Court Opinion

ID: 7805735
Source: CourtListenerOpinion
Date Created: 2022-09-01 17:02:42.930925+00
Date Added: 2024-06-11T16:30:05.134947
License: Public Domain

IN THE
            ARIZONA COURT OF APPEALS
                            DIVISION ONE

                  MICHELE GRAY, Plaintiff/Appellant,

                                   v.

               GC SERVICES, APPLE, Defendant/Appellee.

                         No. 1 CA-CV 21-0533
                            FILED 9-1-2022

          Appeal from the Superior Court in Maricopa County
                         No. CV 2021-002228
             The Honorable Bradley H. Astrowsky, Judge

                    VACATED AND REMANDED

                           APPEARANCES

Michele Gray, Rensselaer, NY
Plaintiff/Appellant

Hassett Glasser PC, Phoenix
By Myles P. Hassett, Jamie A. Glasser, David R. Seidman
Counsel for Defendant/Appellee
                          GRAY v. GC SERVICES
                           Opinion of the Court

                                 OPINION

Judge Michael J. Brown delivered the opinion of the Court, in which
Presiding Judge Maria Elena Cruz and Judge Samuel A. Thumma joined.

B R O W N, Judge:

¶1             Michele Gray appeals from the superior court’s order
dismissing her employment-related claims with prejudice, asserting in
broad terms that the court erred by failing to order arbitration as
contemplated by the parties’ employment agreement. For the reasons
discussed below, the court was required to first decide whether Gray’s
claims were subject to binding arbitration. See A.R.S. § 12-3007(A)(2). Only
if the court decided the claims were not subject to binding arbitration could
it address the merits of the claims; alternatively, if the court decided the
claims were subject to binding arbitration, it lacked authority to address the
merits of the claims. Because the court did not first resolve whether Gray’s
claims were subject to binding arbitration, we vacate the dismissal order
and remand for further proceedings.

                              BACKGROUND

¶2           In June 2019, GC Services, LP (“GCS”) hired Gray as a home-
based customer service representative. As a condition of employment,
Gray signed an arbitration agreement. The employment relationship
soured, and in January 2020, Gray sent GCS a resignation letter, which GCS
immediately accepted.

¶3             In June 2020, Gray sued GCS in the United States District
Court for the Northern District of New York, alleging GCS wrongfully
terminated her employment and violated several federal statutes. That
court later dismissed her claims, but the status of that case is not clear from
the record. In February 2021, Gray filed suit in Maricopa County Superior
Court, raising substantially the same claims she had alleged in the federal
lawsuit, along with claims based on state law. Meanwhile, Gray filed a
nearly identical lawsuit in New York state court.

¶4            In the case before us, GCS filed a combined motion to compel
arbitration and motion to dismiss. GCS stated it was “seeking to compel
any cognizable claims to arbitration pursuant to a valid and binding

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                           Opinion of the Court

arbitration agreement between the parties[.]” GCS then noted that Gray
had earlier “disregarded” the arbitration agreement when she filed her
federal lawsuit in New York. GCS qualified its motion to compel, however,
asserting that if none of Gray’s claims were cognizable, there is nothing to
compel arbitration and dismissal of the complaint would be appropriate
under Arizona Rule of Civil Procedure (“Rule”) 12(b)(6). GCS added that
even if a cognizable claim existed, it would be precluded by res judicata
“because the claims have already been considered and dismissed with
prejudice” in the federal case.

¶5             Following oral argument on the motion (Gray did not attend),
the superior court dismissed Gray’s complaint with prejudice, explaining
that she failed to state a claim upon which relief can be granted and that her
claims were barred by res judicata. The court therefore determined it was
unnecessary to address GCS’s motion to compel arbitration and entered a
final judgment under Rule 54(c). Gray filed a notice of appeal, stating she
was appealing from the dismissal order.

                               DISCUSSION

       A.     Appellate Jurisdiction

¶6              GCS requests that we dismiss Gray’s appeal, asserting the
substantive issues raised in her opening brief go beyond her notice of
appeal. “As a general rule, our review is limited to matters designated in
the notice of appeal or cross-appeal.” Desert Palm Surgical Group, P.L.C. v.
Petta, 236 Ariz. 568, 576, ¶ 15 (App. 2015). Whether the notice of appeal is
sufficient is a question of jurisdiction, and “[w]e have an independent duty
to determine whether we have jurisdiction over an appeal.” Id.

¶7            Although Gray’s notice of appeal included an extraneous
comment referencing her amended complaint, the notice plainly stated that
she was appealing the superior court’s dismissal order. Thus, she
substantially complied with our appellate rules by identifying the correct
order from which she wished to appeal. See ARCAP 8(c)(3) (stating that a
notice of appeal must “[d]esignate the judgment or portion of the judgment
from which the party is appealing”). Moreover, GCS has made no
argument that it was misled as to which order Gray intended to appeal, or
that it was otherwise meaningfully prejudiced. Hill v. City of Phoenix, 193
Ariz. 570, 572–73, ¶ 10 (1999) (explaining that when “the record discloses
an appellant’s intent to appeal from a judgment, . . . the notice of appeal
should be construed as sufficient so long as the defect has neither misled

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                            Opinion of the Court

nor prejudiced an opposing party”). We have appellate jurisdiction under
A.R.S. § 12-2101(A)(2) to decide issues relating to the dismissal order.

       B.     Waiver

¶8            GCS also argues that Gray waived all arguments on appeal
because her opening brief does not comply with ARCAP 13. Among other
things, GCS asserts that Gray failed to include a statement of the case, her
statement of the facts is incoherent, she did not provide any citations to the
law or record, and her arguments are simply a “mishmash of perceived
grievances.” See Ramos v. Nichols, 252 Ariz. 519, 522, ¶ 8 (App. 2022) (“An
appellant who fails to make a ‘bona fide and reasonably intelligent effort to
comply with the rules’ will waive issues and arguments ‘not supported by
adequate explanation, citations to the record, or authority.’” (citation
omitted)). Although the opening brief is deficient in many ways, we decline
to apply waiver because Gray has sufficiently challenged the court’s
decision to dismiss the case on the merits without first considering whether
the case should be referred to arbitration. See id.

       C.     Motion to Compel Arbitration

¶9             Turning to the substance of her appeal, Gray broadly argues
the superior court erred when it failed to compel arbitration pursuant to the
parties’ arbitration agreement. Although not cited by either party, disputes
over whether an enforceable arbitration agreement exists are governed by
Arizona’s version of the Revised Uniform Arbitration Act, and specifically
here, § 12-3007(A)(2), which states in part:

       On motion of a person showing an agreement to arbitrate and
       alleging another person’s refusal to arbitrate pursuant to the
       agreement[,] . . . [i]f the refusing party opposes the motion, the
       court shall proceed summarily to decide the issue and order the
       parties to arbitrate unless it finds that there is no enforceable
       agreement to arbitrate.

(Emphasis added.) We review de novo the interpretation of statutes. In re
$11,660.00 U.S. Currency, 251 Ariz. 106, 108, ¶ 8 (App. 2021). If the statute
is unambiguous, we apply it as written without using other methods of
statutory interpretation. State v. Jurden, 239 Ariz. 526, 530, ¶ 15 (2016).

¶10           Under the plain language of § 12-3007(A)(2), when parties
disagree as to whether an arbitration agreement applies to the claims being
made, the court is required to determine whether there is an enforceable
arbitration agreement. If the court finds no enforceable agreement, it must

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                             Opinion of the Court

deny the motion to arbitrate, and may move on to address other issues. See
A.R.S. § 12-3007(C) (“If the court finds that there is no enforceable
agreement, it may not order the parties to arbitrate . . . .”). But if there is an
enforceable agreement, the court must order the parties to arbitrate. A.R.S.
§ 12-3007(A)(2).

¶11           Here, GCS moved to compel arbitration, to which Gray
objected, arguing her claims were exempt from the arbitration agreement.
Then in its reply, GCS made clear that it disputed Gray’s assertion that she
was exempt. Thus, because GCS moved to compel arbitration and Gray
objected, the court had to determine whether an enforceable arbitration
agreement existed. Id. If there was, then the court was obligated to grant
the motion to compel and stay, or dismiss without prejudice, the lawsuit to
permit arbitration of Gray’s claims. See A.R.S. § 12-3007(G); see also Duenas
v. Life Care Ctrs. of Am., Inc., 236 Ariz. 130, 142, ¶ 40 (App. 2014) (“A
dismissal of claims subject to arbitration should be entered without
prejudice, to allow for further judicial determinations that may prove
necessary.”).

¶12            GCS argues Gray waived any enforcement of the arbitration
agreement, given that she never asked for such relief in the superior court.
In fact, Gray claimed that the arbitration agreement was unenforceable. But
the legislature has made it clear that § 12-3007 cannot be waived. A.R.S.
§ 12-3004(C) (“A party to an agreement to arbitrate or to an arbitration
proceeding may not waive, or the parties may not vary the effect of, the
requirements of . . . § 12-3007 . . . .”). Moreover, applying waiver under
these facts would directly conflict with § 12-3007(A)(2) and run contrary to
public policy. RS Indus., Inc. v. Candrian, 240 Ariz. 132, 135, ¶ 7 (App. 2016)
(“Arizona public policy favors arbitration as a speedy and affordable means
of resolving disputes . . . .”). But cf. Morgan v. Sundance, Inc., 142 S. Ct. 1708,
1713 (2022) (explaining that the federal policy favoring arbitration is only
intended to make arbitration agreements as enforceable as any other
contract, and not to “favor arbitration over litigation”).

¶13           GCS also argues the arbitration issue became moot when the
superior court determined Gray failed to state a claim for relief and that her
claims were precluded by res judicata. That argument fails because as
provided under A.R.S. § 12-3007(D), courts “may not refuse to order
arbitration because the claim subject to arbitration lacks merit or grounds
for the claim have not been established.” Although GCS only asked to
compel arbitration as an alternative to an outright dismissal, under these
circumstances the superior court lacked the authority to bypass the
arbitration issue. On remand, if the court determines the arbitration

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                         GRAY v. GC SERVICES
                          Opinion of the Court

agreement is not enforceable as to these claims, then the court could
properly consider GCS’s motion to dismiss. A.R.S. § 12-3007(C). But if the
court finds that the arbitration agreement is enforceable, the merits of
Gray’s claims must be decided in arbitration. A.R.S. § 12-3007(A)(2).

                             CONCLUSION

¶14          We vacate the court’s order dismissing Gray’s claims and
remand for further proceedings consistent with this opinion. GCS requests
attorneys’ fees and costs under A.R.S. §§ 12-341.01 and -349, and as
sanctions under ARCAP 25. Because GCS is not the prevailing party, and
nothing in Gray’s briefing merits imposing sanctions, we deny the request.
As the successful party on appeal, Gray is awarded taxable costs subject to
compliance with ARCAP 21.

                          AMY M. WOOD • Clerk of the Court
                          FILED:    JT

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