Alvarez v. The Davey Tree Expert Co.

1

Alex Alvarez, Plaintiff, v. The Davey Tree Expert Company, LLC, Defendant.

Civil Action No. 2:24-cv-02690-DCN-KFM

United States District Court, D. South Carolina, Charleston Division

November 14, 2024

REPORT OF MAGISTRATE JUDGE

Kevin F. McDonald United States Magistrate Judge

This matter is before the court on The Davey Tree Expert Company LLC's (“Davey Tree”) renewed motion to compel arbitration (doc. 17) and its partial motion to dismiss for failure to state a claim (doc. 18). Pursuant to 28 U.S.C § 636(b)(1)(A) and Local Civil Rule 73.02(B)(2)(g) (D.S.C.), all pretrial matters in employment discrimination cases are referred to a United States Magistrate Judge for consideration.

I. BACKGROUND

Plaintiff Alex Alvarez sues his former employer, Davey Tree, alleging race and national origin discrimination, retaliation, hostile work environment, wrongful termination, and civil conspiracy. Alvarez, whose national origin is Cuban, began working for Davey Tree in November 2022 as a tree trimmer (doc. 12 ¶ 12). He reported to Emilio Gomila, who is also Cuban, and worked alongside Jose Gutierrez and Serafin Guzman, both of whom are Mexican (id. ¶¶ 14-16). Dennis Jenkins, who is white, served as General Manager and directly supervised Gomila (id. ¶ 18).

Alvarez alleges that, starting in December 2022, Jenkins, Guzman, and Gutierrez began making derogatory comments about Cubans, calling them “lazy” and “slow” (id. ¶ 19). Alvarez says that he reported these remarks to Gomila and Jorge Sanchez, a general foreman, shortly after they occurred (id. ¶ 20). According to Alvarez, Jenkins continued to make disparaging remarks about Cubans from January to May 2023 (id. ¶ 21).

Throughout his employment, Alvarez states that he encouraged other workers to report perceived incidents of discrimination, retaliation, and harassment (id. ¶ 22). He asserts that after Davey Tree learned of his discussions with other employees, it “intensified its campaign of discrimination, retaliation, and hostile work environment” (id. ¶ 23). For example, in January 2023, Davey Tree allegedly reduced Alvarez's pay (id. ¶ 24). In March, he applied for, but did not receive, a general foreman position (id. ¶ 25). Then, in April, Davey Tree disciplined and suspended Alvarez for “disclos[ing] his pay rate to other employees” (id. ¶ 26). When Alvarez returned to work, the company started reducing his hours, stating he was “not qualified to do the job” (id. ¶ 27).

On May 21, 2023, Alvarez complained to an individual named Agosto “about the discrimination and harassment he was being subjected to” (id. ¶ 28). Alvarez asserts that his concerns went unaddressed and that he faced further “bullying and unfair treatment by [Davey Tree] and its employees” (id. ¶ 29). On June 25, 2023, he escalated his concerns to the company's CEO, Patrick Covey (id. ¶ 30). Again, Alvarez claims that the company did not act on his complaint and that the alleged mistreatment continued (id. ¶ 31).

On June 27, 2023, Alvarez submitted a formal complaint through Davey Tree's internal reporting system, “Ethics Point” (id. ¶ 32). A few weeks later, on July 19, 2023, he filed a complaint with the South Carolina Human Affairs Commission (id. ¶ 33). On August 3, 2023, an Ethics Point representative informed Alvarez that the investigation into his complaint had concluded (id. ¶ 34). The next day, August 4, 2023, Davey Tree terminated Alvarez's employment, citing a “lack of work” available for him (id. ¶¶ 35-36). Alvarez, however, contends that the reason given for his firing was pretextual (id. ¶ 39). He alleges that Davey Tree fired him (1) because of his Cuban national origin, (2) for complaining of discrimination, and (3) to replace him with an undocumented worker (id.).

On April 30, 2024, Alvarez filed suit against Davey Tree, asserting claims for discrimination, retaliation, and hostile work environment under Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e to 2000e-17 (doc. 1). On July 5, 2024, Alvarez amended his complaint to add claims for discrimination, retaliation, and hostile work environment under 42 U.S.C. § 1981; wrongful termination in violation of South Carolina Code Annotated § 41-1-30; and civil conspiracy (doc. 12). On August 2, 2024, Davey Tree filed a renewed motion to compel arbitration (doc. 17)^[1] and a partial motion to dismiss Alvarez's wrongful termination and civil conspiracy claims (doc. 18). These motions are fully briefed and ready for review.

II. APPLICABLE LAW AND ANALYSIS

The undersigned will first address Davey Tree's motion to compel arbitration before turning to its partial motion to dismiss for failure to state a claim.

A. Davey Tree's Motion to Compel Arbitration

The Federal Arbitration Act (“FAA”) authorizes “[a] party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration [to] petition any United States district court . . . for an order directing that such arbitration proceed in the manner provided for in such agreement.” 9 U.S.C. § 4. In ruling on a motion to compel arbitration, a court considers two questions: (1) whether “an arbitration agreement exists between the parties,” and (2) whether “the dispute at issue falls within the scope of [that] agreement.” Hightower v. GMRI, Inc., 272 F.3d 239, 242 (4th Cir. 2001); Muriithi v. Shuttle Express, Inc., 712 F.3d 173, 179 (4th Cir. 2013). If both questions are answered affirmatively, the court has “no choice but to grant [the] motion.” Adkins v. Labor Ready, Inc., 303 F.3d 496, 500 (4th Cir. 2002); see Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218 (1985) (“By its terms, the [FAA] leaves no place for the exercise of discretion by a district court, but instead mandates that district courts shall direct the parties to proceed to arbitration on issues as to which an arbitration agreement has been signed.” (emphasis in original)).

Courts evaluate motions to compel arbitration under a summary judgment-like standard. Berkeley Cnty. Sch. Dist. v. Hub Int'l Ltd., 944 F.3d 225, 234 (4th Cir. 2019). The party seeking to compel arbitration “bears the burden of establishing the existence of a binding contract to arbitrate the dispute.” Minnieland Priv. Day Sch., Inc. v. Applied Underwriters Captive Risk Assurance Co., 867 F.3d 449, 456 (4th Cir. 2017). The court may compel arbitration only if there are no “genuine issues of material fact regarding the existence of an agreement to arbitrate.” Chorley Enters., Inc. v. Dickey's Barbecue Rests., Inc., 807 F.3d 553, 564 (4th Cir. 2015). But, if the party opposing arbitration “unequivocally denies ‘that an arbitration agreement exists,' and ‘show[s] sufficient facts in support' thereof,” Berkely Cnty., 944 F.3d at 234 (quoting Chorley Enters., 807 F.3d at 564), “the ‘court shall proceed summarily' and conduct a trial on the motion to compel arbitration,” id. (quoting 9 U.S.C. § 4).

1. Existence of a valid arbitration agreement

“Whether an agreement to arbitrate was formed is . . . a question of ordinary state contract law principles.” Rowland v. Sandy Morris Fin. & Estate Planning Servs., LLC, 993 F.3d 253, 258 (4th Cir. 2021). Under South Carolina law, Davey Tree must show “(1) that [Alvarez] had reasonable notice of an offer to enter into an arbitration agreement, and (2) that [Alvarez] manifested [his] assent to that agreement.” Marshall v. Georgetown Mem'l Hosp., 112 F.4th 211, 218 (4th Cir. 2024).

To support its initial motion to compel arbitration, Davey Tree submitted a copy of the purported Arbitration Agreement and a one-page document titled “Acknowledgement and Receipt of the Arbitration Agreement” (“Acknowledgement”) (docs. 8-2, 8-3).^[2] The Acknowledgement, printed on Davey Tree's letterhead, reads:

I acknowledge that I have received and read a copy of the Arbitration Agreement (the“ Arbitration Agreement”); I understand that, if my employment began before March 19, 2022, the Arbitration Agreement would be retroactive to my first day of work once it becomes effective.

I agree to abide by the terms and conditions of the Arbitration Agreement by signing below. I understand, however, that agreeing to this Arbitration Agreement is not required for employment, and I will not be subject to threats, retaliation, discrimination, or termination if I elect not to sign the Arbitration Agreement.

I also understand that I may opt out of the Arbitration Agreement within 30 days once it takes effect by following the instructions in Section (K) of the Arbitration Agreement.

By signing below, I acknowledge that I have read and understand the Arbitration Agreement and voluntarily agree to be bound by the Arbitration Agreement:

(Doc. 8-2 at 2). Alvarez's printed name and electronic signature appear beneath this text, alongside the date “11/18/2022” (id.). According to Davey Tree, the signed Acknowledgement establishes that Alvarez agreed to be bound by the Arbitration Agreement (doc. 17-1 at 8-9).

Alvarez counters that “there is no evidence [he] was presented with, or agreed to, the terms of the [A]rbitration [A]greement” because the Acknowledgement he allegedly signed differs “from the [one] attached to the [A]rbitration [A]greement submitted by [Davey Tree]” (doc. 25 at 4) (emphasis removed). As Alvarez points out, the Arbitration Agreement attached as Exhibit 2 to Davey Tree's initial motion appears as a “five-page Appendix to an unknown document” (id.). The last page, numbered “A-5,” contains an unsigned acknowledgement form that is identical in substance to the Acknowledgement attached as Exhibit 1 (compare doc 8-2 at 2 with doc. 8-3 at 6). Alvarez contends that the presence of this unsigned acknowledgement page at the end of the Arbitration Agreement calls into question...