STEPHANIE DAWKINS DAVIS, Magistrate Judge.
Plaintiff Kumiko Morioka filed suit against defendants Nissin Travel and Ichiro Sugimoto in Wayne County Circuit Court on July 3, 2018. (Dkt. 1, Exhibit 1). Defendant Nissin Travel Services (U.S.A.), Inc.
Morioka alleged the following facts in her complaint. She is a former employee of Nissin Travel. (Dkt. 1, ¶ 1). Despite "excellent numbers," Morioka was given negative performance reviews to keep her salary down, and she was belittled in the process. (¶ 7). On June 11, 2018, she underwent her most recent performance review with defendant Sugimoto, a high-ranking executive at Nissin. (¶ 8). In this meeting, Sugimoto berated her causing her to experience heart palpitations and to feel ill. When she said she needed to leave to get some air, Sugimoto stood in front of the door spreading his arms and legs across the door, physically blocking her from leaving and screaming that she could not leave until he was finished with her. (¶¶ 9-11). As a result of this incident, Morioka is on medication and suffers from PTSD-like symptoms. (¶ 12). She contends that Sugimoto was acting on behalf of and in his capacity as an executive for defendant Nissin Travel, and therefore Nissin Travel is responsible for Sugimoto's behavior under the doctrine of respondeat superior. (¶ 13). She alleges false imprisonment, intentional infliction of emotional distress, and assault claims against both defendants. (Counts I, II, and III). She also alleges a negligent hiring and supervision claim against Nissin Travel. (Count IV).
Nissin Travel brings this motion to compel arbitration. (Dkt. 2). Nissin contends that plaintiff is subject to a binding arbitration agreement, the terms of which are contained in its Employee Handbook. Nissin asserts that Morioka was required to agree to mandatory arbitration as a term of her employment (Dkt. 2-2, Pg. ID 44), and that her acquiescence was documented in the form of an acknowledgement that she signed on April 22, 2015. (Dkt. 2-3, Pg. ID 49). Above plaintiff's signature on the acknowledgement page is the following language:
Nissin Travel asserts that the Employee Handbook language relating to arbitration provides that employment-related disputes arising out of or in connection with her employment relationship with the company must be arbitrated. (Dkt. 2, Pg. ID 27).
Morioka counters that the conduct at issue did not arise out of the employment relationship with Nissin Travel, while Nissin Travel argues that the basis of her complaint centers on her employment and the performance review with her supervisor, which is about her employment relationship. Morioka insists that the torts committed by Sugimoto and Nissin Travel do not depend on the employment relationship between the parties, and therefore the dispute does not relate to the employment relationship. (Dkt. 3, at p. 4). She characterizes the suit as one about "basic uncivilized and tortious behavior that does not concern their employment relationship." (Dkt. 3, at p. 5).
Plaintiff also challenges the validity of the agreement that Nissin Travel attached to its brief in support. (Dkt. 2-2, Defendant's Exhibit B). Exhibit B contains four pages of the Employee Handbook which immediately precede the document at Exhibit C, the signed Acknowledgment page. (Dkt. 2, at p. 10). Plaintiff insists that the handbook pages comprising Exhibit B could not have come from the same handbook as the acknowledgement page attached as Exhibit C because the first page of the handbook states that it is current as of May 2, 2015, but plaintiff signed the acknowledgment about 9 days before that date on April 22, 2015. Morioka posits that Nissin Travel has perpetrated a fraud on the court in presenting the handbook pages as the operative agreement.
Nissin Travel takes a broader view of the arbitration agreement. Since the agreement covers "all disputes . . . of any kind whatsoever arising out of or in connection with . . . our employment relationship," plaintiff's tort claims arising out of the performance review with her supervisor is a dispute arising out of or in connection with the employment relationship. (Dkt. 6, at p. 4-5). In response to Morioka's challenge to the validity of Exhibit B, Nissin Travel asserts that the arbitration agreement is valid regardless of the fact that plaintiff signed the agreement in advance of its effective date. (Dkt. 6, at p. 3). Further, Nissin Travel points out that the footer on each page of both Exhibits B and C to its opening brief prove that the acknowledgment page and handbook text pages are the same document: the footer on all the pages states "Nissin Travel Services (U.S.A.), Inc.'s Employee Handbook 2015," with a page range of 44 of 48 to 47 of 48 in Exhibit B, to 48 of 48 in Exhibit C. The footer of the first page of the handbook states the same, except it is page 1 of 48. (Dkt. 6, Ex. 1). Morioka did not offer any other evidence demonstrating that Exhibits B and C are not from the same document.
The Federal Arbitration Act provides that a written agreement to arbitrate disputes arising out of a contract involving interstate commerce "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. A party seeking to enforce an arbitration agreement may request that litigation be stayed until the terms of the arbitration agreement have been fulfilled. Id. § 3. On such application, "[t]he court shall hear the parties, and upon being satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue, the court shall make an order directing the parties to proceed to arbitration in accordance with the terms of the agreement." Id. § 4.
Before compelling arbitration, the Court "must engage in a limited review to determine whether the dispute is arbitrable." Masco Corp. v. Zurich Am. Ins. Co., 382 F.3d 624, 627 (6th Cir. 2004) (quoting Javitch v. First Union Sec., Inc., 315 F.3d 619, 624 (6th Cir. 2003)). Such review requires the Court to determine (1) whether "a valid agreement to arbitrate exists between the parties," and (2) whether "the specific dispute falls within the substantive scope of the agreement." Id. (quoting Javitch, 315 F.3d at 624). With respect to the arbitration agreement's validity, "the party opposing arbitration must show a genuine issue of material fact as to the validity of the agreement to arbitrate." Great Earth Companies, Inc. v. Simons, 288 F.3d 878, 889 (6th Cir. 2002) (internal quotation marks and citations omitted). As to the agreement's scope, "there is a presumption of arbitrability in the sense that an order to arbitrate the particular grievance should not be denied unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute." AT&T Techs., Inc. v. Communications Workers of Am., 475 U.S. 643, 650 (1986) (internal citations and quotation marks omitted). In other words, keeping in mind the "strong federal policy in favor of arbitration . . . any ambiguities in the contract or doubts as to the parties' intentions should be resolved in favor of arbitration," Stout v. J.D. Byrider, 228 F.3d 709, 714 (6th Cir. 2000), especially when the arbitration clause is written broadly to encompass all claims arising under the contract, AT&T Techs., 475 U.S. at 650.
The court must make "a number of threshold determinations before compelling arbitration." Fazio v. Lehman Bros., Inc., 340 F.3d 386, 392 (6th Cir. 2003). Specifically, the court must determine: (1) whether the parties agreed to arbitration; (2) the scope of the agreement to arbitrate; (3) if federal statutory claims are asserted, whether Congress intended those claims to be nonarbitrable;
In the view of the undersigned, as explained below the parties agreed to arbitrate their disputes. As a general rule, the enforceability of an arbitration clause depends on the validity of the contract in which it is contained. Oberhansly v. Ass'n of Better Living & Educ. Int'l, 2017 WL 2115539, at *4 (W.D. Mich. May 16, 2017) (citing High v. Capital Senior Living Properties 2-Heatherwood, Inc., 594 F.Supp.2d 789, 797 (E.D. Mich. 2008)). In Michigan, "the elements of a valid contract are (1) parties competent to enter into a contract; (2) a proper subject matter; (3) legal consideration; (4) mutuality of agreement; and (5) mutuality of obligation." Id. "`In order to form a valid contract, there must be a meeting of the minds on all the material facts.'" Id. (quoting Kamalnath v. Mercy Memorial Hosp. Corp., 194 Mich.App. 543, 548 (1992)). In other words, there must be mutual assent to the material facts. Id. (citing Kamalnath, at 548). The most common assent to a contract is well known: "[g]enerally `one who signs a contract which she has had an opportunity to read and understand is bound by its provisions." Id, at *6 (quoting Morris v. Homeowners Loan Corp., 2007 WL 674770, at *5 (E.D. Mich. Feb. 28, 2007). Thus, "`the failure to read or understand an agreement is not cause for avoiding same.'" Morris, at *5 (quoting Carpenter v. Am. Excelsior Co., 650 F.Supp. 933, 937 (E.D. Mich. 1987)).
In this case, there does not appear to be any dispute that both parties are competent to enter into a contract or that such an agreement between employer and employee is improper. Nor does plaintiff complain about any other particular element of a contract. Plaintiff's continued employment was conditioned on her signing the agreement and both parties were obligated to forego seeking redress in court for any claims in favor of arbitration. Further, Morioka signed the acknowledgment page containing the agreement to arbitrate. (Dkt. 2, Ex. B and C).
Morioka does not contest the fact that the signature is hers. Rather, she challenges the authenticity of the handbook pages that Nissin Travel claims contains the agreement to which she is party.
The scope of the arbitration agreement is quite broad:
(Dkt. 6, Ex. 1).
Whether a claim falls within the scope of an arbitration agreement is a factspecific question.
Fazio v. Lehman Bros., 340 F.3d 386, 395 (6th Cir. 2003). The Court acknowledges the well-established rule that "doubts regarding arbitrability must be resolved in favor of arbitration." Fazio, 340 F.3d at 386 (citing Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983). "If the matter at issue can be construed as within the scope of the arbitration agreement, it should be so construed unless the matter is expressly exempted from arbitration by the contract terms." Simon v. Pfizer, Inc., 398 F.3d 765, 773 n. 12 (6th Cir. 2005) (citations omitted); see also AT & T Techs., Inc. v. Communications Workers of Am., 475 U.S. 643, 650 (1986) (doubts are to be construed in favor of arbitration "unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute.").
Plaintiff's IIED claim is dependent on and connected to the employment relationship: Morioka alleges that Sugimoto's behavior was "done with the intention of inflicting emotional distress on Mrs. Morioka to keep her subordinate and working in subpar conditions after being demeaned." (Dkt. 1, ¶ 21). The same is true for her negligent hiring and supervision claim. She claims specifically that Sugimoto has a long history of abusive treatment of employees which made it reasonably foreseeable that he would engage in assaultive conduct toward employees. Morioka asserts that she was assaulted because Nissin Travel permitted Sugimoto to continue his employment with the company. (Dkt. 1-1, ¶¶ 30-33). These two claims are unambiguously raised in connection with her employment relationship with the defendants, and thus are covered by the arbitration agreement.
Plaintiff's false imprisonment and assault claims are perhaps a marginally closer question but are likewise covered by the agreement. Morioka asserts each claim against both her supervisor Sugimoto and Nissin Travel. She cites cases demonstrating that such causes do not require the existence of an employeremployee relationship, but those references are inapposite. While plaintiff's claims of false imprisonment and assault can be maintained without reference to her employment relationship to the two, the torts occurred at work, during work hours, at a performance review with her supervisor. These factors tend to support Nissin Travel's position.
Courts in this circuit follow the principle that the court must "focus on the factual allegations in the complaint rather than the legal causes of action asserted." Corey v. Allergan, Inc., 2014 WL 4557616 (S.D. Ohio Sept. 12, 2014) (quoting Parsley v. Terminix Int'l Co., L.P., 1998 WL 1572764, at *6 (S.D. Ohio Sept. 15, 1998)). For example, in Brubaker v. Barrett, 801 F.Supp.2d 743 (E.D. Tenn. 2011), the plaintiff sued her employer and her immediate supervisor after she discovered that her supervisor had videotaped her through a peep-hole, undressing in her hotel room during a work-related conference that both were attending out of state. She sued for sexual harassment, intentional and negligent infliction of emotional distress, negligence, constructive discharge, outrageous conduct, invasion of privacy and recklessness. Her employer invoked the arbitration language of its employee handbook which the plaintiff had signed, and moved to have the matter arbitrated. The court found that the arbitration clause, which expressly covered "all employment-related disagreements and problems that concern a right, privilege or interest recognized by applicable law," was broad in scope. Id. at 757. Consequently, the court found that there was a presumption that the plaintiff's claims fell within its scope. Id. (citing United Steelworkers of Am. V. Mead Corp., 21 F.3d. 128, 131 (6th Cir. 1994) ("Moreover, in cases involving broad arbitration clauses the Court has found the presumption of arbitrability `particularly applicable,' and only an express provision excluding a particular grievance from arbitration or `the most forceful evidence of a purpose to exclude the claim from arbitration can prevail.'") (quoting AT&T Techs. v. Comms. Workers of Am., 475 U.S. 643, 650 (1986). Because the agreement explicitly included all employment-related disagreements, employment discrimination, conditions of employment or termination of employment causes, the court easily dispatched the plaintiff's negligent supervision, constructive discharge and sexual harassment claims to arbitration.
Like Morioka, the plaintiff in Brubaker had also claimed several torts against her employer based on her supervisor's actions. Nevertheless, irrespective of labels, the court found that those claims also fell within the scope of the arbitration agreement. Relying on the factually similar case of Forbes v. A.G. Edwards & Sons, Inc., 2009 WL 424146 (S.D.N.Y. Feb. 18, 2009), where the plaintiff's supervisor had physically attacked her in a hotel room after work hours during a work-related conference, the Brubaker court found that the plaintiff's common law tort claims were sufficiently related to her employment to fall within the ambit of the arbitration agreement. The court noted that the conduct at issue involved a co-worker, during a work conference and allegations of a harassing workplace. These circumstances were sufficient to deem the plaintiff's claims to be work-related.
There are circumstances in which tortious action taken during work and perpetrated by a fellow employee may not be considered work related. In Jones v. Halliburton Co., 583 F.3d 228 (5th Cir. 2009), the court held that plaintiff's assault and battery, intentional infliction of emotional distress, and false imprisonment claims were not arbitrable because they did not arise out of the employment relationship. The plaintiff sought damages for being drugged, beaten, and gangraped by co-workers while stationed in Iraq for work. Id. at 231. The court acknowledged that even broad arbitration clauses, such as the clause in Jones' contract, are not boundless, that an arbitrable dispute under a broad arbitration clause has a "significant relationship to the contract." Id. at 235. The court stated that when deciding whether a claim falls within the scope of an arbitration agreement, courts "focus on factual allegations in the complaint rather than the legal causes of action asserted." Id. at 240 (quoting Waste Mgmt., Inc. v. Residuos Industrialses Multiquim, S.A. de C.V., 372 F.3d 339, 344 (5th Cir. 2004). In Jones the allegations in the complaint were as follows: (1) Jones was sexually assaulted by several Halliburton/KBR employees in her bedroom, after-hours, (2) while she was off-duty, (3) following a social gathering outside of her barracks, (4) which was some distance from where she worked, (5) at which social gathering several co-workers had been drinking (which, notably, at the time was only allowed in "non-work" spaces). Id. The court held that the plaintiff's allegations thus did not touch matters related to her employment nor did they have a significant relationship to her employment contract. Id. at 241. In this case, the alleged torts occurred during work hours, at work, during a performance review with her supervisor. On these facts Jones is distinguishable. See Phifer v. Michigan Sporting Goods Distributors, Inc., 2010 WL 3609376, at *7 (W.D. Mich. July 28, 2010).
Thus, while assault and false imprisonment can occur wholly apart from any employment relationship, if the conduct alleged arises from such a relationship it rightly falls into the category of work-related. Similar to the language of the arbitration agreement in Brubaker, Nissin Travel's arbitration provision states that "all [employment related] disputes and controversies of any kind whatsoever arising out of or in connection with (i) our employment relationship," shall be finally and conclusively arbitrated in the city where the employee resides. Morioka's complaint is about her employment relationship: receiving bad performance reviews in the past, the performance review at issue, and Sugimoto's alleged misguided and tortious effort to prevent her from leaving during the review. Indeed, plaintiff's theory of Nissin Travel's liability is premised on the company's decision(s) as an employer to maintain Sugimoto as its employee supervising plaintiff. And the facts surrounding the false imprisonment and assault clams are arguably more compellingly work-related here than those found in Brubaker and Forbes, and largely distinguishable from those alleged in Jones. Sugimoto's actions occurred during work hours, at work, while conducting a work task — Morioka's work performance review. Thus, the factual allegations of the complaint all seem to connect to her employment relationship. As such, the undersigned concludes that all of plaintiff's claims are subject to arbitration. Moreover, in light of the federal policy in favor of arbitration and resolving disputes in favor of arbitration, because it is not wholly clear that the claims are not arbitrable, the Court should compel arbitration.
The undersigned concludes that defendants are entitled to dismissal rather than a stay of this litigation. It is true that where claims are referred to arbitration, the FAA provides for a stay of the court proceedings "until such arbitration has been had in accordance with the terms of the agreement." 9 U.S.C. § 3. However, in cases, such as the present one, where all of a party's claims against these defendants are subject to arbitration, courts may properly dismiss the complaint. See Arnold v. Arnold Corp.-Printed Commc'ns for Bus., 920 F.2d 1269, 1275 (6th Cir. 1990) (holding that it was not "error for the district court to dismiss the complaint" after ordering arbitration); see also Ozormoor v. T-Mobile USA, Inc., 354 Fed. Appx. 972, 975 (6th Cir. 2009) (rejecting the argument that the FAA requires district courts to stay suits pending arbitration rather than dismiss them). Indeed, "[t]he weight of authority clearly supports the dismissal of the case when all of the issues raised in the district court must be submitted to arbitration." Green v. Ameritech Corp., 200 F.3d 967, 973 (6th Cir. 2000) (quoting Alford v. Dean Witter Reynolds, Inc., 975 F.2d 1161, 1164 (5th Cir. 1992)). "Most district courts in this circuit agree that the best procedure for enforcing arbitration agreements is to dismiss the court action without prejudice." Gilchrist v. Inpatient Med. Servs., Inc., 2010 WL 3326742, at *5 (N.D. Ohio Aug. 23, 2010) (quoting Nestle Waters N. Am., Inc. v. Bollman, 2006 WL 3690804, at *6 (W.D. Mich. Dec. 12, 2006), aff'd, 505 F.3d 498 (6th Cir. 2007)); see also McGill v. Meijer, Inc., 2011 WL 1166895, at *4 (W.D. Mich. Mar. 28, 2011) (where arbitration is compelled as to all claims, dismissal for lack of jurisdiction is appropriate, and because this dismissal is not on the merits, it will be without prejudice) (citing Kruse v. AFLAC Int'l, Inc., 458 F.Supp.2d 375, 388 (E.D. Ky. 2006)). Given that all of plaintiff's claims against these defendants are subject to final and binding arbitration, the undersigned recommends that the claims against defendants should be dismissed without prejudice.
For the reasons set forth above, the undersigned
The parties to this action may object to and seek review of this Report and Recommendation, but are required to file any objections within 14 days of service, as provided for in Federal Rule of Civil Procedure 72(b)(2) and Local Rule 72.1(d). Failure to file specific objections constitutes a waiver of any further right of appeal. Thomas v. Arn, 474 U.S. 140 (1985); Howard v. Sec'y of Health and Human Servs., 932 F.2d 505 (6th Cir. 1981). Filing objections that raise some issues but fail to raise others with specificity will not preserve all the objections a party might have to this Report and Recommendation. Willis v. Sec'y of Health and Human Servs., 931 F.2d 390, 401 (6th Cir. 1991); Smith v. Detroit Fed'n of Teachers Local 231, 829 F.2d 1370, 1373 (6th Cir. 1987). Pursuant to Local Rule 72.1(d)(2), any objections must be served on this Magistrate Judge.
Any objections must be labeled as "Objection No. 1," "Objection No. 2," etc. Any objection must recite precisely the provision of this Report and Recommendation to which it pertains. Not later than 14 days after service of an objection, the opposing party may file a concise response proportionate to the objections in length and complexity. Fed.R.Civ.P. 72(b)(2), Local Rule 72.1(d). The response must specifically address each issue raised in the objections, in the same order, and labeled as "Response to Objection No. 1," "Response to Objection No. 2," etc. If the Court determines that any objections are without merit, it may rule without awaiting the response.
