Opinion ID: 1734302
Heading Depth: 1
Heading Rank: 3

Heading: Substantial Effect on Interstate Commerce

Text: We understand the concluding sentence of the trial court's order, [f]urthermore, the Court finds that the above-styled case is in line with Sisters of the Visitation v. Cochran Plastering Co . ..., to represent a finding that the transaction evidenced by the Rules and the Acknowledgment, which Austin was required to sign in order to remain employed, did not substantially affect interstate commerce. [6] However, in Citizens Bank v. Alafabco, Inc., 539 U.S. 52, 56-57, 123 S.Ct. 2037, 2040 (2003), the United States Supreme Court rejected the test set out in Sisters of the Visitation v. Cochran Plastering Co., 775 So.2d 759 (Ala.2000), and explained: We have interpreted the term `involving commerce' in the [Federal Arbitration Act] as the functional equivalent of the more familiar term `affecting commerce'words of art that ordinarily signal the broadest permissible exercise of Congress' Commerce Clause power.... . . . . ... Congress' Commerce Clause power `may be exercised in individual cases without showing any specific effect upon interstate commerce' if in the aggregate the economic activity in question would represent `a general practice ... subject to federal control.' Mandeville Island Farms, Inc. v. American Crystal Sugar Co., 334 U.S. 219, 236, 68 S.Ct. 996, 92 L.Ed. 1328 (1948). As explained in Potts v. Baptist Health System, Inc., 853 So.2d 194, 198-99 (Ala. 2002) (quoting AmSouth Bank v. Dees, 847 So.2d 923, 929 (Ala.2002)): `Section 2 of the Federal Arbitration Act (FAA), 9 U.S.C. § 2, provides in pertinent part: `A written provision in ... a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction ... shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract. `Section 2 preempts conflicting Alabama law, including in particular Ala. Code 1975, § 8-1-41(3), which states that [a]n agreement to submit a controversy to arbitration cannot be specifically enforced.' Although the trial court erred in finding that the arbitration agreement was unconscionable, its order can still be upheld if the evidence adduced did not demonstrate that Austin's employment involved commerce under Citizens Bank. Dillard's argues that the transactionAustin's continued employmentdid affect interstate commerce, and it presented Ledbetter's affidavits in support of that argument. Austin contends that her employment at the time she was forced to sign the Acknowledgment, involving answering the telephones, did not affect interstate commerce. In her brief to this Court, Austin contends that [t]his Court must focus upon the narrow question of whether Austin's part-time employment contract to answer telephones for a Dillard's store substantially affects interstate commerce. However, neither Austin nor Dillard's asserts, nor does the record anywhere indicate, that Austin's job position or job title ever changed from sales associate. Rather, it appears that she was assigned to light-duty work to accommodate her physical limitations. Her job-position designation did not change as far as the record reveals; she remained a sales associate who, in the interim after she was injured, was assigned to light-duty work and then placed on medical leave before being assigned to resume the functions of a sales associate in a new department. Austin also asserts in her brief to this Court that by signing the Acknowledgment she did not agree to submit any claims to arbitration, but, instead, merely acknowledged her receipt of the Rules. Although the trial judge did not discuss this contention in his order, we may affirm the trial court's order for any reason. Smith v. Equifax Servs., Inc., 537 So.2d 463 (Ala.1988). As noted, the Acknowledgment stated: Effective immediately, all employees... of Dillard's, Inc., its affiliates, subsidiaries and Limited Liability Partnerships (the `Company') shall be subject to the RULES OF ARBITRATION (the `Rules') described below. Employees are deemed to have agreed to the provisions of the Rules by virtue of accepting employment with the Company and/or continuing employment therewith. (Capitalization in original.) Further, the Rules state that [Dillard's] and the Associate agree that the procedures provided in these Rules will be the sole method used to resolve any covered dispute arising between them. These facts are analogous to the facts in Baptist Health System, Inc. v. Mack, 860 So.2d 1265 (Ala.2003). In Mack, we concluded that, by continuing her employment after she received a copy of a dispute-resolution program and by signing an acknowledgment of her receipt of the program, the employee had agreed to the terms of her employer's dispute-resolution program. Accordingly, Austin, by signing the Acknowledgment and subsequently continuing her employment with Dillard's, expressly agreed to be bound by the Rules. We now consider whether Austin's employment as a sales associate for Dillard's involved commerce, in accordance with Citizens Bank, supra. Dillard's is a Delaware corporation with its principal place of business in Arkansas. Austin is a resident of Lee County, Alabama. Ledbetter's May 17, 2002, affidavit stated that, because the store is located approximately 30 miles from the Georgia state line, the Auburn store had many customers who were residents of Georgia. Ledbetter also attested that during football-game weekends, the Auburn store had customers who were residents of the states of the visiting teams. Ledbetter's affidavits establish that Austin, while answering the store's telephones, regularly answered calls from out-of-state customers, from other Dillard's stores located out-of-state, from its corporate office in Arkansas, from its division personnel in Florida, and from Dillard National Bank personnel in Arizona. Ledbetter stated that Austin was responsible for handling these telephone calls. Attached to Ledbetter's June 11, 2002, affidavit was a list of more than 40 transactions Austin had completed for customers using a credit card issued by Dillard's with an out-of-state billing address, and we can therefore infer that the merchandise sold to those customers likely traveled out-of-state. This list included transactions involving customers with billing addresses in Arizona, Georgia, Kentucky, Louisiana, Mississippi, Missouri, North Carolina, South Carolina, and Texas. Ledbetter affirmed in her May 17, 2002, affidavit that [m]ost, if not all, of the clothing items sold in the Auburn store are purchased by Dillard's buyers in states other than Alabama and are shipped to the Auburn store. (Emphasis supplied.) Further, Ledbetter attested in that affidavit that [t]he merchandise that is sold in the Auburn store is purchased in other states and is transported to the Auburn store through a warehouse in Valdosta, Georgia. Ledbetter stated that the merchandise in the women's shoe department and the intimate apparel department, to both of which Austin was assigned, was purchased from such states as Florida, Illinois, Massachusetts, Missouri, New Jersey, North Carolina, Oregon, Tennessee, and Texas, and from such countries as Brazil, China, Mexico, Indonesia, Burma, and India. In its brief in support of its motion to compel arbitration and in its brief to this Court, Dillard's asserts that its inter-state activities are not divisible from its intra-state activities. Dillard's states: [W]hen [Dillard's] sells an article of clothing, its price includes the expenses incurred to bring the merchandise to the public. Expenses incurred for the employment of Ms. Austin and other sales associates are incorporated into the price of the merchandise in the same manner as other expenses such as shipping costs, vendor expenses, and advertising expenses. Further, Ms. Austin is not paid directly for her transaction with out-of-state customers as compared with the in-state customers. In light of the aforementioned facts, we conclude that Dillard's has shown that the aggregate effect of Austin's employment did satisfy the [Federal Arbitration Act's] `involving commerce' test. Citizens Bank, 539 U.S. at 57, 123 S.Ct. at 2040. Also, the general practice that Austin's employment contract represented, i.e., the sale of consumer goods by a national retailer, involved interstate commerce. Citizens Bank, supra; see also Katzenbach v. McClung, 379 U.S. 294, 302, 85 S.Ct. 377, 13 L.Ed.2d 290 (1964)(This Court has held time and again that this power [to regulate commerce] extends to activities of retail establishments, ... which directly or indirectly burden or obstruct interstate commerce.). Further, Ledbetter also attested to the fact that Austin's paycheck was paid to her with funds from an out-of-state bankRegions Bank in Little Rock, Arkansas. In certain circumstances, this Court has held that that fact alone can satisfy the requirement of proving that an employment agreement had an effect on interstate commerce. See Ameriquest Mortgage Co. v. Bentley, 851 So.2d 458, 465 (Ala.2002) (While [the employee] was employed as an account executive at Ameriquest, [the employee] received her monthly salary from Ameriquest's California headquarters. This fact, which is undisputed, sufficiently satisfies Ameriquest and Harmon's burden of proof regarding the employment contract's effect on interstate commerce.). Accordingly, the trial court's denial of the motion to compel arbitration filed by Dillard's cannot be upheld on the basis that Austin's employment with Dillard's did not affect interstate commerce.