Quilloin v. Tenet HealthSystem Philadelphia, Inc.
673 F.3d 221
| 3rd Cir. | 2012Background
- Quilloin, a registered nurse at Hahnemann University Hospital (Tenet-owned), signed an Employee Acknowledgment admitting receipt of the FTP and agreeing to arbitration.
- The FTP outlined the grievance steps, final and binding arbitration, and a one-year (or statute-based) limitations period for arbitration requests.
- Tenet moved to compel arbitration; the District Court denied, finding genuine disputes of material fact about enforceability.
- Quilloin challenged the arbitration agreement as unconscionable, arguing issues like attorneys’ fees, class-action waiver, and potential “run out the clock” on limitations.
- The District Court sua sponte considered potential substantive unconscionability bases (fees, class waiver, timing) and found genuine disputes of material fact.
- Tenet appealed under the FAA, arguing the court should compel arbitration regardless of unresolved factual disputes; the Third Circuit reviews de novo with a summary-judgment standard.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the arbitration issue is arbitrability and can be reviewed at all. | Quilloin argues the challenged provision is unconscionable. | Tenet argues arbitrability questions are for the court when the contract contains an arbitration clause. | Yes; arbitrability is a judicial question, but the court should decide the unconscionability of the agreement to arbitrate. |
| Whether the FAA preempts Pennsylvania law on class-action waivers. | Quilloin relies on state law to render class-waivers unconscionable. | Tenet contends FAA preempts state rules obstructing arbitration. | Preemption applies; Pennsylvania law precluding class-action waivers in arbitration is preempted by the FAA (Concepcion, Litman). |
| Whether the agreement is substantively unconscionable due to attorneys’ fees. | Ambiguity whether fees can be awarded; could deny fees or restrict remedy. | Ambiguity should be resolved by arbitrator; not a separate impediment to arbitration. | Ambiguity must be resolved by arbitrator; court should compel arbitration. Substantive unconscionability not shown. |
| Whether the agreement is substantively unconscionable due to running out the clock on limitations. | Procedural timing could allow delaying the claim; unconscionable. | There were reasonable time guidelines; tolling does not render the contract unconscionable. | No genuine dispute; time guidelines are not clearly unreasonable or unduly favorable to Tenet. |
| Whether the agreement is procedurally unconscionable due to lack of meaningful choice. | Employer took advantage of power; form contract; lack of informed consent. | Quilloin had bargaining power; signed previously; not coerced; meaningful choice existed. | Quilloin did not lack a meaningful choice; no procedural unconscionability shown. |
Key Cases Cited
- Sandvik AB v. Advent Intl. Corp., 220 F.3d 99 (3d Cir. 2000) (appellate review of denial to compel arbitration under FAA §16)
- Puleo v. Chase Bank USA, N.A., 605 F.3d 172 (3d Cir. 2010) (plenary review of validity and enforceability of arbitration agreements)
- Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 83 (U.S. 2002) (presumption of judicial determination of arbitrability)
- First Options of Chi., Inc. v. Kaplan, 514 U.S. 938 (U.S. 1995) (contractual delegation and arbitrability standard)
- Rent-A-Center v. Jackson, 130 S. Ct. 2772 (2010) (delegation clause and severability; arbitrability questions may be for arbitrator)
- PacifiCare Health Sys. v. Book, 538 U.S. 401 (U.S. 2003) (resolve ambiguities about enforceability by compelling arbitration)
- Concepcion v. AT&T Mobility LLC, 563 U.S. 333 (U.S. 2011) (FAA preempts state laws that impede arbitration, including class-waiver regimes)
- Litman v. Cellco P'ship, 655 F.3d 225 (3d Cir. 2011) (state law preemption of class-arbitration prohibitions under FAA)
- Alexander v. Anthony Intern., L.P., 341 F.3d 256 (3d Cir. 2003) (procedural unconscionability in employment arbitration contexts)
- Nino v. Jewelry Exch., Inc., 609 F.3d 191 (3d Cir. 2010) (unconscionability linked to bargaining power and time limits)
- Great Western Mortg. Corp. v. Peacock, 110 F.3d 222 (3d Cir. 1997) (procedural unconscionability in employment arbitration; differing bargaining power)