Court Opinion

ID: 9542
Source: CourtListenerOpinion
Date Created: 2010-04-25 05:46:50+00
Date Added: 2024-06-11T09:33:22.784622
License: Public Domain

United States Court of Appeals,

                                Fifth Circuit.

                                 No. 95-50882.

                               Summary Calendar.

                 Camille ROJAS, Plaintiff-Appellant,

                                        v.

 TK COMMUNICATIONS, INC., d/b/a KXTN Radio Station and Tichenor
Media Systems, Inc., d/b/a KXTN Radio Station, Defendants-
Appellees.

                                July 11, 1996.

Appeal from the United States District Court for the Western
District of Texas.

Before WIENER, EMILIO M. GARZA and PARKER, Circuit Judges.

     ROBERT M. PARKER, Circuit Judge:

                                      FACTS

     In 1991, Camille Rojas was employed as a disc jockey by TK

Communications Inc. ("TK"), which operated KXTN radio station in

San Antonio, Texas.           During her tenure at the station, Rojas

alleges that she was sexually harassed by her supervisor, Jesse

Arce.   Despite her complaints, Rojas alleges that TK never took

corrective action and that Arce and another supervisor retaliated

against her    because    of    her   complaints.        Rojas    resigned   from

employment with KXTN on December 22, 1991.

     While    working    at    the    radio   station,    Rojas    executed   an

employment agreement with her employer.              Paragraph 23 of that

agreement provides, in pertinent part, as follows:

     23. Arbitration Except for breaches or threatened breaches of
     the provisions of Paragraphs 15 through 18 relating to
     equitable relief, any action contesting the validity of this

                                        1
     Agreement, the enforcement of its financial terms, or other
     disputes shall be submitted to arbitration pursuant to the
     American   Arbitration  Association   in   Ft.  Lauderdale,
     Florida....

Despite this arbitration clause, Rojas commenced this lawsuit

against TK and Tichenor Media Systems, Inc., ("Tichenor").1

                             PROCEEDINGS BELOW

     In her original petition, Rojas alleged that she was subjected

to sexual harassment and retaliation by TK for having complained of

the alleged sexual harassment, in violation of Title VII of the

Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e et seq.

Rojas    joined   Tichenor    as   a       defendant   under   a   theory   of

successorship liability.        TK and Tichenor filed their answers,

denying Rojas' allegations.

     TK then sought to dismiss the action on the ground that Rojas'

claims were subject to the mandatory arbitration clause in her

employment agreement. Tichenor filed a motion for summary judgment

claiming that it had no successor liability in connection with

Rojas' underlying claim.

     On October 30, 1995, the district court granted TK's motion to

dismiss and Tichenor's motion for summary judgment.                The court

first ruled that Rojas must arbitrate her claims against TK in

accordance with the arbitration clause in her employment agreement.

The court further held that, as a matter of law, Tichenor had no

liability to Rojas as a successor to TK.           This appeal followed.

                                DISCUSSION

     1
        Tichenor purchased KXTN from TK in June of 1993.

                                       2
I. Standard of Review

      The district court's dismissal of Rojas' claims and grant of

summary judgment are subject to de novo review.                 Burns-Toole v.

Byrne, 11 F.3d 1270 (5th Cir.1994) (internal citation omitted).                    A

district court's grant of summary judgment is proper when "there is

no genuine issue as to any material fact" and "the moving party is

entitled to judgment as a matter of law."             Fed.R.Civ.P. 56(c). The

evidence presented to the trial court is viewed in a light most

favorable to the nonmovant.             Hassan v. Lubbock Indep. Sch. Dist.,

55 F.3d 1075, 1078 (5th Cir.1995).

II. Arbitration

     The district court concluded that Rojas' Title VII claims were

subject   to   compulsory        arbitration.         Rojas   challenges        this

conclusion on several grounds.             First, she claims that Title VII

claims fall within the Federal Arbitration Act's ("FAA") "contracts

of employment" exclusion.           Therefore, she contends she is not

required to arbitrate her claims.             In the alternative, she argues

that even if her claims are not within the FAA's exclusion, the

contract in question contains a narrow arbitration clause which is

inapplicable       to   her   claims.      Finally,   she   contends    that     the

employment agreement in question is an unconscionable contract of

adhesion and is therefore unenforceable.              We address each of these

arguments below.

A. Arbitrability of Title VII Claims

     Under the FAA, "[a] written provision in ... a contract

evidencing     a    transaction     involving      commerce    to      settle     by

                                          3
arbitration a controversy thereafter arising out of such contract

... shall be valid, irrevocable, and enforceable, save upon such

grounds as exist at law or in equity for the revocation of any

contract."    9 U.S.C. § 2.    None of the parties disputes that Rojas'

contract with TK for employment as a disc jockey is one "involving

commerce" within the meaning of § 2 of the FAA.           However, Rojas

contends that her employment contract is excluded from the FAA's

coverage.

      Section 1 of the FAA provides, in pertinent part:            "but

nothing herein contained shall apply to contracts of employment of

seamen, railroad employees, or any other class of workers engaged

in foreign or interstate commerce."      9 U.S.C. § 1 et seq.    Arguing

for a broad reading of this section, Rojas contends that because

she is a worker engaged in interstate commerce, the FAA does not

apply to her contract of employment.       We disagree.

     In 1991, the Supreme Court held that an employee, who agreed

to arbitrate claims arising out of his employment, was required to

arbitrate a claim under the Age Discrimination in Employment Act

("ADEA"), 29 U.S.C. § 621 et seq., and therefore was barred from a

federal court lawsuit.        Gilmer v. Interstate/Johnson Lane Corp.,

500 U.S. 20, 111 S. Ct. 1647, 114 L. Ed. 2d 26 (1991).            Following

Gilmer this court held that Title VII claims must likewise be

arbitrated.    In Alford v. Dean Witter Reynolds, Inc., 939 F.2d 229

(5th Cir.1991), an employee sued under Title VII for discriminatory

discharge.    Although the employee was subject to an arbitration

agreement, the district court refused to dismiss the case or to

                                     4
compel arbitration.       This court affirmed.         However, the Supreme

Court subsequently vacated our affirmance and remanded for further

consideration in light of Gilmer, supra.              Relying on Gilmer, we

held that the employee's Title VII claim must be arbitrated:

     Because both the ADEA and Title VII are similar civil rights
     statutes, and both are enforced by the EEOC ... we have little
     trouble concluding that Title VII claims can be subjected to
     compulsory arbitration.    Any broad public policy arguments
     against such a conclusion were necessarily rejected by Gilmer.
939 F.2d at 230.        While the preceding statement would appear to

dispose of the issue presently before the court, we must address a

distinction between the facts of the instant case and those present

in both Gilmer and Alford.

     In Gilmer the Supreme Court noted:

     [I]t would be inappropriate to address the scope of the § 1
     exclusion because the arbitration clause being enforced here
     is not contained in a contract of employment.         The FAA
     requires that the arbitration clause being enforced be in
     writing. See 9 U.S.C. §§ 2, 3. The record before us does not
     show, and the parties do not contend, that Gilmer's employment
     agreement with [his employer] contained a written arbitration
     clause. Rather, the arbitration clause at issue in Gilmer's
     securities registration application, which is a contract with
     the securities exchanges, not with [his employer]....
     Consequently, we leave for another day the issue [of whether
     § 1 excludes from the FAA all "contracts of employment"].

Gilmer, 500 U.S. at 24 n. 1, 111 S. Ct. at 1651 n. 1.

     Similarly,    in    Alford,    a   case   that   also   dealt   with    an

arbitration clause contained in a contract between an employee and

a securities exchange rather than an employer, we noted that the

Supreme Court had expressly refused to address the issue now before

the court.    See Alford, 939 F.2d at 230 n. * (noting that courts

should   be   mindful    of   the   potential   issue    presented    by    the

exclusionary language present in § 1 of the FAA when dealing with

                                        5
arbitration         clauses     contained     in   employment   contracts    between

employers and employees).                Consequently, we must determine the

scope of the exclusionary language present in § 1.

       We are not the first to address the scope of the exclusions

present in § 1.          In fact, numerous other courts have addressed this

very       issue,   the    majority      of   which   have   determined    that   the

exclusionary language present in § 1 is to be narrowly construed.2

Particularly persuasive is a recent opinion from the Sixth Circuit.

       In Asplundh Tree Expert Co. v. Bates, 71 F.3d 592 (6th

Cir.1995), the court, after a thorough analysis of the treatment of

this       issue    by    its   sister    circuits,     came    to   the   following

conclusion:

       [T]he exclusionary clause of § 1 of the Arbitration Act should
       be narrowly construed to apply to employment contracts of
       seamen, railroad workers, and any other class of workers
       actually engaged in the movement of goods in interstate
       commerce in the same way that seamen and railroad workers are.
       We believe this interpretation comports with the actual
       language of the statute and the apparent intent of the
       Congress which enacted it. The meaning of the phrase "workers
       engaged in foreign or interstate commerce" is illustrated by
       the context in which it is used, particularly the two specific
       examples given, seamen and railroad employees, those being two
       classes of employees engaged in the movement of goods in
       commerce.

       2
      See Miller Brewing Co. v. Brewery Workers Local Union No.
9, 739 F.2d 1159, 1162 (7th Cir.1984) (§ 1 exclusion is limited
to workers employed in the transportation industries or engaged
in the actual movement of goods in interstate commerce), cert.
denied 469 U.S. 1160, 105 S. Ct. 912, 83 L. Ed. 2d 926 (1985);
Erving v. Virginia Squires Basketball Club, 468 F.2d 1064, 1069
(2d Cir.1972) (same); Dickstein v. duPont, 443 F.2d 783, 785
(1st Cir.1971) (same); Tenney Eng'g, Inc. v. United Elec. Radio
& Mach. Workers, 207 F.2d 450, 453 (3d Cir.1953) (same); But see
Willis v. Dean Witter Reynolds, Inc., 948 F.2d 305, 310-11 (6th
Cir.1991) (dicta); Pritzker v. Merrill Lynch, Pierce, Fenner &
Smith, Inc., 7 F.3d 1110, 1119-20 (3d Cir.1993).

                                              6
Asplundh, 71 F.3d at 601.

     If    Congress     had     intended       to    exclude     all   contracts   of

employment from FAA coverage, Congress could simply have used

statutory language in § 1 similar to the following:                        "... but

nothing    herein     contained     shall       apply       to   any   contracts   of

employment."    Congress did not do this.                    As another court has

noted, "[i]t is quite impossible to apply a broad meaning to the

term "commerce' in Section 1 and not rob the rest of the exclusion

clause of all significance." Albert v. National Cash Register Co.,

874 F. Supp. 1324, 1327 (S.D.Fla.1994).                   We agree with the majority

of other courts which have addressed this issue and conclude that

§ 1 is to be given a narrow reading.                Therefore, we find that the

district    court     was     correct   when        it    determined    that   Rojas'

employment contract was subject to the requirements of the FAA.

B. Applicability of the Arbitration Clause in Question

      Next, Rojas argues that even if her claim is not excluded

from the FAA's coverage, her claim is not within the "narrow

language" of the arbitration clause in her contract.                   The clause at

issue covers "any action contesting the validity of this Agreement,

the enforcement of its financial terms, or any other disputes."

(emphasis added).

     Whenever the scope of an arbitration clause is in question,
     the   court  should   construe   the   clause   in  favor   of
     arbitration.... "The [FAA] establishes that, as a matter of
     federal law, any doubts concerning the scope of arbitrable
     issues should be resolved in favor of arbitration, whether the
     problem at hand is the construction of the contract language
     itself or an allegation of waiver, delay or a like defense to
     arbitrability."

City of Meridian, Miss. v. Algernon Blair, Inc., 721 F.2d 525, 527-

                                           7
28 (5th Cir.1983) (quoting Moses H. Cone Memorial Hosp. v. Mercury

Constr. Corp., 460 U.S. 1, 24-250, 103 S. Ct. 927, 941-42, 74
L. Ed. 2d 765 (1983)).        Contrary to Rojas' attempt to characterize

the arbitration clause as "narrow", we conclude that the district

court was correct when it found that "any other disputes" was

sufficiently broad to encompass Rojas' Title VII claims.                       See also

Crawford v.       West   Jersey   Health       Sys.,     847 F. Supp. 1232,      1243

(D.N.J.1994) (Title VII claim encompassed by arbitration clause

requiring    arbitration     of     "   "any     dispute       ...   regard[ing]     the

interpretation or performance of any part of this Agreement' ");

DiCrisci     v.    Lyndon    Guar.       Bank,     807 F. Supp. 947,    950-51

(W.D.N.Y.1992) (Title VII claims encompassed by arbitration clause

requiring arbitration of "any dispute").

C. Unconscionability of Agreement

         Rojas'     claim    that       the    employment        agreement      is    an

unconscionable contract of adhesion is an attack on the formation

of the contract generally, not an attack on the arbitration clause

itself.3    Because her claim relates to the entire agreement, rather

than just the arbitration clause, the FAA requires that her claims

be heard by an arbitrator.        See R.M. Perez & Assoc., Inc. v. Welch,

     3
      In her brief, Rojas contends that her attack on the
Agreement is limited to the arbitration clause. While we
acknowledge that she specifically attacks the arbitration clause,
she also contends that she signed the Agreement "[b]ased upon the
Defendant's representations ... [that the Agreement's] coverage
[would] be limited to situations such as non-competition, payola,
and intellectual property rights." Appellant's Brief at 18. She
also attacks the agreement based upon "inequality of bargaining
power". Id. These assertions belie Rojas' contention that her
attack is limited to the arbitration clause and they support our
conclusion that her attack is directed at the entire agreement.

                                          8
960 F.2d 534, 538 (5th Cir.1992).

III. Successor Liability4

         Under general contract principles, there is no dispute that

Tichenor did not assume liability on Rojas' claim.    Rojas does not

dispute that, in its asset purchase agreement with TK, Tichenor

expressly excepted Rojas' claim against TK when it assumed certain

pre-transfer obligations of TK.

     The liability that Rojas seeks to establish against Tichenor,

however, does not arise from contract.    The successorship doctrine

is derived from labor law principles enunciated in four Supreme

Court cases:    John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543,

84 S. Ct. 909, 11 L. Ed. 2d 898 (1964), NLRB v. Burns International

Security Servs., Inc., 406 U.S. 272, 92 S. Ct. 1571, 32 L. Ed. 2d 61

(1972), Howard Johnson Co. v. Detroit Local Joint Executive Bd.,

417 U.S. 249, 94 S. Ct. 2236, 41 L. Ed. 2d 46 (1974), and Fall River

Dyeing & Finishing Corp. v. NLRB, 482 U.S. 27, 107 S. Ct. 2225, 96
L. Ed. 2d 22 (1987).     See Southward v. South Cent. Ready Mix Supply

Corp., 7 F.3d 487, 493 (6th Cir.1993).

     Wiley held that a successor employer will have a duty to

arbitrate under a preexisting collective bargaining agreement when

there is "substantial continuity" in the business enterprise before

and after a change in ownership. 376 U.S. at 551, 84 S.Ct. at 915.

In Burns, the Court ruled that, even though a successor employer

     4
      Finding that we are in agreement with the district court on
this issue, we have adopted, and will simply restate the relevant
portions of the district court's analysis of Tichenor's successor
liability.

                                   9
may be required to recognize and bargain with a union under the

reasoning in Wiley, it is not bound to the substantive terms of a

preexisting collective bargaining agreement. 406 U.S. at 277-90,

92 S.Ct. at 1576-84.      In Howard Johnson, the Court further limited

Wiley by holding that a successor employer by way of sale of

assets, as opposed to a merger transaction as in Wiley, was not

bound to arbitrate a grievance. 417 U.S. at 257-59, 94 S.Ct. at

2240-42. Finally, in Fall River Dyeing, the Court reaffirmed Burns

holding that a new employer was free to disregard the terms of its

predecessor's     collective     bargaining       agreement   in    hiring    the

predecessor's employees and that it had no duty to arbitrate unless

there was substantial continuity between the former and latter's

business operations. 482 U.S. at 40, 43-47, 107 S. Ct. at 2234,

2236-38.   See generally, Southward, 7 F.3d at 493-96.

     Although developed in the context of labor relations, the

doctrine   of    successor     liability    has   been   extended     to   claims

asserted under Title VII and related statutes.                     As one court

explained,

     the successor doctrine arises in the context of discrimination
     cases in situations where the assets of a defendant employer
     are transferred to another entity. Thus, the purpose of the
     doctrine is to ensure that an employee's statutory rights are
     not "vitiated by the mere fact of a sudden change in the
     employer's business."    The doctrine allows the aggrieved
     employee to enforce against the successor a claim he could
     have secure against the predecessor.

          Thus, applicability of the doctrine hinges on the need to
     protect a plaintiff where the offending entity is substituted
     by another company.

Brennan v.      Nat'l   Tel.   Directory    Corp.,    881 F. Supp. 986,   992

(E.D.Pa.1995) (citations omitted).

                                      10
       In EEOC v. MacMillan Bloedel Containers, Inc., 503 F.2d 1086,

1094 (6th Cir.1974), the court identified nine factors to be

considered in determining whether successor liability should be

imposed in a discrimination case.              These factors are:

      (1) whether the successor company had notice of the charge or
      pending lawsuit prior to acquiring the business or assets of
      the predecessor;     (2) the ability of the predecessor to
      provide relief;    (3) whether there has been a substantial
      continuity of business operations;      (4) whether the new
      employer uses the same plant; (5) whether he uses the same or
      substantially the same work force; (6) whether he uses the
      same or substantially the same supervisory personnel; (7)
      whether the same jobs exist under substantially the same
      working conditions; (8) whether he uses the same machinery,
      equipment, and methods of production;     and (9) whether he
      produces the same product.

Musikiwamba    v.    ESSI,   Inc.,   760 F.2d 740,    750   (7th   Cir.1985)

(paraphrasing MacMillan ). This court agrees with Musikiwamba that

the first two factors are critical.                   Id.    The remaining seven

simply "provide a foundation for analyzing the larger question of

whether there is a continuity in operations and the work force of

the successor and predecessor employers," as required by Wiley and

its progeny.        Id. at 751;      see also Bates v. Pacific Maritime

Ass'n, 744 F.2d 705, 709-10 (9th Cir.1984) (three factors governing

successor liability determination are (1) continuity in operations

and   workforce,     (2)   notice    of    the   claim,      and    (3)   ability    of

predecessor employer to provide relief);                    Preyer v. Gulf Tank &

Fabricating Co., 826 F. Supp. 1389, 1395 (N.D.Fla.1993);                             cf.

Criswell v. Delta Air Lines, Inc., 868 F.2d 1093, 1095 (9th Cir.)

(applying Bates factors in age discrimination case), cert. denied,

489 U.S. 1066, 109 S. Ct. 1342, 103 L. Ed. 2d 811 (1989).

      The policy underlying the successor doctrine—to protect an

                                          11
employee when the ownership of his employer suddenly changes—is not

served by imposing liability on Tichenor in this case.            Although

Tichenor had notice of Rojas' claim and continued to operate KXTN

in much the same way as TK, TK is still a viable entity.          Tichenor

submitted   uncontroverted      evidence    on   summary   judgment   that,

although TK has sold the assets of KXTN, it still operates five

other radio stations, including one in Dallas.             Moreover, Rojas

does not seek reinstatement in this action and has, in fact,

rejected Tichenor's offer for reemployment at KXTN under conditions

designed to prevent further harassment. Under these circumstances,

it would be unjust to impose liability on Tichenor for the mere

purpose of enhancing Rojas' ability to collect a money judgment.

See Musikiwamba, 760 F.2d at 750-751;        Brennan, 881 F. Supp. at 992;

Brown v. Evening News Ass'n, 473 F. Supp. 1242 (E.D.Mich.1979).

Compare Bates, 744 F.2d at 710 (fact that predecessor still a

viable entity less relevant where plaintiffs sought classwide

relief   rather   than   only    monetary    and   injunctive   relief   as

individuals). Accordingly, we find that the district court did not

err when it granted Tichenor's motion for summary judgment on the

issue of successor liability.

                                CONCLUSION

     For the foregoing reasons, the judgment of the district court

is AFFIRMED.

                                    12