Soto-Fonalledas v. Ritz-Carlton San Juan Hotel Spa & Casino
640 F.3d 471
| 1st Cir. | 2011Background
- Soto-Fonalledas and her conjugal partnership filed a federal employment discrimination suit against Ritz-Carlton San Juan in 2009 alleging Title VII, ADA, and Puerto Rico law claims.
- Ritz-Carlton moved to compel arbitration under the FAA, submitting the English and Spanish versions of the arbitration agreement.
- The district court granted arbitration and dismissed the claims without prejudice to filing in Commonwealth courts.
- Soto appealed, challenging the validity of the arbitration agreement rather than its existence.
- The First Circuit affirmed, applying a de novo review and addressing validity of consideration, remedies, notice, and interpretive ambiguities.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of consideration for arbitration | Soto argues no valid consideration existed for the arbitration clause under Puerto Rico law. | The agreement provides bilateral obligations that independently constitute valid consideration. | Valid consideration exists; two bilateral obligations support arbitration. |
| Remedies under Title VII/ADA in arbitration | Arbitration would deprive remedies available under Title VII and the ADA. | Ambiguity in language about remedies should be resolved in arbitration; no bar to arbitration. | Remedies ambiguity is resolvable by arbitration; arbitration does not violate statutory rights at this stage. |
| Adequacy of notice of arbitration clause | Soto had inadequate notice of agreeing to arbitrate statutory claims. | Agreement plainly identifies covered claims and obligates use of the arbitral process. | Notice is adequate; textual language clearly identifies scope and obligation. |
| Who decides issues of enforceability when remedies are ambiguous | Questions of enforceability should be decided by courts due to potential conflicts with statutory rights. | Ambiguities affect contract interpretation, to be resolved by arbitrator in the first instance. | Ambiguities regarding remedies are matters of contract interpretation to be decided by arbitrator; not a question of arbitrability. |
Key Cases Cited
- PacifiCare Health Sys., Inc. v. Book, 538 U.S. 401 (U.S. 2003) (ambiguous remedial terms resolved by arbitrator; not a gateway question)
- Green Tree Fin. Corp. v. Bazzle, 539 U.S. 444 (U.S. 2003) (arbitration issues, including class arbitration, for arbitrator to decide)
- Vimar Seguros y Reaseguros, S.A. v. M/V Sky Reefer, 515 U.S. 528 (U.S. 1995) (arbitration questions must be decided by arbitrator in first instance)
- Dialysis Access Ctr., LLC v. RMS Lifeline, Inc., 638 F.3d 367 (1st Cir. 2011) (burden to show valid agreement to arbitrate; standard continues)
- InterGen N.V. v. Grina, 344 F.3d 134 (1st Cir. 2003) (independent ground for affirmance; arbitrability framework)
- PacifiCare Health Sys., Inc. v. Book, 538 U.S. 401 (U.S. 2003) (remedial limitations may be interpreted to avoid conflicts)
- Anderson v. Comcast Corp., 500 F.3d 66 (1st Cir. 2007) (direct conflicts between damages provisions and statutes not necessarily arbitrability)
- Kristian v. Comcast Corp., 446 F.3d 25 (1st Cir. 2006) (vindication of statutory rights and ambiguity resolved by arbitrator in first instance)
- Sleeper Farms v. Agway, Inc., 506 F.3d 98 (1st Cir. 2007) (arbitration clause validity and enforcement principles)
- Rosenberg v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 170 F.3d 1 (1st Cir. 1999) (education on arbitration and statutory rights interplay)
- Bercovitch v. Baldwin Sch., Inc., 133 F.3d 141 (1st Cir. 1998) (arbitration clauses and statutory rights considerations)
- Awuah v. Coverall N. Am., Inc., 554 F.3d 7 (1st Cir. 2009) (vindication of statutory rights and arbitration)
- Campbell v. Gen. Dynamics Gov't Sys. Corp., 407 F.3d 546 (1st Cir. 2005) (state contract law governs validity of arbitration agreement)