DIANE K. VESCOVO, Chief Magistrate Judge.
Before the court is the April 25, 2018 motion of the defendant, American Home Shield Corporation ("AHS"), to compel arbitration and dismiss the complaint, or in the alternative, to stay this litigation pending arbitration. (Mot. to Compel Arbitration, ECF No. 34.) In support of its motion, AHS filed a memorandum of facts and law, and a declaration of Kelley Bryant. (Mem., ECF No. 34-1; Bryant Decl., ECF No. 34-2.) The plaintiff, Tenika Fondren ("Fondren"), proceeding pro se, filed a "Motion to Deny Defendant's Motion to Compel Arbitration And to Dismiss Complaint" on April 30, 2018, which is in essence a response to AHS's motion to compel, and the court will treat it as such. (Pl.'s Resp., ECF No. 35.) AHS then filed a reply in support of its motion to compel arbitration on May 14, 2018. (AHS Reply, ECF No. 36.) Fondren filed a sur-reply to the AHS reply on May 21, 2018, which will be disregarded. (Fondren Sur-reply, ECF No. 37.)
On July 21, 2017, Fondren filed a pro se complaint against AHS alleging employment discrimination in violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq. ("Title VII"). (Compl., ECF No. 1.) Fondren filed a motion for leave to proceed in forma pauperis along with her complaint, (ECF No. 2), which the court denied on July 24, 2017. (ECF No. 7.) Fondren then paid the filing fee. (ECF No. 8.) Fondren initially served AHS on August 11, 2017, via a certified process server. (See Proof Service 2-3, ECF No. 10.) After the time for AHS to answer had expired, Fondren filed a motion for entry of default, (ECF No. 14), which the Clerk entered on October 2, 2017, (ECF No. 15). Subsequently, both parties filed various responses and motions regarding the Clerk's entry of default, which the court treated as a motion by AHS to set aside entry of default and responses by each side to such motion. (See Order Granting Def.'s Mot. Set Aside Entry Default 2, ECF No. 21.) The court granted AHS's motion to set aside the entry of default on October 25, 2017, and gave Fondren an additional 30 days to re-serve AHS. (Id. at 6, 8.) The district judge affirmed the order setting aside entry of default on November 22, 2017, (ECF No. 25), and Fondren filed proof of re-service on December 20, 2017, (Proof Service, ECF No. 27). On January 10, 2018, AHS filed a motion to dismiss or, in the alternative, for a more definite statement. (ECF No. 28.) On April 4, 2018 the district judge adopted the report and recommendation denying AHS's motion to dismiss or, in the alternative, for a more definite statement. (ECF No. 32.) On April 25, 2018 AHS filed the motion to compel arbitration and dismiss the complaint, or in the alternative, to stay this litigation pending arbitration, which is currently before the court. (Mot. to Compel Arbitration, ECF No. 34.)
In support of its motion to compel arbitration, AHS asserts that on November 29, 2011, Fondren electronically signed her acknowledgement of receipt of the mandatory alternative dispute resolution program known as the ServiceMaster We Listen Dispute Resolution Plan ("We Listen Plan"). (Mem. 1-2, ECF No. 34-1.)
Fondren does not dispute that she electronically signed acknowledgement of the current We Listen Plan on November 29, 2011, or that the We Listen Plan covers her claims. (Pl.'s Resp. 1, ECF No. 35.) Instead, Fondren argues that she tried to initiate the We Listen Plan but AHS did not allow her to proceed with the dispute resolution plan that AHS now seeks to enforce. (Id.) In its reply, AHS contends that any questions about whether or not Fondren previously demanded arbitration or whether she can assert any defense based on inaction by AHS are properly resolved by the arbitrator and not the court. (AHS Reply 2, ECF No. 36.)
In ruling on a motion to compel arbitration, the court must first determine whether a valid agreement to arbitrate exists. Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 403-04 (1967). Pursuant to the Federal Arbitration Act ("FAA"), 9 U.S.C. §§ 1-307, federal law applies to a written provision in a contract "evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract." 9 U.S.C. § 2. Thus, the FAA governs any agreement to arbitrate contained in a contract relating to interstate commerce. The term "commerce" for purposes of § 2 of the FAA means "commerce among the several states or with foreign nations." Id. § 1. Congress intended this section to apply to all contracts within its power to regulate commerce under Art. 1 § 8, cl. 3 of the Constitution. See Am. Airlines, Inc. v. Louisville & Jefferson Cty. Air Bd., 269 F.2d 811, 815-16 (6th Cir. 1959); Tenney Eng'g Inc. v. United Elec. Radio & Mach. Workers of Am., 207 F.2d 450, 453 (3d Cir. 1953). Specifically excluded are 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 held that this exception "exempts from the FAA only contracts of employment of transportation workers" and not all employment contracts. Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 119 (2001).
In the present case, the parties do not dispute that AHS is engaged in interstate commerce. Because Fondren is not engaged in the movement of goods as seamen or railroad workers are, the employment contract at issue here is not excluded from the FAA.
The FAA preempts state law on the issue of arbitrability in dealing with those contracts falling under the FAA. See Southland Corp. v. Keating, 465 U.S. 1, 10 (1984); Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983). In Moses H. Cone, the Supreme Court, affirming a Fourth Circuit judgment enforcing an arbitration clause, stated that the federal act governed the issue of arbitrability of the dispute between parties:
Id. at 24-25.
"Section 4 of the [FAA] sets forth the procedure to be followed by a district court when presented with a motion to compel arbitration." Winn v. Tenet Healthcare Corp., No. 2:10-cv-02140-JPM-cgc, 2011 WL 294407, at *1 (W.D. Tenn. Jan. 27, 2011)(citing 9 U.S.C. § 4 & Great Earth Cos., Inc. v. Simons, 288 F.3d 878, 889 (6th Cir. 2002)). In relevant part, § 4 provides as follows:
9 U.S.C. § 4.
When considering a motion to compel arbitration, the district court has four tasks:
Sellers v. Macy's Retail Holdings, Inc., No. 2:12-CV-02496-SHL, 2014 WL 2826119, at *6 (W.D. Tenn. June 23, 2014)(citations omitted).
In determining whether the parties agreed to arbitrate, ordinary state law principles governing contract formation apply. First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 944 (1995); Seawright v. Am. Gen. Fin. Servs., Inc., 507 F.3d 967, 974 (6th Cir. 2007). While "§ 2 of the Act preempts state statutory and case law that treats arbitration agreements differently from any other contract," it also "preserves general principles of state contract law as rules of decision on whether the parties have entered into an agreement to arbitrate." Cook Chocolate Co. v. Salomon, Inc., 684 F.Supp. 1177, 1182 (S.D.N.Y. 1988). The We Listen Plain contains a Tennessee choice of law provision. (Bryant Decl. 10, Ex. 2, ECF No. 34-2.) Thus, the court must apply Tennessee law to determine if a valid, enforceable contract exists.
Under Tennessee law, a contract is enforceable if there was mutual assent between the parties and sufficient consideration to support the arbitration agreement. Brubaker v. Barrett, 801 F.Supp.2d 743, 751 (E.D. Tenn. 2011). A signature on an arbitration agreement evidences assent. Id. at 756-57. Further, under Tennessee law, employment constitutes sufficient consideration to support an arbitration agreement. See Fisher v. GE Med. Sys., 276 F.Supp.2d 891, 894-95 (M.D. Tenn. 2003).
AHS has filed the declaration of Kelley Bryant, Learning Management System Administrator for The ServiceMaster Company, who states that Fondren electronically signed acknowledgement of her receipt of the We Listen Plan pursuant to which she agreed to participate in and be bound by the terms of The We Listen Plan. (Bryant Decl. 2, ECF No. 34-2.) Fondren does not deny signing the agreement, (Pl.'s Resp. 1, ECF No. 35); thus, there is mutual assent. In addition, Fondren's continued employment after signing the We Listen Plan constitutes sufficient consideration. Fisher, 276 F. Supp. 2d at 895. Accordingly, the court finds that there is a binding agreement to arbitrate.
Next, the court considers whether all of Fondren's claims in this lawsuit are covered by the arbitration agreement. The scope of the We Listen Plan is broad. It applies to any claims alleging a violation of law arising from the employment relationship, along with specifically mentioning discrimination and retaliation claims. (Bryant Decl. 8, ECF No. 34-2.) Fondren's complaint alleges Title VII discrimination and retaliation claims which relate to her employment with AHS. (Compl., ECF No. 1.) Thus, all of her claims in this lawsuit are covered and arbitrable. Furthermore, the Sixth Circuit law is clear that Title VII claims and retaliation claims are subject to arbitration. See EEOC v. Frank's Nursery & Crafts, Inc., 177 F.3d 448, 462 (6th Cir. 1999)(recognizing plaintiff in employment discrimination case waives her right to pursue a private cause of action by agreeing to arbitrate); Willis v. Dean Witter Reynolds, Inc., 948 F.2d 305, 310 (6th Cir. 1991)(holding that claims arising under Title VII are subject to arbitration); Terry v. Labor Ready, Inc., No. 02-1034, 2002 WL 1477213, at *3 (W.D. Tenn. July 2, 2002)(compelling arbitration in Title VII case).
In her response to the motion to compel arbitration, Fondren challenges the enforceability of the agreement to arbitrate based on the alleged inaction by AHS when she allegedly attempted to initiate the dispute resolution procedures under the We Listen Plan. She argues that AHS's "failure to co-operate and fully abide by the contract should void the [We Listen Plan]." (Pl.'s Resp. 3, ECF No. 35.) The We Listen Plan contains the following delegation clause:
(Bryant Decl. 11, Ex. 2, ECF No. 34-2.) In Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63 (2010), the Supreme Court held that a nearly identical delegation clause in an arbitration agreement grants the arbitrator exclusive jurisdiction to resolve issues of enforceability of a binding arbitration agreement. Thus, whether Fondren previously invoked the We Listen Plan dispute resolution procedures and whether any alleged inaction by AHS precludes arbitration are issues properly resolved by the arbitrator not the court.
Because there is a binding agreement to arbitrate governed by the FAA and AHS is entitled to an order compelling arbitration, the court must determine whether to stay or dismiss this lawsuit pending arbitration. "The weight of authority clearly supports 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)); Sellers, 2014 WL 2826119, at *10-11 (granting motion to compel arbitration and dismissing case without prejudice). As discussed supra, all claims in this lawsuit are subject to arbitration; thus, this case should be dismissed without prejudice.
Although the sur-reply filed by Fondren on May 21, 2018, will be disregarded, the court will nonetheless consider the issue of whether the participation of AHS in the civil action has waived its right to arbitration. A party may waive its right to arbitrate by "engaging in two courses of conduct: (1) taking actions that are completely inconsistent with any reliance on an arbitration agreement; and (2) delaying its assertion to such an extent that the opposing party incurs actual prejudice." Aqualucid Consultants, Inc. v. Zeta Corp., 721 F. App'x 414, 418 (6th Cir. 2017)(internal quotations omitted)(citing Hurley v. Deutsche Bank Trust Co., 610 F.3d 334, 338 (6th Cir. 2010)); O.J. Distrib., Inc. v. Hornell Brewing Co., 340 F.3d 345, 355 (6th Cir. 2003). Both inconsistency and actual prejudice must be found to establish waiver. Shy v. Navistar Int'l Corp., 781 F.3d 820, 828 (6th Cir. 2015). "[B]ecause of the strong presumption in favor of arbitration, waiver of the right to arbitration is not to be lightly inferred." Johnson Assocs. Corp. v. HL Operating Corp., 680 F.3d 713, 717 (6th Cir. 2012)(quoting Glazer v. Lehman Bros., Inc., 394 F.3d 444, 450 (6th Cir. 2005)).
The court first addresses whether AHS took actions that are completely inconsistent with reliance on the arbitration agreement set forth in the We Listen Plan. Before filing the current motion to compel arbitration and to dismiss the complaint, AHS previously filed a motion to dismiss Fondren's complaint or in the alternative for a more definite statement. (ECF No. 28.) The motion to dismiss was based in part on addressing what AHS believed was insufficient service of process, and in part on a request by AHS for the court to dismiss the complaint for failure to state a claim or order Fondren to submit a more definite complaint. (Mem., ECF No. 28-1.) The motion to dismiss or in the alternative for a more definite statement was denied by the court, in favor of Fondren. (ECF No. 32.) All of the previous actions taken in this case related to service of process, including a default judgment that was later set aside due to insufficient service of process. (ECF No. 25.) Considering all of the collective actions taken by AHS, they are not completely inconsistent with any reliance on an arbitration agreement, and are therefore insufficient to waive the right to arbitration.
The court must also address whether AHS delayed its assertion of the arbitration defense to such an extent that Fondren incurred actual prejudice. "There are many ways to establish prejudice, such as showing that a party waited until a statute of limitations expired to invoke arbitration, or showing harm to a party due to lengthy delays and costly discovery." Aqualucid, 721 F. App'x at 418 (citing O.J. Distrib., Inc., 340 F.3d at 358). "Without discovery or any significant advancement in the litigation, Plaintiffs likely wasted relatively few resources on unnecessary litigation due to Defendants' delay." Id. at 418 (quoting Shy, 781 F.3d at 830). Although there was some delay in this case before AHS asserted its arbitration defense, much of the delay was related to service of process disputes. There has been no discovery or other significant advancement in the litigation. Additionally, the previous motion to dismiss filed by AHS was denied by the court, resulting in no prejudice to Fondren. There is no evidence that Fondren has incurred actual prejudice as a result of a delayed assertion by AHS of the right to arbitration.
Because AHS did not take actions that are completely inconsistent with any reliance on the arbitration agreement, or delay its assertion of the arbitration defense to such an extent that Fondren incurred actual prejudice, AHS did not waive its right to arbitration.
For the reasons stated above, the court finds that a valid arbitration agreement exists between Fondren and AHS, that the current dispute between the parties falls within the scope of that agreement, that Congress has not excluded any of Fondren's federal claims from arbitration, that the arbitrator and not the court should properly resolve whether Fondren can assert any defense based on inaction by AHS, and that AHS did not waive its right to arbitration. Accordingly, it is recommended that AHS's motion to compel arbitration be granted, that Fondren be required to submit her claims against AHS to the We Listen Plan, and that Fondren's lawsuit be dismissed without prejudice.
