PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

DIANE O'NEIL,

Plaintiff-Appellee,

v. No. 96-2460

HILTON HEAD HOSPITAL,

Defendant-Appellant.

Appeal from the United States District Court

for the District of South Carolina, at Beaufort.

Solomon Blatt, Jr., Senior District Judge.

(CA-96-1933-9-8)

Argued: May 8, 1997

Decided: June 13, 1997

Before WILKINSON, Chief Judge, and RUSSELL and

MICHAEL, Circuit Judges.

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Reversed and remanded by published opinion. Chief Judge Wilkinson

wrote the opinion, in which Judge Russell and Judge Michael joined.

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COUNSEL

ARGUED: Brian S. McCoy, ROBINSON, BRADSHAW & HINSON, P.A., Rock Hill, South Carolina, for Appellant. Samuel Stanton

Svalina, SVALINA, RICHARDSON & LARSON, Beaufort, South

Carolina, for Appellee. ON BRIEF: Benjamin A. Johnson, Sarah B.

Boucher, ROBINSON, BRADSHAW & HINSON, P.A., Rock Hill,

South Carolina, for Appellant. J. Brent Kiker, SVALINA, RICHARDSON & LARSON, Beaufort, South Carolina, for Appellee.
OPINION

WILKINSON, Chief Judge:

Diane O'Neil sued her former employer, Hilton Head Hospital,

alleging that she had been discharged in violation of the Family and

Medical Leave Act ("FMLA"). Citing an arbitration agreement signed

by O'Neil, the hospital moved that the suit be stayed pending arbitration as required by section 3 of the Federal Arbitration Act ("FAA"),

9 U.S.C. § 3. The district court denied this motion.

We reverse. The FAA embodies a strong federal policy in favor of

arbitration, and, accordingly, there is a strong presumption in favor of

the validity of arbitration agreements. The district court erred when

it found that the hospital was obligated to provide O'Neil with continued employment in order for the arbitration clause to be effective. We

remand the case to the district court with directions that it be stayed

pending arbitration.

I.

Diane O'Neil began working for Hilton Head Hospital as a respiratory therapist on January 15, 1991. On June 12, 1994, O'Neil began

a leave of absence from the hospital, which she alleges was medical

leave pursuant to the FMLA. While O'Neil was on leave, Hilton Head

Hospital was acquired by American Medical International ("AMI").

During her leave, on August 19, 1994, O'Neil signed an acknowledgment form recognizing receipt of an AMI Employee Handbook and

agreeing to submit all employment disputes to arbitration. That form

contained the arbitration clause which is the subject of this appeal.

The clause states:

I understand that AMI makes available arbitration for resolution of grievances. I also understand that as a condition of

employment and continued employment, I agree to submit

any complaints to the published process and agree to abide

by and accept the final decision of the arbitration panel as

ultimate resolution of my complaints for any and all events

that arise out of employment or termination of employment.

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(emphasis in original).

On October 13, 1994, O'Neil was discharged. O'Neil filed a complaint against the Hospital in state court alleging violations of the

FMLA. The Hospital removed the case to the district court and pursuant to section 3 of the FAA, 9 U.S.C. § 3, moved to stay the action

pending arbitration. The district court denied this motion from the

bench on September 12, 1996. The Hospital appeals.

II.

In the FAA, Congress endorsed arbitration as a less formal and

more efficient means than litigation of resolving disputes. In line with

this congressional intent, the Supreme Court has repeatedly emphasized that the FAA represents "a liberal federal policy favoring arbitration agreements." Moses H. Cone Memorial Hospital v. Mercury

Construction Corp., 460 U.S. 1, 24 (1983); accord Mastrobuono v.

Shearson Lehman Hutton, Inc., 115 S.Ct. 1212, 1216 (1995); Gilmer

v. Interstate/Johnson Lane Corp., 500 U.S. 20, 26 (1991). Pursuant

to that liberal policy, "any doubts concerning the scope of arbitrable

issues should be resolved in favor of arbitration, whether the problem

at hand is the construction of the contract language itself or an allegation of waiver, delay, or a like defense to arbitrability." Moses H.

Cone, 460 U.S. at 24-25.

The federal policy favoring the effective and efficient resolution of

disputes through arbitration applies with equal strength to claims created by contract or by statute. "By agreeing to arbitrate a statutory

claim, a party does not forgo the substantive rights afforded by

the statute; it only submits to their resolution in an arbitral, rather than

a judicial, forum." Mitsubishi Motors Corp. v. Soler ChryslerPlymouth, Inc., 473 U.S. 614, 628 (1985); see also Austin v. OwensBrockway Glass Container, Inc., 78 F.3d 875, 880-81 (4th Cir. 1996)

(statutory claims are subject to arbitration). Nothing in the Family and

Medical Leave Act suggests that Congress wished to exempt disputes

arising under it from the coverage of the FAA. See Satarino v. A.G.

Edwards & Sons, Inc., 941 F.Supp. 609, 613 (N.D. Tex. 1996)

(FMLA "contains nothing to suggest that agreements to arbitrate are

unenforceable.").

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It is clear that the provisions of the FAA apply here. The FAA

exempts from its coverage "contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or

interstate commerce." 9 U.S.C. § 1. The circuit courts have uniformly

reasoned that the strong federal policy in favor of arbitration requires

a narrow reading of this section 1 exemption. Thus, those courts have

limited the section 1 exemption to seamen, railroad workers, and

other workers actually involved in the interstate transportation of

goods. See Rojas v. TK Communications, Inc., 87 F.3d 745, 748 (5th

Cir. 1996); Asplundh Tree Expert Co. v. Bates , 71 F.3d 592, 600-601

(6th Cir. 1995); Miller Brewing Co. v. Brewery Workers Local No. 9,

739 F.2d 1159, 1162 (7th Cir. 1984); Erving v. Virginia Squires Basketball Club, 468 F.2d 1064, 1069 (2d Cir. 1972); Dickstein v.

duPont, 443 F.2d 783, 785 (1st Cir. 1971).1 We agree with this uniform body of precedent. If Congress had wished to exempt all

employees from the coverage of the FAA it could have said so.

Instead it enumerated an exempt class of employees, which is limited

to workers engaged in the shipment and transportation of goods. See

Rojas, 87 F.3d at 748. Therefore, since O'Neil was not engaged in the

interstate transportation of goods, she does not fall within the section

1 exclusion, and the FAA applies.

III.

The FAA states that arbitration agreements "shall be valid, irrevocable, and enforceable, save upon such grounds that exist at law or

in equity for the revocation of any contract." 9 U.S.C. § 2. The FAA

further provides for stays of proceedings in federal district courts

when an issue in the proceeding is referable to arbitration. 9 U.S.C.

§ 3. O'Neil attempts to avoid these statutory directives by arguing that

the arbitration agreement was not supported by consideration and that

the agreement was contingent upon the hospital's commitment to pro-

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1 United Electrical, Radial & Machine Workers v. Miller Metal Products, Inc., 215 F.2d 221 (4th Cir. 1954), is not to the contrary. To begin

with, this case predates the substantial body of Supreme Court precedent

supporting utilization of the arbitration process. Even if we were to

assume that Miller Metal Products had any remaining vitality, however,

it clearly does not apply to individual employment contracts. Id. at 224.

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vide her "continued employment." We address each of these contentions in turn.

A.

O'Neil first argues the contract to arbitrate was not supported by

adequate consideration because the agreement was not binding on the

hospital. O'Neil's argument fails because its premise is mistaken.

Here the agreement to be bound by arbitration was a mutual one.

The contract to arbitrate was proffered by the employer. Such a proffer clearly implies that both the employer and the employee would be

bound by the arbitration process. If an employer asks an employee to

submit to binding arbitration, it cannot then turn around and slip out

of the arbitration process itself.

It is true that courts have refused to enforce arbitration agreements

where the agreement specifically allows the employer to ignore the

results of arbitration. See Hull v. Norcom, Inc. , 750 F.2d 1547, 1549

(11th Cir. 1985). That is not the case here, however. There is no such

clause in the arbitration agreement signed by O'Neil, and we decline

to read such a clause into the contract. A mutual promise to arbitrate

constitutes sufficient consideration for this arbitration agreement.

Rickborn v. Liberty Life Insurance Co., 468 S.E.2d 292, 300 (S.C.

1996).

O'Neil's argument that AMI has nowhere agreed to be bound by

arbitration also ignores the multiple references in the AMI employee

handbook, which indicate that AMI agreed that the arbitration process

was binding. For, example, the handbook states:"As regards the Fair

Treatment Procedure, AMI is committed to accepting the obligation

to support and assure access to the binding arbitration procedure for

solving disputes if necessary." (emphasis added). Indeed, the arbitration agreement signed by O'Neil clearly states that the decision of the

arbitration board is "final." (emphasis in original).

O'Neil's argument is especially misplaced in the circumstances of

this case. Not only has the hospital consistently argued that it is bound

by the arbitration agreement, it has, by virtue of this suit, shown its

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commitment to the arbitration process. Indeed, the only party to this

case who has shown a desire to avoid binding arbitration is O'Neil

herself.2

B.

The district court held that O'Neil's "continued employment" was

a condition precedent to the arbitration agreement. The court reasoned

that since O'Neil had not reported to work and had not been paid a

salary since signing the agreement, she had not continued employment with Hilton Head Hospital. The court therefore concluded that

the arbitration agreement was not effective. O'Neil argues that we

should follow this reasoning on appeal. We decline this invitation.

First, the district court misconstrued the language of the arbitration

agreement, reading it to indicate that O'Neil's agreement to arbitrate

was conditioned on continued employment with the hospital. This

reading reverses the plain meaning of the arbitration clause, which

specifically states: "I also understand that as a condition of employment and continued employment, I agree to submit any complaints"

to arbitration. This clause placed no employment condition on the

hospital, but rather imposed a condition upon O'Neil: if she wished

to continue employment, she had to agree to arbitration. If the provision had been intended to create a condition relating to the effectiveness of the arbitration agreement, it would have stated: "I also

understand that as a condition of my agreement to arbitrate employment disputes, the Hospital agrees to provide me with continued

employment." However, this is simply not what the arbitration clause

says.

Second, the district court relied on the provisions of the FMLA,

stating that under the FMLA, a person who takes leave must be "restored to the position they had or a similar position." This reliance on

the provisions of the FMLA was plainly improper. It is for the arbitrator, not the district court, to determine whether the FMLA is even

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2 Because we find that the contract was supported by a mutual promise

to be bound by arbitration, we need not address the hospital's argument

that the contract was supported by employment benefits provided to

O'Neil after she signed the arbitration agreement.

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applicable to O'Neil's case. As the Supreme Court stated in Prima

Paint Corp. v. Flood & Conklin Manufacturing, 388 U.S. 395, 404

(1967), "in passing upon a § 3 application for a stay while the parties

arbitrate, a federal court may consider only issues relating to the making and performance of the agreement to arbitrate." By considering

the provisions of the FMLA, the district court put the cart before the

horse.

Third, the district court referred to an affidavit by O'Neil, which

stated that she had been told by an unnamed supervisor that she would

be allowed to return to work if she filled out AMI's employment

forms. To the extent the district court relied on this statement, it was

in error because this statement had nothing to do with whether the

arbitration agreement was binding. Whatever relevance that statement

might have is related to O'Neil's underlying claim and thus is for consideration by the arbitrator, not the district court. However, even if the

alleged statement had somehow been pertinent to the effectiveness of

the arbitration agreement, allegations of a vague promise cannot overcome the binding language of a written arbitration agreement. Waiver

and estoppel are disfavored under the FAA. See Moses H. Cone, 460

U.S. at 24-25.

Neither the language of the arbitration agreement nor the other

sources relied upon by the district court support the conclusion that

continued employment was a condition relevant to the effectiveness

of the arbitration agreement. Therefore, the arbitration agreement in

this case must be enforced.

IV.

The Supreme Court has repeatedly emphasized that"questions of

arbitrability must be addressed with a healthy regard for the federal

policy favoring arbitration." Gilmer, 500 U.S. at 26 (quoting Moses

H. Cone, 460 U.S. at 24). The district court's analysis turned this

clear injunction on its head, pursuing every possible avenue to avoid

the binding arbitration agreement between O'Neil and her employer.

We cannot endorse such an approach. Accordingly, we reverse the

judgment of the district court and remand with instructions that

O'Neil's action be stayed in accordance with section 3 of the FAA.

REVERSED AND REMANDED

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