Braxton v. O'Charley's Restaurant Properties, LLC
1 F. Supp. 3d 722
W.D. Ky.2014Background
- Plaintiffs Braxton, Bailey, and Colburn are former hourly employees of O’Charley’s (Hopkinsville, KY) who sued alleging wrongful termination/retaliation after asserting workers’ compensation rights. The case was removed to federal court.
- At hiring, O’Charley’s used an electronic onboarding system and an arbitration agreement requiring employees to arbitrate employment/termination disputes as a condition of employment. New hires clicked an “I Agree” button; the system captured an electronic signature.
- O’Charley’s submitted declarations and computer printouts showing each plaintiff electronically assented and received the employee Handbook, which stated that signing the arbitration agreement was a condition of employment.
- Plaintiffs submitted sworn affidavits denying they signed any arbitration agreement and one additional former employee submitted a similar affidavit. In a surreply plaintiffs later argued they were unaware of the agreement, though their affidavits only deny signing.
- The court was required to decide whether a valid agreement to arbitrate existed and, if so, whether to stay or dismiss the federal action pending arbitration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a valid arbitration agreement exists | Plaintiffs deny they signed or agreed to arbitration; formation is disputed and thus requires a jury | O’Charley’s says plaintiffs assented via electronic onboarding, Handbook notice, and continued employment | Court: Agreement valid and enforceable; plaintiffs’ actions (receipt, review, continued employment) manifested assent even absent a signature |
| Whether a genuine issue of material fact prevents court from deciding arbitrability | Plaintiffs contend unequivocal denials and affidavits create a factual dispute requiring jury resolution | O’Charley’s contends evidence of electronic records and onboarding policy demonstrate assent as a matter of law | Court: Although denials raise an issue, Kentucky law permits assent by conduct; evidence of notice, opportunity to review, and continued employment resolves formation in favor of arbitration |
| Whether the FAA requires a signed writing to be enforceable | Plaintiffs imply signature required to bind them | O’Charley’s relies on FAA and case law that writing—not signature—is required; conduct can suffice | Court: FAA requires a writing but not a signature; state contract principles permit binding by conduct; arbitration enforced |
| Whether the court should stay or dismiss the case pending arbitration | Plaintiffs implicitly prefer litigation continue | O’Charley’s sought dismissal if all claims arbitrable (or compel arbitration if stayed) | Court: All claims are subject to arbitration; consistent with Sixth Circuit practice, the court dismisses the action rather than stay it |
Key Cases Cited
- Preston v. Ferrer, 552 U.S. 346 (2008) (FAA expresses national policy favoring arbitration)
- EEOC v. Waffle House, Inc., 534 U.S. 279 (2002) (arbitration agreements placed on same footing as other contracts)
- Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991) (arbitration of statutory claims enforceable under FAA)
- Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265 (1995) (FAA framework applies in state and federal courts)
- Southland Corp. v. Keating, 465 U.S. 1 (1984) (FAA substantive law applies in state courts)
- Masco Corp. v. Zurich Am. Ins. Co., 382 F.3d 624 (6th Cir. 2004) (court’s limited review to determine arbitrability; two-step inquiry)
- Javitch v. First Union Sec., Inc., 315 F.3d 619 (6th Cir. 2003) (arbitrability inquiry framework)
- Seawright v. Am. Gen. Fin. Servs., Inc., 507 F.3d 967 (6th Cir. 2007) (continued employment can manifest assent to arbitration absent signature)
- Mazera v. Varsity Ford Mgmt. Servs., LLC, 565 F.3d 997 (6th Cir. 2009) (unequivocal denial may create jury question; discussion of affidavits and evidentiary showing)
- Great Earth Cos. v. Simons, 288 F.3d 878 (6th Cir. 2002) (opposing party must show genuine issue of material fact to avoid summary determination on arbitrability)
- Par-Knit Mills, Inc. v. Stockbridge Fabrics Co., 636 F.2d 51 (3d Cir. 1980) (unequivocal denial plus affidavits can require jury determination)
- Choice Hotels Int’l Inc. v. BSR Tropicana Resort, Inc., 252 F.3d 707 (4th Cir. 2001) (district court may dismiss rather than stay when all claims are arbitrable)