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Gibbs v. Cappo Management VII, Inc.

United States District Court, E.D. North Carolina, Northern Division

April 28, 2017

DONALD R. GIBBS, Plaintiff,



         This cause comes before the Court on defendant' motion to dismiss, or, in the alternative, to stay and compel arbitration. [DE 16]. The matter is fully briefed and ripe for disposition. A hearing was held before the undersigned on March 21, 2017, in Raleigh, North Carolina. For the following reasons, defendant's motion is granted and the case is dismissed.


         Plaintiff filed his complaint on October 12, 2016, alleging claims of harassment and retaliation under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e, etseq., against defendant Cappo Management, and claims of harassment and retaliation under 42 U.S.C. § 1981 against all defendants. [DE 1]. Plaintiff alleges that he was subjected to multiple instances of racial name calling and slurs on a near daily basis during his employment with defendant Cappo Management. Id. Plaintiff alleges that management was notified, did nothing to stop the harassment, and then fired him because of his complaints. Id.

         Pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure and the Federal Arbitration Act, 9 U.S.C. §§ 1-6 ("FAA"), defendants filed a motion to dismiss, requesting from this Court an order compelling arbitration on plaintiffs claims and dismissing plaintiffs complaint. Plaintiffs application for employment with defendant contained a mandatory arbitration clause, and plaintiff also signed a separate Arbitration Agreement after beginning employment which made arbitration mandatory in lieu of suit in court. Id. Defendants argue, therefore, that all of the issues in a lawsuit are subject to a mandatory arbitration agreement and that arbitration of all claims in the complaint should be compelled by the Court. [DE 16].

         In response, plaintiff does not dispute that he signed these agreements, but argues the arbitration agreement is not a true bargained-for agreement because he signed it more than a month after beginning work and had no choice but to sign it in order to keep his job. [DE 24]. Plaintiff also argues that the arbitration agreement should does not pertain to this suit because the agreement was between plaintiff and Victory Automotive Group, Inc. Id. Victory is a management company, but according to plaintiff is not in a subsidiary, parent, or closely related corporation with defendant Cappo Management. Therefore, since it is not a signatory on the arbitration agreement, plaintiff argues that Cappo Management should not benefit from the agreement between Victory and plaintiff. Id. In addition, plaintiff argues that defendants Tony Beakes and Marc Hellman are not parties to the agreement and so cannot be covered by the arbitration clause. Id. Finally, plaintiff argues that the Arbitration Agreement is unconscionable because defendants never provided plaintiff a copy of the arbitration agreement before he was required to sign, because the arbitration agreement was contained on an entirely separate page, and because there was no reference or verbal discussion of the arbitration agreement. Id.


         Defendants brought this motion to dismiss under Rule 12(b)(6). However, both parties agree that the motion can be resolved under the standards governing a motion to dismiss as well as under a motion for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. Accordingly, and because defendant's motion relies on matters outside of the pleadings, the Court will treat this motion as one for summary judgment. Fed.R.Civ.P. 12(d).

         A court may grant summary judgment only if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317 (1986). The court must determine "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 411 U.S. 242, 251-52 (1986). The moving party bears the initial burden to show the court that there is an absence of a genuine issue concerning any material fact and that the non-moving party cannot prevail. See Celotex, 411 U.S. at 325. In order to survive the motion, the non-moving party must then show that there is "evidence from which a jury might return a verdict in his favor." Anderson, 477 U.S. at 257. The court must accept all of the non-moving party's evidence as true and must view all inferences drawn from the underlying facts in the light most favorable to the non-moving party. See Id. at 255.

         The Federal Arbitration Act ("FAA"), 9 U.S.C. § 1 et seq., governs the resolution of private disputes through arbitration. Section 2 of the FAA provides that a "written provision in any ... contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract... shall be valid, irrevocable, and enforceable ...."9 U.S.C. §2.

Under Section 3 of the FAA,
If any suit or proceeding be brought in any of the courts of the United States upon any issue referable to arbitration under an agreement in writing for such arbitration, the court in which such suit is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration.

9 U.S.C. § 3. Therefore, under the FAA, a lawsuit must yield to arbitration where there is (1) a dispute between the parties; (2) a written agreement that includes an arbitration provision purporting to cover the dispute; (3) a relationship between the transaction and interstate commerce; and (4) a failure of the parties to arbitrate the dispute. See American Gen. Life & Accident Ins. Co. v. Wood, 429 F.3d 83, 87 (4th Cir. 2005). Whether a valid agreement to arbitrate a dispute exists is governed by state law contract principles. Adkins v. Labor Ready, Inc., 303 F.3d 496, 500 (4th Cir. 2002). However, "due regard must be given to the federal policy favoring arbitration, and ambiguities as to the scope of the arbitration clause itself resolved in favor of arbitration." Volt Info. Sciences, Inc. v. Leland Stanford Jr. Univ., 489 U.S. 468, 475-76(1989).

         The first element of the four-part test is met, as evidenced by the current lawsuit. The Court also finds that the second element is met because plaintiff signed two valid agreements to arbitrate this dispute. When plaintiff applied to work for defendant Cappo Management, he submitted an ...

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