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Ronald McNamara v. Yellow Transportation, Inc., 08-2654 (2009)

Court: Court of Appeals for the Eighth Circuit Number: 08-2654 Visitors: 96
Filed: Jul. 01, 2009
Latest Update: Mar. 02, 2020
Summary: United States Court of Appeals FOR THE EIGHTH CIRCUIT _ No. 08-2654 _ Ronald D. McNamara, * * Plaintiff-Appellee, * * Appeal from the United States v. * District Court for the District * of South Dakota. Yellow Transportation, Inc., * * Defendant-Appellant. * _ Submitted: February 13, 2009 Filed: July 1, 2009 _ Before LOKEN, Chief Judge, MELLOY and BENTON, Circuit Judges. _ MELLOY, Circuit Judge. Yellow Transportation, Inc. (“Yellow”), terminated Ronald McNamara’s employment after more than twen
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                     United States Court of Appeals
                           FOR THE EIGHTH CIRCUIT
                                    ___________

                                    No. 08-2654
                                    ___________

Ronald D. McNamara,                  *
                                     *
           Plaintiff-Appellee,       *
                                     *    Appeal from the United States
     v.                              *    District Court for the District
                                     *    of South Dakota.
Yellow Transportation, Inc.,         *
                                     *
           Defendant-Appellant.      *
                                ___________

                              Submitted: February 13, 2009
                                 Filed: July 1, 2009
                                  ___________

Before LOKEN, Chief Judge, MELLOY and BENTON, Circuit Judges.
                              ___________

MELLOY, Circuit Judge.

       Yellow Transportation, Inc. (“Yellow”), terminated Ronald McNamara’s
employment after more than twenty-three years of service. McNamara filed suit
against Yellow alleging retaliation, gender discrimination, and a violation of the
Family and Medical Leave Act (“FMLA”). Yellow moved for summary judgment or,
in the alternative, for an order to compel arbitration. The district court denied these
motions, and Yellow appeals.

       We hold that McNamara was not a transportation worker exempted from the
Federal Arbitration Act (“FAA”). We also hold that McNamara’s dispute was subject
to a valid arbitration agreement and that Yellow did not waive its right to arbitrate by
failing to move for arbitration during EEOC proceedings prior to McNamara’s filing
of this suit. Accordingly, we reverse the district court’s denial of Yellow’s motion to
compel arbitration and remand to the district court with directions to enter a stay
holding the case in abeyance pending arbitration.

I.    Background

      Yellow hired McNamara in January 1983. Over the years, McNamara worked
in several different capacities for Yellow. He served as a Customer Relations
Manager in a call center in Sioux Falls, South Dakota, at the time of the events
relevant to the present claims.

        On October 29, 2001, Yellow instituted a mandatory arbitration program.
According to an unrebutted affidavit that Yellow submitted with its motions to the
district court, Yellow circulated a two-page arbitration agreement (“2001 Agreement”)
to its employees via email and via interoffice mail.1 McNamara does not deny that he


      1
       The 2001 Agreement provided:

      [E]xcept for claims listed . . . as “Excluded Claims;” all disputes, claims
      or controversies arising out of, or related to your employment or the
      cessation of your employment with Yellow that would otherwise require
      or allow resort to a court or other governmental tribunal . . . will instead
      be resolved exclusively by final and binding arbitration before a neutral
      arbitrator.

            Employment Claims include, but are not limited to, claims of
      discrimination, harassment or retaliation and claims for benefits brought
      against Yellow . . . whether based on local, state or federal laws or
      regulations, or on tort, contract, or equitable law, or otherwise. By way
      of example only, Employment Claims include claims under the Age
      Discrimination in Employment Act, Title VII of the Civil Rights [sic] of
      1964, as amended, including the amendments of the Civil Rights Act of

                                          -2-
received the 2001 Agreement by either method of delivery. The 2001 Agreement
stated that the arbitration process would “become a condition of your employment,
effective November 8, 2001,” and McNamara continued as Yellow’s employee after
that date. He did not dispute the applicability of the 2001 Agreement at any time
during his employment.

       On June 30, 2004, Yellow distributed to its employees, including McNamara,
a document entitled “Yellow, a Matter of Respect, Policy Guide to Workplace
Conduct” (“Policy Guide”). The Policy Guide contained descriptions of Yellow’s
policies applicable to union and non-union workers on a wide variety of topics. The
Policy Guide included a copy of the 2001 Agreement. The first page of the Policy




      1991, the Americans with Disabilities Act, the Family and Medical
      Leave Act, the Employee Retirement Income Security Act, and the Fair
      Labor Standards Act.
      ...
            . . . The arbitration and the Dispute Resolution Process shall be
      controlled by the Federal Arbitration Act (“FAA”). If for any reason the
      FAA does not apply or if the FAA is silent on the issue, then the
      provisions of the Indiana Uniform Arbitration Act . . . shall apply (to the
      extent they do not conflict with the FAA) and subject Employment
      Claims to arbitration. . . .
      ...
            This Dispute Resolution Process will become a condition of your
      employment, effective November 8, 2001. By remaining on Yellow’s
      payroll after that date, both you and the Company are agreeing to
      binding arbitration and giving up the right to trial by jury.


                                         -3-
Guide was a disclaimer with a large font, bold-faced header stating “DISCLAIMER.”
The balance of the page was in all caps and underlined.2


      2
       The Disclaimer provided:

      THIS POLICY GUIDE AND ALL OF THE INFORMATION
      CONTAINED IN THIS GUIDE, IS INTENDED TO BE AN
      INFORMATIONAL SOURCE FOR EMPLOYEES. IT IS NOT (AND
      SHALL NOT BE CONSTRUED TO BE) AN EXPRESS OR IMPLIED
      CONTRACT BETWEEN THE COMPANY AND ITS EMPLOYEES.

      THIS GUIDE IS NOT INTENDED TO INCLUDE ALL COMPANY
      POLICIES. THE POLICIES DESCRIBED IN THIS GUIDE MAY BE
      REVISED FROM TIME TO TIME, AND NEW POLICIES THAT ARE
      NOT INCLUDED IN THIS GUIDE MAY BE ADDED.
      ACCORDINGLY, THE COMPANY RESERVES THE RIGHT TO
      CHANGE, SUSPEND, ELIMINATE OR ADD TO ANY AND ALL
      POLICIES, PROCEDURES, PROCESSES, PRACTICES AND
      EMPLOYEE BENEFITS, EXCEPT FOR THE “AT WILL” NATURE
      OF YOUR EMPLOYMENT AND THE DISPUTE RESOLUTION
      PROCESS. DISTRIBUTION OR OTHER               WRITTEN
      ANNOUNCEMENTS OF CHANGES MAY NOT ALWAYS OCCUR
      IN ADVANCE OF THE CHANGE.

      THE EMPLOYMENT-AT-WILL RELATIONSHIP MAY NOT BE
      MODIFIED EXCEPT IN WRITING SIGNED BY THE PRESIDENT
      OF THE COMPANY AND YOU EXPLICITLY STATING THAT THE
      EMPLOYMENT-AT-WILL RELATIONSHIP IS BEING MODIFIED.
      THE DISPUTE RESOLUTION PROCESS MAY NOT BE MODIFIED
      WITH RESPECT TO ANY PENDING MATTER AND MAY BE
      MODIFIED WITH RESPECT TO FUTURE MATTERS ONLY IF
      ADVANCE NOTICE OF THE CHANGE HAS BEEN DISTRIBUTED
      IN A MANNER REASONABLY CALCULATED TO BE RECEIVED
      BY EMPLOYEES. MANAGEMENT ALSO RESERVES THE RIGHT
      TO MAKE FINAL DECISIONS CONCERNING THE
      INTERPRETATION AND APPLICATION OF CORPORATE
      HUMAN RESOURCES POLICIES, INCLUDING ALL OF THOSE
      CONTAINED IN THIS POLICY GUIDE.


                                       -4-
       Following the disclaimer, every page of the Policy Guide included a header that
stated, “This Information Applies to All Employees.” In addition, every page
included a footer that stated “POLICY GUIDE.” Pages 16 and 17 of the Policy Guide
contained a reproduction of the 2001 Agreement. The only difference between the
language set forth on Pages 16 and 17 of the Policy Guide and the 2001 Agreement,
as distributed in 2001, was language concerning an effective date and the
consequences of remaining an employee after the effective date. In the Policy Guide,
this language was truncated and stated only, “The Dispute Resolution Process is a
condition of your employment.”

       Yellow required its employees to sign a form acknowledging receipt of the
Policy Guide. McNamara signed the acknowledgment form on June 30, 2004. He
then remained Yellow’s employee until his termination on June 19, 2006.

       While we do not purport to assess the merits of McNamara’s substantive claims,
we describe both his version and Yellow’s version of the termination for context.
According to McNamara, he criticized his manager during Yellow’s review of the
manager, stating that the manager had harassed people within the office and showed
favoritism to women. McNamara asserts that the manager discovered the criticism
through a violation of McNamara’s rights, targeted McNamara for termination, and
eventually hired several women to work as Customer Relations Managers following
McNamara’s termination. According to Yellow, it terminated McNamara for
violating its Internet/computer acceptable-use policy and for a “long history of
disregard for Yellow’s rules and procedures.” Yellow alleges in its brief that it
provided McNamara “extensive coaching regarding his multiple violations of
Yellow’s rules and procedures” and issued him a “Notice of Corrective Action” for
purportedly creating a hostile work environment.

      McNamara submitted a claim to the EEOC, and Yellow did not raise the issue
of arbitration during the EEOC proceedings or prior to McNamara’s filing of the

                                         -5-
present suit. After McNamara filed suit, Yellow moved for summary judgment or for
an order compelling arbitration. Yellow supported its motions with an affidavit,
copies of the 2001 Agreement, and copies of an email message distributing the 2001
Agreement. Yellow’s arguments in support of arbitration relied upon the 2001
Agreement as the contract requiring arbitration. McNamara, in contrast, directed a
competing affidavit and his arguments in opposition to Yellow’s motions exclusively
towards the Policy Guide, making no reference to the 2001 Agreement and failing to
dispute any of Yellow’s evidence regarding the 2001 Agreement or McNamara’s
receipt of the 2001 Agreement. The district court also focused on the Policy Guide,
making no reference to the 2001 Agreement. The district court resolved Yellow’s
motions on the briefs and did not hold a hearing. In its order denying the motions, the
district court stated, “The question on arbitration is whether or not the Defendant’s
Policy Guides are contracts.” The court held the Policy Guide was not an enforceable
arbitration agreement.

II.   Discussion

      A.     Jurisdiction and Standard of Review

       We have jurisdiction to review the denial of a motion to compel arbitration as
an interlocutory appeal within the scope of 28 U.S.C. § 1292(a)(1). Nordin v.
Nutri/System, Inc., 
897 F.2d 339
, 342 (8th Cir. 1990) (“[The] order . . . has an
injunctive effect, and . . . a denial of a motion to compel arbitration can only be
effectively challenged on immediate appeal because the advantages of arbitration will
be forever lost if the appeal is delayed. Therefore, we have jurisdiction over the
court’s denial of [the] motion to compel arbitration pursuant to § 1292(a)(1).”). We
“review[] de novo a district court’s order compelling arbitration, when the decision
is based on contract interpretation.” Berkley v. Dillard’s Inc., 
450 F.3d 775
, 777 (8th
Cir. 2006). “However, to the extent that the district court’s order is based upon factual
findings, our review is guided by the clearly erroneous standard.” Nordin, 897 F.2d

                                          -6-
at 344. Here, the district court’s order was not based on any factual findings material
to our analysis, and, as such, our review is de novo. See 
Berkley, 450 F.3d at 777
.

       The questions we must address include whether McNamara was a
“transportation worker” exempted from the FAA. If not, we must determine whether
the 2001 Agreement is a valid arbitration agreement that encompasses McNamara’s
claims. Finally, if McNamara’s claims are otherwise subject to a valid arbitration
agreement, we must decide whether Yellow waived its right to arbitrate McNamara’s
claims by participating in the EEOC process before first asserting its right to
arbitration.

      B.      Transportation Worker

       The FAA does not 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. The Supreme Court has interpreted this exemption narrowly, agreeing
with the majority of circuits that it “‘is limited to transportation workers, defined . . .
as those workers actually engaged in the movement of goods in interstate commerce.’”
Circuit City Stores, Inc. v. Adams, 
532 U.S. 105
, 112 (2001) (quoting Cole v. Burns
Int’l Sec. Servs., 
105 F.3d 1465
, 1471 (D.C. Cir. 1997)). In Lenz v. Yellow
Transportation, Inc., 
431 F.3d 348
, 351 (8th Cir. 2005), we applied Circuit City and
determined that a “Customer Service Representative” for Yellow who worked at a call
center was not a transportation worker.

      It is undisputed that McNamara’s job title was Customer Relations Manager and
that he was a manager or supervisor over Customer Service Representatives at
Yellow’s Sioux Falls, South Dakota call center. Yellow submitted a description of
McNamara’s duties via affidavit stating that the call center where McNamara worked
was distinct from a nearby freight dock that Yellow described as “a completely



                                           -7-
separate facility with a separate manager.” Yellow described McNamara’s duties as
follows:

      As a Customer Relations Manager, Mr. McNamara’s primary
      responsibilities included assisting Customer Service Representatives in
      identifying and resolving customer issues; managing resources and
      staffing needs; assisting teams in setting objectives, goals, performance
      standards and expectations; and maintaining effective communications
      with employees and other managers. Mr. McNamara had little, if any,
      interaction with the customers themselves. He did not handle goods that
      traveled interstate. He was not directly responsible for the transporting
      of interstate goods, nor did he supervise employees who were directly
      responsible for the transporting of interstate goods.

McNamara failed to contest, by affidavit or otherwise, Yellow’s description of his job.
He did allege for the first time in his brief on appeal, without evidentiary support, that
certain of his job duties involved a greater degree of customer contact and
troubleshooting than suggested by Yellow’s description. We cannot rely, however,
on unsupported factual allegations raised for the first time in an appeal brief. See,
e.g., Kerr v. FEMA, 
113 F.3d 884
, 886 n.3 (8th Cir. 1997) (“Not only has [the
appellant] raised this argument for the first time on appeal, but he has also neglected
to support this allegation with any specific law or facts from the record.”).

       Further, even if we could consider McNamara’s unsupported description of his
job duties, we see no material distinction between his allegations and Yellow’s
description of his job duties. His allegations vaguely allege some interaction with
shipping customers but do not show that his duties differed materially from the
Customer Service Representatives whom he supervised (except for the fact that he was
a supervisor or manager over them). In fact, in his brief, McNamara relies upon the
district court’s opinion in Lenz rather than our opinion reversing the district court in
that case. See Lenz v. Yellow Transp., Inc., 
352 F. Supp. 2d 903
, 906–09 (S.D. Iowa
2005) (holding that a customer service representative for Yellow was a transportation

                                           -8-
worker under the FAA), rev’d, 
431 F.3d 348
. As such, McNamara actually argues
that his duties were similar to the duties of the plaintiff in Lenz. He states,
“Essentially, if Mr. McNamara and Lenz had worked in the same office, he would
have been Mr. Lenz’s boss. So clearly, Mr. McNamara’s job duties were similar to
that of Mr. Lenz but just extended themselves to include the management of people.”
For the purpose of applying Circuit City, then, McNamara asserts no material
difference in duties between McNamara as a supervisor and the plaintiff in Lenz as
the type of employee McNamara supervised. As such, Lenz directly controls our
decision on this issue, and we conclude McNamara was not a transportation worker
exempted from the FAA. 
Lenz, 431 F.3d at 352
–53.

      C.     2001 Arbitration Agreement

       The parties agree that, in this case, the questions of whether they are subject to
a valid arbitration agreement and whether such an agreement encompasses their
claims are questions for the court. The parties also agree that we apply South Dakota
law to determine whether McNamara and Yellow were subject to a valid arbitration
agreement. See, e.g., First Options of Chicago, Inc. v. Kaplan, 
514 U.S. 938
, 944
(1995) (applying state law to determine whether parties had agreed to arbitration);
Patterson v. Tenet Healthcare, Inc., 
113 F.3d 832
, 834 (8th Cir.1997) (applying state
contract law to determine whether a binding contract to arbitrate exists). South
Dakota law provides, “Elements essential to existence of a contract are: (1) Parties
capable of contracting; (2) Their consent; (3) A lawful object; and (4) Sufficient cause
or consideration.” S.D. Codified Laws § 53-1-2; see also Mueller v. Cedar Shore
Resort, Inc., 
643 N.W.2d 56
, 70 (S.D. 2002). McNamara contests only the issues of
consent or acceptance and consideration.

       Applying the laws of other states, we have held that continued employment
after an employer imposes a term or condition upon employment demonstrates the
acceptance and consideration necessary to form an enforceable contract. See, e.g.,

                                          -9-

Berkley, 450 F.3d at 777
(“By continuing her employment, [the employee] accepted
the terms of the arbitration program.”); Winfrey v. Bridgestone/Firestone, Inc., 
205 F.3d 1349
(unpublished table decision), 
1999 WL 1295310
, at *1 (8th Cir. 1999)
(“[W]here an at-will employee . . . retains employment with knowledge of new or
changed conditions, . . . retention of employment constitute[s] acceptance of the offer
of a unilateral contract; by continuing to stay on the job, although free to leave, [the
employee] supplie[s] the necessary consideration for the offer, and agree[s] to be
bound by the Plan’s mandatory arbitration provision.” (internal citation and quotation
omitted)). The 2001 Agreement expressly stated that continued employment with
Yellow would operate as acceptance of the 2001 Agreement. Supra at n.1.
McNamara, in fact, continued to work for Yellow for approximately five years after
receiving the 2001 Agreement. As a result, his continued employment served as
acceptance and consideration.

        Although the South Dakota Supreme Court has not directly addressed this issue,
the parties identify no authority suggesting that it would adopt an opposite position.
It is the well-established law of contracts in several Eighth Circuit states, and we can
discern no likelihood that South Dakota would deviate from this rule. See,
e.g., Johnston v. Panhandle Coop. Ass’n, 
408 N.W.2d 261
, 266 (Neb. 1987) (stating
that continuation of employment by at-will employee following change in conditions
of employment serves as acceptance and consideration); Pine River State Bank v.
Mettille, 
333 N.W.2d 622
, 627 (Minn. 1983) (same). Further, to the extent there
might be any doubt as to the sufficiency of continued employment as consideration
for an arbitration agreement in South Dakota, the parties’ mutual agreement to
relinquish trial rights serves as adequate alternative consideration in this case. See
S.D. Codified Laws § 53-6-1 (“Any benefit . . . agreed to be conferred upon the
promiser . . . or any prejudice . . . agreed to be suffered by such person . . . as an
inducement to the promiser, is a good consideration for a promise.”). Accordingly,
we hold that the 2001 Agreement was a valid contract.



                                         -10-
        McNamara argues that the Policy Guide governs the parties’ relationship and
that it does not rise to the level of an enforceable contract. He also argues that, given
the disclaimers present in the Policy Guide, inclusion of the 2001 Agreement within
the Policy Guide stripped the 2001 Agreement of contractual status. McNamara’s
arguments are unavailing. By its unambiguous language, the Policy Guide was
merely informational and more than adequately disavowed not only any pretension
of serving as a contract but also any claim to alter existing contracts. Because the
Policy Guide was not itself a contract and in no way altered the 2001 Agreement, the
2001 Agreement governed the relationship between McNamara and Yellow at the
time of McNamara’s termination in 2006.

       As to the issue of scope, McNamara does not appear to contend seriously that
the subject matter of the present dispute lies outside the scope of the arbitration
requirements of the 2001 Agreement. The 2001 Agreement expressly encompasses
discrimination, retaliation, and harassment claims and explicitly references federal
civil rights statutes and the FMLA, all of which McNamara relies upon in his
complaint. In addition, we have recognized the permissibility of subjecting
employment-related civil-rights claims to arbitration. See 
Patterson, 113 F.3d at 837
–38 (holding that Title VII claims could be subject to arbitration); see also Gilmer
v. Interstate/Johnson Lane Corp., 
500 U.S. 20
, 35 (1991) (holding that ADEA claims
could be subject to arbitration). Given the strong federal policy favoring arbitration,
we conclude McNamara’s claims fall within the scope of the 2001 Agreement. See
Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 
460 U.S. 1
, 24–25 (1983)
(“[A]ny doubts concerning the scope of arbitrable issues should be resolved in favor
of arbitration . . . .”).

      D.     Waiver

      McNamara argues that by failing to raise the issue of arbitration at an earlier
time, Yellow waived its right to arbitrate the current claims. He also argues that he

                                          -11-
may be prejudiced by Yellow’s purported untimeliness because, although Yellow asks
our court to compel arbitration, Yellow intends to argue to the arbitrators that a
contractual time limit bars arbitration. According to McNamara, Yellow’s dual
arguments may leave him entirely without a forum in which to resolve his claims. For
the reasons set forth by the First Circuit in Marie v. Allied Home Mortgage Corp., 
402 F.3d 1
, 15–16 (1st Cir. 2005), we reject McNamara’s waiver argument. To prevent
the complete loss of a forum, however, we direct the district court on remand to enter
a stay thus retaining jurisdiction to ensure a forum for McNamara’s claims in the
event the arbitrators hold a contractual or procedural limit bars arbitration.
See Howsham v. Dean Witter Reynolds, Inc., 
537 U.S. 79
, 85–86 (2002) (stating that
the issue of whether a time limit in the applicable arbitration rules barred an
arbitration claim was a question to be addressed in the first instance by the arbitrators
rather than the court); see also 9 U.S.C. § 3 (authorizing a stay of proceedings pending
arbitration).

       In Marie, the First Circuit addressed the question of “whether an employer
waives its contractual right to compel arbitration of a Title VII claim by not filing for
arbitration when the employee initiates an EEOC complaint, but instead waiting and
only moving to compel arbitration after the employee later files a civil claim in federal
court.” 
Marie, 402 F.3d at 3
. The court relied primarily upon an efficiency argument
in holding that an employer’s participation in EEOC proceedings without making an
arbitration request did not reflect a desire to waive arbitration rights. 
Id. at 13.
As
support, the court cited EEOC v. Waffle House, Inc., 
534 U.S. 279
(2002), a case
where the Supreme Court held that an “employer cannot stop the EEOC, a third party,
from bringing a public enforcement action against an employer by invoking an
arbitration agreement between the employer and the relevant employee.” 
Marie, 402 F.3d at 15
(describing Waffle House). Marie held that because an employer could not
stop a preliminary EEOC investigation by invoking arbitration, “forcing employers
to bring arbitration during the pendency of EEOC investigations [would be] a waste
of resources . . . and [would be] contrary to the general purposes of the FAA.” 
Id. at -12-
16. The court further concluded that, even after resolution of a preliminary EEOC
investigation in favor of the employer, a failure by the employer to seek arbitration
would not constitute waiver. 
Id. at 17
(“We will not force the employer to make a
wasteful, preemptive decision to arbitrate when it has no idea whether a dispute will
still exist. . . . [I]n general there is no need for the non-complaining party, the
employer, to make a pre-suit demand for arbitration .” (internal quotation omitted)).
This is a sensible outcome given that not every employee will persist in pressing a
claim after adverse resolution of EEOC proceedings.3

       Finally, we do not believe the rationale in Marie that we adopt today precludes
further litigation between the present parties in the event that Yellow might prevail on
its argument in arbitration that McNamara has contractually or procedurally defaulted
on his arbitration claim. That issue is not before us in the present appeal. As
indicated, we recognize that it may arise in the present dispute, however, and as such,
we direct the district court on remand to enter a stay and retain jurisdiction pending
arbitration.

       Accordingly, we reverse the judgment of the district court and remand for
further proceedings consistent with this opinion.
                      ______________________________


      3
        The court in Marie referred to an Eighth Circuit case, National American
Insurance Co. v. TransAmerica Occidental Life Insurance Corp., 
328 F.3d 462
, 466
(8th Cir. 2003), in which we declined to rule on a waiver issue that was related to the
impact of the parties’ participation in an earlier proceeding. 
Marie, 402 F.3d at 12
.
In National American, we deferred to arbitrators to address in the first instance a
question of whether a party had waived its arbitration rights based on its prior
conduct. Nat’l 
Am., 328 F.3d at 466
. Here, although the parties argue the issue of
waiver, neither party suggests that it would be appropriate on the facts of this case to
reserve this question of waiver for the arbitrators to address in the first instance.
Accordingly, we need not address the finer points of when courts are and are not
bound to honor parties’ requests to reserve questions of waiver for resolution by
arbitrators.

                                         -13-

Source:  CourtListener

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