Russell v. Dunlap & Kyle Tire Co., Inc., (Tennessee) et al
MEMORANDUM AND ORDER: Defendants Motion 7 is GRANTED, and Russells claims are dismissed. The court ORDERS that the parties arbitrate pursuant to the valid Arbitration Agreement. Signed by District Judge Aleta A. Trauger on 8/29/2017. (DOCKET TEXT SUMMARY ONLY-ATTORNEYS MUST OPEN THE PDF AND READ THE ORDER.)(ab)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF TENNESSEE
DUNLAP & KYLE TIRE CO., INC.
DUNLAP & KYLE TIRE CO., INC.
Case No. 3:17-cv-00843
Judge Aleta A. Trauger
MEMORANDUM & ORDER
Pending before the court is a Motion to Dismiss and Compel Arbitration or, in the
Alternative, to Stay Proceedings and Compel Arbitration (Docket No. 7) filed by the defendants,
Dunlap & Kyle Tire Co., Inc. (Tennessee) and Dunlap & Kyle Tire Co., Inc. (Mississippi)
(collectively, “Dunlap”), to which the plaintiff, Richard Russell, has filed a Response in
opposition (Docket No. 10), and Dunlap has filed a Reply (Docket No. 11). For the reasons
discussed herein, Dunlap’s motion will be granted and the case will be dismissed.
FACTS & PROCEDURAL HISTORY
From 1994 to 2016, Russell was employed by Dunlap’s Nashville plant. In 2001, Russell
was promoted to the management team and, in 2011, he became Operations Manager for the
plant. Russell alleges that, in 2016, he was constructively discharged by being demoted to a
sales role, despite having no sales experience, and relocated to the plant’s warehouse, where he
was forced to work in close proximity to the person who replaced him as Operations Manager.
Russell alleges that his constructive discharge, in conjunction with racist comments and
behaviors condoned by his supervisor, constituted racial discrimination in violation of 42 U.S.C.
§ 2000e and the Tennessee Human Rights Act, T.C.A. § 4-21-401.
In October 2011, Dunlap introduced an alternative dispute resolution program for its
employees. As part of this program, Dunlap distributed to employees an Employee Handbook
and an Arbitration Agreement. The Employee Handbook details various policies and procedures
related to reporting workplace issues such as harassment, violence, and safety concerns. The
Employee Handbook also states that the Arbitration Agreement is a separate agreement
regarding a separate policy: “Of course, we have instituted a separate Arbitration policy, which is
embodied in the separate Arbitration Agreement entered into by the Company and yourself.
The remedies provided by the Arbitration agreement are in addition to those stated in this
handbook. Please refer to the Arbitration Agreement for further details.” (emphasis added).
Upon reading the Employee Handbook, employees were required to sign an Acknowledgment
and Consent form. That form states:
“I understand that the handbook is not a contract of employment,
express or implied, and does not create binding obligations on the
Company. I also understand that the Company has the right, at any
time, and for any reason, to make changes in all employment
policies, instructions, and procedures with or without notice, and
with retroactive effect, except the At-Will Employment Policy and
the separate Arbitration Agreement entered into with all
employees. I further understand . . . that the Company may take
any action concerning my employment, including termination of
my employment, with or without cause, without notice, and
without further obligation to me, except as provided by law and
the separate Arbitration Agreement.” (emphasis added).
The form concludes with the following reaffirmation: “I further agree to abide by the Arbitration
Agreement entered into with respect to arbitration of all employment related disputes referenced
therein.” The Arbitration Agreement requires that any dispute arising out of employment at
Dunlap be resolved via binding arbitration. Both Dunlap and employees are mutually bound by
the Arbitration Agreement, which states: “The parties hereto acknowledge that, by entering into
this Agreement, they are waiving their rights to a judicial forum and a jury trial for the
determination of any covered Claims or disputes.” Russell signed both the Arbitration
Agreement and the Acknowledgement and Consent form on October 25, 2011.
The question of whether the plaintiff's claim must be arbitrated is governed by the
Federal Arbitration Act (“FAA”). The FAA provides that a written arbitration agreement “shall
be valid, irrevocable, and enforceable, save upon such grounds as exist in law or in equity for the
revocation of any contract.” 9 U.S.C. § 2. There is a strong presumption in favor of arbitration
under the FAA. Morrison v. Circuit City Stores, Inc., 317 F.3d 646, 652–53 (6th Cir. 2003).
The FAA sets up a presumption in favor of arbitration and requires courts to rigorously enforce
agreements to arbitrate. Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213, 221 (1985).
Although district courts within the Sixth Circuit are split as to whether a motion to
dismiss based on an arbitration agreement should be brought under Rule 12(b)(1) or Rule
12(b)(6) and the Sixth Circuit has not resolved this inconsistency, the Sixth Circuit has been
clear that, to avoid compelled arbitration, a party must show that there is a genuine issue of
material fact as to the validity or applicability of the agreement to arbitrate. Great Earth Cos.,
Inc. v. Simons, 288 F.3d 878, 889 (6th Cir. 2002). The required showing mirrors that required to
withstand summary judgment in a civil action. Id.
The Arbitration Agreement is a valid contract and is thus enforceable under the FAA.
Russell argues that the Arbitration Agreement is not a contract because it is part of the Employee
Handbook, which is not legally binding, due to the following sentence in the Acknowledgment
and Consent form: “I understand that the handbook is not a contract of employment, express or
implied, and does not create binding obligations on the Company.” This argument is unavailing.
The Employee Handbook makes clear that the Arbitration Agreement is a separate agreement
from the Employee Handbook. The Acknowledgment and Consent form makes clear that the
Arbitration Agreement is an agreement separate and apart from the Employee Handbook. Both
the Employee Handbook and the Acknowledgment and Consent form specifically refer to the
Arbitration Agreement as “the separate Arbitration Agreement.” Further, the Acknowledgment
and Consent form notes that the Arbitration Agreement, unlike the Employee Handbook, creates
legal obligations that are binding on both Dunlap and its employees: “The parties hereto
acknowledge that, by entering into this Agreement, they are waiving their rights to a judicial
forum and a jury trial for the determination of any covered Claims or disputes.” Although
Russell is correct that the Arbitration Agreement does not contain the word “contract,” it was
presented separately from the Acknowledgement and Consent form as a stand-alone document
and required a separate signature from the Acknowledgment and Consent form.
Russell relies on Stanich v. Hissong Group, Inc., 2010 WL 3732129 (S.D. Ohio Sept. 20,
2010)—a case not binding on this court that dealt with an unenforceable arbitration agreement—
to support his contention that the Arbitration Agreement in this case is likewise unenforceable.
The dispute addressed in Stanich, however, is clearly distinguishable, in that the arbitration
agreement in question 1) was added to an employee handbook only after the handbook had been
signed by the employee; 2) was not a standalone agreement requiring a separate signature, and;
3) did not create binding legal obligations on both parties because it could be modified
unilaterally by the employer. The Arbitration Agreement here, to the contrary, is a separate
document that creates binding legal obligations on both Dunlap and Russell and was signed by
Russell simultaneous to his signing of the Employee Handbook’s Acknowledgment and Consent
form. Therefore, the Arbitration Agreement is a valid contract and governs this case pursuant to
the FAA. Russell does not request a stay pending the results of arbitration, and his claims are
dismissed in favor of arbitration.
For the foregoing reasons, the defendants’ Motion is GRANTED, and Russell’s claims
are dismissed. The court ORDERS that the parties arbitrate pursuant to the valid Arbitration
Enter this 29th day of August 2017.
ALETA A. TRAUGER
United States District Judge
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