers, and retailers. Doc. 24 at f 5. Giddings and his then-wife Shelley

(Shelley) worked for GunUp in South Dakota, and Giddings was a minority share owner of
GunUp. Doc. 24 at

5-7. Media Lodge is an electronic media marketing company, has

employees in several states, and sells electronic advertising services throughout the coimtry.
Doc. 21 at ][ 3. Media Lodge's content targets outdoor enthusiasts who are interested in hunting,
shooting, fishing, and other outdoor activities. Doc. 21 at 3.

In 2014, Media Lodge CEO Siegel and Daniel Hall, GunUp's CEO, began negotiating a

merger between GunUp and Media Lodge. Doc. 25-1 at 4; Doc. 29. These negotiations
included discussions about Hall, Giddings, and Shelley coming to work for Media Lodge. Doc.
25-1 at 4; Docs. 29-29-7. GunUp and Media Lodge executed a merger agreement on March 31,
2015. Doc. 41 at

17; Doc. 25-5 at 18. The next day, Giddings, Shelley, and Hall signed

employment agreements with Media Lodge. Doc. 21 at ^ 5-7; Doc. 21-1; Doc. 24 at ^ 6; Doc.
25-1 at 4-5. Giddings's Employment Agreement contained the following arbitration clause:
Binding Arbitration. In the event any disagreement arises
under this Agreement, the disagreement shall be settled by binding
arbitration pursuant to the Rules of the American Arbitration
Association. The arbitration shall be governed by the United
States Arbitration Act, 9 U.S.C. §§ 1-16, and judgment upon the
award rendered by the arbitrator may be entered by any court
having jurisdiction thereof. The place of arbitration shall be
Atlanta, Georgia, there shall only be one arbitrator selected by the

parties, and the arbitrator shall not be empowered to award
damages in excess of actual damages, although the arbitrator shall
be empowered to award injunctive relief. The parties hereto
hereby waive all defenses in connection to any arbitration
hereunder or the enforcement of any arbitration award rendered
pursuant hereto.
Doc. 21-1 at 6.

Giddings went on mandatory active duty with the United States Air Force from late April
2015 until September 30, 2015. Doc. 41 at ][ 21. Giddings alleges that when he returned to work
upon completing his service. Media Lodge violated USERRA by failing to properly reemploy
him, demoting him without just cause, and terminating him without just cause. Doc. 41 at TfH 49-

75. Giddings seeks compensatory, general, and liquidated damages from Defendants for these
alleged USERRA violations. Doc. 41. Since filing Ws suit, Giddings has relocated to Florida.
Doc. 41 at Tf 2. This Court held a hearing on the motions in this case in late 2017.
n.

The FAA and Standard of Review

Congress enacted the FAA to counter judicial aversion to arbitration and ensure that
courts treat arbitration agreements just like any other contract. Volt Info. Scis.. Inc. v. Bd. of
Trs. Leland Stanford Junior Univ.. 489 U.S. 468, 478 (1989). The key language of the FAA

states that a written agreement to arbitrate in a contract involving interstate commerce "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 FAA applies here because the Employment
Agreement, including the arbitration clause, is in writing and because the Agreement concerned
Giddings's work with Media Lodge, a company that is engaged in interstate commerce. Doc. 21

at H 3; CarMax Auto Superstores Cal. LLC v. Hernandez. 94 F. Supp. 3d 1078, 1100-02 (C.D.
Cal. 2015); Gnnnell v. Meritor Sav. Bank. No. CIV. A. 90-5916, 1991 WL 25715, at *2 (E.D.
Pa. Feb. 27, 1991); see also Allied-Bruce Terminix Cos. v. Dobson. 513 U.S. 265, 273-74

(1995)(adopting a broad reading of the phrase "involving commerce" in 9 U.S.C. § 2). The
FAA provides two mechanisms for enforcing an arbitration agreement: a stay of proceedings
under § 3 when an issue in the case is "referable to arbitration" and an order compelling
arbitration under § 4 when a party has refused to adhere to an arbitration agreement. 9 U.S.C.

§§3,4. Because both Giddings and Defendants have filed affidavits with attached exhibits, this
Court will apply the summary judgment standard when ruling on the motion to compel
arbitration, viewing the evidence and resolving genuine issues of material dispute in the
nonmoving party's favor. Neb. Mach. Co. v. Cargotec Sols. LLC. 762 F.3d 737, 741-42 (8th
Cir. 2014).
III.

Analysis

A. Delegation Provision and Waiver Thereof

Ordinarily, a court considering a motion to compel arbitration must decide two threshold
issues, sometimes referred to as "questions of arbitrability:" 1) whether a valid arbitration

agreement exists between the parties; and 2) whether the dispute falls within the scope of the
arbitration agreement. Faber v. Menard. Inc.. 367 F.3d 1048, 1052(8th Cir. 2004); Daisv Mfg.
Co. V. NCR Corp.. 29 F.3d 389, 392 (8th Cir. 1994). Questions of arbitrability are for the court
to decide "[ujnless the parties clearly and unmistakably provide otherwise." Howsam v. Dean
Witter Revnolds. Inc.. 537 U.S. 79, 83(2002)(alteration in original)(quoting AT&T Techs.. Inc.
V. Commc'ns Workers. 475 U.S. 643, 649 (1986)).

However, just as parties can agree to

arbitrate the merits of a dispute, they can also agree to submit questions of arbitrability to the
arbitrator. Rent-A-Center. W.. Inc. v. Jackson. 561 U.S. 63,68-69 (2010). Thus, although there

is a presumption that courts will decide questions of arbitrability, these questions must be sent to
arbitration if the parties clearly and umnistakably expressed their intent to do so. Howsam. 537

U.S. 79 at 83-84; see also Rent-A-Center. 561 U.S. at 69 n.l. Agreements to arbitrate questions

of arbitrability have come to be known as "delegation provisions." See Rent-A-Center, 561 U.S.
at 68.

Both parties addressed questions of arbitrability to this Court in briefmg and at oral
argument. That is, neither party argued or even addressed a claimed delegation provision being
in the arbitration clause. However, under Eighth Circuit precedent, this arbitration clause

arguably could be read as containing a delegation provision intending to submit questions of
arbitrability to the arbitrator.

The arbitration clause provides that "[i]n the event any

disagreement arises under this Agreement, the disagreement shall be settled by binding
arbitration pursuant to the Rules of the American Arbitration Association ['AAA']." Doc. 21-1
at 6. The AAA Employment Arbitration Rules and Mediation Procedures, in turn, provide for
the arbitrator to rule on questions of arbitrability.

AAA Employment Arbitration Rules and

Mediation Procedures, Rule 6^ ("The arbitrator shall have the power to rule on his or her own
jurisdiction, including any objections with respect to the existence, scope or validity of the
arbitration agreement."). When an arbitration provision incorporates rules that authorize an

^Rule 6 of the Employment Arbitration Rules and Mediation Procedures was in effect when
Giddings signed the Employment Agreement in 2015. The arbitration clause specifies "Rules of
the American Arbitration Association" generally and not the Employment Arbitration Rules and
Mediation Procedures, but those are the AAA rules that obviously would govern employment

disputes. In Mercadante v. XE Services. LLC,78 F. Supp. 3d 131 (D.D.C. 2015), the arbitration
provision simply stated that disputes under the contract "shall be resolved by binding arbitration
according to the rules of the American Arbitration Association." Id at 138. The district court
cited to Rule 6 of the AAA Employment Arbitration Rules and Mediation Procedures without

discussing whether the general reference to the AAA rules was sufficient to incorporate the AAA
rules for employment disputes. Id at 138. But see. Glob. Client Sols.. LLC v. Qssello, 367 P.3d
361, 369 (Mont. 2016) (holding that an arbitration provision stating that arbitration would be
"administered by the American Arbitration Association ('AAA') pursuant to its mles and

procedures" did not show that the parties agreed to have the arbitrator decide issues of
arbitrability in part because the arbitration provision did not specify which set of AAA mles
were incorporated).

arbitrator to decide issues of arbitrability, the Eighth Circuit deems that incorporation to
constitute "a clear and unmistakable expression of the parties' intent to leave the question of

arbitrability to an arbitrator." Fallo v. High-Tech Inst.. 559 F.3d 874, 878 (8th Cir. 2009); see
also Green v. SuperShuttle Int'l. Inc.. 653 F.3d 766, 769 (8th Cir. 2011)("By incorporating the
AAA Rules, the parties agreed to allow the arbitrator to determine threshold questions of

arbitrability."). The arbitration clause in Fallo contained language similar to the arbitration
clause here, stating that disputes "shall be settled by arbitration in accordance with the
Commercial Rules of the American Arbitration Association." 559 F.3d at 877. The Eighth
Circuit held that this general language was sufficient to incorporate the Commercial Rules of the
AAA,including Rule 7, which gives arbitrators the authority to determine their own jurisdiction.
Id. at 877-78. Because Rule 7 authorizes arbitrators to decide issues of arbitrability, the Eighth

Circuit held that the arbitration provision's incorporation of the AAA rules was "a clear and
unmistakable expression of the parties' intent to leave issues of arbitrability to an arbitrator."
Id at 878.

Despite what the Fallo case deems a delegation provision in the arbitration clause. Media
Lodge's motion to compel arbitration relied on the arbitration clause in general, and Media
Lodge at no time has argued the existence of a delegation provision requiring the arbitrator to
decide questions of arbitrability. So the question becomes whether Media Lodge has waived any

^Because Media Lodge failed to argue that the arbitration clause contained a delegation
provision, Giddings did not have a chance to argue, as Giddings surely would, that he was
unsophisticated and had utterly no intention to leave issues of arbitrability to the arbitrator and
was unaware of the content of AAA rules. Such an argument likely would not produce a
different result than in Fallo. Indeed, the plaintiffs in Fallo were a group of 38 current or former
students of a for-profit vocational school that had allegedly engaged in fraudulent

misrepresentation contrary to a Missouri consumer protection statute, but the Eighth Circuit
nevertheless deemed the reference in their student enrollment agreements to AAA rules to
constitute a "clear and unmistakable expression" of intent to leave issues of arbitrability to the
arbitrator. Fallo. 559 F.3d at 878.

assertion of a delegation provision in the arbitration clause. After all, "[a] delegation clause

operates as a defense that the defendant must raise in order to rely upon it." Bodine v. Cook's
Pest Control. Inc.. 830 F.3d 1320, 1324 (11th Cir, 2016). Under Eighth Circuit precedent, a

party can waive an assertion of a delegation provision by failing to raise the argument. Express
Scripts. Inc. v. Aegon Direct Mktg. Servs.. Inc.. 516 F.3d 695 (8th Cir. 2008). The Eighth
Circuit in Express Scripts found a waiver of the argument of a delegation provision to exist

because the defendant not only failed to raise the issue before the district court, but also forwent

briefing the issue to the Eighth Circuit, raising it for the first time at oral argument. Id. at 70102.

Because Express Scripts involved a more obvious case of waiver, this Court—after

considering briefing of the motion and oral argument on the motion—entered an Order
Concerning Possible Waiver of "Delegation Provision" Assertion, Doc. 63, which noted the
absence of any argument by the Defendants of a delegation provision in the arbitration clause.
The Order stated that "it would benefit the Court to know for sure whether the defendants who

filed the motion [to compel arbitration] are indeed waiving any arguments of a delegation

provision," and gave those defendants an opportunity "to file any assertion of a 'delegation
provision' and explanation of why such assertion has not been waived, or this Court will deem
any such assertion to be waived." Doe. 63. The Defendants' response to the Order was:
On February 23, 2018, the Court requested clarification
firom Defendants Media Lodge, lA Tech, LLC, and Jeff Siegel

("Defendants") regarding whether they had waived an argument
that the arbitration provision at issue contained a "delegation

provision." Defendants provide the following in response to the
Court's request:

Defendants did not raise or waive an argument or make an
assertion that the issue of arbitrability should be within the

arbitrator's jurisdiction. Such an argument would be unsupported
because the arbitration provision in this case does not contain a

delegation provision. Accordingly, Defendants acknowledge that
the issue of arbitrability is properly before this Court.

Doc. 64.

Consistent with this Court's Order Concerning Possible Waiver of "Delegation

Provision" Assertion, Doc. 63, and Express Scripts, the Defendants have waived any argument

of the existence of a delegation provision, and this Court will address the questions raised about

arbitrability.'^
B.

Issues of Arbitrability

Giddings argues that the arbitration clause is unconscionable, that his claims do not fall
within the scope of the arbitration clause, and that USERRA claims are not arbitrable. Giddings
thus argues both that the arbitration clause is invalid and that, alternatively, the arbitration clause
does not encompass his claims.

State contract law governs whether a valid arbitration agreement exists between Giddings

and Media Lodge. First Options of Chi.. Inc. v. Kaplan. 514 U.S. 938,944(1995). This Court is

sitting in diversity jurisdiction, so it applies South Dakota's choice-of-law rules to determine

"^Even if this Court had deemed there to be an enforceable delegation provision, this Court likely
would have addressed at least some of Giddings' challenges to arbitrability. When an arbitration
clause contains a delegation provision, the party opposing arbitration can still challenge the
validity of the delegation provision itself. Rent-A-Center. 561 U.S. at 68-72; Brerman v. Opus
Rank 796 F.3d 1125, 1133-34 (9th Cir. 2015); see also. Fallo. 559 F.3d at 877-79 (considering

arguments that arbitration clause was unconscionable after deciding that parties had delegated
questions of arbitrability to the arbitrator). Case law from the Supreme Court and the Ninth
Circuit suggests that Giddings would ordinarily need to direct his unconscionabjlity arguments to
the delegation provision itself rather than the arbitration clause as a whole. Rent-A-Center. 561
U.S. at 70-74 (refusing to consider arguments that an arbitration contract was unconscionable as
a whole where the specific arbitration agreement at issue was a delegation provision in the
contract giving the arbitrator authority to resolve questions of arbitrability); Brerman. 796 F.3d at
1128, 1132-34 (considering an arbitration clause and delegation provision sunilar to the ones
here and holding that challenges to the arbitration clause, rather than to the delegation provision
contained therein, were for the arbitrator to decide). However, Media Lodge's motion to compel
arbitration relied on the arbitration clause in general, and did not argue that the delegation

provision required the arbitrator to decide questions of arbitrability. Because that distinguishes
this case from Rent-A-Center and Brennan where the parties seeking to compel arbitration

specifically relied on delegation provisions, this Court likely would have construed Giddings'
unconscionability arguments as challenges to the delegation provision and addressed at least
some of them.

which state's laws govern whether a valid arbitration agreement exists. Erickson v. Thrivent Ins.
Agencv. Inc.. 231 F. Supp. 3d 324, 329 (D.S.D. 2017). The Employment Agreement has a

choice-of-Iaw provision, stating that the Agreement "shall be construed and the legal relationship
between the parties determined in accordance with the laws of the State of Georgia." Doc. 21-1

at 6. Giddings argues that the choice-of-law provision does not apply once the Employment
Agreement is terminated, that South Dakota law should govern this case, and that, in any event,

Georgia's law on contracts is substantially similar to South Dakota's. Doc. 23 at 9 n.3. Rather
than addressing Giddings' argument about the choice-of-law provision. Defendants in their reply
briefstate that "[f]or purposes of this Motion to Dismiss and Compel Arbitration, Defendants do

not object to the application of South Dakota and Eighth Circuit law." Doc. 28 at 3 n.2. This
Court will therefore apply South Dakota law to determine whether Giddings and Defendants

have a valid arbitration agreement.^
Unconscionability under South Dakota law has both "procedural" and "substantive"

components. Nvgaard v. Sioux Vallev Hosps. & Health Svs.. 731 N.W.2d 184, 194-95 (S.D.

2007); Tnhnsnn v. .Tohn Deere Co.. 306 N.W.2d 231, 237 (S.D. 1981).

Procedural

unconscionability concerns the making of the contract. Nvgaard. 731 N.W.2d at 194-95;
TnbnsfiTi 306 N.W.2d at 237. Factors relevant to assessing procedural imconscionability include

the relative bargaining power of the parties, whether the complaining party had a meaningful
choice, and whether the provision in question was written in. fme print or technical jargon.
Nvgaard. 731 N.W.2d at 194-95; Johnson. 306 N.W.2d at 237; Scotland Vet Supplv v. ABA

Recoverv Serv.. Inc.. 583 N.W.2d 834, 837 (1996); Green v. Clinic Masters. Inc.. 272 N.W.2d

^Georgia's law on unconscionability is similar enough to South Dakota's that the results in this
case would be the same under either state's law. ^Cappuccitti v. DirecTV. Inc.. 623 F.3d

1118, 1124(llthCir. 2010)(describing Georgia law concerning unconscionability).

813, 816 (S.D. 1978). Substantive unconscionability, on the other hand, focuses on whether the
contract contains "overly harsh or one-sided terms." Nvsaard. 731 N.W.2d at 195 (quoting
Johnson. 306 N.W.2d at 237).

Giddings argues that the arbitration clause is procedurally unconscionable because of a

great disparity in bargaining power and because he had only one day to review the Employment
Agreement. The argument that unequal bargaining power renders arbitration agreements
unenforceable in employment relationships is not new.

Gihner v. Interstate/Johnson Lane

Corp.. 500 U.S. 20, 32-33 (1991). The Supreme Court addressed such an argument in Gihner.

holding that "[m]ere inequality in bargaining power . . . is not a sufficient reason to hold that
arbitration agreements are never enforceable in the employment context." Id. at 33. Relying on
Gilmer. this Court enforced an arbitration agreement between a software engineer and his

employer even though the employer possessed greater bargaining power and the engineer had to
sign the agreement to keep his job. Baker v. Science Applications IntT Corp.. No. Civ. 06-4096,
2006 WL 2708546, at *2-3 (D.S.D. Sept. 21, 2006), affd. 273 F. App'x 577(8th Cir. 2008)(per

curiam). Although the engineer argued that he had no choice but to work for his employer, this
Court found that the engineer could have declined the arbitration agreement and sought work
elsewhere. Id. at *2.

Giddings acknowledges the Baker decision but points to the Supreme Court's statement
in Gilmer that "courts should remain attuned to well-supported claims that the agreement to
arbitrate resulted from the sort of fraud or overwhehning economic power that would provide

grounds for the revocation of any contract." Gilmer. 500 U.S. at 33 (internal marks omitted)
(quoting Mitsubishi Motors Corp. v. Soler Chrvsler-Plvmouth. Inc.. 473 U.S. 614, 627 (1985)).
According to Giddings, the following facts show that the agreement to arbitrate resulted from

10

overwhelming economic power: 1) Media Lodge's employment of Giddings and Shelley was a
material term ofthe merger between Media Lodge and GunUp, Doc. 25-5 at 22-23; Doc. 44-1 at
4; Doc. 25-2 at 3; Doc. 25-1 at 5; 2) Giddings received the Employment Agreement containing
the arbitration clause one day before closing of the merger. Doc. 24 at T| 8; and 3) as a result of

the merger, Giddings would receive $46,952.66 in deferred compensation for work he performed
for GunUp, $85,702.00 in Media Lodge stock due to his 2.86% ownership in GunUp, and
$16,654.27 in cash disbursements. Doc. 24 at ][ 7; Doc. 25-5 at 61. Giddings argues that his

refusal to sign the Employment Agreement would have jeopardized his and Shelley's jobs and
forfeited the deferred compensation. Media Lodge stock, and cash disbursements.

Media Lodge disputes many of the assertions Giddings relies on to show procedural

unconscionability. Media Lodge argues that the merger was not conditioned on Giddings'
employment with Media Lodge so he did not have to sign the Employment Agreement to receive
the deferred compensation, stock, and disbursements; that there is no evidence Shelley's job
would have been in jeopardy if Giddings had refused to sign the Employment Agreement; and
that Giddings was given nearly two weeks to have the Employment Agreement reviewed by

counsel. In support of this last argument. Media Lodge filed an affidavit from Siegel explaining
that Hall was acting on behalf of Giddings and Shelley to negotiate their employment

agreements, so Siegel provided all ofthe terms and conditions to Hall and discussed the terms of
those agreements with Hall. Doc. 29 at 14. Media Lodge also filed a series of emails between
Siegel and Hall concerning the employment agreements in support of its argument. On February
11, 2015, Siegel emailed Hall a to-do list, which included a promise to send Hall employment

agreements for Giddings and Shelley. Doc. 29-2 at 1. Siegel asked Hall how Giddings and
Shelley's "comp packages" were structured and told Hall that their salaries would be "as outlined

11

in your spreadsheet." Doc. 29-2 at 1. Hall responded that Slegel's email "sound[ed] good" and
that he would be working on the to-do list from his end. Doc. 29-2. On March 17, 2015, Siegel
emailed Hall a draft employment agreement for Hall, Giddings, and Shelley. Doc. 29 at f 7;
Doc. 29-3.

Although the draft left blank spaces for the employee's name, title, and

compensation. It contained the other terms of the agreement. Including the same arbitration
provision found In the employment agreements Giddings and Hall ultimately signed. Doc. 29 at

17; Doc. 21-1 at 6; Doc. 29-3 at 6. Hall replied that the draft looked like "pretty boiler plate 'atwlll' employment agreements." Doc. 29-3 at 1. Because the parties were considering having
Hall and the Giddings work a set term of years rather than an indefinite period as the draft

provided. Hall offered to draft some revised employment contracts. Doc. 29-3 at 1. He
explained that he had "a fair bit of experience In this area (running HR and recruiting for a
$50MM company for close to 2 years and my wife Is an employment attorney who specializes in

such things)." Doe. 29-3 at 1. On March 18, 2015, Siegel emailed Hall a copy of Media
Lodge's military leave policy along with the following message: "Good to chat yesterday. Re:
Caleb [Giddings]—^what's been the GunUp policy on Military Leave? Our company policy Is as
written below, but I'm open to pushing to change that If needed." Doc. 29-4 at 1. Hall replied
that same day saying "[pjretty standard policy language for military duty. Should be fine for us."
Doc. 29-4 at 1. On March 19, 2015, Hall emailed Media Lodge's counsel saying that attorney

Jamie Cole would be handling "our employment agreements" and that Hall and Cole would be

drafting agreements with a three-year term of employment. Doc. 29 at ^ 9; Doc. 29-5 at 2. After
further discussions, however. Hall emailed Siegel that "[w]e are ok with at-wlll agreements."
Doc. 29-5 at 1. He said that he would contact Siegel If he had any questions about the

agreements and that he would have Attorney Cole review them if he needed advice. Doc. 29-5 at

12

1. On March 26, 2015, Siegel emailed Hall a revised copy of Hall's employment agreement.

Doc. 29 at T110; Doc. 29-6. He also asked Hall to confirm the job titles and compensation for
Giddings and Shelley. Docs. 29-6, 29-7. Hall responded that same day, stating that he had
talked with Giddings and Shelley and that they were fine with their titles and compensation.
Doc. 29-7.

The emails between Hall and Siegel undercut Giddings's claim that the arbitration clause

was procedurally unconscionable because he had so little time to review it. Although Giddings
may not have received the final Employment Agreement until a day before the March 31 merger.

Hall(the CEO and co-owner of the small business at which Giddings then worked) had a draft of
the agreement, which included the arbitration clause, by March 17. Hall said that he had
experience with employment agreements and, by March 19, he had an attorney to review the
agreements if he felt it was necessary. It was not unreasonable for Siegel to use Hall, GunUp's
CEO,to cormnunicate with then GunUp employees Giddings and Shelley about the post-merger

employment agreements with Media Lodge. And Siegel can hardly be faulted for assuming that
Hall was acting on Giddings' behalf in negotiating the employment agreement. After all. Hall

provided Siegel with salary information for Giddings and Shelley, discussed Medial Lodge's
military leave policy as it related to Giddings, said that the leave policy would be "fine for us"
and that "[w]e are okay with at-will agreements," and told Siegel that he had spoken with

Giddings and Shelley to confirm they were satisfied with their salaries. Giddings has not
provided any evidence that he requested more time to consider the Employment Agreement, that
he was denied the opportunity to negotiate the terms of the Employment Agreement himself, or
that he raised any concerns about the Employment Agreement with Hall or Media Lodge. Nor

has he alleged that he did not understand the arbitration clause, which was written in plain

13

English with normal-size print. Under these circumstances, Giddings's receipt of the final

Employment Agreement one day before the merger does not make the arbitration clause
procedurally unconscionable.
Giddings's argument that Media Lodge's overwhelming bargaining power makes the
arbitration clause procedurally unconscionable fares no better. None of the documents Giddings
cites establish that the merger, the money Giddings hoped to receive therefrom, and Shelley's job
were dependent upon him signing the Employment Agreement. See Doc. 25-5; Doc. 44-1 at 4;
Doc. 25-2 at 3; Doc. 25-1 at 5. Even if the money from the merger had somehow been
dependent on Giddings signing the Employment Agreement, the choice Giddings faced was no
different from the choice facing every employee asked to sign an arbitration agreement—
whether the job and the salary and benefits that come with it are worth more to the employee
than access to a judicial forum. But the Supreme Court's statement in Gilmer—^that unequal
bargaining power is not alone an adequate reason for refusing to, enforce arbitration clauses in

employment contracts—signals that employees seeking to avoid an arbitration clause must show
"circumstances more egregious than the ordinary economic pressure faced by every employee
who needs the job." Vilches v. The Travelers Co.. 413 F. App'x 487, 493 (3d Cir. 2011)

(citation omitted).

Indeed, "[i]t is well-settled . . . that conditioning employment on the

acceptance of an agreement to arbitrate disputes ... is not itself unlawfully coercive." Williams
V. Parked Prods.. Inc.. 91 P. App'x 707, 708 (2d Cir. 2003). Giddings has not offered any
evidence of financial distress so bad that he had no choice but to sign the Employment

Agreement. And there is no indication that Giddings could only work for Media Lodge. In fact,
Giddings explains in his affidavit that he is the owner and author of a blog for competitive
shooters and that he has 11 years' experience and "deep relationships" in the firearm media

14

industry. Doc. 24 at Tjlj 3, 4. Giddings had the option to decline employment with Media Lodge.

Although this may not have been an easy choice, it was still a meaningful one.
Giddings also argues that the arbitration clause is substantively unconscionable because it
limits the arbitrator to awarding "actual damages." Doc. 21-1 at 6. In Giddings' view, this
limitation is one-sided because the party most likely to seek additional damages, such as
liquidated damages or attorney fees under a statutory claim, would disproportionately be the

employee. Questions about remedies are generally for the arbitrator to decide in the first
instance. Faber v. Menard. Inc.. 367 F.3d 1048, 1054(8th Cir. 2004). The arbitrator is not only

"particularly well-suited to interpret the agreement and determine the appropriate extent of [its]
remedial authority," but also "has the authority to enforce substantive statutory rights even if
those rights are in conflict with contractual limitations in the agreement that would otherwise

apply." Id (alteration in original) (citations and internal marks omitted). Recognizing that
arbitrators have the authority to enforce substantive statutory rights even if the contract says
otherwise, Media Lodge said during the hearing that if Giddings' claims go to arbitration, Media

Lodge would not argue that the Employment Agreement deprived the arbitrator of authority

under USERRA to award front pay, liquidated damages, or costs and fees.^ The Eighth Circuit
in Faber recognized that "a restriction on remedies in an arbitration agreement may so limit

recovery that the agreement is unconscionable and invalid under state law." Id at 1054-55

(considering argument that arbitration provision requiring employee to pay his own attorney's
fees unconscionably denied the employee his statutory right to fees and costs if he prevailed

under the Age Discrimination Employment Act). But here, the judicial admissions of Media

^Media Lodge also agreed that it would not argue that the final sentence of the arbitration clause
limits Giddings' defenses to the arbitrator's decision.
15

Lodge committing itself not to argue for any restriction on the arbitrator to award damages
recoverable under USERRA resolves that concern about substantive unconscionability.

Moreover, this Court is staying the case, rather than dismissing it, in case the arbitrator somehow
decides that USERRA claims or remedies cannot be addressed under the arbitration clause.

Giddings nevertheless argues that the limitation on damages makes the arbitration clause
substantively unconscionable under the Supreme Court of South Dakota's decision in Rozeboom

V. Northwestern Bell Telephone Co.. 358 N.W.2d 241 (S.D. 1984).^ The plaintiff in Rozeboom
signed a contract with Northwestern Bell to advertise his business in the yellow pages. Id. at
242. The contract contained a clause limiting the plaintiffs damages to the price of the

advertisement. Id.

The Supreme Court of South Dakota found that this limitation was

unconscionable because of Northwestern Bell's monopoly on yellow pages advertising and its

"wholly unequal" bargaining power. Id at 245. The compelling reasons for finding the
limitation clause in Rozeboom unconscionable are not present here. Media Lodge did not have a

monopoly on jobs involving marketing in the firearm industry and Giddings could have sought
work elsewhere if he did not want to sign the Employment Agreement. And, again. Media

Lodge has made a judicial admission that it will not seek to enforce the damage limitation
language.

Giddings' last argument about substantive unconscionability is that the arbitration clause
is unenforceable because it requires that arbitration occur in Atlanta, Georgia. Giddings

^Giddings asserts in a footnote that a Washington state court hearing, a case Hall brought against
Media Lodge, declared the Arbitration Provision at issue here "both procedurally and
substantively unconscionable." Doc. 23 at n.4. But Hall's motion for partial summary judgment
in that case was unopposed, and the state court merely declared the provision unenforceable
without engaging in any analysis. Doc. 25-4 at 2-3. Giddings also argues that this Court in

Baker "specifically disapproved of arbitration clauses containing limitations of plaintiff remedies
as unconscionable." Doc. 23 at 12. This Court never made any such statement in Baker.
16

contends that he has no connection to Georgia and that it would be unconseionable to require
him to travel to Georgia at his own expense to pursue his rights against Media Lodge. Media
Lodge had little explanation of why Georgia was selected as a venue for arbitration, but said at
the hearing that it would "not necessarily" be insisting that the arbitration occur in Georgia.
Giddings has not cited any authority in support of his argument or offered any evidence that
traveling from Florida (where he presently resides) to Georgia for the arbitration would be
prohibitively expensive for him. See Green Tree Fin. Corp.-Al. v. Randolph. 531 U.S. 79, 92
(2000)("[WJhere . . . a party seeks to invalidate an arbitration agreement on the ground that
arbitration would be prohibitively expensive, that party bears the burden of showing the
likelihood of incurring such costs.").

This Court declines to find the arbitration clause

unconscionable under these circumstanees.

C. Scope of Arbitration Agreement

Giddings argues that he eannot be forced to arbitrate his USERRA claims because they
do not fall within the scope of the arbitration clause. While state law governs whether a valid
arbitration agreement exists, federal substantive law governs whether a claim falls within the

seope of an arbitration clause. Donaldson Co. v. Burroughs Diesel. Inc.. 581 F.3d 726, 731 (8th
Cir. 2009). "[AJrbitration is a matter of contract." AT&T Mobility LLC v. Concepcion. 563
U.S. 333, 339 (2011)(quoting Rent-A-Center. 561 U.S. at 69). Therefore, "a party cannot be

required to submit to arbitration any dispute which he has not agreed so to submit." Howsam.
537 U.S. at 83 (quoting Steelworkers v. Warrior & Gulf Navigation Co.. 363 U.S. 574, 582

(I960)) However, "any doubts concerning the scope of arbitrable issues should be resolved in
favor of arbitration," including "construction of the contract language itself." Moses H. Cone
MemT Hosp. v. Mercury Constr. Corp.. 460 U.S. 1, 24—25(1983).

17

Giddings' argument that his USERRA claims are not within the scope of the arbitration
clause focuses somewhat curiously not on the arbitration clause but on Section 5 of the
Employment Agreement, which is entitled "Termination of Employment Under Agreement."
Doc. 21-1 at 2. Among other things, Section 5 states that Media Lodge can terminate Giddings'
employment "without any liability at any time" and that Media Lodge's total liability for
terminating Giddings "shall be payment of his salary through the effective date of termination."
Doc. 21-1 at 3. Giddings contends that Section 5 constitutes an illegal prospective waiver of his
USERRA rights, citing Richardson v. Sugg. 448 F.3d 1046, 1054-55 (8th Cir. 2006). Giddings
appears to argue that the existence of such unenforceable prospective waiver language in Section
5 indicates that arbitration under the Employment Agreement was not meant to cover USERRA
claims. Part of Giddings' argument is undercut by Media Lodge's judicial admission that it will
not invoke damage limitation provisions in the Employment Agreement if the USERRA claims
are subject to arbitration. Regardless, evaluating whether the dispute is within the scope of the
arbitration clause should start with the language of the arbitration clause itself.
The arbitration clause in the Employment Agreement applies "in the event any
disagreement arises under this Agreement." Doc. 21-1 at 6. The Eighth Circuit has classified
the phrase "all disputes arising under" in an arbitration clause as broad, although not as broad as
"any claim, controversy or dispute . . . relating to." PRM Energv Svs.. Inc. v. Primenergv.
L.L.C.. 592 F.3d 830, 837 (8th Cir. 2010); see also Coregis Tns. Co. v. Am. Ffealth Foimd.. Inc..
241 F.3d 123, 128-29 (2d Cir. 2001)(describing "related to" as broader than "arising out of in
contract language). "Arbitration may be compelled under 'a broad arbitration clause ... as long

as the underlying factual allegations simply touch matters covered by the arbitration provision.'"
PRM Energv Svs.. 592 F.3d at 837 (internal marks omitted) (quoting 3M Co. v. Amtex Sec..

18

Inc.. 542 F.3d 1193, 1199 (8th Cir. 2008)). At least three courts have concluded that statutory
claims fall within arbitration clauses similar to the clause here. Dreher v. Eskco. Inc. Nos. 3:08-

cv-325, 3:09-cv-209, 2009 WL 2176060, at *2, 6-7 (S.D. Ohio July 21, 2009) (holding that

employee's claims under the FMLA and state gender discrimination statutes fell within
arbitration clause requiring the employee to arbitrate "[a]ny dispute arising from" the
employment agreement); Kruse v. AFLAC Int'l. Inc.. 458 F. Supp. 2d 375, 387(E.D. Ky. 2006)
(holding that arbitration clause requiring arbitration of"any dispute arising under this Agreement
to the maximum extent allowed by applicable law" in an employment agreement applied to

employee's Title VII and state statutory claims); Owner-Operator Indep. Driver's Ass'n. Inc. v.

Swift Tran.sp. Co., 288 F. Supp. 2d 1033, 1036-37(D. Ariz. 2003)(holding that federal statutory
claims fell within the scope of an arbitration clause requiring the parties to arbitrate "[a]ny
disagreement or litigation arising under" the contract)(alteration in original).

This case presents a close decision on whether Giddings' USERRA claims are within the

scope of the arbitration clause. Giddings' complaint alleges only USERRA claims and makes no
breach of Employment Agreement or other such non-USERRA claims. The Employment

Agreement's damage limitations in Section 5 and in the arbitration clause itself—^though such
damage limitations are being waived by Media Lodge—suggest that the parties did not have in
mind potential federal statutory claims like USERRA when drafting or negotiating the arbitration

clause or Employment Agreement.^ The decision would be easier if the arbitration clause had

^The language of the arbitration clause is not ambiguous and thus extrinsic evidence to interpret
it typically would not be employed. On the issue of unconscionability of the arbitration clause,
and not on interpretation, the parties submitted information of record that GunUp's CEO
inquired of Media Lodge's CEO about military leave policy during the time Giddings'
employment agreement was negotiated, and Media Lodge supplied that policy which GunUp's
CEO deemed satisfactory. This would suggest that the parties were aware of the possibility of
Giddings going on military leave.
19

made all disputes "relating to" Giddings' employment subject to arbitration, but this arbitration
clause applies "in the event that any disagreement arises under this [Employment] Agreement."
The Employment Agreement established the employer-employee relationship between Media

Lodge and Giddings. Although Giddings' claims are based only on USERRA, they arise out of
the employment relationship and termination of that relationship, and Media Lodge's defense on
the merits to the elaims will focus on what it believes were Giddings' lack of commitment to

Media Lodge.^ The Eighth Circuit has held arbitration appropriate to compel under 'a broad
arbitration clause .. . as long as the underlying factual allegations simply touch matters eovered
by the arbitration provision.'" PRM Energv Svs.. 592 F.3d at 837 (internal marks omitted)
(quoting 3M Co.. 542 F.3d at 1199). Giddings' USERRA claims here "touch matters covered
by" the arbitration provision, so arbitration should be compelled under Eighth Circuit precedent.
D. Arbitrability of USERRA Claims

At the hearing, Giddings argued for the first time that 38 U.S.C. § 4302, the legislative

history of USERRA, and the Department of Labor's (DOL) interpretation of § 4302 establish
that Congress intended to prohibit compelled arbitration of USERRA rights. At the invitation of

this Court, both parties submitted letters after the hearing citing cases addressing the arbitration
of USERRA claims. Docs. 58, 59.

"[Cjontracts to arbitrate federal statutory claims are enforceable unless 'Congress has
evinced an intention to preclude a waiver ofjudicial remedies for the statutory rights at issue.'"
Bailevv. Ameriquest Mortg. Co.. 346 F.3d 821, 822-23 (8th Cir. 2003)(quoting Green Tree Fin.

®The parties filed pleadings both in a lawsuit that Media Lodge and related plaintiffs filed against
GunUp alleging fraud and breach of the merger agreement and in a lawsuit GunUp's CEO Hall
filed against Media Lodge and related parties. Those pleadings included in places allegations
about Media Lodge's alleged inappropriate treatment of Giddings' employment and about
Giddings' alleged underperformance of his duties as a Media Lodge employee.
20

Corp.. 531 U.S. at 90). Such congressional intent "will be discoverable in the text of the

[statute], its legislative history, or an 'inherent conflict' between arbitration and the [statute's]
underlying purposes." Gilmer. 500 U.S. at 26.
Every federal circuit court to consider the issue has held that neither § 4302 nor the
legislative history of USEREA shows that Congress intended to prohibit compelled arbitration of
USERRA claims. Zioberv. BLB Res.. Inc.. 839 F.3d 814, 817-821 (9th Cir. 2016), cert, denied.
137 S. Ct. 2274 (2017); Landis v. Pinnacle Eve Care. LLC. 537 F.3d 559, 561-63 (6th Cir.

2008); Garrett v. Circuit Citv Stores. Inc.. 449 F.3d 672, 676-81 (5th Cir. 2006); see also Bodine
V. Cook's Pest Control Inc.. 830 F.3d 1320, 1327 (11th Cir. 2016)(holding that § 4302(b) does
not "automatically invalidate an entire agreement with USERRA-offending terms"). For the
reasons set forth by the Fifth, Sixth, and Ninth Circuits, this Court finds that § 4302 and

USERRA's legislative history do not establish that Congress intended to preclude a waiver of
judicial remedies for USERRA rights.
No federal circuit court has specifically addressed the DOL's interpretation of § 4302(b),
although the issue was raised before the Ninth Circuit in Ziober. See Ziober. 839 F.3d at 822

(Watford, J., concurring) (citing the DOL's interpretation of § 4302(b)); Plaintiff-Appellant's
Reply Brief at 33-36, Ziober. 839 F.3d 814 (No. 14-56374), 2015 WL 1396699, at *27-28
(urging the Ninth Circuit to give deference to the DOL's interpretation of § 4302(b)). In the
preamble to the federal regulations on USERRA,the DOL,the agency tasked with administering
USERRA, stated that § 4302(b) "has been interpreted expansively; for instance, it includes a

prohibition against the waiver in an arbitration agreement of an employee's right to bring a
USERRA suit in Federal court. See, e.g., Garrett v. Circuit Citv Stores. Inc.. 338 F. Supp. 2d

717, 721-22(N.D. Tex. 2004)." 70 Fed. Reg. 75246, 75257(Dec. 19, 2005). The DOL did not

21

make this statement when discussing arbitrability of USERRA claims, but as an example of the

breadth of the statute when explaining why employees caimot waive their reemployment rights
before or during a term of military service. Id There has been a significant shift in the law since

the DOL issued the preamble in 2005. Not only has the Fifth Circuit reversed the district court
decision the DOL relied on when discussing § 4302(b), s^ Garrett. 449 F.3d 672, but the Ninth

and Sixth Circuits, along with several district courts, have held that § 4302(b) does not prohibit

compelled arbitration of USERRA claims, Ziober. 839 F.3d at 817-821; Landis. 537 F.3d at
561-63; Will v. Parsons Evergreene. LLC. No. 08-cv-00898-DME-CBS, 2008 WL 5330681, at

*3-5 (D. Colo. Dec. 19, 2008); Ohlfs v. Charles Schwab & Co.. No. 08-cv-00710-LTB-MEH,
2008 WL 4426012, at *3^ (D. Colo. Sept. 25, 2008); Kitts v. Menards. Inc.. 519 F. Supp. 2d

837, 844 (N.D. Ind. 2007). Giddings has not cited any cases holding that the DOL's 2005
interpretation of § 4302(b) establishes that employees cannot be compelled to arbitrate their
USERRA claims. Moreover, it is unclear what weight this Court should give an agency's

interpretation when attempting to discern whether Congress intended to prohibit arbitration of
statutory rights. See Krusch v. TAMKO Bldg. Prods.. Inc.. 34 F. Supp. 3d 584, 591-94
(M.D.N.C. 2014) (finding that agency's interpretation of statute was not controlling when
deciding whether Congress intended to prohibit "pre-dispute" arbitration of statutory claims).

Giddings' citation to the DOL's interpretation does not establish that Congress intended to
preclude a waiver of judicial remedies for USERRA rights. Will. 2008 WL 5330681, at *5
(holding that even if the DOL's interpretation of § 4302(b) could be "some indication of
Congress's intent, it is at best very minimal indication of that intent, and insufficient to overcome
the strong federal policy favoring arbitration"); Ohlfs. 2008 WL 4426012, at *4 (rejecting

22

argument that the DOL's interpretation of § 4302(b) established that USEREA claims are not
subject to arbitration).
E. Arbitration of Claims against Siegel and lA Tech

The parties did not brief whether this Court can or must compel arbitration of Giddings'
claims against Siegel and lA Tech (who are affiliated with Media Lodge but not signatories to

the Employment Agreement). This Court raised the issue at the hearing, and Defendants cited to
authority addressing the issue in their letter to this Court. Doc. 58 (citing Alltel Commc'ns. LLC
V. Qglala Sioux Tribe. No. CIV. 10-5011-JLV, 2010 WL 1999315 (D.S.D. May 18, 2010)). In

2009, the Supreme Court made clear that state contract law controls whether a nonsignatory can
enforce an arbitration clause. Arthur Andersen LLP v. Carlisle. 556 U.S. 624, 631 (2009);

Donaldson Co.. 581 F.3d at 732 (applying Mississippi law to determine whether a nonsignatory
could enforce an arbitration provision). By that time, however, federal courts had already

developed a significant body of federal common law concerning a nonsignatory's ability to
compel arbitration. See, e.g.. CD Partners. LLC v. Grizzle. 424 F.3d 795, 798 (8th Cir. 2005)
(discussing when a nonsignatory can enforce an arbitration clause without referencing any

particular state's law); PRM Energv Svs.. 592 F.3d at 834 (relying on "federal law" to decide

'''Giddings' letter to this Court also cited to Ouiles v. Union Pacific Railroad Co.. 8;16CV330,
2017 WL 1592360 (D. Neb. Apr. 28, 2017), to question "the enforeeability of arbitration
agreements when the arbitration agreement itself is silent on USERRA." Doc. 59. After
deciding that there was no valid, binding agreement to arbitrate, the district court in Ouiles
suggested that the arbitration agreement was also unenforceable because it failed to mention
USERRA and USERRA requires that employees expressly waive their right to bring USERRA
claims in federal court. Ouiles. 2017 WL 1592360, at *6. The court in Ouiles was incorrect; the

law does not require that arbitration agreements specifically mention USERRA to be
enforceable. Ziober. 839 F.3d 814 (compelling arbitration of USERRA claims where the

arbitration agreement was silent on USERRA); Landis. 537 F.3d 559 (same); Garrett. 449 F.3d
672 (same); Mitchell v. Weather Chatmel. LLC. No. 1:11-CV-3039-ODE, 2012 WL 13013002,

at *4^5 (N.D. Ga. Mar. 9, 2012) (rejecting argument that plaintiff could not be compelled to
arbitrate USERRA claims because arbitration clause failed to expressly mention USERRA).
23

whether a nonsignatory could compel arbitration). The lone South Dakota case on this issue—
Rossi Fine Jewelers. Inc. v. Gunderson. 648 N.W.2d 812 (S.D. 2002)—drew broadly from this

body of federal common law to hold that non-signatories could enforce an arbitration clause in a
franchise agreement. Id at 815-16. The plaintiff in Rossi contracted with a company called
Nature's 10 to operate a jewelry franchise. Id at 813. The plaintiff eventually sued Nature's 10,
Nature's lO's owner Mylan Ventures, and several individuals who were officers of Nature's 10

or Mylan. Id Among other things, the plaintiff alleged breach of contract, fraud, deceit, and
personal liability of the officers. Id at 814. Although Mylan Ventures and the officers were not
signatories to the franchise agreement between the plaintiff and Nature's 10, they moved to
compel arbitration under the arbitration clause contained therein. Relying on agency principles,

principles of equitable estoppel, and the idea that plaintiffs should not be able to avoid arbitration
simply by adding a nonsignatory defendant, the Supreme Court of South Dakota held that Mylan
Ventures and the officers could enforce the arbitration elause. Id at 815-16.

Applying Rossi here, this Court finds that Siegel and lA Tech can enforce the arbitration
clause. Like Mylan Ventures and the officers in Rossi. Siegel and lA Tech are closely related to
one of the signatories to the arbitration clause. One of the reasons the Supreme Court of South
Dakota allowed the officers in Rossi to enforce the arbitration clause was that the officers were

agents of Mylan or Nature's 10 and were being sued for actions they took as officers of the
companies. Id at 815. The court explained that allowing agents to enforce an arbitration
agreement under such circumstances was necessary "to prevent cireumvention of arbitration

agreements" and "to effeetuate the intent of the signatory parties." Id (quoting Hirschfeld
Prods.. Inc. v. Mirvish. 673 N.E.2d 1232, 1233 (N.Y. 1996)). The Eighth Circuit recognizes a

similar rule. Relying on "agency and related principles," the Eighth Circuit has held that a

24

nonsignatory should be allowed to "compel arbitration when, as a result of the nonsignatory's
close relationship with the signatory, a failure to do so would eviscerate the arbitration
agreement." PRM Energy Svs.. 592 F.3d at 834. Here, Siegel is Media Lodge's CEO and,

according to Giddings' complaint, its agent. Doc. 41 at 111. Giddings' allegations against

Siegel all concern Siegel's conduct as an officer of Media Lodge. As to lA Tech, Giddings'
complaint states that LA Tech is the majority owner of Media Lodge, that LA Tech was "jointly
operating Media Lodge in Sioux Falls," and that Media Lodge's press releases state that "Media
Lodge is a division of LA Tech." Doc. 41 at

5-6, 12. Siegel and LA Tech's relationship with

Media Lodge is close enough that the failure to allow them to compel arbitration would
eviscerate Media Lodge's arbitration agreement with Giddings. Rossi. 648 N.W.2d at 815-16;

see also Finnie v. H & R Block Fin. Advisors. Inc.. 307 F. App'x 19, 21 (8th Cir. 2009)
(unpublished per curiam)(applying the close relationship test to hold that a supervisor sued for
employment discrimination could enforce an arbitration agreement between employer and
plaintiff); Grizzle. 424 F.3d at 798-99 (holding that the close relationship test allowed three
corporate officers to compel arbitration under an arbitration agreement to which their corporation
was a signatory); Pritzker v. Merrill Lynch. 7 F.3d 1110, 1121 (3d Cir. 1993) (holding that a
nonsignatory corporate sister of a signatory corporation could compel arbitration); J.J. Ryan &
Sons. Inc. v. Rhone Poulenc Textile. S.A.. 863 F.2d 315, 320-21 (4th Cir. 1988)("When the
charges against a parent company and its subsidiary are based on the same facts and are
inherently inseparable, a court may refer claims against the parent to arbitration even though the
parent is not formally a party to the arbitration agreement."). After all, Giddings alleges that
Media Lodge and lA Tech were jointly operating the Sioux Falls Media Lodge office and that

they both qualify as "private employers" under USERRA. Doc. 41 at

25

5, 13. And Giddings

does not distinguish between defendants in terms of the claims asserted or the misconduct

alleged. Rather, he alleges the same USERRA claims against the Media Lodge Defendants—
failure to properly reemploy, demotion, and termination—^using the same bases for liability: the
failure to assign Giddings the strong sales accoimts he would have had but for his military
service, requiring him to accept a lower paying contract position with lesser benefits and
responsibilities, and terminating his employment without just cause. Doc. 41 at

45, 53, 60-

62, 71-72. Thus, under Rossi. Giddings' claims against Siegel and lA Tech are subject to
arbitration alongside the claims against Media Lodge.
IV.

Conclusion

For the reasons stated above, it is hereby

ORDERED that Defendants' Motion to Dismiss Proceedings and Compel Arbitration,
Doc. 18, is granted to the extent that this case is stayed and the parties must proceed to
arbitration in accordance with the terms ofthe contract.

DATED this <3*^ day of March,2018.
BY THE COURT:

ROBERTO A. LANG!
UNITED STATES DISTRICT JUDGE

26