Stoetzer v. Novation IQ, LLC et al, No. 2:2019cv02670 - Document 21 (D. Kan. 2020)
Court Description: MEMORANDUM AND ORDER granting 9 Motion to Compel Arbitration. This case is hereby stayed pending the completion of arbitration. The parties shall file a status report no later than July 31, 2020, informing the court on the status and schedule of the arbitration proceedings. Signed by U.S. District Senior Judge Sam A. Crow on 3/31/20. (msb)
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Stoetzer v. Novation IQ, LLC et al Doc. 21 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF KANSAS JULIE STOETZER, Plaint iff vs. Case No. 19-2670-SAC NOVATION IQ, LLC, et al., Defendant . MEMORANDUM AND ORDER The plaint iff Julie St oet zer (“ St oet zer” ) worked as Vice President of Product Management for t he defendant Novat ion iQ, LLC (“ NiQ” ) from February of 2018 t hrough t he middle of February of 2019. She filed t his lawsuit on Oct ober 30, 2019, alleging claims of sex discriminat ion and ret aliat ion in violat ion of Tit le VII of t he Civil Right s Act of 1964, 42 U.S.C. § 2000e, et seq. ECF# 1. Pursuant t o t he Federal Arbit rat ion Act (“ FAA” ), 9 U.S.C. §§ 1, et seq., NiQ moves t he court for an order compelling t he plaint iff t o arbit rat e all claims in her lawsuit and st aying t he case unt il arbit rat ion is complet ed. ECF# 9. NiQ seeks t o enforce t he arbit rat ion clause found in t heir employment agreement . St oet zer count ers t hat t he employment agreement t o arbit rat e is illusory and unenforceable, in t hat NiQ ret ained “ t he unfet t ered right t o modify” t he t erms of t he arbit rat ion agreement . ECF# 12, p. 7. From it s review of t he governing document s and applicat ion of t he relevant case law from t his dist rict , t he court concludes t he arbit rat ion agreement is not illusory, but valid and enforceable. The defendant ’ s mot ion is grant ed. Dockets.Justia.com St at ement of Fact s When she st art ed working for NiQ, St oet zer signed a seven-page document , ent it led Employment Agreement , on February 21, 2018. ECF# 10-1, pp. 511. The Agreement recit es as t he part ies’ considerat ion t he following: In considerat ion of t he mut ual promises and covenant s set fort h herein, and ot her good and valuable considerat ion, including cont inued employment and access t o Company’ s t rade secret s, confident ial and propriet ary informat ion and Company’ s cust omer goodwill, t he sufficiency of which is hereby acknowledged, Company and Associat e hereby agree as follows . . . . ECF# 10-1, p. 5. Sect ion 8 of t he Agreement set s fort h t he following t erm on arbit rat ion: Subj ect t o Sect ion 8(a), any disput e, cont roversy or claim arising out of or relat ing t o t his Agreement or t he breach hereof or Associat e’ s employment , including, but not limit ed t o, any claims for wrongful t erminat ion or employment discriminat ion, shall be resolved by arbit rat ion in accordance wit h t he rules of t he American Arbit rat ion Associat ion. . . . Associat e and Company agree t hat t he Company is engaged in int erst at e commerce and t his Sect ion 8 is int ended t o comply wit h, and be int erpret ed, pursuant t o t he Federal Arbit rat ion Act . ECF# 10-1, p. 9. This Agreement furt her specifies t hat it is t he only agreement bet ween t he part ies and t hat any changes must be by writ t en agreement : This Agreement may not be amended or modified except by a writ ing execut ed by all of t he part ies heret o. This Agreement const it ut es t he ent ire agreement of t he Company and Associat e relat ing t o t he subj ect mat t er hereof and supersedes any prior oral and writ t en underst andings and agreement s relat ing t o such subj ect mat t er. ECF # 10-1, p. 10. Finally, t he Agreement spells out t hat t he Company handbook or it s ot her pract ices govern on mat t ers not covered by t he Agreement but t hat t he Agreement cont rols in t he event of any conflict : The t erms and condit ions of Associat e’ s employment shall, t o t he ext ent not addressed or described in t his Employment Agreement , be governed by Company’ s Handbook and exist ing pract ices. In t he event of a conflict bet ween 2 t his Employment Agreement and t he Handbook or exist ing pract ices, t he t erms of t his Agreement shall govern. ECF# 10-1, p. 5. On her first day of work, St oet zer also execut ed an Associat e acknowledgement st at ing t hat she had received online access t o a “ Company Associat e Playbook.” ECF# 12-1, p. 1. This writ t en acknowledgement included an employment -at -will provision followed by: I underst and t hat except for employment “ at -will,” t he Company can change st at us or any and all policies or pract ices at any t ime. I also underst and t hat not hing in t he Playbook creat es, or is int ended t o creat e, a promise or represent at ion of cont inued employment . ECF# 12-1, p. 1. St oet zer at t aches t his single-page acknowledgement t o her response and not hing else. Not ably, t he acknowledgement makes no ment ion or reference t o any agreement or requirement for arbit rat ion. The only evidence of record concerning any employment t erm governing arbit rat ion appears in t he writ t en Employment Agreement . Governing Law Enact ed because of “ widespread j udicial host ilit y t o arbit rat ion agreement s,” t he FAA recognizes t hat , “ [a] writ t en provision in any . . . cont ract evidencing a t ransact ion involving commerce t o set t le by arbit rat ion a cont roversy t hereaft er arising out of such cont ract or t ransact ion . . . shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equit y for t he revocat ion of any cont ract .” Belt ran v. AuPairCare, Inc., 907 F.3d 1240, 1250 (10t h Cir. 2018) (quot ing in part 9 U.S.C. § 2). The Act is a “ congressional declarat ion of a liberal federal policy favoring arbit rat ion agreement s.” Moses H. Cone Mem'l Hosp. v. 3 Mercury Const r. Corp., 460 U.S. 1, 24 (1983). Thus, “ quest ions of arbit rabilit y must be addressed wit h a healt hy regard for t he federal policy favoring arbit rat ion.” Id. By operat ion, § 3 of t he FAA “ obliges court s t o st ay lit igat ion on mat t ers t hat t he part ies have agreed t o arbit rat e,” and § 4 “ aut horizes a federal dist rict court t o compel arbit rat ion when it would have j urisdict ion over a suit on t he underlying disput e.” Hill v. Ricoh Americas Corp., 603 F.3d 766, 771 (10t h Cir. 2010) (cit at ion omit t ed). While t he FAA “ preempt [s] st at e laws t hat aim t o channel disput es int o lit igat ion rat her t han arbit rat ion, even under t he FAA it remains a ‘ fundament al principle’ t hat ‘ arbit rat ion is a mat t er of cont ract ,’ not somet hing t o be foist ed on t he part ies at all cost s.” Howard v. Ferrell gas Part ners, L.P., 748 F.3d 975, 977 (10t h Cir. 2014) (quot ing AT & T Mobilit y LLC v. Concepcion, 563 U.S. 333, 338 (2011)). In Belt ran, t he Tent h Circuit laid out t he governing t wo-st ep inquiry: In deciding whet her t o grant a mot ion t o arbit rat e, court s must resolve “ whet her t he part ies are bound by a given arbit rat ion clause” and “ whet her an arbit rat ion clause in a concededly binding cont ract applies t o a part icular t ype of cont roversy.” Id. [Howsam v. Dean Wit t er Reynolds, Inc., 537 U.S. 79 (2002)] at 84. The first inquiry requires a court t o det ermine whet her t he arbit rat ion agreement should “ be declared unenforceable ‘ upon such grounds as exist at law or in equit y for t he revocat ion of any cont ract .’ ” Concepcion, 563 U.S. at 339 (quot ing 9 U.S.C. § 2). “ This saving clause permit s agreement s t o arbit rat e t o be invalidat ed by ‘ generally applicable cont ract defenses, such as fraud, duress, or unconscionabilit y,’ but not by defenses t hat apply only t o arbit rat ion or t hat derive t heir meaning from t he fact t hat an agreement t o arbit rat e is at issue.” Id. (quot ing Doct or’ s Assocs., Inc. v. Casarot t o, 517 U.S. 681, 687 (1996)). The enforceabilit y of t he agreement is a mat t er of st at e law. Id. 907 F.3d at 1250-51. Procedurally, t he court has set out t he following summary t o guide it s decision of such mat t ers: In det ermining whet her a disput e is arbit rable, t he court uses a burden-shift ing framework similar t o t hat used in deciding summary j udgment mot ions. A defendant bears t he init ial burden of showing t hat an arbit rat ion agreement is valid. Smart Text Corp. v. Int erland, Inc ., 296 F.Supp.2d 4 1257, 1262–63 (D.Kan.2003) (cit at ions omit t ed); Phox v. At riums Mgmt . Co., 230 F.Supp.2d 1279, 1282 (D.Kan. 2002). Once t he defendant has met t his burden, t he plaint iff must show t hat a genuine issue of fact remains about t he agreement . Smart Text Corp., 296 F.Supp.2d at 1263; Phox, 230 F.Supp.2d at 1282. “ Just as in summary j udgment proceedings, a part y cannot avoid ... arbit rat ion by generally denying t he fact s upon which t he right t o arbit rat ion rest s....” Tinder v. Pinkert on Sec., 305 F.3d 728, 735 (7t h Cir.2002). Hildebrand v. Par Net work, Inc., 2009 WL 4508578, 1–2 (D.Kan.2009). To demonst rat e a genuine issue of mat erial fact as t o t he making of t he agreement t o arbit rat e, t he fact s “ must be ident ified by reference t o an affidavit , a deposit ion t ranscript , or a specific exhibit incorporat ed t herein.” Adams v. Am. Guar. & Liab. Ins. Co., 233 F.3d 1242, 1246 (10t h Cir.2000). In deciding whet her t he non-movant has ident ified a genuine issue of mat erial fact for t rial, “ t he evidence of t he non-movant is t o be believed and all j ust ifiable inferences are t o be drawn in his favor.” Anderson v. Libert y Lobby, Inc., 477 U.S. 242, 255 (1986). Rangel v. Hallmark Cards, Inc., No. 10-4003-SAC, 2010 WL 781722, at *4 (D. Kan. Mar. 4, 2010). Analysis and Holding There are no mat erial issues of fact over whet her St oet zer ent ered int o t he Employment Agreement and t hereby agreed t o arbit rat e all employment -relat ed claims like t hose at issue in t his lawsuit . On it s face, t he Agreement is plainly support ed by mut ual and valid considerat ion. While she crit icizes t he arbit rat ion provision as “ t remendously vague” and as carving out except ions favorable t o NiQ, St oet zer does not fashion her crit icisms int o a legal argument for t he court ’ s considerat ion. Therefore, t he court concludes t hat St oezt er was a part y t o t he Employment Agreement which has a binding arbit rat ion provision t hat covers all her claims here. St oet zer does cont end, however, t hat t he arbit rat ion agreement is unenforceable as illusory because NiQ in t he Associat e Acknowledgement ret ained t he 5 right t o modify it s “ policies and pract ices” unilat erally. St oet zer believes NiQ’ s ret ained aut horit y t o unilat erally change it s policies ext ends t o t he Employment Agreement and t he arbit rat ion provision. NiQ denies t hat it ret ained any right t o unilat erally modify any provisions in t he Employment Agreement , including t he binding arbit rat ion provision. Inst ead, NiQ explains t he language used by St oet zer applies only t o t he “ policies or pract ices” in t he Playbook and not t o t he binding t erms of t he Employment Agreement . The court has reviewed t he Employment Agreement and agrees wit h NiQ. The Employment Agreement clearly provides it is t he part ies’ exclusive cont ract . The Employment Agreement does not confer or reserve any aut horit y t o NiQ t o change unilat erally any writ t en t erm, including t he binding agreement t o arbit rat e. The t opic of t he Associat e Acknowledgement signed by St oet zer is t he Company Associat e Playbook as a source of NiQ’ s policies and pract ices t o be underst ood as not creat ing “ a promise of represent at ion of cont inued employment .” ECF# 12-1, p. 1. This provision in t he Acknowledgement cannot be reasonably int erpret ed as referring t o or incorporat ing t he Employment Agreement and, specifically, t he part ies’ agreement t o arbit rat e. St oet zer does not submit evidence showing t hat t he Associat e Acknowledgement or t he Playbook even ment ions t he arbit rat ion provisions or procedures in t he Employment Agreement . Finally, t he Employment Agreement plainly st at es t hat it s t erms govern any conf lict wit h t he Company’ s handbook policies and exist ing pract ices. These fact s are uncont est ed as well as t he legal conclusions t hat follow from t hem. 6 Consequent ly, t his case plainly comes wit hin t he holding of Clut t s v. Dillard’ s, Inc., 484 F.Supp.2d 1222, 1226 (D. Kan. 2007). The court is persuaded by Judge Lungst rum’ s sound reasoning and conclusion reached in Clut t s: Plaint iff urges t hat t he agreement t o arbit rat e is also illusory because it allows defendant t o unilat erally modify t he t erms at any t ime. In support of t his argument , plaint iff relies on language not in t he arbit rat ion agreement it self or t he accompanying Rules of Arbit rat ion but in defendant 's employee handbook and an “ associat e cert ificat ion” signed by plaint iff t hat generally reference defendant 's abilit y t o change unilat erally defendant 's rules, policies and benefit s. As highlight ed by defendant , however, neit her t he arbit rat ion agreement nor t he Rules of Arbit rat ion reserves defendant 's right t o modify t he t erms of t he arbit rat ion agreement . Moreover, neit her defendant 's employee handbook nor t he associat e cert ificat ion ment ions t he arbit rat ion agreement in part icular or arbit rat ion procedures in general. In ot her words, t he arbit rat ion agreement and Rules of Arbit rat ion are ent irely separat e and dist inct from t he employee handbook and associat e cert ificat ion. These fact s, t hen, set t his case apart from t hose cases in which court s have arbit rat ion agreement s illusory based on language in an employee handbook. See, e.g. Dumais v. American Golf Corp., 299 F.3d 1216, 1217 (10t h Cir. 2012) (arbit rat ion agreement was illusory where employee handbook, which included arbit rat ion provision, reserved employer’ s right t o modify); Barnes v. Securit as Securit y Sys. USA, Inc., 2006 WL 42233, at *1-2 (D. Kan. Jan. 6, 2006)(same). The court , t hen, rej ect s plaint iff’ s argument t hat defendant may unilat erally modify t he arbit rat ion agreement . See Hil l v. Peoplesof t USA, Inc., 412 F.3d 540, 543-44 (4t h Cir. 2005) (arbit rat ion agreement was separat e and dist inct from ot her document s permit t ing modificat ion where t he agreement was set fort h in a comprehensive six-page document which t he employee signed and agreement , on it s face, unambiguously required bot h part ies t o arbit rat e). Id. at 1226 (foot not e omit t ed); see Whit e v. Four B Corp., No. 11-2416-JWL, 2011 WL 4688843, at *3 (D. Kan. Oct . 5, 2011). In similar fashion, Judge Robinson has held t hat a provision in a handbook giving t he employer aut horit y t o make unilat eral changes was dist inct from an Arbit rat ion Agreement t hat was separat ely signed by t he part ies and did not allow for unilat eral modificat ions: The Court agrees t hat t he Arbit rat ion Agreement is separat e and dist inct from t he Handbook. The Arbit rat ion Agreement does not allow Defendant s t o unilat erally modify or revoke; in fact , t he Arbit rat ion Agreement specifically provides t hat any modificat ion or revocat ion be made in writ ing and signed by 7 bot h part ies. The Arbit rat ion Agreement was signed separat ely and cont ains a merger clause. In signing t he Handbook’ s receipt , Plaint iff acknowledged reading and agreeing t o not only t he Arbit rat ion Agreement , but t he provision wit hin t hat agreement on revocat ion and modificat ion. The Court t herefore finds t hat t he Arbit rat ion Agreement cont rols t hat quest ion and Defendant s may not unilat erally modify or revoke t he Arbit rat ion Agreement . Thus, t he Arbit rat ion Agreement is not illusory. Lockard v. EYM King of Kansas, LLC, No. 17-2181-JAR, 2017 WL 4012203, at *4 (D. Kan. Sep. 12, 2017)(foot not es omit t ed). The holdings in bot h cases are not only persuasive, but t hey are on all fours here. The court finds t hat t he Employment Agreement wit h it s arbit rat ion provision is cont rolling. Because t he Employment Agreement cannot be modified except in writ ing signed by all part ies, because it s t erms govern any conflict wit h any policy or pract ice, and because t he Associat e Acknowledgement does not give NiQ t he unilat eral aut horit y t o modify or revoke t he agreement t o arbit rat e, t he court finds t hat t he arbit rat ion agreement here is not illusory. The court will enforce t he part ies’ agreement t o arbit rat e as writ t en. IT IS THEREFORE ORDERED t hat NiQ’ s mot ion t o st ay t he case and compel arbit rat ion (ECF# 9) is grant ed. This case is hereby st ayed pending t he complet ion of arbit rat ion. The part ies shall file a st at us report no lat er t han July 31, 2020, informing t he court on t he st at us and schedule of t he arbit rat ion proceedings. Dat ed t his 31st day of March, 2020, Topeka, Kansas. s/ Sam A. Crow Sam A. Crow, U.S. Dist rict Senior Judge 8
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