Court Opinion

ID: 24276
Source: CourtListenerOpinion
Date Created: 2010-04-25 08:19:59+00
Date Added: 2024-06-11T08:17:17.125845
License: Public Domain

IN THE UNITED STATES COURT OF APPEALS

                           FOR THE FIFTH CIRCUIT

                         __________________________

                                 No. 00-21022
                              Summary Calendar
                         __________________________

EDDIE L. PRATT,
                                                        Plaintiff-Appellant,

                                     versus

JOE MYERS MOTORS-THREE, INC.,
                                                         Defendant-Appellee.

         ___________________________________________________

             Appeal from the United States District Court
                  For the Southern District of Texas
                           (No. 99-CV-3951)
         ___________________________________________________
                             May 18, 2001

Before HIGGINBOTHAM, WIENER, and BARKSDALE, Circuit Judges.

PER CURIAM:1

     Plaintiff-Appellant       Eddie   L.     Pratt   (“Pratt”)    appeals   the

dismissal    of    her    employment-discrimination         lawsuit     against

Defendant-Appellee Joe Myers Motors-Three, Inc. (“Joe Myers”).                As

we agree with the district court that the parties are bound by a

valid    arbitration     agreement   which    bars    litigation   of   Pratt’s

claims, we affirm.

                                       I.

     1
      Pursuant to 5TH CIR. R. 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
                           FACTS AND PROCEEDINGS

      Pratt filed suit against her former employer, Joe Myers,

alleging employment discrimination on the basis of sex and race.

Joe Myers filed a motion to dismiss Pratt’s claims on the ground

that they were barred by an arbitration agreement between the

parties contained in the “Dispute Resolution Program” (the “Plan”)

set   forth   in   an   employee    handbook      received   by     Pratt   at   the

beginning of her employment. The Plan unambiguously states that it

is the “exclusive procedural mechanism for the final resolution of

all disputes falling within its terms.”

      The district court converted the motion to dismiss into a

motion for summary judgment. In its initial memorandum opinion and

order, the district court determined that the Plan comprises an

agreement     to   arbitrate       that       encompasses    this     employment-

discrimination dispute.      Noting that (1) by its terms, the Plan is

binding only on “the Company,” which is defined by the Plan as “Joe

Myers Dealerships,” its subsidiaries, and “any electing entity,”

(2) “Joe Myers Dealerships” is not a legal entity, and (3) no party

submitted evidence that Joe Myers Motors-Three, Inc. is either a

subsidiary of “Joe Myers Dealerships” or an “electing entity,” the

district court concluded that it was uncertain whether a contract

existed between Joe Myers and Pratt.               Accordingly, the district

court denied Joe Myers’s motion for summary judgment, ordered

                                          2
arbitration on this sole issue,2 and stayed the proceedings.    The

district court made clear that if the arbitrator determined that

both parties are bound by the terms of the Plan, then Pratt’s

lawsuit must be dismissed.

     After the arbitrator determined that both parties were bound

by the Plan, the district court entered a second memorandum opinion

and order in response to Pratt’s objection to arbitration and

motion for reconsideration.    The district court denied Pratt’s

motions after concluding that “there are no legal constraints

external to the parties’ agreement that foreclose arbitration of

Pratt’s claims.” The district court subsequently dismissed Pratt’s

case with prejudice, and this appeal followed.

                                II.

                              ANALYSIS

A.   Standard of Review

     We review the district court’s grant of summary judgment de

novo, applying the same standard as the district court.3   Under the

familiar summary-judgment standard, a motion for summary judgment

is properly granted only if there is no genuine issue as to any

     2
      A challenge to the formation of the contract in general
rather than to the validity of the arbitration clause must be
decided by arbitration under the Federal Arbitration Act (“FAA”).
See R.M. Perez & Assoc., Inc. v. Welch, 960 F.2d 534, 538 (5th Cir.
1992).
     3
      Shackelford v. Deloitte & Touche, LLP, 190 F.3d 398, 403 (5th
Cir. 1999).

                                 3
material fact.4        In deciding whether a fact issue has been created,

we must view the facts and the inferences to be drawn therefrom in

the light most favorable to the nonmoving party.5                   Furthermore, we

must review all of the evidence in the record, but make no

credibility determinations or weigh any evidence.6

B.   Existence of a Valid Arbitration Agreement

     Pratt challenges the district court’s ruling that the parties

are bound by an arbitration agreement that bars litigation of her

employment-discrimination suit.                To determine the merits of this

claim,    we    must   conduct   a   two-step        inquiry.      First,    we   must

determine whether the parties agreed to arbitrate this dispute;

second, if we conclude that the parties agreed to arbitrate, we

must consider whether any federal statute or policy renders the

claims nonarbitrable.7

     1.        Agreement to Arbitrate

     Pratt       raises    two   objections          to   the     district   court’s

determination      that    the   parties       are   bound   by    an   agreement   to

arbitrate.        First, Pratt challenges, on various grounds, the

existence of a contract between her and Joe Myers.                      Second, Pratt

     4
      Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317,
322 (1986).
     5
      See Olabisiomotosho v. City of Houston, 185 F.3d 521, 525
(5th Cir. 1999).
     6
      Reeves v. Sanderson Plumbing Products, Inc., 530 U.S. 133,
135 (2000) (citations omitted).
     7
      See R.M. Perez, 960 F.2d at 538 (citation omitted).

                                           4
contends that even if the Plan is a valid contract, it is not an

agreement to arbitrate because the language of the Plan, according

to Pratt, makes arbitration voluntary rather than mandatory.             We

will consider each argument in turn.

           a.    Challenge to the Contract

      Pratt argues that there is no contract between her and Joe

Myers because (1) the plain language of the Plan excludes Joe Myers

and Pratt as parties to the Plan, and (2) by not legally binding

itself to the Plan when Pratt was hired, Joe Myers provided only

“illusory promises” which cannot serve as consideration.            We need

not linger long over Pratt’s challenge to the existence of a

contract because, as an attack on the formation of the contract in

general rather than just on the arbitration clause, this claim is

itself subject to arbitration under the FAA.8           Accordingly, the

district court did not err in submitting this issue to arbitration,

or in denying Pratt’s motion to vacate the arbitrator’s ruling that

both she and Joe Myers are bound by the terms of the Plan.

      We also note that the district court, in its second memorandum

and   order,    alternatively   based   its   ruling   on   the   following

admissions made by Pratt in her amended complaint:

           When hired by [Joe Myers] on or about May 18, 1998,
           [Pratt] received and acknowledged receipt of an employee
           handbook. The employee handbook contained and described
           a Dispute Resolution Program [the Plan] that conferred on
           [Pratt] certain contractual rights.     According to the

      8
      See Rojas v. TK Communications, Inc., 87 F.3d 745, 748 (5th
Cir. 1996).

                                    5
            handbook   and   [Pratt’s]   written   acknowledgment,
            arbitration of Pratt’s employment dispute was optional
            and not mandatory.

(emphasis added).          Pratt’s response to Joe Myers’s motion for

summary judgment similarly avers that she “does not dispute that

the Plan confers contractual rights and obligations upon [Pratt]

and [Joe Myers].      In fact, [Pratt] sues [Joe Myers] for violating

her contractual rights . . . including those under the Plan”

(emphasis added).         Accordingly, the district court concluded that

Pratt has admitted the existence of a contract between her and Joe

Myers.

     On    appeal,    Pratt    denies    that    her    statements    qualify    as

judicial     admissions,      and   insists      that     her    pleadings     only

“hypothetically allege . . . the existence of an additional written

contract.”        Pratt’s attempt to characterize her assertions as

nothing    more    than    “alternative      legal     theories,”    however,   is

specious at best.          We agree with the district court that, in

addition to the finding of an existing contract by the arbitrator,

Pratt has admitted the existence of a contract between her and Joe

Myers.

            b.    Exclusivity of the Arbitration Remedy

     Pratt further contends that even if the Plan is a valid

contract, it is not an agreement to arbitrate because the language

of the Plan, according to Pratt, makes arbitration voluntary rather

than mandatory.           In support of her contention that the Plan

“expressly    authorizes      judicial       action,”    Pratt   points   to    the

                                         6
following provision:

              Proceedings under the Plan shall be the exclusive, final
              and binding Method by which Disputes are resolved.
              Consequently, the institution of a proceeding under this
              Plan shall be a condition precedent to the initiation of
              any   legal   action   (including   action   before   an
              administrative tribunal with adjudicatory powers)9
              against the Company and any such action shall be limited
              to those under the [Federal Arbitration] Act.

(emphasis added). Pratt then argues that § 4 of the FAA, which

provides, “[i]f the making of the arbitration agreement or the

failure, neglect, or refusal to perform the same be in issue, the

court shall proceed summarily to the trial thereof[,]”10 requires

us   to     remand   this   case   for   a   jury   trial   on   the   issue   of

arbitrability.

      Pratt, however, “cherry-picks” certain provisions of the FAA

that appear to support her position while ignoring others that

manifestly undercut it.            For example, Pratt seizes on § 4's

provision for a jury trial when the “making” of the arbitration

agreement is at issue, but ignores the surrounding language which

makes clear that this provision of the FAA applies in the context

of an action to compel arbitration:

              [A] party aggrieved by the alleged failure, neglect, or
              refusal of another to arbitrate under a written agreement
              for arbitration . . . may petition any United States
              district court which, save for such agreement, would have

      9
      The next paragraph of the Plan clarifies that “it is not
intended nor does it limit in any manner the rights of an employee
to file a claim with the Equal Employment Opportunity Commission or
the Texas Human Rights Commission.”
      10
           9 U.S.C. § 4.

                                         7
             jurisdiction . . . for an order directing that such
             arbitration proceed in the manner provided for in such
             agreement. . . . filed. If the making of the arbitration
             agreement or the failure, neglect, or refusal to perform
             the same be in issue, the court shall proceed summarily
             to the trial thereof.11

Accordingly, the “legal action” contemplated by the FAA (and thus

permitted by the Plan) is a petition for an order to compel

arbitration, and not, as Pratt would have it, a freestanding

“judicial challenge . . . to the ‘making’ of the arbitration

agreement[.]”

     In further support of her contention that the Plan offers

arbitration only as an option and not a requirement, Pratt relies

on the following paragraph of the Plan:

             If the dispute involves a legally protected right, such
             as protection against age, race, sex discrimination,
             sexual harassment or claims for retaliation and has not
             been resolved in Options One [the “Open Door Policy,” or
             complaining through the chain of command], Two [the
             “Conference,” or meeting with a company representative],
             or Three [“Mediation”], you or the Company may request
             arbitration. While you do not have to go proceed through
             each of the options in their exact numerical order, the
             Program is designed with multiple steps to maximize the
             possibility of resolution prior to Option [F]our
             [“Arbitration”].     All outside dispute resolution
             processes in this program will use neutral parties
             provided through the American Arbitration Association.

(emphasis added).            More specifically, Pratt contends that the

phrase     “you   or   the    Company   may   request   arbitration”   can   be

interpreted to mean that arbitration is merely an option, and not

a requirement.

     11
          Id. (emphasis added).

                                         8
      As an initial matter, we note that federal law, comprising

generally      accepted    principles       of       contract   law,    governs    the

interpretation of an arbitration clause subject to the FAA; we look

to state law only to shape these general principles.12                    Relying on

these familiar principles, we will enforce a contract according to

its   plain     meaning,   unless   such         a    reading   would    defeat    the

intentions of the parties.13        In construing a written contract, we

must give effect to the intentions of the parties as expressed in

the instrument.14

      Here, the Plan states unequivocally that it is “intended to

create an exclusive procedural mechanism for the final resolution

of all disputes falling within its terms.”                 The Plan also provides

that both the employees and the employer “will be bound to use [the

Plan] as the primary and sole means of dispute resolution.”                       As we

have already observed, the Plan clearly states that “[p]roceedings

under the Plan shall be the exclusive, final and binding method by

which Disputes are resolved.”        And there can be no doubt that the

agreement        to     arbitrate    encompasses            Pratt’s       employment

discrimination claims, as the Plan makes clear that it applies,

inter alia, to “any legal or equitable claim . . . including . . .

      12
      See Neal v. Hardee’s Food Systems, Inc., 918 F.2d 34, 37 n.5
(5th Cir. 1990).
      13
           Id. at 37.
      14
      State Farm Fire & Casualty Insurance Co. v. Keegan, 209 F.3d
767, 768 (5th Cir. 2000) (citation omitted).

                                        9
allegations of: discrimination based on race, sex . . . [or] sexual

harassment.”

     Pratt’s reading of the phrase “you or the Company may request

arbitration”     to    mean   that   arbitration    is    merely    optional   is

certainly correct in the sense that the Plan does not require that

each and every dispute be arbitrated.          It simply does not follow,

however, that if, under the Plan, arbitration is optional, then so

too is litigation. To the contrary, the Plan expressly limits “any

legal action” to that provided for in the FAA, which in turn

provides only, under these circumstances, for an action to compel

arbitration.

     In sum, we are convinced that the obvious intention of the

parties under the Plan was to submit any employment dispute that

might arise —— and not be resolved amicably —— to alternative

dispute resolution procedures rather than to resort to traditional

means of litigation to resolve disputes that could not be disposed

of amicably.     We are equally persuaded that, even after according

proper summary-judgment deference to Pratt, the plain language of

the Plan will admit of no other interpretation than that Pratt is

barred    from    pursuing      her    grievances        through     litigation.

Accordingly,     the    summary-judgment     record      amply     supports    the

district court’s conclusion that both parties are bound by an

agreement to arbitrate that encompasses this dispute.

     2.    Whether any Federal Statute or Policy Renders Pratt’s
           Claims Nonarbitrable

                                       10
     Pratt correctly states that even if we conclude that the

arbitration     agreement     is   otherwise     enforceable,    we   must    also

consider whether any federal statute or policy renders her claims

nonarbitrable.15      In the instant case, Pratt directs us to a Ninth

Circuit case, Craft v. Campbell Soup Co., which held that Congress

did not intend the FAA to apply to employment contracts.16                      But

after the parties had filed their briefs in this appeal, the

Supreme Court overruled Craft in Circuit City Stores, Inc. v.

Adams, which squarely held that the FAA applies to employment

contracts.17       In any event, the law is well established in this

circuit     that   employment      contracts    are    subject   to   the    FAA.18

Accordingly, Pratt’s sole argument with respect to whether any

federal statute or policy renders her claims nonarbitrable is

foreclosed by binding precedent.

                                       III.

                                    CONCLUSION

     For     the    reasons   announced       above,   the   district       court’s

dismissal of Pratt’s claims with prejudice is

AFFIRMED.

     15
          See R.M. Perez, 960 F.2d at 538.
     16
      177 F.3d 1083, 1091 (9th Cir. 1999) (overruled by Circuit
City Stores, Inc. v. Adams, --- U.S. ---, 121 S. Ct. 1302 (2001)).
     17
          Id. at 1306.
     18
          See Rojas, 87 F.3d at 749.

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