Chambers v. Hampden Coal, LLC et al

Filing 11

MEMORANDUM OPINION AND ORDER granting defendants' 3 MOTION to dismiss and this complaint is dismissed without prejudice to arbitration. Signed by Judge John T. Copenhaver, Jr. on 3/1/2018. (cc: counsel of record; any unrepresented parties) (taq)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF WEST VIRGINIA
AT CHARLESTON
JOHN CHAMBERS,
Plaintiff,
v.

Civil Action No. 2:17-cv-2744

HAMPDEN COAL, LLC, a
Delaware limited liability
company, and BLACKHAWK MINING,
LLC, a Kentucky Corporation,
and TONY OSBORNE, individually,
Defendants.

MEMORANDUM OPINION AND ORDER
Pending is a motion to dismiss, or, in the
alternative, compel arbitration, filed by defendants Hampden
Coal, LLC and Blackhawk Mining, LLC (together “defendants”)1 on
May 12, 2017.
I. Background
Plaintiff John Chambers filed his complaint in the
Circuit Court of Boone County, West Virginia on December 13,
2016.

See Compl. Ex. A to Notice of Removal.

Shortly after, he

filed his amended complaint on January 17, 2017, adding
defendant Hampden Coal, LLC (“Hampden Coal”) to the action.
Am. Compl. Ex. A to Notice of Removal.

See

Invoking this court’s

diversity jurisdiction pursuant to 28 U.S.C. § 1332(a)(1),

1

Defendant Tony Osbourne has not yet been served.
Docket.

See generally

defendants timely removed the action to this court on May 5,
2017, within thirty days after service of the amended complaint.
Notice of Removal ¶ 3.
Mr. Chambers states that he was employed with Hampden
Coal from June of 2005 until approximately December 14, 2014.
Am. Compl. ¶¶ 5, 8.

In 2014, Blackhawk Mining, LLC purchased

Hampden Coal and sometime thereafter required Mr. Chambers to
sign an arbitration agreement.

Pl.’s Resp. Defs.’ Mot. Dismiss

Compel Arbitration (“Pl.’s Resp.”) at 1.

He alleges that

defendants terminated his employment due to his age, in
violation of the West Virginia Human Rights Act.
13; W. Va. Code § 5-11-9.

Id. at ¶¶ 8-

Mr. Chambers seeks compensatory

damages, unmitigated front pay, emotional distress and punitive
damages, and attorney fees and costs.

Am. Compl. ¶ 18.

Defendants move the court to dismiss this action, or,
in the alternative, to compel arbitration according to a mutual
arbitration agreement that they argue is binding on Mr.
Chambers’ claim under the Federal Arbitration Act (“FAA”), 9
U.S.C. § 1, et seq.

Defs.’ Mem. Supp. Mot. Dismiss Compel

Arbitration at 1-3 (“Defs.’ Mem.”).
Mr. Chambers agrees that valid arbitration agreements
are governed by the FAA, but he disputes the validity and
enforceability of the agreement that he signed.
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Pl.’s Resp. at

2-3.

He claims that the agreement is unenforceable because it

lacks proper consideration and, by its own terms, “specifically
states that it is not a contract.”
II. Legal Standard
In an action brought “upon any issue referable to
arbitration under an agreement in writing for such arbitration”
where the court is “satisfied that the issue involved in such
[action] is referable to arbitration,” the court shall “stay the
trial of the action until such arbitration has been had in
accordance with the terms of the agreement.”

2 U.S.C. § 3.

“A

district court therefore 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.”

Adkins v.

Labor Ready, Inc., 303 F.3d 496, 500 (4th Cir. 2002).
“The principal purpose of the FAA is to ensure that
private arbitration agreements are enforced according to their
terms.”

AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 344

(2011) (internal quotations omitted).

Under the FAA, agreements

to arbitrate are “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.

“[G]enerally applicable contract

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defenses, such as fraud, duress, or unconscionability, may be
applied to invalidate arbitration agreements.”

Doctor’s Assocs.

V. Casarotto, 517 U.S. 681, 687 (1996).
III. Analysis
If (1) the arbitration agreement between Mr. Chambers
and Hampden Coal is enforceable and (2) his claim is referable
to arbitration under that agreement, then the court must compel
arbitration.

9 U.S.C. § 3; see Adkins 303 F.3d at 500.

A. Enforceability of Arbitration Agreement
The enforceability of an arbitration agreement is
determined by the applicable state contract law.

See First

Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995).
The parties are in agreement that West Virginia state law
controls the validity of their arbitration agreement.

Pl.’s

Resp. at 2; Defs.’ Mem. at 7.
Mr. Chambers argues that the arbitration agreement he
signed is unenforceable because it lacks proper consideration
due to mistaken references to an employer other than Hampden
Coal.

Pl.’s Resp. at 3.

The agreement provides in relevant

part:

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Consideration. By signing this agreement,
Hampden Coal and I are exchanging promises to
arbitrate any disputes arising between us. Every
individual who works for Hampden Coal must have
signed and returned this Agreement to be eligible
for employment and continued employment with Blue
Diamond. Blue Diamond’s employment and continued
employment of me as well as, the benefits and
compensation provided by Hampden Coal are
consideration for this Agreement. Both Hampden
Coal and I remain free to end our employment
relationship at any time, for any reason.
Mutual Arbitration Agreement of John Chambers at 3 Ex. 1 to
Defs.’ Mot. Dismiss (“Chambers Agreement”).2

Because

“[p]laintiff has never worked for or had any association with
Blue Diamond” and “Blue Diamond has never been plaintiff’s
employer nor offered plaintiff employment,” the consideration
“has never come to fruition.”

Pl.’s Resp. at 3.

Without this

consideration, Mr. Chambers asserts, the agreement is
unenforceable.
Mr. Chambers also claims that the arbitration
agreement is unenforceable because the agreement itself states
that it is not a contract.

The final paragraph of the agreement

states that “[t]his Agreement is not, and shall not be construed
to create a contract of employment.”

Chambers Agreement at 3.

Therefore, he asserts, the agreement itself “claims not to be an
agreement.”

Pl.’s Resp. at 4.

2

All references to the Mutual Arbitration Agreement of John
Chambers utilize the pagination generated by the ECF system.
5

The enforceability of an identical arbitration
agreement was recently addressed by the Supreme Court of Appeals
of

West Virginia in Hampden Coal, LLC v. Varney, No. 17-0088,

2018 W. Va. LEXIS 102 (W. Va. 2018).

Mr. Chambers acknowledges

that the mutual arbitration agreement he entered into with
Hampden Coal is identical to the arbitration agreement at issue
in Varney.

Pl.’s Resp. Defs.’ Mot. Stay at 2; Compare Chambers

Agreement with Mutual Arbitration Agreement of Michael Varney
Ex. 1 to Defs.’ Reply Mot. Stay.
The court in Varney addressed both issues levied
by Mr. Chambers in opposition to the enforceability of the
arbitration agreement.

First, it found that valid consideration

existed despite the “scrivener’s error” referencing Blue
Diamond, because “a mutual agreement to arbitrate is sufficient
consideration to support an arbitration agreement.”
W. Va. LEXIS 102 at *11-*13.

Varney 2018

Second, it found that the language

disclaiming the creation of a contract of employment made no
impact on the enforceability of the arbitration agreement.
at *36.

Id.

Finding that the agreement was enforceable, the court

remanded the case for an entry of an order dismissing the action
and compelling arbitration.

Id. at *39.

As in Varney, the identical agreement signed by Mr.
Chambers is enforceable under state law.

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B. Claim is Referable to Arbitration
To determine whether a claim is properly referable to
arbitration, defendants must demonstrate:
(1) the existence of a dispute between the
parties, (2) a written agreement that includes
an arbitration provision which 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.
Am. Gen. Life & Accident Ins. Co. v. Wood, 429 F.3d 83, 87 (4th
Cir. 2005).

Here, it appears that all four elements are met

with respect to Mr. Chambers’ claim.
First, it is clear that a dispute exists between the
parties, as evidenced by the civil suit brought by plaintiff for
improper termination based on age.
Second, there is a written arbitration agreement that
purports to cover the dispute.

The agreement states, somewhat

awkwardly, that it covers “all disputes or claims of any kind
includes but is not limited to, claims of unlawful
discrimination, retaliation or harassment based upon . . . age .
. . and all other claims relating to employment or termination
from employment.”

Chambers Agreement at 2.

Mr. Chambers’ sole

claim of a violation of the West Virginia Human Rights Act based

7

on termination due to age discrimination is plainly the type of
dispute considered in and covered by the agreement.
Third, the diverse citizenship of the parties
indicates that their business relationships relate to interstate
commerce.

Mr. Chambers is a citizen of West Virginia while

defendants are formed under the laws of Delaware and Kentucky.
Am. Compl. ¶¶ 1-3.

That the transaction is related to

interstate commerce is not in dispute.

See Allied-Bruce

Terminix Cos. v. Dobson, 513 U.S. 265 (1995).
Finally, Mr. Chambers has refused to arbitrate this
action, instead opting to file a suit for age discrimination in
state court (since removed to this court) and oppose defendants’
motion to compel arbitration.

As such, the fourth factor is

also met and his claim is properly referable to arbitration.
C. Dismissal of the Action
Defendants move for dismissal of this action, but, in
the alternative, they request that the action be compelled to
arbitration.
The FAA states that a court satisfied that the claims
of a suit are arbitrable “shall on application of one of the
parties stay the trial of the action until such arbitration has
been had.”

9 U.S.C. § 3 (emphasis added).
8

“Notwithstanding the

Plaintiff,
v.

Civil Action No. 15-14025

terms CHEMICAL . dismissal TERM DISABILITY PROGRAM,
THE DOWof § 3 . . COMPANY LONG is a proper remedy when all of the
an Employee Welfare Benefits Plan,
issues LIFE ASSURANCE COMPANY OF arbitrable.” Choice Hotels
LIBERTY presented in a lawsuit are BOSTON,
a Massachusetts Corporation, and
Int’l, Inc. v. BSR Tropicana
DOES 1 THROUGH 10, inclusive, Resort, Inc., 252 F.3d 707, 709-10
(4th Cir. Defendants.district court may, therefore, dismiss a
2001). A
case rather than merely ORDER AND NOTICE
staying it. Greenville Hosp. Sys. V.
Employee Welfare Benefit Plan, 628 16.1, Appx. 842, 845-46 (4th
Pursuant to L.R. Civ. P. Fed. it is ORDERED that the
following dates are hereby fixed as the time by or on which
Cir 2015).
certain events must occur:
01/28/2016 In this case, because the sole 12(b), brought by Mr.
Motions under F.R. Civ. P. claim together with
supporting briefs, memoranda, affidavits, or other
such matter in support thereof. properly be
Chambers is subject to arbitration, and would (All motions
unsupported by memoranda will be denied without
prejudice pursuant to L.R. Civ. P. 7.1 (a)).
referred there, dismissal is warranted in lieu of a stay.
02/08/2016

Last day for Rule 26(f) meeting.

02/15/2016

IV. Report of
Last day to file Conclusion Parties= Planning
Meeting. See L.R. Civ. P. 16.1.

For the foregoing reasons, it is ORDERED that
Scheduling conference at 4:30 p.m. at the Robert C.
Byrd to dismiss be, and hereby Charleston, before
defendants’ motion United States Courthouse inis, granted and
the undersigned, unless canceled. Lead counsel
directed to appear.
this complaint is dismissed without prejudice to arbitration.

02/22/2016

02/29/2016

Entry of scheduling order.

03/08/2016 The Last day to serve requested to 26(a)(1) disclosures.
Clerk is further F.R. Civ. P transmit copies of
this written opinion and order to all counsel of record and any
The Clerk is requested to transmit this Order and
Notice to all counsel of record and to any unrepresented
unrepresented parties.
parties.
DATED: March 1, 5, 2016
DATED: January 2018
John T. Copenhaver, Jr.
United States District Judge

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