Source: http://openjurist.org/368/f3d/269/parilla-v-iap-worldwide-services-vi-inc
Timestamp: 2013-12-10 07:46:00
Document Index: 523665301

Matched Legal Cases: ['§ 1', '§ 2000', '§ 4', '§ 4', '§ 1331', '§ 1612', '§ 2000', '§ 1367', '§ 1612', '§ 16', '§ 16', '§ 2', '§ 4', '§ 2', '§ 4', '§ 208']

368 F3d 269 Parilla v. Iap Worldwide Services Vi Inc | OpenJurist
368 F. 3d 269 - Parilla v. Iap Worldwide Services Vi Inc	Home368 f3d 269 parilla v. iap worldwide services vi inc
368 F3d 269 Parilla v. Iap Worldwide Services Vi Inc 368 F.3d 269
Virgen PARILLAv.IAP WORLDWIDE SERVICES VI, INC.; Worldwide Services, Inc.; Gene Ludlow; Roy Varner AppellantsParilla Appellantv.IAP Worldwide Services VI, Inc.; IAP Worldwide Services, Inc.; Gene Ludlow; Roy Varner.
Francis J. D'Eramo (Argued), Nichols, Newman, Logan & D'Eramo, Christiansted, St. Croix, USVI, for Appellants.
Lee J. Rohn, K. Glenda Cameron (Argued), Law Offices of Lee J. Rohn, Christiansted, St. Croix, USVI, for Appellant.
IAP Worldwide Services VI, Inc. ("IAPVI"), IAP Worldwide Services, Inc. ("IAP"), Gene Ludlow, and Roy Varner (collectively, "Appellants") appeal from an order of the District Court of the Virgin Islands denying their motion to compel arbitration pursuant to the Federal Arbitration Act ("FAA"), 9 U.S.C. § 1 et seq. Appellee Virgen Parilla, a former employee of IAPVI, brought suit against Appellants alleging, inter alia, discriminatory conduct in violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq. Invoking the provisions of an arbitration agreement in Parilla's employment contract, Appellants filed a motion to compel arbitration of Parilla's claims. The District Court denied Appellants' motion, holding that the agreement to arbitrate was unenforceable. For the reasons that follow, we will reverse the District Court's order and will remand to the District Court for further proceedings consistent with this opinion.
On June 6, 2000, IAPVI hired Parilla as an administrative assistant. Upon the commencement of her employment, Parilla entered into an Hourly Employment Agreement ("the Agreement") with IAPVI. The Agreement addressed such employment-related matters as compensation, overtime, insurance, vacation, sick pay, promotions and discipline. Additionally, ¶¶ 16, 17, 19, and 20 of the Agreement pertained to arbitration. Paragraph 16 provides, in relevant part:
Any controversy or claim arising out of or relating in any way to this Agreement, to the breach of this Agreement, and/or to Employee's employment with Employer, or to the suspension or termination of Employee's employment with Employer, including claims against Employer, its owners or subsidiary or parent or affiliated companies, and its or their officers, directors, employees, and agents (including any person or company that manages any portion of the Facility) (all of the foregoing shall be collectively referred to as "Employer" for purposes of sections 16-20) shall be resolved by arbitration and not in a court or before an administrative agency.
App. at 44. Paragraph 17 of the Agreement sets forth all matters that are subject to arbitration, including "[a]ll claims or matters arising out of or relating in any fashion to this Agreement, to the breach of this Agreement, or to Employee's dealings with Employer, Employee's employment or the suspension or termination of Employee's employment with Employer." App. at 44.1
Paragraph 19 sets forth numerous procedures governing an arbitration proceeding. It requires that "[a]rbitration shall take place pursuant to the Federal Arbitration Act, and in accordance with the Rules governing arbitration set forth in the National Rules for the Resolution of Employment Disputes of the American Arbitration Association [(`AAA Rules')], as they shall be amended from time to time." App. at 45. Paragraph 19 also contains a thirty-day notice provision in order for an employee to bring a claim:
Employee must present Employee's claim in written form to the Company within thirty (30) calendar days of the event which forms the basis of the claim, unless a different time for presentation of the claim is provided for by the National Rules for the Resolution of Employment Disputes of the American Arbitration Association. For the purposes of this time limitation, the event forming the basis of a claim arising from discharge of Employee shall be the date of discharge. In no event may Employee bring a claim of any nature against Employer unless the claim is filed as set forth in this paragraph and within the time set forth in this paragraph. The written notice submitted by the Employee shall describe the event forming the basis of the claim, a description of the claim, the relief sought by Employee, and an address and telephone number where Employee can be reached. Notice must be given to the Project/Camp Manager by hand delivery or by certified mail, return receipt requested, and must be received by the Project/Camp Manager on or before the expiration of the thirty (30) calendar days from date of the event forming the basis of the claim, unless a different time for presentation of the claim is provided for by the National Rules for the Resolution of Employment Disputes of the American Arbitration Association. If notice is given by hand delivery, Employee must retain a receipted copy of the notice. If notice is given by certified mail, Employee must retain a copy of the return receipt. In the event that timely notice is not provided to the Company as set forth herein, it is agreed that the Employee has waived Employee's right to assert the claim, and shall have no further remedy against Employer. It is further agreed that this time limitation is to be strictly enforced by the arbitrator.
App. at 45-45A. With respect to the selection of an arbitrator, ¶ 19 provides:
Within fifteen (15) calendar days of receipt of timely notice of a claim from Employee, the Company shall submit a request to the American Arbitration Association to furnish a list of five (5) impartial arbitrators. The parties specifically agree that the list of arbitrators shall consist of individuals who do not reside in the U.S. Virgin Islands or Puerto Rico. The arbitrators shall be selected by the Company and by the aggrieved Employee by alternately striking a name from the list provided. In the event that either party refuses to cooperate in this process of selection, the other party may select any name from the list to serve as arbitrator.
App. at 45A. Paragraph 19 also allocates the costs of arbitration:
Unless Employee elects otherwise, the Company shall advance the arbitrator's fees and expenses and, if the Company is successful in the arbitration, the Employee agrees to reimburse the Company for the arbitrator's fees and expenses if so directed by the arbitrator. Provided, however, that the Company agrees to pay for the arbitrator's transportation and lodging costs incurred. Other than arbitrator's fees and expenses, each party shall bear its own costs and expenses, including attorney's fees.
App. at 45A-45B. Finally, ¶ 20 governs the venue of the arbitration hearing and the arbitration decision:
The arbitration hearing shall take place in St. Croix, U.S. Virgin Islands. The arbitrator, in rendering a decision, may uphold the actions of the Company or may grant relief to Employee. If the arbitrator finds that disciplinary action was merited, the arbitrator may not alter or amend the form of disciplinary action imposed by the Company. The arbitrator shall provide the parties with, at minimum, a written, concise explanation of the basis for the award.
App. at 45B.
In July 2002, Parilla's employment with IAPVI was terminated. She subsequently commenced a civil action against IAPVI, its parent corporation IAP, and two of its employees, Gene Ludlow and Roy Varner. The suit alleged violations of Title VII, Titles 10 and 24 of the Virgin Islands Code, wrongful discharge, breach of contract, misrepresentation, negligent and/or intentional infliction of emotional distress, and sought punitive damages. Invoking the arbitration provisions of the Agreement, Appellants filed a motion to compel arbitration pursuant to § 4 of the FAA, 9 U.S.C. § 4. Parilla opposed this motion.
The District Court denied the motion to compel arbitration. It held that the Agreement was identical in all material respects to an employment agreement that the District Court had examined in a previous case, Plaskett v. Bechtel International, Inc., 243 F.Supp.2d 334 (D.Vi.2003). Adopting its reasoning in Plaskett, the District Court held that certain terms within the arbitration provisions of ¶¶ 16, 17, 19, and 20 of the Agreement were unconscionable. The District Court further held that the unconscionable terms permeated the arbitration provisions and that such terms therefore could not be severed from the remainder of the arbitration provisions. Accordingly, the District Court declined to enforce the whole of the arbitration provisions. Appellants filed a timely notice of appeal, and Parilla filed a timely notice of cross-appeal.
On appeal, Appellants argue that the District Court erred in each of the three instances in which it found arbitration provisions of the Agreement to be unconscionable: (1) the thirty-day notice requirement in order for an employee to bring a claim; (2) the agreement by the parties to bear their own costs, expenses, and attorney's fees as applied to a federal Title VII claim; and (3) Rules 17, 18, and 34 of the AAA Rules regarding confidentiality, which were incorporated into the Agreement. Alternatively, Appellants argue that the District Court erred in refusing to sever the terms it found unconscionable from the remainder of the arbitration provisions. In response, Parilla argues that we should affirm the District Court's conclusion that the three terms are unconscionable and that the entire agreement to arbitrate is accordingly unenforceable. Parilla further urges that, as an alternative basis for upholding the District Court's judgment, we hold three additional terms of the arbitration agreement unconscionable: (4) the agreement that all covered claims are to be resolved through arbitration rather than before an administrative agency; (5) the agreement that no potential arbitrator may reside in the U.S. Virgin Islands or Puerto Rico; and (6) the agreement that if the employee loses the arbitration, the employee will reimburse IAPVI for the arbitrator's fees and expenses if so directed by the arbitrator. We exercise plenary review over the District Court's holding as to whether the parties entered into a valid and enforceable agreement to arbitrate their disputes. Alexander v. Anthony Int'l, L.P., 341 F.3d 256, 263 (3d Cir.2003) (citing Harris v. Green Tree Fin. Corp., 183 F.3d 173, 176 (3d Cir.1999)).
The District Court had jurisdiction over this case under 28 U.S.C. § 1331 and 48 U.S.C. § 1612(a), because the case arose under, inter alia, Title VII, 42 U.S.C. § 2000e, et seq. The District Court exercised supplemental jurisdiction over Parilla's Virgin Islands claims pursuant to 28 U.S.C. § 1367 and 48 U.S.C. § 1612(a). We have jurisdiction over this appeal pursuant to 9 U.S.C. § 16(a)(1)(B), which permits a party to seek immediate appellate review of a district court's order denying a motion to compel arbitration.
Before proceeding to the merits of this appeal, we turn briefly to two additional matters that are characterized by the parties as going to our jurisdiction. Appellants have moved to dismiss the cross-appeal for lack of jurisdiction, correctly pointing out that there has been no final order in the District Court and that the sole basis for appellate jurisdiction, 9 U.S.C. § 16(a)(1)(B), authorizes only appellate review of an order declining to compel arbitration. In response, Parilla insists that her cross-appeal is within our pendent jurisdiction, citing E.I. DuPont de Nemours & Co. v. Rhone Poulenc Fiber & Resin Intermediates, SAS, 269 F.3d 187, 202-203 (3d Cir.2001), and, alternatively, that all of the arguments made in support of her cross-claims can be entertained by the Court as alternative grounds for affirming the judgment of the District Court. We agree with Parilla's alternative argument and express no opinion regarding the existence of pendent appellant jurisdiction. Appellants' motion to dismiss the cross-appeal will be denied as moot.
Second, Parilla has filed a motion to dismiss the appeals of IAP, Gene Ludlow and Roy Varner on the ground that they lack standing to appeal. She insists that being neither parties to the agreement to arbitrate nor third party beneficiaries of that agreement they have no cognizable interest in this controversy. She stresses that the District Court made no finding that these appellants were intended to be beneficiaries of the agreement. Her argument borders on the frivolous.
Paragraph 16 of the Agreement explicitly provides that claims arising out of Parilla's employment with IAPVI, "including claims against ... its owners or subsidiary or parent or affiliated companies, and its or their officers, directors, employees, and agents ... shall be resolved by arbitration and not in a court or before an administrative agency." App. at 44 (emphasis added). As in In re Prudential Insurance Co. of America Sales Practice Litigation All Agent Actions, 133 F.3d 225, 230 (3d Cir.1998), the arbitration agreement reflects a clear and unequivocal intent on the part of the parties to submit to arbitration covered claims against entities who fall into the aforementioned categories. The only factfinding necessary to conclude that IAP, Ludlow, and Varner were intended beneficiaries of the Agreement, therefore, would have been to inquire whether these entities were in fact the parent company and employees of IAPVI. Such specific findings of fact by the District Court were unnecessary, however, as Parilla expressly conceded those facts in her complaint. See Soo Line R.R. Co. v. St. Louis Southwestern Ry. Co., 125 F.3d 481, 483 (7th Cir.1997) (noting the "well-settled rule that a party is bound by what it states in its pleadings"); Keller v. United States, 58 F.3d 1194, 1198 n. 8 (7th Cir.1995) ("Judicial admissions are formal concessions in the pleadings, or stipulations by the party or its counsel, that are binding upon the party making them."); see also Glick v. White Motor Co., 458 F.2d 1287, 1291 (3d Cir.1972) (noting that unequivocal "judicial admissions are binding for the purpose of the case in which the admissions are made[,] including appeals"). Accordingly, we conclude that IAP, Gene Ludlow, and Roy Varner were intended beneficiaries of the Agreement and we will therefore deny Parilla's motion to dismiss them as parties to this appeal.
III. Enforceability of the Arbitration Provisions
We recently addressed the enforceability of arbitration agreements in Alexander, 341 F.3d at 264. We there noted that the FAA establishes "a strong federal policy in favor of the resolution of disputes through arbitration." Id. at 263 (citing Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983)). Under the FAA, "such agreements are `enforceable to the same extent as other contracts.'" Id. (quoting Seus v. John Nuveen & Co., 146 F.3d 175, 178 (3d Cir.1998)); see 9 U.S.C. § 2.2 Accordingly, under the FAA, "[a] party to a valid and enforceable arbitration agreement is entitled to ... an order compelling such arbitration." Alexander, 341 F.3d at 263 (citing Seus, 146 F.3d at 179); see 9 U.S.C. § 4.3 It is up to the court, prior to granting such an order, to determine whether the parties entered a valid agreement to arbitrate. Alexander, 341 F.3d at 264 (citing 9 U.S.C. § 2). "We are to look to the relevant state law of contracts in making this determination." Id. (citing Blair v. Scott Specialty Gases, 283 F.3d 595, 603 (3d Cir.2002); Harris, 183 F.3d at 179). Applying the relevant state contract law, a court may also hold that an agreement to arbitrate is "unenforceable based on a generally applicable contractual defense, such as unconscionability." Id. (citing Doctor's Assocs., Inc. v. Casarotto, 517 U.S. 681, 687, 116 S.Ct. 1652, 134 L.Ed.2d 902 (1996)). We set forth below the relevant principles of unconscionability and will apply those principles to the arbitration terms at issue in this case. We will then determine whether it is appropriate to sever any unenforceable provisions from the parties' agreement to arbitrate.
In Alexander, a case also arising in the U.S. Virgin Islands, we applied Virgin Islands law, as expressed in the Restatement (Second) of Contracts, to determine whether the terms of an arbitration agreement were unenforceable on grounds of unconscionability. See id. at 264; see also 1 V.I.Code Ann. § 4.4 The relevant provision of the Restatement states:
Restatement (Second) of Contracts § 208 (1981). Applying this provision in Alexander, we explained the contractual defense of unconscionability:
Courts have generally recognized that the doctrine of unconscionability involves both "procedural" and "substantive" elements. Procedural unconscionability pertains to the process by which an agreement is reached and the form of an agreement, including the use therein of fine print and convoluted or unclear language. This element is generally satisfied if the agreement constitutes a contract of adhesion. A contract of adhesion is one which is prepared by the party with excessive bargaining power who presents it to the other party for signature on a take-it-or-leave-it basis. A contract, however, is not unconscionable merely because the parties to it are unequal in bargaining position. An adhesion contract is not necessarily unenforceable. The party challenging the contract therefore must also establish substantive unconscionability. This element refers to terms that unreasonably favor one party to which the disfavored party does not truly assent. According to the commentary accompanying section 208:
[G]ross inequality of bargaining power, together with terms unreasonably favorable to the stronger party, may confirm indications that the transaction involved elements of deception or compulsion, or may show that the weaker party had no meaningful choice, no real alternative, or did not in fact assent or appear to assent to the unfair terms.
[Restatement §