BHC PINNACLE POINTE HOSPITAL, LLC v. DEBRA NELSON AND HENRY ANDERSON, JR., INDIVIDUALLY, AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED
No. CV-19-151
Supreme Court of Arkansas
February 20, 2020
2020 Ark. 70
KAREN R. BAKER, Associate Justice
APPEAL FROM THE PULASKI COUNTY CIRCUIT COURT [NO. 60CV-18-7000]. HONORABLE TIMOTHY DAVIS FOX, JUDGE. REVERSED AND REMANDED.
Susаn P. Williams I attest to the accuracy and integrity of this document 2021.07.01 13:52:39-05‘00’ 11.0.0
In this interlocutory appeal, appellant BHC Pinnacle Pointe Hospital, LLC (“Pinnacle Pointe“), appeals the Pulaski County Circuit Court‘s order denying its motion to compel arbitration of a class-action complaint filed by appellees Debra Nelson and Henry Anderson, Jr., individually and on behalf of all others similarly situated (collectively “employees“). On appeal, Pinnacle Pointe argues that the circuit court erred in denying its motion to compel arbitration. We reverse and remand.
On October 8, 2018, the employees filed a class-action complaint against Pinnacle Pointe for its violations of the
On November 13, 2018, Pinnacle Pointe filed its motion to dismiss the complaint and compel arbitration or, in the alternative, to stay litigation and discovery pending arbitration. Pinnacle Pointe explained that it routinely executes voluntary arbitration agreements, called Alternative Resolution for Conflicts (“ARC“) Agreements with its employees. The ARC Agreements are governed by the
With regard to the ARC Program, Pinnacle Pointe attached as an exhibit an affidavit of Bill Lightfoot, the assistant vice president of Clinical Training and Education for the Behavioral Health Division of UHS of Delaware, Inc. Mr. Lightfoot stated that the ARC Program provides a comprehensive mechanism for resolving disputes in “Tiers.” The ARC Summary set forth the ARC Tiers as follows:
Tier 1
In the first of three Tiers, you will continue to bring any workplace concerns directly to us by following the procedures in the Dispute Resolution Policy-Problem Solving Procedure as outlined in your Employee Handbook. This is considered Tier 1, and most concerns will be resolved at this level.Tier 2
If Tier 1 doesn‘t result in a resolution, you may choose to proceed to Tier 2: Mediation. Mediation is a voluntary process where procedures and conversations are facilitated by a neutral third party whose purpose is to help you and your employer reach an agreeable resolution. There are guidelines to help begin the process online at the American Arbitration Association website: www.adr.org.Tier 3
If a solution to your concerns is not resolved at Tier 2, then you can proceed with Tier 3, Arbitration. Arbitration is a hearing and an alternative to court. Arbitration is overseen by an arbitrator who is a professional, independent, and impartial third party who listens to both sides, reviews evidence, and renders a final, binding decision.
In short, Tier 1 provides you with an opportunity to directly resolve concerns with your employer. If necessary, Tier 2 provides an opportunity for both parties to tell their stories with a listener who provides an objective view of the grievance and offers options to resolve the dispute. Finally, Tier 3 provides both parties with a neutral decision maker who is empowered to end the dispute.
Mr. Lightfoot explained that the employees receive education through HealthStream, an online-learning management system. The employees review and electronically acknowledge the ARC Program and the ARC Agreement by participating in an online learning activity called the ARC Course. The ARC Course requires the employees to complete four distinct steps: (1) open and review the ARC Summary, (2) open and review the ARC Agreement, (3) open and review the ARC Acknowledgment
Anderson‘s November 30, 2013 certificate of completion reflected that he completed the ARC Course and received a score of “100%.” The ARC Agreement reviewed by Anderson provided in pertinent part:
This Agreement is governed by the
Federal Arbitration Act, 9 U.S.C. § 1 et seq. and evidences a transaction involving commerce. This Agreement applies to any dispute arising out of or related to Employee‘s employment with Company or one of its affiliates, subsidiaries or parent companies (“Company“) or termination of employment and survives after the employment relationship terminates. Nothing contained in this Agreement shall be construed to prevent or excuse Employee from utilizing the Company‘s existing internal procedures for resolution of complaints, and this Agreement is not intended to be a substitute for the utilization of such procedures.. . . .
Except as it otherwise provides, this Agreement also applies, without limitation, to disputes regarding the employment relationship, compensation, breaks and rest periods[.]
Pinnacle Pointe also attached the affidavit of its human resources director, James Howe. Mr. Howe explained that the ARC Program can be completed online through HealthStream or reviewed in paper format. Any ARC documents that are submitted in paper format are maintained as part оf the employee‘s personnel file. Mr. Howe stated that Nelson signed her ARC Acknowledgment Form and ARC Agreement on August 29, 2017.1 Mr. Howe stated that neither Nelson nor Anderson submitted the ARC Opt Out Form. Further, Pinnacle Pointe asserted that Nelson and Anderson intended to be bound by the arbitration agreements pursuant to the FAA because they did not submit Opt Out Forms; they voluntarily entered into valid arbitration agreements; and the employees’ claims are within the scope of the arbitration agreement.
On December 10, 2018, Pinnacle Pointe filed its reply to the employees’ response. Pinnacle Pointe argued that the employees’ interpretation of Tilley was overbroad. Pinnacle Pointe contended that the ARC dispute-resolution steps do not violate the AMWA and therefore do not void the arbitration agreements. Pinnacle Pointe acknowledged that it inadvertently failed to attach copies of Nelson‘s ARC Acknowledgment Form and ARC Agreement and therefore attached a copy of both as exhibits. Nеlson‘s ARC Agreement is similar to Anderson‘s ARC Agreement (1) it is governed by the FAA; (2) it applies to any dispute arising out of or related to employee‘s employment with Company or termination of employment and survives after the employment relationship terminates; (3) it is not to be construed to prevent or excuse the employee from utilizing the Company‘s existing internal procedures for resolution of complaints; and (4) it is not intended to be a substitute for the utilization of such procedures. Likewise, Nelson‘s ARC Agreement applies to disputes regarding the employment relationship, compensation, and breaks and rest periods.
Additionally, Pinnacle Pointe attached a second affidavit of James Howe in which he stated that as part of his duties, he assists with maintaining the employee handbook and is involved in addressing issues that employees bring forward pursuant to the voluntary Dispute Resolution Procedure; he also stated that employees are not required to submit a dispute directly to the facility as a prerequisite to arbitration under the ARC Agreement. A copy of the dispute resolution procedure found in the employee handbook was also attached.
On December 17, 2018, the employees filed their sur-reply in opposition to Pinnacle Pointe‘s motion to dismiss complaint and compel arbitration. The employees asserted that the employee handbook provision referenced in Tier 1 of the ARC Program itself has five different steps for an employee to follow in the dispute resolution process. The employees contended that despite Pinnacle Pointe‘s position that the different Tiers in the ARC Program are not mandatory, the language in the ARC and the employee handbook suggest otherwise. The employees argued that the handbook presents administrative hurdles that violate the AMWA.
On December 26, 2018, Pinnacle Pointe filed its response to the employees’ sur-reply. Pinnacle Pointe responded that the employee handbook‘s Dispute Resolution Procedure as well as the ARC Agreement itself are voluntary.
On January 11, 2019, the circuit court notified the parties that a motion hearing had been set for January 25, 2019. However, on January 18, 2019, the circuit court entered its order denying Pinnacle Pointe‘s motion to dismiss complaint and compel arbitration or, in the alternative, to stay litigation and discovery pending arbitration.
I. Jurisdiction
As a threshold issue, we first turn to the employees’ argument that this court lacks jurisdiction to consider the appeal becаuse the appeal is not authorized by an Arkansas statute.
In this case, the arbitration agreements at issue are clearly governed by the FAA. Thus, the employees’ argument regarding the AUAA‘s exclusion of the employer-employee disputes is of no moment. When we construe a court rule, we use the same means and canons of construction that we use to interpret statutes. Kesai v. Almand, 2011 Ark. 207, at 3-4, 382 S.W.3d 669 (citing Pope v. Overton, 2011 Ark. 11, 376 S.W.3d 400). The first rule in considering the meaning and effect of a statute or rule is to construe it just as it reads, giving the words their ordinary and usually accepted meaning in common language; when the language is plain and unambiguous, there is no need to resort to rules of statutory construction. Id. As Pinnacle Pointe correctly points out,
II. Denial of the Motion to Compel Arbitration
On appeal, Pinnacle Pointe argues that the circuit court erred as a matter of law in denying its motion to compel arbitration. We review a circuit court‘s order
As set forth above, the arbitration agreements at issue are governed by the FAA. In Regional Care of Jacksonville, LLC v. Henry, 2014 Ark. 361, at 6, 444 S.W.3d 356, 360 (citing Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (2006)), we explained that Congress enacted the FAA,
A written provision . . . or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.
Additionally, despite an arbitration provision being subject to the FAA, courts look to state contract law to determine whether the parties’ agreement to arbitrate is valid. GGNSC Holdings, LLC v. Chappel, 2014 Ark. 545, 453 S.W.3d 645. The same rules of construction and interpretation apply to arbitration clauses as to agreements generally. Hart, 344 Ark. 656, 42 S.W.3d 552. The construction and legal effect of a written contract to arbitrate are to be determined by the court as a matter of law. Id. Accordingly, we will give effect to the parties’ intent as evidenced by the arbitration agreement itself. Id.
In HPD, LLC v. TETRA Techs., Inc., we explained:
In deciding whether to grant a motion to compel arbitration, two threshold questions must be answered. First, is there a valid agreement to arbitrate between the parties? Second, if such an agreement exists, does the dispute fall within its scope? In answering these questions, doubts about arbitrability must be resolved in favor of arbitration. Further, the court (rather than the arbitrator) decides these questions of arbitrability, unless the parties clearly and
unmistakably delegate that issue to the arbitrator. Based on the principle that arbitration is a matter of contract, the question of “who has the primary power to decidе arbitrability” turns upon what the parties agreed about that matter.
2012 Ark. 408, at 6, 424 S.W.3d 304, 308 (internal citations omitted). Even if an arbitration agreement exists and the dispute falls within the scope of the agreement, a court may still declare an arbitration agreement unenforceable “upon such grounds as exist at law or in equity for the revocation of any contract.” BDO Seidman, LLP v. SSW Holding Co., Inc., 2012 Ark. 1, at 13, 386 S.W.3d 361, 370 (quoting
A. Predispute Jury-Trial Waiver
In the present case, Nelson and Anderson do not challenge either the validity or the scope of their ARC Agreements. Nor do they contend that their agreements are unenforceable based on general contract defenses.2 Instead, they argue that their arbitration agreements are predispute jury-trial waivers and are unenfоrceable pursuant to Tilley, 2017 Ark. 343, 532 S.W.3d 570. In Tilley, we held that predispute contractual waivers of the right to a jury trial are unenforceable under the Arkansas Constitution. We explained as follows:
The Arkansas Constitution states that “[t]he right of trial by jury shall remain inviolate, and shall extend to all cases at law, without regard to the amount in controversy; but a jury trial may be waived by the parties in all cases in the manner prescribed by law.
Ark. Const. art. 2, § 7 . Black‘s Law Dictionary
defines “inviolate” as “free from violation; not broken, infringed, or impaired.” Black‘s Law Dictionary 904 (9th ed. 2009).
When tasked with interpreting the phrase “in the manner prescribed by law,” this court has stated:
Obviously, those who drafted the constitutional amendment had the purpose and intention to invest in the Legislature the authority to determine what actions on the part of a litigant constituted a waiver of the right of trial by jury; we say ‘obviously’ because there could have been no other
purpose in the provision, ‘but a jury trial may be waived by the parties in all cases in the manner prescribed by law‘. This provision, of course, includes prospective laws. The General Assembly is the lawmaking power, and it proceeded, in passing Act 460 of 1949 [of which 27–1743.2 is a part], to prescribe and enumerate various acts by which a defendant waives a trial by jury. Mode v. Barnett, 235 Ark. 641, 645, 361 S.W.2d 525, 527 (1962). Further, in Venable v. Becker, we found that a valid waiver of the right to a trial by jury occurred in the manner prescribed by Rule 38 of the Arkansas Rules of Civil Procedure and the former statute that Rule 38 superseded, Ark. Stat. Ann. § 27-1743. Thus, this court has consistently interpreted the phrase “in the manner prescribed by law,” to be governed by Arkansas statutes and the Arkansas Rules of Civil Procedure.
Id. at 13, 532 S.W.3d at 577–78. In rejecting Malvern National Bank‘s comparison of a jury-waiver clause to an arbitration clause, we explained that “arbitration agreements are governed by the Arkansas Arbitration Act as codified at
Relying on Tilley, the employees contend that because the FAA is not an Arkansas statute or Arkansas rule, the FAA is not “a manner prescribed by law” in which one may waive the right to a jury trial. Stated differently, the employees argue that because the ARC Agreements are governed by the FAA and not an Arkansas law, they are unenforceable pursuant to the Arkansas Constitution. In response, Pinnacle Pointe urges this court to reject the employees’ misapplication of Tilley and argues that the FAA and the Supremacy Clause of the United States Constitution mandate enforcement of the ARC Agreements.
The Arkansas Constitution states that “[t]he right of trial by jury shall remain inviolate, and shall extend to all cases at law, without regard to the amount in controversy; but a jury trial may be waived by the parties in all cases in the manner prescribed by law.”
we hold that arbitration agreements governed by the FAA constitute “a manner prescribed by law” in which one may waive the right to a jury trial.3
B. AMWA
Finally, the employees argue that the ARC Agreements are unenforceable because they impose numerous procedural burdens that are prohibited by the AMWA. To support their position, the employees contend that according to the AMWA, employees asserting their rights under the Act “shall not be required to exhaust administrative remedies before bringing an action.”
In reviewing
On review, the AMWA itself does not define exhaustion of administrative remedies. Black‘s Law Dictionary defines exhaustion of administrative remedies as “[t]he doctrine that, if an administrative remedy is provided by statute, a claimant must seek relief first from the administrative body before judicial relief is available.” Black‘s Law Dictionary 694 (10th ed. 2014). An administrative remedy is defined as “a nonjudicial remedy provided by an administrative agency.” Id. at 1485. Administrative agency is defined as “an official body, esp. within the government, with the authority to implement and administer particular legislation.” Id. at 75.
In this case, the purported administrative and procedural burdens do not аmount to an exhaustion of administrative remedies as contemplated by the AMWA. The AMWA‘s rule on administrative remedies is inapplicable to the ARC Agreements because administrative agencies—not private parties—establish administrative remedies.
As set forth above, Nelson and Anderson do not challenge either the validity or the scope of their ARC Agreements. Nor do they contend that the ARC Agreements are unenforceable on the basis of general contract defenses. Therefore, we hold that Pinnacle Pointe has met its burden of demonstrating the validity of Nelson‘s and Anderson‘s ARC Agreements.
We now turn to whether the claims asserted by the employees fall within the scope of their ARC Agreements. ARC Agreements apply, without limitation, to disputes regarding the employment
Pinnacle Pointe‘s motion to compel arbitration. We reverse and remand for the entry of an order compelling arbitration.
Reversed and remanded.
HART, J., dissents.
JOSEPHINE LINKER HART, Justice, dissenting. I dissent. Arkansas law prohibits enforcement of the “ARC agreements,” and the Federal Arbitration Act (FAA) does not preempt or otherwise impact this conclusion in any way. Furthermore, the ARC agreements lack the necessary elements required of an enforceable contract. The circuit court‘s order denying arbitration should be affirmed for either of these reasons.
I. Arkansas Law Prohibits Enforcement of the ARC Agreements, and this Conclusion Is Not Impacted by the Federal Arbitration Act
A. Arkansas Law Prohibits Enforcement of the ARC Agreements
Arkansas law, specifically within the context of a worker seeking to recover owed but unpaid wages from his or her employer, is crafted to ensure that the worker can effectively and efficiently go to court and obtain what he or she is owed.
wages, including overtime wages, to which the employee is entitled[.]”
Finally,
Considering these authorities together, this much is plain: in the specific context of a worker seeking to recover unpaid wages from his or her employer, Arkansas law protects the worker‘s right to file a claim in court and to have that claim decided by a jury, and this
right cannot be “waived” before any such dispute has arisen. To the extent the majority has reached some other conclusion in its opinion, the majority is mistaken.
Here, the ARC agreements would operate to waive the employees’ ability to pursue any claims for relief in court and have their claims decided by a jury, all before any such claims have arisen (per the arbitration requirement in Tier III of the ARC agreements, not to mention the steps outlined in the first two Tiers)—in the specific context of a worker seeking to recover owed but unpaid wages from his or her employer. Accordingly, the predispute commitment to arbitrate contained in the ARC agreements cannot qualify as “a manner prescribed by law” because it is actually prohibited by law, as set forth above. And as set forth in Part II.B infra, the FAA has no impact on this conclusion. In short, Arkansas law prohibits enforcement of the ARC agreements.
B. The FAA Has No Application Here
The next question is whether Arkansas‘s prohibition аgainst enforcing the ARC agreements would be preempted by application of federal law, specifically the FAA. Another question wrapped up in these considerations is whether, as the majority holds, the FAA is a “manner prescribed by law” by which the workers could legally waive their rights to recover unpaid wages from their employer in court. From a review of the FAA‘s plain language, the simple answer to each of these questions is no.
In short, the FAA does not apply to employment agreements. Despite the language in
of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.”
While a court‘s authority under the Arbitration Act to compel arbitration may be considerable, it isn‘t unconditional. If two parties agree to arbitrate future disputes between them and one side later seeks to evade the deal, §§ 3 and 4 of the Act often require a court to stay litigation and compel arbitration “accord[ing to] the terms” of the parties’ agreement. But this authority doesn‘t extend to all private contracts, no matter how emphatically they may express a preference for arbitration.
Instead, antecedent statutory provisions limit the scope of the court‘s powers under §§ 3 and 4. Section 2 provides that the Act applies only when the parties’ agreement to аrbitrate is set forth as a “written provision in any maritime transaction or a contract evidencing a transaction involving commerce.” And § 1 helps define § 2‘s terms. Most relevant for our purposes, § 1 warns that “nothing” in the Act “shall apply” to “contracts of employment of seamen, railroad employees, or any other class of
workers engaged in foreign or interstate commerce.”
New Prime, 139 S. Ct. at 537 (emphasis added). The issue in New Prime was whether a plaintiff worker who sued his employer for unpaid wages could be forced to submit to an arbitration provision contained in his work agreement pursuant to the FAA. The Court readily concluded that there was no authority under the FAA to compel arbitration in this context because the FAA does not apply to contracts of employment:
When Congress enacted the Arbitration Act in 1925, the term “contracts of employment” referred to agreements to perform work. No less than those who camе before him, Mr. Oliveira is entitled to the benefit of that same understanding today. Accordingly, his agreement with New Prime falls within § 1‘s exception, the court of appeals was correct that it lacked authority under the Act to order arbitration, and the judgment is . . . [a]ffirmed.
Id. at 543–44 (emphasis added).
This plainly applicable authority from the Supreme Court of the United States settles any remaining question before this court in the present matter. There is no authority under the FAA to compel arbitration in the context of a dispute relating to a contract for employment.2 Id. The majority‘s reliance on the FAA for this proposition is wholly misplaced. The same is true of the Arkansas Uniform Arbitration Act, as it excepts “employer-employee disputes” from its application.
II. The ARC Agreements Are Not Even Valid Contracts
Furthermore, the ARC agreements at issue here do not even qualify as enforceable contractual agreements. A legal contract requires mutual consideration, an offer with definite
terms, and an acceptance of that offer. To be enforceable, the agrеement must involve bargained-for obligations by both parties. These requirements are often conceived in terms of a “bargained-for benefit,” a “promise for a promise,” etc. As this court has said:
A contract to be enforceable must impose mutual obligations on both of the parties thereto. The contract is based upon the mutual promises made by the parties; and if the promise made by either does not by its terms fix a real liability upon one party, then such promise does not form a consideration for the promise of the other party. As is said in
the case of St. Louis, I.M.&S. Ry. Co. v. Clark: mutuality of contract means that an obligation must rest on each party to do or permit to be done something in consideration of the act or promise of the other; that is, neither party is bound unless both are bound. A contract, therefore, which leaves it entirely optional with one of the parties as to whether or not he will perform his promise would not be binding on the other.
Townsend v. Standard Indus., Inc., 235 Ark. 951, 954, 363 S.W.2d 535, 537 (1962) (citations omitted) (quoting El Dorado Ice & Planing Mill Co. v. Kinard, 96 Ark. 184, 188, 131 S.W. 460, 462 (1910)).
Here, agreeing to submit any subsequent employee-employer dispute to the “three tiers” of alternative dispute resolution contemplated in the ARC agreements was never a requirement for the plaintiffs’ employment with Pinnacle Pointe. This is apparent from the language contained in the ARC agreements and from the affidavits contained in the record acknowledging as much. The “ARC ACKNOWLEDGEMENT FORM” contained in the record specifically states:
We are rolling out a new 3-tier program for resolution of workplace disputes, known as the Alternative Resolution of Conflicts (ARC). ARC is an agreement to arbitrate disputes in the workplace. ARC is a contract between you, the employee, and your employer. ARC does not change any othеr terms and conditions of employment; it simply is a contract where you and your employer agree to resolve any formal disputes through arbitration instead of litigation.
(Emphasis added.)
This is insufficient for an enforceable contract. Pinnacle Pointe simply presented the ARC agreements to the workers, and the ARC agreements provided that if the workers did not “opt out” within the time limit, they were bound to whatever was contained in those documents. There was not a promise being exchanged for another promise.
To the extent one argues that Pinnacle Pointe‘s “promise” to pursue claims against its workers through its self-authored procedures instead of a court of law is valid consideration, i.e., a “bargained-for benefit” to the workers, I submit that such intimations defy reality. In effect, the ARC agreements simply direct workers to resolve any potential disputes in a less impartial forum where the playing field could be slanted toward the party with greater resources—and without the protections of a court of law.3 The ARC agreements would curtail or altogether remove the workers’ constitutional rights to access the courts, due process, and free speech, in exchange for higher costs and a diminished ability to prove his or her case.4 The ARC agreements do not contemplate an actual bargained-for benefit from the workers’ perspective. Instead, the ARC agreements simply demand (without “chang[ing] any other terms and conditions of employment“) that the
workers engage in a separate, affirmative act—“opting out” of the
In short, regardless of whether the employees acknowledged receipt of the ARC agreements, and regardless of whether the ARC agreements are labeled binding “contract(s),” this arrangement simply lacks the mutual consideration necessary for an enforceable contractual agreement. Accordingly, the ARC agreements in this case are not enforceable, and the circuit court‘s decision should be affirmed on this basis.
As a final matter, note that BHC Pinnacle Pointe Hospital, LLC (Pinnacle Pointe), is the appellant in this interlocutory appeal. The circuit court below denied Pinnacle Pointe‘s motion to compel arbitration, ruling in favor of the plaintiff-appellees (workers)—workers seeking to recover unpaid wages from Pinnacle Pointe. The majority‘s refusal to consider various arguments in favor of the workers is therefore misplaced since this court affirms the circuit court‘s decision if it was correct for any reason. See, e.g., Alexander v. Chapman, 299 Ark. 126, 771 S.W.2d 744 (1989).5 I am troubled by this court‘s robust use of procedural bars, particularly when reaching the merits is the just thing to do. But in this case, the conclusion reached either in Part I or that in Part II of this opinion independently requires that the circuit court‘s denial of arbitration be affirmed.
I dissent.
Friday, Eldredge & Clark, LLP, by: Daniel L. Herrington, Joshua C. Ashley, and Allison C. Pearson, for appellant.
Holleman & Associates, P.A., by: John Holleman, Timothy A. Steadman, and Jerry Garner, for appellees.