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Caldwell v. Hydrovac Industrial Services, Inc.

United States District Court, N.D. Mississippi, Aberdeen Division

March 31, 2014

FREDRICK L. CALDWELL, Plaintiff,
v.
HYDROVAC INDUSTRIAL SERVICES, INC., Defendant.

ORDER ON ARBITRATION

SHARION AYCOCK, District Judge.

Plaintiff claims that his termination from employment violated Title VII as well as the Family Medical Leave Act. In response, Defendant asserts that a valid, binding, and enforceable arbitration agreement exists between Caldwell and his employer. Therefore, Defendant seeks to compel arbitration [8] pursuant to that agreement.

Factual and Procedural Background

At the time of his hire at Hydrovac, Plaintiff received an Employee Handbook which stated that "[n]othing contained herein shall create or be construed to create any contractual rights between the Company and any employee." That Handbook further outlined an arbitration provision providing:

By accepting and continuing the employment relationship, the Company and each employee agree that any controversy, dispute or claim between an employee and the Company, except for disputes involving any employee's obligations involving noncompetition, nonsolicitation and disclosure of information belonging to the Company, shall be settled by final and binding arbitration in accordance with the Employment Arbitration Rules of the American Arbitration Association. Employees and the Company both have the right to pursue the same causes of action and obtain the same damages in arbitration that they could pursue in any court. The effect of this policy is that both employees and the Company are waiving their right to file a lawsuit in court against the other party except as set out in this paragraph.

Caldwell admits to signing an Acknowledgment Form that he understood and agreed that "[n]othing contained in Hydro-Vac Industrial Services, Inc.'s Employee Handbook is intended to create nor shall be construed as creating a contract of employment, express or implied, or guarantee of employment for a definite or indefinite term." The Acknowledgement further provided that, "Hydro-Vac Industrial Services, Inc. has the right to clarify, amend and/or supplement the information contained in the Employee Handbook." Plaintiff's signature on that document signified that he had "received a copy of the Hydro-Vac Industrial Services, Inc. Employee Handbook, ... read and understand the information outlined in the handbook, ... asked any questions I may have concerning its contents and [would] comply with all policies and procedures to the best of my ability."

The Handbook was revised during Plaintiff's employment, in January of 2009, but the arbitration provision was not changed. Defendant attached to its motion an Acknowledgement Form for the revision purportedly signed by Plaintiff, but Plaintiff disputes that his signature appears on that page and claims it is a forgery.

Plaintiff filed this federal lawsuit, and Defendant now moves to compel arbitration of Plaintiff's claim.

Arbitration Standard

"When considering a motion to compel arbitration, the court must determine: (1) whether a valid agreement to arbitrate exists between the parties, and (2) whether the dispute at issue falls within the scope of that agreement." Grant v. Houser , 469 F.Appx. 310, 314 (5th Cir. 2012). The first question "is governed by ordinary state-law contract principles, " and "the strong federal policy favoring arbitration does not apply." Klein v. Nabors Drilling USA L.P. , 710 F.3d 234, 236 (5th Cir. 2013) (citations omitted). At step two of the analysis, the Court "appl[ies] the federal policy and resolve[s] ambiguities in favor of arbitration." Id . (citation omitted). If the Court concludes that a valid agreement to arbitrate exists and the subject dispute is within its scope, the Court may consider "whether legal constraints external to the parties' agreement foreclosed the arbitration of those claims." Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc. , 473 U.S. 614, 628, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985).

Discussion and Analysis

Looking to the first step, the Court must determine whether a valid agreement to arbitrate exists between the parties. Plaintiff claims that because the Handbook explicitly disclaimed that document being construed as a contract or creating a contractual relationship between the parties, there was no valid agreement to arbitrate. Further, Plaintiff states that if the provision could be construed as a contract, because the employer could modify the arbitration clause, that promise is illusory.

Arbitration is a contract matter between parties, and a court generally cannot compel a party to arbitrate a dispute unless the parties agreed to arbitrate the dispute in question. VT Halter Marine, Inc. v. Wartsila N. Am., Inc., 511 F.Appx. 358, 360 (5th Cir. 2013) (citing Pennzoil Exploration & Prod. Co. v. Ramco Energy Ltd. , 139 F.3d 1061, 1064 (5th Cir. 1998)): AT&T Techs., Inc. v. Commc'ns Workers , 475 U.S. 643, 648, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986)); Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp. , 559 U.S. 662, 130 S.Ct. 1758, 176 L.Ed.2d 605 (2010) ("We think it is also clear from our precedents and the contractual nature of arbitration that parties may specify with whom they choose to arbitrate their disputes.... Nothing in the FAA authorizes a court to compel arbitration of any issues, or by any parties, that are not already covered in the agreement." (internal quotation marks, citations, and alterations omitted)). Courts are to apply ordinary state-law principles governing the formation of contracts in deciding whether the parties agreed to arbitrate a dispute. See Webb v. Investacorp., Inc. , 89 F.3d 252, 258 (5th Cir. 1996) (citing First Options of Chicago, Inc. v. Kaplan , 514 U.S. 938, 115 S.Ct. 1920, 1924, 131 L.Ed.2d 985 (1995)). Thus, the defendant has the initial burden of proving a valid contract under Mississippi law. Iuka Guar. Bank v. Beard , 658 So.2d 1367, 1371 (Miss. 1995) (holding that the proponent of a contract carries the burden of proving its existence).

Under Mississippi law, a valid contract must have the "mutual assent" of the parties. Byrd v. Simmons , 5 So.3d 384, 388 (Miss. 2009). The Mississippi ...


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