Case Information
*1 IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF TENNESSEE NASHVILLE DIVISION
JOHN RILEY, THOMAS PEAKS, )
TIMOTHY CAMPBELL, NATHANIEL )
PHILLIPS, and DESLYN WILLIAMS, )
) NO. 3:21-cv-00314 Plaintiffs, )
) JUDGE RICHARDSON v. )
)
NTAN, LLC, d/b/a ACTION NISSAN, )
)
Defendant. )
MEMORANDUM OPINION AND ORDER
Pending before the Court is “Defendant’s Motion to Dismiss, or in the Alternative to Stay the Proceedings, and Compel Arbitration for Plaintiffs John Riley, Timothy Campbell, and Nathaniel Phillips” (Doc. No. 23, “Motion”). Plaintiffs responded. (Doc. No. 27). Defendant replied. (Doc. No. 28). Plaintiffs also filed a “Notice of Filing New Authority” [1] (Doc. No. 29, “Notice”). [2]
BACKGROUND
Plaintiffs are five former employees of Defendant NTAN, LLC, d/b/a Action Nissan (“Action Nissan”). (Doc. No. 1 at ¶ 1, 5). Defendant is an automobile dealership located in Nashville, Tennessee. ( Id . at ¶ 5). Plaintiffs bring claims of race discrimination, a racially hostile work environment, and retaliation under Section 1981 related to acts of alleged discrimination and retaliation that occurred during Plaintiffs’ employment with Defendant. ( Id . at ¶¶ 11–17). Defendant seeks to compel arbitration as to three of the five Plaintiffs—John Riley, Timothy Campbell, and Nathaniel Phillips (“Arbitration Plaintiffs”) [3] —who each executed an arbitration agreement with Defendant (Doc. No. 24-1 at 6–9, “Arbitration Agreement”). [4] The Arbitration Agreement provides in pertinent part that “[e]xcept for certain Excluded Claims described below, you agree that any legal claim or dispute that you may have against [Defendant] arising out of your application for employment, your employment, or the separation thereof (“Covered Claim” ) will be resolved by final and binding arbitration.”
LEGAL STANDARD
The Federal Arbitration Act (“FAA”) provides that a written provision in a contract “to
settle by arbitration a controversy thereafter arising out of such contract . . . shall be valid,
irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation
of any contract.” 9 U.S.C. § 2. This section of the FAA “embodies the national policy favoring
arbitration and places arbitration agreements on equal footing with all other contracts.”
Seawright
*3
v. Am. Gen. Fin. Servs., Inc.
,
Under the FAA, if a party establishes the existence of a valid agreement to arbitrate, the
district court must grant the party’s motion to compel arbitration and stay or dismiss proceedings
until the completion of arbitration.
Glazer v. Lehman Bros., Inc.
,
[F]irst, it must determine whether the parties agreed to arbitrate; second, it must determine the scope of that agreement; third, if federal statutory claims are asserted, it must consider whether Congress intended those claims to be nonarbitrable; and fourth, if the court concludes that some, but not all, of the claims in the action are subject to arbitration, it must determine whether to stay the remainder of the proceedings pending arbitration.
Stout
,
“In evaluating motions to compel arbitration, ‘courts treat the facts as they would in ruling
on a summary judgment.’”
Yaroma
,
DISCUSSION
I. ARBITRABILITY OF CLAIMS OF ARBITRATION PLAINTIFFS Plaintiffs do not appear to dispute that the Arbitration Plaintiffs entered into binding arbitration agreements with Defendant, and Plaintiffs acknowledge that Defendant “provided Plaintiffs electronically signed arbitration agreements for [the Arbitration Plaintiffs].” (Doc. No. 27 at 2). In fact, in their Response, Plaintiffs make no argument as to whether the arbitration agreements between the Arbitration Plaintiffs and Defendant are valid and enforceable; thus, Plaintiffs (who bear the burden as the party opposing arbitration) have not shown a genuine issue of material fact as to the first of the four steps, i.e., the existence of an agreement to arbitrate. They *5 likewise have not shown the existence of a genuine issue of material fact as to the second step, i.e., the scope of the Arbitration Agreement, and it is plain that the Arbitration Plaintiffs’ claims are Covered Claims and thus fall within the scope of the agreement to arbitrate as set forth in the Arbitration Agreement. And with respect to the third step, Plaintiffs very understandably do not assert that Congress intended such claims to be non-arbitrable. Thus, Plaintiffs have not, at any of the three relevant steps, raised a genuine issue of material fact as to whether the Arbitration Plaintiffs’ claims are not subject to arbitration.
Instead, Plaintiffs argue only that the Motion should be denied because Defendant violated certain discovery deadlines and that the Motion is “untimely.” ( Id . at 3–4). But the Motion was not untimely. The Magistrate Judge ordered that any motion to compel arbitration be filed by February 22, 2022 (Doc. No. 22), and Defendant complied by filing the present Motion on that date. Second, the alleged discovery deficiencies identified by Plaintiffs are of no assistance to Plaintiff in opposing the Motion; Plaintiff has not explained why—or cited any authority suggesting that— these kinds of discovery deficiencies can constitute grounds for denying a motion to compel, and the Sixth Circuit’s three specified steps conspicuously omit any role for such deficiencies in the analysis of a motion to compel arbitration.
Plaintiffs thus have not demonstrated a genuine issue of material fact as to the validity or
applicability of the arbitration agreement here. The Court finds that the arbitration agreement is
valid and enforceable, and the Court must grant the Motion and compel the Arbitration Plaintiffs
to arbitrate their claims.
Glazer
,
II. DISPOSITION OF CLAIMS IN THIS COURT
Finally, the Court must address the fourth step from
Stout
—whether to stay the remainder
of the proceedings pending arbitration. In context, it is clear that in referring to the “remainder of
the proceedings,”
Stout
was referring to the
non-arbitrable
claims.
Stout
,
As to that question, Defendant assumes that the non-arbitrable claims will continue unabated in this Court (Doc. No. 24 at 13) (“[T]he two plaintiffs for whom arbitration has not been compelled will presumably continue this action in this Court.”). Defendant also addresses something not strictly within the scope of the question raised by Stout : what this Court should do with the claims that are arbitrable. This is a legitimate question—albeit one that should not have been raised to the exclusion of the question of what to do with the claims that are not arbitrable— because this Court has the option of either dismissing or staying the arbitrable claims (as they exist in this Court ) while the claims proceed in arbitration . Defendant asks the Court to dismiss the Arbitration Plaintiffs’ claims in this Court simultaneous with sending those claims to arbitration (Doc. No. 24 at 12–13); alternatively, Defendant asks for the proceedings as to the Arbitration Plaintiffs be stayed while their claims are arbitrated (Doc. No. 24 at 1). Plaintiffs respond by *7 effectively addressing both what to do with the claims that are arbitrable and the claims that are not arbitrable. Specifically, they request that the Court “stay the proceedings with respect to [the Arbitration Plaintiffs], and only them, pending the outcome of any arbitration . . . .” In so doing, they impliedly request that the Court allow the Non-Arbitration-Plaintiffs’ claims to go forward (rather than being either stayed or dismissed) while the arbitration takes places. (Doc. No. 27 at 4).
Although the parties are not particularly attentive to the distinction, as suggested above, the Court has two discrete issues to resolve. First, the Court must decide whether to dismiss or stay the claims of the Arbitration Plaintiffs while arbitration of those claims occurs. Second, the Court must decide whether to stay the remainder of the proceedings, meaning the claims of the Non- Arbitration Plaintiffs.
The FAA states that:
If any suit or proceeding be brought in any of the courts of the
United States upon any issue referable to arbitration under an
agreement in writing for such arbitration
,
the court in which such
suit is pending, upon being satisfied that the issue involved in such
suit or proceeding is referable to arbitration under such an
agreement, shall on application of one of the parties stay the trial of
the action until such arbitration has been had in accordance with
the terms of the agreement
,
providing the applicant for the stay is
not in default in proceeding with such arbitration.”
9 U.S.C. § 3 (emphasis added). At the outset, the Court recognizes that 9 U.S.C. § 3 does not stand
as a model of clarity for statutory drafting. Unsurprisingly, the provision’s inartful drafting has
created inconsistent interpretations among the courts. As discussed further below with respect to
the Court’s treatment of the non-arbitrable claims, it is plausible that 9 U.S.C. § 3 requires a court
however, construes Defendant’s motion to alternatively request a stay only of the Arbitration Plaintiffs’
claims, given Defendant’s above-referenced statement that “[t]he two plaintiffs for whom arbitration has
not been compelled will presumably continue this action in this Court.” (Doc. No. 24 at 13).
*8
to stay the entirety of the proceeding (
i.e.,
stay even non-arbitrable claims), even when fewer than
all claims are referred to arbitration. The Court, however, does not need to address this
interpretation when determining what to do with the arbitrable claims in this case. With respect to
the arbitrable claims, it is sufficient to say that courts have treated 9 U.S.C. § 3 to require, at a
minimum, a stay of arbitrable claims (not necessarily to the exclusion of staying non-arbitrable
claims) upon application of one of the parties when fewer than all claims are referred to arbitration.
See Shearson/American Exp.
,
Inc. v. McMahon
,
Jones v. U-Haul Co. of Massachusetts and Ohio, Inc.
, 16 F. Supp. 3d 922 (S.D. Ohio 2014);
Forsyth v. HP Inc.
,
*9
Although 9 U.S.C. § 3 ordinarily mandates a stay of arbitrable claims, there is a judicially
created exception that permits courts to dismiss, rather than stay, an action when “all claims” or
(“all issues”) before the court are referred to arbitration.
See e.g.
,
5th of July, LLC v. Thomas
, 2020
WL 5983111 (M.D. Tenn. Oct. 8, 2020) (“whether to stay or dismiss a case in
which all claims
have been referred to arbitration is a matter of discretion”) (emphasis added) (citing
Ozomoor v.
T-Mobile USA, Inc.
,
As the party asserting the exception to a generally applicable rule, Defendant needs to show the Court that the exception actually can be invoked to do what Defendant claims it can do in the particular circumstances. Here, that means Defendant needs to show the Court that the exception can be used to dismiss less than the entire action— i.e., the (arbitrable) claims of the Arbitration Plaintiffs but not the (non-arbitrable) claims of the Non-Arbitration Plaintiffs. But Defendant does not even specifically assert that this is the case. Instead, Defendant claims only that “when all of a plaintiffs’ claims in a suit will be referred to arbitration, the Sixth Circuit has held that the case *10 may be dismissed rather than stayed.” ( Id. ). But to say that “the case may be dismissed” when “all of a ” plaintiff’s claims are arbitrable is not to say that anything less than the entire case can be dismissed—and it certainly is not to say that “all of a plaintiff’s claims,” but fewer than all claims of all plaintiffs, may be dismissed when all of that plaintiff’s claims are arbitrable, but not all claims of the co-plaintiffs are arbitrable. And Defendant’s recap of relevant case law, quoted verbatim just below, does not suggest that anything less than an entire case can ever be dismissed based on the judicially created exception invoked by Defendant:
Ozormoor v. T–Mobile USA, Inc. ,354 F. App’x 972 , 975 (6th Cir. 2009) (affirming the district court’s order compelling arbitration and dismissing the complaint when all claims were referred to arbitration); Green v. Ameritech Corp. ,200 F.3d 967 , 973 (6th Cir. 2000) (noting that the “[t]he weight of authority clearly supports dismissal of the case when all of the issues raised in the district court must be submitted to arbitration”). Numerous district courts in this circuit have dismissed actions where all claims are subject to arbitration. See, e.g., Doe v. Déjà Vu Consulting Inc. ,2017 U.S. Dist. LEXIS 142019 , at *57 (M.D. Tenn. Sep. 1, 2017); Braxton v. O’Charley’s Rest. Props., LLC ,1 F. Supp. 3d 722 , 728–29 (W.D. Ky. 2014) (collecting cases).
(Doc. No. 24 at 12–13). The language quoted above from 5th of July, LLC, Morrison , and Wholesale Grocery Products Antitrust Litigation is to like effect, suggesting that the kind of dismissal authorized pursuant to this exception is dismissal of the entire action, or “all issues before the court,” and not dismissal of merely some claims (or “issues”) while other claims (“or issues”) are not dismissed but rather are either stayed or allowed to proceed.
It makes sense that dismissal of less than the entire case would not be authorized by this judicially created exception. The exception is, after all, an exception to a generally applicable rule, and there are good reasons to limit the exception to easily identifiable, unambiguous, and carefully circumscribed circumstances, i.e. , when all claims (of all plaintiffs, if there is more than one plaintiff) are arbitrable. For this reason, the Court finds, alternatively (in the event that it did have discretion to dismiss only the Arbitration Plaintiffs’ claims) that it would not exercise its discretion *11 to dismiss the Arbitration Plaintiffs’ claims while doing something other than dismissal with the Non-Arbitration Plaintiffs’ claims.
True, the Court could consider the possibility of dismissing the entire instant action, arbitrable and non-arbitrable claims alike. One suspects that this was never the idea behind the judicially creation exception that allows dismissal of an entire action; one suspects that the idea was to authorize dismissal (of the entire action) only in the straightforward case where all claims in the action were arbitrable. And it may be that the exception is not properly construed to allow the Court to dismiss an entire action where the action includes both arbitrable and non-arbitrable claims. But in any event, the Court need not decide whether it could grant a request to dismiss the entire action under such circumstances, because Defendant does not ask the Court to dismiss the entire action; instead, as noted above, Defendant does not contemplate the dismissal of the Non- Arbitration Plaintiffs’ claims and asks the Court only to “dismiss the complaints of the arbitration plaintiffs.” (Doc. No. 24 at 12).
Since the Court will not be dismissing the entire action, it needs to decide what to do with
the claims in this Court of (i) the Arbitration Plaintiffs while their claims are being arbitrated, and
(ii) the claims of the Non-Arbitration Plaintiffs. There appears to be no reason why the two
categories of claims cannot be treated separately. As for the first category, the answer is clear: by
statute, the claims of the Arbitration Plaintiffs are to be stayed while they are being arbitrated
As for the Non-Arbitration Plaintiffs’ claims, the question is somewhat more involved. The
options for the Court as to those claims are to either (i) stay them or (ii) allow them to proceed
even while the arbitrable claims are being arbitrated. As noted above in a footnote, Defendant
presumes that these claims will proceed in this Court. But as further noted above, there is a
colorable argument that 9 U.S.C. § 3 requires a Court to stay the entire proceeding, even when
*12
fewer than all claims are referred to arbitration. The provision states that the court, upon
satisfaction that “any issue” is referable to arbitration, “shall on application of one of the parties
stay the trial of
the action
…” 9 U.S.C. § 3 (emphasis added). Indeed, at least one other court has
recognized that there is some “superficial appeal” to construing the provision’s reference to “the
action” as requiring a stay of the entire proceeding, arbitrable and non-arbitrable claims alike.
See
Narragansett Elec. Co. v. Constellation Energy Commodities Group, Inc.
,
As noted, several courts have found that it is “within a district court’s discretion whether
to stay . . . an entire action, including issues not arbitrable, pending arbitration.”
See Forsyth v. HP
Inc.
,
The circuits, however, have differed in their approaches to considering a (discretionary)
stay of an entire proceeding. Some circuits generally disfavor stays for non-arbitrable claims
pending the arbitration of other claims in the action.
See Caytrans BBC, LLC v. Equipment Rental
and Contractors Corp.
,
Other courts take a balancing approach.
See Aukema v. Chesapeake Appalachia, LLC
, 839
F. Supp. 2d 555, 559 (N.D.N.Y. 2012) (listing judicial economy factors in determining to whether
to grant a stay of non-arbitrable claims);
Guild Mortgage Co. LLC v. Crosscountry Mortgage LLC
,
In the Court’s view, employing the balancing approach is preferable to entertaining some sort of presumption against staying the non-arbitrable claims. Each case has unique factual and procedural characteristics that the court ought to consider in its decision whether to stay the entire proceeding. Given the scarcity of judicial resources, a presumption against staying the entire proceedings could lead to needless duplication of efforts on the part of the court—and seems particularly inapt when (as here) the plaintiffs voluntarily brought the action together rather than being forced to do so through required joinder. Moreover, in particular cases it may actually be to a non-arbitration plaintiff’s (as well as the defendant’s) benefit to stay the entire proceeding, as each side potentially could benefit from efficiencies resulting from the arbitration. Taking a holistic approach, therefore, stands to benefit both the judicial system and the parties—and where there may be inefficiencies or prejudice to staying the entire proceeding, the court can choose to forego staying the entire proceedings in federal court.
Turning to the case at hand, there appear to be several common questions of fact among the claims of the various Plaintiffs. The Complaint does not list with specificity which Plaintiffs suffered from (which) particular instances of alleged discrimination. (Doc. No. 1). Instead, the Complaint lumps all Plaintiffs together, implying all Plaintiffs were subject to each alleged *15 incident of discrimination. Naturally, the arbiter’s findings of fact could be of assistance in resolving the Non-Arbitrating Plaintiffs’ claims, and in doing so, could prevent duplication of efforts and inconsistent results. Further, the Court does not discern that the Non-Arbitration Plaintiffs will be harmed by the stay. Once the arbitration ends, the Non-Arbitration Plaintiffs will be allowed to go forward with their claims aided by whatever insight (which could be substantial indeed) is to be gained from the happenings in, findings from, or results of the arbitration proceedings.
In summary, judicial economy favors staying the Non-Arbitration Plaintiffs’ claims pending resolution of the arbitration.
CONCLUSION
For the reasons set forth herein, Defendant’s Motion (Doc. No. 23) is GRANTED in part and DENIED in part. Specifically, the Motion is granted in that the Arbitration Plaintiffs shall proceed to arbitration to resolve their claims as requested by Defendant, and the Motion is denied in that the claims of all Plaintiffs are hereby STAYED pending arbitration (contrary to Defendant’s suggestion that the Arbitration Plaintiffs’ claims be dismissed and the Non-Arbitration Plaintiffs’ claims be allowed to proceed).
IT IS SO ORDERED.
___________________________________ ELI RICHARDSON UNITED STATES DISTRICT JUDGE
Notes
[1] The Court does not find the authority referenced by Plaintiffs in their Notice,
Morgan v. Sundance, Inc
.,
[2] Each of Plaintiffs’ two filings are styled as being filed on behalf of all Plaintiffs, which is understandable, especially considering that all Plaintiffs have the same counsel. Therefore, the Court refers to the opponents of the Motion as “[all] Plaintiffs” even though the Motion implicates only a subset of Plaintiffs, i.e. , the Arbitration Plaintiffs as identified herein.
[3] To avoid confusion, the Court refers to John Riley, Timothy Campbell, and Nathaniel Phillips as the “Arbitration Plaintiffs” and the remaining Plaintiffs as the “Non-Arbitration Plaintiffs.” Collectively, the Court refers to the Arbitration and Non-Arbitration Plaintiffs as “Plaintiffs.”
[4] As noted by the human resources director for the parent company of Defendant, each Plaintiff executed (separately) the same arbitration agreement, i.e., the Arbitration Agreement as identified above. (Doc. No. 24-1 at 1–3).
[5] By “arbitrable” and “non-arbitrable,” the Court does not mean what the words facially suggest, i.e. , “capable of being arbitrated” and “not capable of being arbitrated,” respectively. Instead, the Court means “subject to compelled arbitration” and “not subject to compelled arbitration,” respectively.
[6] It is not entirely clear from Defendant’s motion whether Defendant’s alternative request is to stay the proceedings as to the Arbitration Plaintiffs or to stay the entire proceeding, including the claims of the Non- Arbitrating Plaintiffs. On the one hand, Defendant phrases the alternative request as one to “stay these proceedings,” which seems to refer to staying all claims and not just the arbitrable claims. (Doc. No. 24 at 1) (“or, alternatively, to stay these proceedings pursuant to the Federal Arbitration Act…”). The Court,
[7] As the Court has observed above, the case law interpreting 9 U.S.C. § 3 is inconsistent. Some cases suggest that 9 U.S.C. § 3 requires a court to stay the entire proceeding, even when fewer than all claims are referred to arbitration. Conversely, other cases appear quite clear that only the claims within the scope of the arbitration agreement must be stayed. With regards to treatment of the arbitrable claims in this case, the Court cites these cases to illustrate that courts agree that at a minimum, 9 U.S.C. § 3 requires a stay of the arbitrable claims when fewer than all claims are referred to arbitration.
[8] When the Court refers to “an action” or “proceeding,” it means all claims of all plaintiffs in a particular lawsuit.
[9] To the extent that the Non-Arbitration Plaintiffs feel otherwise, they should be reminded (i) that it was their choice to join as co-plaintiffs with individuals with arbitration agreements that patently raised a substantial risk that their claims would be stayed; and (ii) such feelings, to the extent validly based on applicable circumstances, could support a colorable motion to dismiss them as plaintiffs without prejudice pursuant to Fed. R. Civ. P. 21.