Court Opinion

ID: 2974685
Source: CourtListenerOpinion
Date Created: 2015-09-22 17:21:44.910576+00
Date Added: 2024-06-11T11:43:52.670521
License: Public Domain

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                      File Name: 07a0039n.06
                      Filed: January 12, 2007

                                 Nos. 05-4179 & 06-3361

                     UNITED STATES COURT OF APPEALS
                          FOR THE SIXTH CIRCUIT

RANDOLPH F. LEGAIR,                            )
                                               )
       Plaintiff-Appellant,                    )
                                               )
v.                                             )     ON APPEAL FROM THE UNITED
                                               )     STATES DISTRICT COURT FOR
CIRCUIT CITY STORES, INC.,                     )     THE SOUTHERN DISTRICT OF
                                               )     OHIO
       Defendants-Appellees.                   )

       Before: MARTIN and COOK, Circuit Judges; TARNOW, District Judge.*

       TARNOW, District Judge. Plaintiff Randolph Legair sued Circuit City Stores,

Inc., for racially discriminatory practices in violation of Title VII of the Civil Rights

Act (42 U.S.C. § 2000e, et seq.). In this consolidated appeal, Legair challenges the

District Court’s grant of defendant’s motion to compel arbitration, and its

       *
       The Honorable Arthur J. Tarnow, United States District Judge for the Eastern District of
Michigan, sitting by designation.

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confirmation of the arbitrator’s award. Plaintiff’s counsel appeals the amount of

attorney fees awarded as a sanction against him for contempt. For the reasons that

follow, we AFFIRM the District Court’s rulings on all issues.

                                          I

      Plaintiff Randolph Legair, an African-American male, began working for

Circuit City in Miami, Florida in 1989. In February 1995, Circuit City implemented

a new policy, mandating binding arbitration for employee dispute resolution.

      The program was introduced to employees via video meetings and information

packages. The program was mandatory for new hires, but voluntary for existing

employees. However, existing employees were informed that they would be bound

by the new program unless they opted out of it. Opting out required sending a form

to Circuit City within 30 days of receiving the program information. Plaintiff signed

a form indicating that he understood his obligations in respect to the opt-out

provision. However, he did not send Circuit City an opt-out form.

      Plaintiff moved to Ohio in 1997, and continued working for defendant. In

April 2000, plaintiff was terminated. He filed a complaint in August 2001 in state

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court, alleging both breach of contract and racially discriminatory practices in

violation of Title VII (42 U.S.C. § 2000e) and Ohio’s analogous provisions (Ohio

Rev. Code Ann. §§ 4112.02(A) and 4112.99). Defendant removed the action to the

Southern District of Ohio, and moved to compel arbitration.

      The district court reserved its ruling on defendant’s motion until the Sixth

Circuit ruled in Morrison v. Circuit City Stores, Inc., 317 F.3d 646 (6th Cir. 2003),

because it addressed the same arbitration agreement at issue. The Morrison decision

was released in January 2003. It held that the Circuit City dispute resolution program

was not unconscionable, and was enforceable. Id. at 667. In May 2003, the district

court granted defendant’s motion to compel arbitration, and stayed all other

proceedings.

      Plaintiff’s motions for reconsideration and relief from judgment were denied.

An appeal to the Sixth Circuit was dismissed. An arbitrator was named in June 2004.

Plaintiff’s counsel resisted the arbitration process, by failing to conduct discovery,

seeking to have the arbitrator removed for alleged bias, and refusing to participate in

scheduled conferences or hearings.

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      A week before the arbitration hearing, the plaintiff sought to dismiss the

arbitration. The arbitrator conditioned accepting the dismissal on receipt of a signed

writing from the plaintiff, indicating that plaintiff had been advised of the legal

ramifications of a dismissal with prejudice. No writing was provided. The arbitrator

proceeded with the scheduled arbitration hearing. He ruled for the defendant.

      In July 2005, the district court ruled on a number of motions, including the

plaintiff’s motion to remove and replace the arbitrator and stay the arbitration. Legair

v. Circuit City Stores, Inc., 2006 WL 278405, 97 Fair Emp. Prac. Cas. (BNA) 1470

(S.D.Ohio, Feb. 03, 2006). It confirmed the arbitrator’s award, finding it “solidly

based in the facts and law.” Id. at *6.

      In its July 2005 Opinion and Order, the district court also granted defendant’s

motion for contempt sanctions against plaintiff’s counsel. It ordered counsel to

compensate the defendant for excess costs associated with three specified motions.

      In February 2006, the district court ordered plaintiff’s counsel to pay

defendant’s fees of $7,822, according to an itemized schedule. Plaintiff’s counsel

challenged the fee as excessive, and claimed in an affidavit that any sanction over

several hundred dollars was likely to bankrupt him. However, he provided no

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additional supporting documentation of his financial status. Counsel’s appeal of the

sanctions order was consolidated with the plaintiff’s.

                                         II

                                         A

      An order to compel arbitration is reviewed de novo. Morrison, 317 F.3d at

665. When a district court decides to confirm or vacate an arbitration award, the

appellate court “review[s] its legal conclusions de novo and its factual findings for

clear error.” International Brotherhood of Teamsters, Local 519 v. United Parcel

Service, Inc., 335 F.3d 497, 503 (6th Cir. 2003). However, review of arbitration

awards is extremely deferential, and the Federal Arbitration Act presumes

confirmation. Dawahare v. Spencer, 210 F.3d 666, 669 (6th Cir. 2000). The award

should only be vacated if a party demonstrates manifest disregard of the law, or that

one of the few available statutory grounds are met. Id. (citing Glennon v. Dean

Witter Reynolds, Inc., 83 F.3d 132, 136 (6th Cir.1996); 9 U.S.C. § 10(a) (1994)).

      Plaintiff Legair claims the district court erred when it granted defendant’s

motion to compel arbitration.     Courts are obligated to enforce an arbitration

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agreement unless grounds exist to revoke it. Dean Witter Reynolds, Inc. v. Byrd, 470
U.S. 213, 218 (1985). The agreement to arbitrate here was valid and enforceable.

      Morrison applied Ohio law, and found the arbitration agreement to be

enforceable, and not unconscionable. 317 F.3d at 666. The court expressed concerns

about the fairness of some of the terms (for example, it struck a remedy limitation

provision as unenforceable but severable, id. at 670). Id. However, the absence of

procedural unconscionability led the court to conclude that the agreement overall was

enforceable. Id.

      The factors to determine procedural unconscionability include relative

bargaining position, age, education, experience, and whether terms were explained

to the weaker party. Id. As in Morrison, the circumstances here do not establish

unconscionability. On the issue of experience, Plaintiff was a manager for Circuit

City for several years before the program was introduced. In addition, Circuit City

made an extensive effort to explain the program’s terms, using video meetings,

information packages, and phone numbers for employee questions. It expressly

suggested, and provided a thirty day window for, consulting one’s own attorney. The

program was not unconscionable.

                                        --6--
      Plaintiff argues further that the arbitration agreement lacks consideration. But

the Morrison court said that because Ohio law finds consideration in a “detriment to

the promisee,” the program’s time and notice requirements limiting modification

constituted consideration. Id. at 668.

      Plaintiff also claims that arbitration agreements imposed on existing employees

are unenforceable. However, the cases on which he relies are distinguishable. See

Trumbull v. Century Marketing Corp., 12 F. Supp. 2d 683 (N.D.Ohio 1998) (an

arbitration agreement was unenforceable because the language was buried in a 60-

page handbook. It also lacked consideration because the employer retained an

unfettered right to modify its agreement at any time without notice); Lee v. Red

Lobster, 92 Fed. App’x 158, 163 (6th Cir. 2004) (where the employee made clear to

management her unwillingness to be bound, the arbitration agreement would not be

enforced).

      By contrast, the plaintiff here signed a form indicating that he understood his

obligations if he chose not to participate in the program. He then failed to take the

required action to opt out. Further, he never informed management that he did not

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accept the program. The district court correctly found that plaintiff by his conduct

demonstrated his agreement to be bound.

      The district court also did not err in confirming the award. The only grounds

for vacating or modifying an arbitration award are either statutory or “manifest

disregard.” Dawahare, 210 F.3d at 669. Neither was proved.

                                         B

      The imposition of sanctions under Fed. R. Civ. P. 11 is reviewed for abuse of

discretion. Tropf v. Fidelity Nat. Title Ins. Co., 289 F.3d 929, 936 (6th Cir. 2002)

(citing 28 U.S.C. § 1927; Union Planters Bank v. L & J Dev. Co., 115 F.3d 378, 384

(6th Cir.1997)). However, courts have “wide discretion” to select the appropriate

sanction. Jackson v. The Law Firm of O’Hara, Ruberg, Osborne, and Taylor, 875
F.2d 1224, 1229 (6th Cir. 1989) (citations omitted).

      Sanctions are appropriate when “an attorney . . . intentionally abuses the

judicial process or knowingly disregards the risk that his actions will needlessly

multiply proceedings.” Red Carpet Studios Div. of Source Advantage, Ltd. v. Sater,

465 F.3d 642, 646 (6th Cir. 2006). The amount of sanctions should be determined

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by the primary consideration of deterrence.           Jackson, 875 F.2d at 1229.

Compensation for loss caused is an additional goal. Id. Because of that primary

focus, the court should impose “the least severe sanction that is likely to deter.” Id.

      A district court that fails to inquire into the sanctioned party’s ability to pay

abuses its discretion. Id. at 1230. However, when courts evaluate an attorney’s

ability to pay, the burden of proof is on the sanctioned party to provide evidence of

financial status. See DiPaolo v. Moran, 407 F.3d 140 (3d Cir. 2005); Johnson v.

A.W.Chesterton, Co., 18 F.3d 1362 (7th Cir. 1994); Dodd Ins. Services, Inc. v. Royal

Ins. Co. of America, 935 F.2d 1152 (10th Cir. 1991). An unsupported claim

regarding financial status is clearly insufficient. Dodd, 935 F.2d at 1160. Even in the

case of a proven total inability to pay, a court may still impose modest sanctions,

because the purpose is to deter future misconduct in litigation. Id.

      The district court properly inquired into counsel’s financial status and ability

to pay. The sole evidence provided was counsel’s own affidavit, asserting that a

sanction greater than several hundred dollars would likely bankrupt him. He

provided no supporting documentation, nor, as the court observed, any evidence of

                                         --9--
income or net worth. With only this conclusion of his financial status, counsel failed

to meet the sanctioned party’s burden of proof.

      According to Dodd, even if plaintiff’s counsel had met his burden of

demonstrating financial status, it was still within the court’s discretion to impose the

sanction it felt it necessary to serve the cause of deterrence. The court’s award to the

moving parties is not an abuse of discretion.

                                          III

      We affirm the district court’s judgment on all issues.

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