Ashford v. PricewaterhouseCoopers LLP

954 F.3d 678

Shannon ASHFORD, Plaintiff - Appellee,

v.PRICEWATERHOUSECOOPERS LLP, Defendant - Appellant.

No. 18-1958

United States Court of Appeals, Fourth Circuit.

Argued: January 30, 2020

Decided: April 3, 2020

ARGUED: Helgi C. Walker, GIBSON, DUNN & CRUTCHER LLP, Washington, D.C., for Appellant. John Charles Ormond, Jr., ORMOND DUNN, Columbia, South Carolina, for Appellee. ON BRIEF: Stacy K. Wood, PARKER POE ADAMS & BERNSTEIN LLP, Charlotte, North Carolina; Jason C. Schwartz, GIBSON, DUNN & CRUTCHER LLP, Washington, D.C., for Appellant.

Before NIEMEYER, QUATTLEBAUM, and RUSHING, Circuit Judges.

Reversed and remanded with instructions by published opinion. Judge Quattlebaum wrote the opinion in which Judge Niemeyer and Judge Rushing joined.

QUATTLEBAUM, Circuit Judge:

The Federal Arbitration Act expresses a strong policy in favor of arbitration. Based on that, the Supreme Court and our Court have consistently held that contractual provisions capable of being reasonably read to call for arbitration should be construed in favor of arbitration. Following our precedent, we construe the arbitration provision in the employment agreement between Shannon Ashford and PricewaterhouseCoopers, LLP ("PwC") to require arbitration of Ashford’s Title VII claims. We also conclude that the arbitration provision was neither procedurally nor substantively unconscionable. Therefore, we reverse the district court’s denial of PwC’s motion to compel arbitration of Ashford’s Title VII claims and remand the case with instructions to compel.

I.

PwC hired Ashford in March 2015 as an associate in its Columbia, South Carolina advisory group. To confirm her employment, Ashford electronically executed an employment agreement containing arbitration provisions.¹

The agreement required arbitration of all "Covered Claims," including claims under "federal, state and local laws regarding employment ... and any other claims arising under any federal, state or local statute[,] ordinance, regulation, public policy or common law." J.A. 45. It expressly excluded, however, "[c]laims that arise under Title VII of the Civil Rights Act of 1964, which prohibits employment discrimination on the basis of race, color, religion, sex, and national origin, unless and until federal law no longer prohibits the Firm from mandating arbitration of such claims." J.A. 46. The agreement applied to the "Firm," defined to include "[PwC] and/or any of its subsidiaries or affiliates based in the United States." J.A. 45.

Later, after being passed over for several promotions, Ashford sued PwC in South Carolina state court alleging race discrimination under Title VII of the Civil Rights Act of 1964 and 42 U.S.C. § 1981, and retaliation under Title VII. PwC then removed the case to federal court and moved to compel arbitration, and to stay or dismiss the proceedings, in accordance with the terms of Ashford’s employment agreement.

In support of its motion, PwC argued that the Title VII exclusion in Ashford’s agreement did not apply to her claims because federal law no longer prohibited PwC from mandating arbitration of Title VII claims. According to PwC, at the time the agreement’s arbitration provisions were drafted, PwC was subject to the Franken Amendment to the Defense Appropriations Act for Fiscal Year 2010—which bars certain defense contractors from mandating arbitration of Title VII claims in employment contracts. See 48 C.F.R. §§ 222.7402(a)(1)(i), 252.222–7006, 222.7400 – 7405. However, when Ashford’s employment began, PwC no longer performed the types of work that invoked the prohibition on mandatory arbitration and, thus, was no longer subject to the Amendment.²

The district court granted PwC’s motion as to Ashford’s Section 1981 claim but denied it as to her Title VII claims. Applying New York law pursuant to the agreement’s choice of law provision, the district court concluded that the Title VII exclusion remained in effect. The district court concluded that the "unless and until federal law no longer prohibits" language in the Title VII exclusion required a change of federal law. Since the law did not change, the district court reasoned her Title VII claims were still excluded from the mandatory arbitration provision. It further found that the agreement’s definition of "Firm" included PwC and any of its subsidiaries or affiliates. Based on this language, the district court determined that PwC was required to establish that neither PwC nor any of its subsidiaries or affiliates were prohibited from mandating the arbitration of Title VII claims by federal law. But since PwC only presented evidence that it was not prohibited from mandating the arbitration of Title VII claims, the court ruled that PwC failed to establish that the Title VII exclusion did not apply. Finally, the district court alternatively concluded that if the Title VII exclusion ceased to apply because of a change in facts, rather than a change of law, it was procedurally and substantively unconscionable.

PwC timely appealed the district court’s order.³ We have jurisdiction over this interlocutory appeal pursuant to 9 U.S.C. § 16.

II.

PwC’s appeal requires us to consider two primary issues. First, does Ashford’s employment agreement exclude her Title VII claims from the mandatory arbitration requirement? If so, that ends our inquiry and the judgment of the district court should be affirmed. But if not, we must then consider whether the Title VII exclusion is unconscionable. We address each of these issues in turn.

A.

We first consider whether the employment agreement excludes Ashford’s Title VII claims from arbitration. In doing so, we "review de novo the enforceability of an arbitration provision, and apply a strong federal policy in favor of enforcing arbitration agreements." Dillon v. BMO Harris Bank, N.A. , 856 F.3d 330, 333 (4th Cir. 2017) (internal quotation marks omitted). Congress enacted the Federal Arbitration Act ("FAA") to curb "widespread judicial hostility to arbitration agreements." AT&T Mobility LLC v. Concepcion , 563 U.S. 333, 339, 131 S.Ct. 1740, 179 L.Ed.2d 742 (2011). The FAA requires courts to "rigorously ... enforce arbitration agreements according to their terms ...." Epic Sys. Corp. v. Lewis , ––– U.S. ––––, 138 S. Ct. 1612, 1620, 200 L.Ed.2d 889 (2018) (internal quotation marks omitted). The FAA’s policy of favoring arbitration augments "ordinary rules of contract interpretation," Choice Hotels Int’l, Inc. v. BSR Tropicana Resort, Inc. , 252 F.3d 707, 710 (4th Cir. 2001), and requires all ambiguities to be resolved in favor of arbitration. Wash. Square Secs., Inc. v. Aune , 385 F.3d 432, 436 (4th Cir. 2004). It applies with equal force to employment agreements providing for the arbitration of discrimination claims brought under Title VII of the Civil Rights Act. Murray v. United Food and Commercial Workers Int’l. Union , 289 F.3d 297, 301 (4th Cir. 2002).

1.

With that background in mind, we turn to PwC’s first argument. PwC insists the agreement requires arbitration of Ashford’s Title VII claims if either the law changed to allow PwC to arbitrate Title VII claims or facts changed so that any federal prohibition of mandatory arbitration of such claims no longer applied to PwC. In contrast, Ashford contends the agreement requires arbitration of Title VII claims only in the event of a change of law. It is undisputed that no such change in law has occurred. Therefore, for PwC to prevail, the agreement must allow arbitration of Title VII claims if facts change so that the prohibition of mandatory arbitration of Title VII claims does not apply to PwC.

Importantly, under precedent from the Supreme Court and this Court, we must read the Title VII exclusion in favor of arbitration if we can reasonably do so.

[T]here is a presumption of arbitrability in the sense that "[a]n order to arbitrate the particular grievance should not be denied unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute. Doubts should be resolved in favor of coverage."

AT&T Techs., Inc. v. Commc’ns Workers of America, 475 U.S. 643, 650, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986) (quoting United Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582–83, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960) ); see also Aune , 385 F.3d at 436. Thus, we ask if the agreement can be read to permit arbitration here.

We conclude that it can. The key language from the agreement is "unless and until federal law no longer prohibits the Firm from mandating arbitration of such claims." Critically, this language does not say that the only way PwC can mandate arbitration of Title VII claims is if federal law no longer prohibits PwC from mandating arbitration due to a change in law. Instead, it looks more broadly as to whether PwC is no longer prohibited from mandating arbitration of Title VII claims, regardless of the reason.

Further, for federal law to prohibit PwC from mandating arbitration of Title VII claims, there must be both a legal prohibition against mandating arbitration and facts tying PwC to that prohibition. The pertinent legal prohibition is the Franken Amendment to the Defense Appropriations Act for Fiscal Year 2010. That amendment bars defense contractors from mandating arbitration of Title VII employment claims. But the prohibition only applied to those engaged in certain defense contracting. At the time the agreement was drafted, PwC performed the type of defense contracting work that subjected it to the Franken Amendment. Together, the existence of the prohibition—the law—and PwC’s defense contracting work—the facts—combined to prohibit PwC from mandating arbitration of Title VII claims.

And since both the law and the facts were required to prohibit PwC from mandating arbitration of Title VII claims, a change in either could result in federal law "no longer prohibit[ing] PwC from mandating arbitration" of such claims. Here it was a change in...