United States District Court, N.D. New York
August 5, 2004.
MARSHA DARRAH, Plaintiff,
FRIENDLY ICE CREAM CORPORATION, Defendant.
The opinion of the court was delivered by: DAVID HURD, District Judge
MEMORANDUM-DECISION and ORDER
Plaintiff Marsha Darrah ("Darrah" or "plaintiff") brings this
suit against defendant Friendly Ice Cream Corporation ("Friendly"
or "defendant"), alleging retaliation and constructive
termination in violation of the Family Medical Leave Act
Friendly has moved to compel arbitration and dismiss the
complaint or stay proceedings, and/or for summary judgment.
Plaintiff opposed. Oral argument was heard on July 9, 2004 at
Utica, New York. Decision was reserved. II. FACTS
The following facts are uncontroverted.
On May 4, 1999, Friendly hired Darrah as an Assistant Manager.
In January 2002, she was promoted to standing General Manager.
Because of her high-risk pregnancy, she declined a November 2002
promotion to full-time General Manager, asking that she remain an
Assistant Manager if and when Friendly located a General Manager
who could relieve her of the standing General Manager duties.
On May 27, 2003, Darrah signed an "Employment Dispute
Resolution Policy and Contract to Arbitrate for Present
Employees" ("the Agreement"). Plaintiff signed the Agreement
right below where it indicated she understood the contract, had
enough time to consider it, had her questions answered to her
satisfaction and would be bound by this contract. The Agreement
contains a two-step dispute resolution process that commences
with an employee's use of an "Open Door Policy" followed by final
and binding arbitration. The Agreement indicates that the
employee will have to pay the filing fee, while the employer will
pay all other administrative costs.
The Agreement states that "both of us agree that . . . we
will settle all claims or disputes about work . . . exclusively
through the Company Open Door Policy, and if this procedure
fails, then by final and binding arbitration. . . ." (Docket No.
6, Attach. 5, Ex. A) (emphasis added). The following paragraph
For example, these disputes include claims under any
statute or common law, like the Age Discrimination in
Employment Act, Title VII of the Civil Rights Act of
1965, as amended, the Americans with Disabilities
Act, the Fair Labor Standards Act, 42 U.S.C. § 1981,
as amended, the Employee Polygraph Protection Act,
the Employee Retirement Increase Security Act, the
National Labor Relations Act, state statutes like
them or statutes and common law on work or hiring,
the Law of Contract, the Law of Tort, claims for malicious prosecution, wrongful firing, wrongful
arrest or imprisonment, intentional or negligent
infliction of emotional distress or defamation. Id.
FMLA was not included.
The Agreement also provided that Darrah had "21 days to
consider it," advised her that she "may want legal advice from an
attorney before signing" it, and also that she had the right to
"withdraw [her] consent to this Policy and Contract within seven
(7) days from the day" she signed it. Id. Plaintiff did not
withdraw her consent within this time frame. Friendly had the
exclusive right to change or end the contract upon giving sixty
days notice to the employee.
On July 2, 2003, just over a month after signing the Agreement
and just over a week after going into premature labor, Darrah
requested and Friendly approved a leave of absence for the high
risk birth of her baby. On September 10, 2003, subsequent to the
birth of her child, plaintiff returned to work.
Upon returning to work, Darrah alleges that Friendly and/or its
employees (1) failed to restore her to her previous position of
Assistant Manager, or even an equivalent position; (2) reduced
her hours, altered her work schedule, and diminished her work
duties and responsibilities; and (3) harassed, embarrassed, and
humiliated her in a manner that was intentionally fashioned to
cause severe emotional distress.
After Darrah's return to work, co-workers told her that the
General Manager, Ken Viazzi ("Viazzi"), had told them that she
was demoted from her Assistant Manager position. Another
Assistant Manager, in the presence of several co-workers and
regular customers, removed and threw away Darrah's name plaque at
the front of the restaurant that listed her as an assistant
manager. Upset by this situation, on September 17, 2004,
plaintiff met with Viazzi and told him that she was "exercising [her] rights under
Friendly's `Open Door Policy.'" (Docket No. 9, ¶ 27). She
requested that "he review [her] post-leave work status and
treatment by management." Id. Viazzi responded to the request
by laughing and stating that she "was being hormonal." Id. ¶
28. Due to Viazzi's failure to respond to her complaints, about a
week later she requested a meeting with the District Manager,
George Wutkee ("Wutkee"). Wutkee responded that these matters
should be exclusively addressed by the General Manager, Viazzi.
On October 31, 2003, plaintiff received a telephone call from
Viazzi stating that Wutkee "was letting [her] go as an Assistant
Manager[,]" which was her pre-FMLA leave position, and that she
could continue to work only as a waitress, which position
commanded reduced hours and pay. Id. ¶¶ 31-32. Darrah claims
she was constructively terminated by Friendly's on December 24,
This action was filed on April 8, 2004, followed by defendant's
motion to compel arbitration.
A. Standard for Motion to Compel Arbitration
"In the context of motions to compel arbitration brought under
the Federal Arbitration Act, 9 U.S.C. § 4 (2000), the court
applies a standard similar to that applicable for summary
judgment." Bensadoun v. Jobe-Riat, 316 F.3d 171, 175 (2d Cir.
2003). Summary judgment must be granted when the pleadings,
depositions, answers to interrogatories, admissions, and
affidavits show that there is not genuine issue as to any
material fact, and that the moving party is entitled to summary
judgment as a matter of law. Fed.R.Civ.P. 56; Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 247 (1986); Lang v.
Retirement Living Pub. Co., 949 F.2d 576, 580 (2d. Cir. 1991).
The moving party carries the initial burden of demonstrating an absence of a genuine issue of material fact.
Fed.R.Civ.P. 56; Celotex Corp. v. Catrett, 477 U.S. 317, 323
(1986); Thompson v. Gjivoje, 896 F.2d 716, 720 (2d Cir. 1990).
Facts, inferences therefrom, and ambiguities must be viewed in a
light most favorable to the nonmovant. Matsushita Elec. Indus.
Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986); Project
Release v. Prevost, 722 F.2d 960, 968 (2d Cir. 1983).
B. Federal Arbitration Act ("FAA")
The FAA provides that written arbitration agreements "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. Where it is demonstrated that a claim should be
submitted to arbitration, a court is empowered to stay legal
proceedings. Id. § 3. There is a strong federal policy in favor
of arbitration under the FAA. See David L. Threlkeld & Co. v.
Metallgesellschaft Ltd., 923 F.2d 245, 248 (2d Cir. 1991). When
assessing a motion to compel arbitration, two issues must be
resolved: (1) whether the parties agreed to arbitrate, and (2)
whether the claims asserted fall within the scope of the
arbitration agreement. Specht v. Netscape Communications Corp.,
306 F.3d 17, 26 (2d Cir. 2002).
1. Whether the Parties Agreed to Arbitrate Darrah's Claims
Though courts routinely compel parties to arbitrate disputes
where a valid agreement exists, it is clear that the FAA only
requires arbitration agreements to be enforced "in accordance
with their terms." Volt Info. Sciences, Inc. v. Bd. of Trustees
of Leland Stanford Jr. Univ., 489 U.S. 468, 478, 109 S.Ct. 1248,
103 L.Ed.2d 488 (1989); see also Mastrobuono v. Shearson
Lehman Hutton, Inc., 514 U.S. 52, 57, 115 S.Ct. 1212,
131 L.Ed.2d 76 (1995) ("[T]he FAA's proarbitration policy does not
operate without regard to the wishes of the contracting
parties"). Here, the language of the Agreement is clear that the parties agreed to arbitrate only disputes that had not been
resolved through the Open Door Policy. The Open Door Policy "must
be used before arbitration[,]" which may only be initiated if the
Open Door Policy "fails." (Docket No. 6, Attach. 5, Ex. A.) In
other words, the parties agreed that engaging in the Open Door
Policy is a condition precedent to initiating arbitration.
The term "fails" must be interpreted in light of the Open Door
Policy itself. Open Door Policies provide for an interactive
dispute resolution process, with an employee calling a matter to
the attention of a superior, who then works informally with the
employee to resolve the matter. Put another way, in order for the
policy to be undertaken, both sides must engage in it. Thus, the
term "fails" implies that the policy has begun, that the parties
have attempted in good faith to resolve the dispute under the
policy, and that, despite their informal best efforts, they have
failed to come to an agreement. Otherwise, the Agreement would
mandate arbitration in situations where an employee
unsuccessfully attempted to engage in the Open Door Policy,
rather than where such policy itself, once undertaken, "fails."
Therefore, it must be determined whether each side fulfilled its
duty to engage in the Open Door Policy.
Friendly claims, in a footnote in its memorandum of law, that
"[t]he Complaint is completely silent about any efforts made by
[Darrah] to utilize th[e] Open Door Policy prior to the time she
claims her employment with Friendly was constructively
terminated in December 2003. Nevertheless, for the purposes of
this motion and for purposes of proceeding with this matter in an
arbitral forum, Friendly is willing to assume that this `open
door' step of the process has failed and/or need not be
satisfied." (Docket No. 7, p. 3 n. 1.) Initially, it is noted
that Friendly is not permitted "to assume" that the Open Door
Policy "need not be satisfied" because the parties clearly agreed
that only those disputes not resolved through the Open Door Policy would be subject to arbitration.
Second, Friendly is not permitted "to assume" that the Open Door
Policy failed because, as noted, it is a two-way street and must
therefore be engaged in, by both sides, before it can be said to
Darrah fulfilled her duty to engage in the Open Door Policy.
She brought her grievances to Viazzi, explicitly informing him
that she was exercising her rights under the Open Door Policy. He
dismissively responded that she "was being hormonal." She then
requested a meeting with the District Manager, who responded that
such disputes were to be exclusively addressed by Viazzi. These
facts, if true, demonstrate that plaintiff fulfilled her duty
under the Open Door Policy, and that Friendly did not fulfill its
These facts must be accepted as true, because Friendly has
failed to deny them in its reply papers. The only treatment given
the above facts is a footnote in defendant's memorandum of law
that rejects Darrah's argument that defendant anticipatorily
repudiated the Agreement by failing to engage in the Open Door
Policy. Defendant does not deny that the actual facts are true.
Whether the legal mandates of an anticipatory repudiation have
been fulfilled is beside the point the only relevant inquiry is
whether the parties intended to arbitrate Darrah's claims.
Whether the parties intended to arbitrate Darrah's claims depends
upon whether the Open Door Policy failed. Whether the Open Door
Policy failed depends upon whether both sides fulfilled their
duties to engage in it. Darrah did so engage; Friendly did not.
By refusing to engage in the Open Door Policy, defendant clearly
failed to comply with a condition precedent to arbitration under
the Agreement. Under such circumstances, there was never an
agreement by both parties to arbitrate the FMLA claims pending
in this forum. 2. Whether Darrah's Claims are Covered by the Agreement to
It is worth noting that, even if it is assumed that the Open
Door Policy was undertaken by both sides and that it then
"fail[ed]," whether the claims at issue are covered by the scope
of the Agreement is not at all clear. When determining whether a
dispute falls within the scope of an arbitration agreement, the
arbitration clause at issue should first be classified as broad
or narrow. Louis Dreyfus Negoce S.A. v. Blystad Shipping &
Trading, Inc., 252 F.3d 218, 224 (2d Cir. 2001). While a clause
providing for arbitration of "`any dispute, controversy or claim
arising under or in connection with [an] [employment agreement]'"
is "the prototypical broad arbitration provision," Oldroyd v.
Elmira Sav. Bank, FSB, 134 F.3d 72, 76 (2d Cir. 1998) (second
alteration in original), the Second Circuit has warned more
recently that there are "[n]o fixed rules govern[ing] the
determination of an arbitration clause's scope," and, "[i]n the
end, a court must determine whether, on the one hand, the
language of the clause, taken as a whole, evidences the parties'
intent to have arbitration serve as the primary recourse for
disputes connected to the agreement containing the clause, or if,
on the other hand, arbitration is designed to play a more limited
role in any future dispute," Louis Dreyfus, 252 F.3d at 224.
Just looking at the arbitration clause itself, it could be
argued that it is both broad and narrow. For example, while the
clause purports to submit to arbitration "all claims or disputes
about work," including "claims under any statute or common law,"
it goes on to list, ostensibly by way of example, no less than
seven specific federal statutes and several specific common law
causes of action. (Docket No. 6, Attach. 5, Ex. A.)
Significantly, it does not list FMLA claims. Moreover, the clear language of the agreement states that the
Open Door Policy is the primary vehicle by which these disputes
are to be resolved. Id. ("[W]e will settle all claims or
disputes about work . . . exclusively through the Company Open
Door Policy, and if this procedure fails, then by final and
binding arbitration"). Arbitration may only be invoked if the
Open Door Policy fails. Construing the facts in Darrah's favor,
Friendly's failure to engage in the Open Door Policy with respect
to her FMLA claims appears to demonstrate that defendant did not
believe such claims were covered by the Agreement. Otherwise, it
would have made at least some attempt to resolve plaintiff's
grievance under the Open Door Policy. It would be reasonable to
assume that defendant failed to engage in the Open Door Policy in
recognition of the fact that the FMLA was not listed, despite
virtually every other employment-related federal statute
appearing explicitly in the text of the Agreement. However, the
reason defendant did not comply with all the terms and conditions
of the Agreement need not be resolved. The facts are that it did
not; thus it never agreed to arbitrate and cannot now compel
plaintiff to arbitrate under the Agreement.
The defendant's motion will be denied in all respects.
Accordingly, it is
1. Defendant Friendly Ice Cream Corporation's motion to compel
arbitration and stay proceedings or dismiss the Complaint is
DENIED with prejudice; and
2. Defendant Friendly Ice Cream Corporation's motion for
summary judgment is DENIED; and 3. Defendant shall file and serve an Answer to the Complaint on
or before August 13, 2004.
IT IS SO ORDERED.
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