Claybrook v. Sunoco GP LLC

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SHARA CLAYBROOK Plaintiff, v. SUNOCO GP LLC, M. KATE FITZPATRICK, and CHERYL A. SMITH Defendants.

No. 1:18-cv-00029-TAV-CHS

United States District Court, E.D. Tennessee, Chattanooga

March 28, 2023

REPORT AND RECOMMENDATION

CHRISTOPHER H. STEGER, UNITED STATES MAGISTRATE JUDGE.

I. Introduction

This matter is before the Court upon Defendants' Motion to Vacate Arbitration Award^[1][Doc. 34] and Plaintiff Shara Claybrook's ("Plaintiff" or "Claybrook") Motion to Confirm Arbitration Award and Award Interest [Doc. 45]. By way of background, these motions follow entry of an arbitration award in favor of Plaintiff against Defendants Sunoco GP, LLC ("Sunoco"), M. Kate Fitzpatrick ("Fitzpatrick"), and Cheryl A. Smith ("Smith"), with respect to Plaintiff's claims of defamation and tortious interference with a business relationship. In their competing motions, Defendants seek to have the arbitration award set aside, while Plaintiff asks the Court to confirm the award.

These motions are before the Court having been referred for a report and recommendation by the District Court pursuant to 28 U.S.C. § 636(b)(1)(B) and (C). The Court has subject matter jurisdiction to hear these motions pursuant to 28 U.S.C. § 1332. For the reasons stated herein, the Court WILL RECOMMEND that Defendants' Motion to Vacate Arbitration Award [Doc. 34] be DENIED; Plaintiff's Motion to Confirm Arbitration Award and Award Interest [Doc. 45] be GRANTED; the Arbitrator's award be CONFIRMED pursuant to the Federal Arbitration Act, 9 U.S.C. § 9; and Plaintiff be AWARDED post-award, prejudgment interest and post-judgment interest.

II. Background

A. Procedural History

On February 2, 2018, Plaintiff filed an action in this Court asserting claims against Sunoco and former Sunoco employees, Fitzpatrick and Smith, arising from Plaintiff's employment with Sunoco. On August 17, 2018, Sunoco filed a motion to dismiss and compel arbitration of Plaintiff's lawsuit. On October 4, 2018, the parties entered a stipulation of dismissal without prejudice in this Court pursuant to Federal Rule of Civil Procedure 41, so that the case could be submitted to arbitration.

In November 2018, the American Arbitration Association ("AAA") opened a case to arbitrate Plaintiff's claims against Defendants and appointed as the arbitrator, Matthew Sweeny, a shareholder at Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, and a former Davidson County Circuit Court judge. Neither side objected to Arbitrator Sweeney's appointment. [Doc. 451, Ex. 1 to Pl.'s Response to Def.s' Motion to Vacate, Page ID # 868]^[2].

Plaintiff asserted four claims against Sunoco in the arbitration: (1) a violation of the Fair Labor Standards Act ("FLSA"); (2) a violation of the Family and Medical Leave Act ("FMLA"); (3) defamation; and (4) tortious interference with a business relationship. Plaintiff also asserted the two tort claims against Fitzpatrick and Smith.

By way of factual background, Plaintiff was employed as a field recruiter for Sunoco from December 2015 to October 2017. According to Plaintiff, shortly before Sunoco sold the division where she worked to 7-Eleven, she was given a verbal job offer by Axalta Coatings Systems, Ltd ("Axalta"). The job offer involved better pay and benefits than what she was receiving at Sunoco. Thereafter, Defendants Kate Fitzpatrick and Cheryl Smith, two managerial level employees with Sunoco, gave an Axalta employee, Carrie Ruddy, false, negative and misleading, confidential information about Plaintiff-deliberately and with reckless disregard for the truth-knowing and intending that that information would cause her job offer at Axalta to be rescinded. As a result of this information, Axalta did rescind its offer of employment to Plaintiff.

Defendants denied all liability with respect to Plaintiff's claims. Defendants asserted that no evidence existed to support Plaintiff's contention that Axalta had actually offered Plaintiff a job and that, in any event, Fitzpatrick only had a personal and casual conversation about Plaintiff via text message with a friend at Axalta, Carrie Ruddy. Defendants further asserted that nothing Fitzpatrick said was intended to be used by Axalta in deciding whether to hire Plaintiff or could reasonably be construed as such. Defendants also denied that anything Fitzpatrick said to Ruddy actually had any bearing on Plaintiff's loss of a job offer from Axalta. Defendants further denied that Smith had any communications about Plaintiff to anyone at Axalta.

Arbitrator Sweeney held an evidentiary hearing on September 22-24, 2020, on the issue of liability under all four claims. On November 30, 2020, Arbitrator Sweeney issued a twenty-nine page Interim Award in which he dismissed Plaintiff's FLSA and FMLA claims but found in favor of Plaintiff on her claims against Defendants for defamation and tortious interference with a business relationship. As part of the Interim Award, Arbitrator Sweeney awarded Plaintiff the following damages:

1) $156,501.41 in compensatory damages against Defendants jointly and severally;

2) $5,360.00 against Sunoco in attorney fees incurred by Plaintiff related to her Motion for Sanctions for spoliation of evidence; and

3) $1,127.90 in litigation costs and expenses.

[Doc. 44-2, Interim Award at Page ID # 779]. Arbitrator Sweeney stated in his decision that "[t]his award shall remain in full force and effect until such time as a Final Award is rendered." [Doc. 442, Interim Award at Page ID # 781].

Arbitrator Sweeney held a subsequent hearing on punitive damages on March 25, 2021.

On April 29, 2021, Arbitrator Sweeney issued his Final Award, a thirty-nine page opinion in which he detailed his findings in favor of Plaintiff on her tort claims and the basis for his award of compensatory and punitive damages. The Final Award incorporated the Interim Award.^[3][Doc. 35 1, Arbitrator Sweeney's Final Award]. In the Final Award, Arbitrator Sweeney awarded to Plaintiff the following damages:

1) $156,501.41 in compensatory damages against Defendants jointly and severally;

2) $5,360.00 against Sunoco in attorney fees incurred by Plaintiff related to her Motion for Sanctions for spoliation of evidence;

3) $2,304.40 in litigation costs and expenses;

4) $2,950.00 for AAA administrative fees;

5) $41,342.50 for the Arbitrator's fee;

6) $25,000 in punitive damages each against Fitzpatrick and Smith; and

7) $450,000 in punitive damages against Sunoco.

[Doc. 35-1, Final Award, Page ID # 209].

Subsequently, Defendants filed their Motion to Vacate Arbitration Award [Doc. 34] in this Court, and Plaintiff followed with her Motion to Confirm Arbitration Award and Award Interest [Doc. 45]. Plaintiff does not contest Arbitrator Sweeney's dismissal of Plaintiff's FLSA and FMLA claims. Rather, at issue is Arbitrator Sweeney's decision finding that Defendants defamed Plaintiff and interfered with her business relationship with Axalta, and his decision awarding Plaintiff compensatory and punitive damages.

B. Arbitrator Sweeney's Findings of Fact

The facts of this case are extensive. The Court does not attempt to detail all of the evidence in this Report and Recommendation. Such an exercise is outside the Court's scope of authority to review an arbitration decision pursuant to the Federal Arbitration Act ("FAA"). The Court will, however, detail salient findings made by Arbitrator Sweeney:

• Plaintiff was employed by Sunoco as a field recruiter from December 2015 through October 2017. In 2017, she was earning $83,200.00 per year. Plaintiff was assigned recruiting responsibilities for positions at Sunoco's retail stores in parts of Tennessee and Georgia, and Defendant Cheryl Smith was Plaintiff's direct supervisor. Kate Fitzpatrick was a Senior HR Manager for Sunoco. As a condition of Plaintiff's employment, Sunoco required Plaintiff to enter into an agreement ("Arbitration Agreement") which barred claims arising from her employment to be brought in any state or federal court against Sunoco and/or its employees; instead, the Arbitration Agreement required such claims to proceed to final and binding arbitration. [See Arbitration Agreement Doc. 44-1, Page ID # 735.]^[4]

• In Spring 2017, it became known that Sunoco was selling to 7-Eleven the business unit in which Plaintiff worked. The affected Sunoco employees were guaranteed jobs until October 15, 2017, and would receive certain benefits, including a bonus, if they agreed to stay through that date. Plaintiff signed her transition agreement with Sunoco on August 26, 2017, and remained with Sunoco until October 15, but she did not receive a bonus because she refused to sign a release of claims against Sunoco.

• After the 7-Eleven sale was announced, Plaintiff began to look for other employment because she did not know whether 7-Eleven would hire her after the sale. In August 2017, Plaintiff was contacted by a former business colleague, Isha Patterson, the North American Human Resources Leader at Axalta. Patterson told Plaintiff about a Senior Human Resources Generalist position at Axalta's Duracoat facility in Alabama. Plaintiff interviewed with Patterson on August 20, 2017, and was given a verbal offer by Patterson for a job in Huntsville, Alabama, making $95,000 a year, a full benefits package, a $30,000 relocation package, and the immediate availability of FMLA leave. Plaintiff verbally accepted the offer and Patterson told her she would receive written confirmation after Patterson returned to her office in Texas. Before a written offer was extended, however, Carrie Ruddy, a former Sunoco employee who was then employed at Axalta, reached out to Fitzpatrick, her former colleague at Sunoco, seeking information about Plaintiff. Fitzpatrick and Smith then responded to Ruddy via text

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