Gibbs v. Cappo Management VII, Inc., d/b/a OBX Chevrolet Buick
2:16-cv-00073
| E.D.N.C. | Apr 28, 2017Background
- Plaintiff Donald R. Gibbs sued Cappo Management (and individual defendants Beakes and Hellman) alleging racial harassment and retaliation under Title VII and § 1981; complaint filed Oct. 12, 2016.
- Defendants moved to dismiss or stay and compel arbitration based on an arbitration provision in Gibbs’s employment application and a separate signed Arbitration Agreement.
- Gibbs conceded he signed the documents but argued they were not true bargained-for agreements (signed after hire, coerced to keep job), were unconscionable, and did not bind Cappo Management or the individual defendants because the agreements named Victory Automotive Group.
- The court treated the Rule 12(b)(6) motion as one for summary judgment because it relied on materials outside the pleadings.
- The court examined FAA requirements, North Carolina contract-law principles (including unconscionability, assent, and consideration), and the arbitration agreements’ text, finding the agreements cover employment disputes and expressly encompass matters affecting interstate commerce.
- The court concluded all four FAA elements were met, compelled arbitration, and dismissed (rather than stayed) the case because all issues were arbitrable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of arbitration agreements | Gibbs: agreements not true bargained-for contracts; signed after hire under coercion to keep job | Defendants: Gibbs signed both application clause and Arbitration Agreement; signature and continued employment constitute assent and consideration | Agreements valid under NC law; no procedural or substantive unconscionability found |
| Scope — whether agreement covers these claims | Gibbs: agreement (or management company named) does not bind Cappo Management or individual defendants | Defendants: agreements refer to "Employer and Employee" and cover any dispute arising from employment | Agreement language covers disputes arising from employment and binds Cappo Management; claims arbitrable |
| FAA applicability / interstate commerce nexus | Gibbs: (did not contest nexus) | Defendants: employment contracts fall within FAA; agreement expressly references interstate commerce | FAA applies; adequate nexus to interstate commerce established |
| Remedy — stay vs. dismissal | Gibbs: sought to proceed in court | Defendants: move to compel arbitration and dismiss | Court compelled arbitration and dismissed the action because all issues were arbitrable |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment standard)
- Anderson v. Liberty Lobby, 477 U.S. 242 (genuine dispute standard for summary judgment)
- Circuit City Stores, Inc. v. Adams, 532 U.S. 105 (employment contracts within scope of FAA)
- American Gen. Life & Accident Ins. Co. v. Wood, 429 F.3d 83 (elements for compelling arbitration)
- Sydnor v. Conseco Fin. Servicing Corp., 252 F.3d 302 (state contract law governs arbitration validity)
- Volt Info. Sciences, Inc. v. Leland Stanford Jr. Univ., 489 U.S. 468 (federal policy favors arbitration; ambiguities resolved for arbitration)
- Tillman v. Commercial Credit Loans, Inc., 655 S.E.2d 362 (N.C. law on procedural and substantive unconscionability)