Gray v. GC Servs., LP

540 P.3d 1240

Michele GRAY, Plaintiff/Appellant,

v.GC SERVICES, LP, Defendant/Appellee.

No. 1 CA-CV 21-0533

Court of Appeals of Arizona, Division 1.

Filed December 14, 2023

Michele Gray, Rensselaer, NY, Plaintiff/Appellant

Hassett Glasser PC, Phoenix, By Myles P. Hassett, Jamie A. Glasser, David R. Seidman, Counsel for Defendant/Appellee

Judge Michael J. Brown delivered the opinion of the Court, in which Presiding Judge Maria Elena Cruz and Judge Samuel A. Thumma joined.

OPINION

BROWN, Judge:

¶1 Michele Gray appeals the superior court's order dismissing her employment-related claims with prejudice, asserting the court erred by failing to order arbitration under the parties' employment agreement. We hold that the parties explicitly agreed to resolve all disputes arising out of Gray's employment through arbitration, including whether Gray's current lawsuit is barred by claim preclusion. Thus, we vacate the dismissal order and remand to allow the parties to participate in arbitration to address preclusion and other issues in the exclusive forum they selected to resolve their dispute.

BACKGROUND

¶2 In June 2019, GC Services, LP ("GCS") hired Gray as a home-based customer service representative. As a condition of employment, Gray signed a "Mutual Agreement for Dispute Resolution" ("Agreement") providing for "mutually binding" arbitration. The Agreement states that it is governed by the Federal Arbitration Act ("FAA") and "shall survive the termination of [Gray's] employment" by GCS.¹

¶3 The employment relationship soured, and in January 2020, Gray sent GCS a resignation letter, which GCS immediately accepted. Several months later, Gray sued GCS in the United States District Court for the Northern District of New York, alleging GCS wrongfully terminated her employment in violation of several federal and state statutes. In February 2021, Gray sued GCS in Maricopa County Superior Court, raising substantially the same claims she had alleged in the federal lawsuit, along with claims based on state law. Meanwhile, Gray filed a nearly identical suit in New York state court. Regardless of the ultimate disposition of the suits Gray filed in New York, they have no bearing on the outcome of this appeal.

¶4 In the case before us, GCS filed a combined motion to compel arbitration and motion to dismiss. GCS stated it was "seeking to compel any cognizable claims to arbitration pursuant to a valid and binding arbitration agreement between the parties," which required them "to arbitrate all disputes arising out of or related to [Gray's] employment or the termination thereof." GCS qualified its motion to compel, however, asserting there was nothing the superior court could compel because Gray's complaint failed to state any cognizable claim and thus dismissal was appropriate under Arizona Rule of Civil Procedure ("Rule") 12(b)(6). GCS added that, even if a "cognizable claim" existed, Gray's lawsuit would be barred by claim preclusion.²

¶5 The superior court dismissed Gray's complaint with prejudice, explaining it was unnecessary to decide the "arbitration issue" because Gray failed to state a claim under any of the grounds she had alleged, and claim preclusion applied. After the court issued a final judgment, Gray filed a timely notice of appeal.

DISCUSSION

A. Appellate Jurisdiction

¶6 GCS asks that we dismiss Gray's appeal, asserting the substantive issues raised in Gray's opening brief go beyond her notice of appeal. "As a general rule, our review is limited to matters designated in the notice of appeal or cross-appeal." Desert Palm Surgical Grp., P.L.C. v. Petta , 236 Ariz. 568, 576, ¶ 15, 343 P.3d 438, 446 (App. 2015). Whether the notice of appeal is sufficient is a question of jurisdiction, and "[w]e have an independent duty to determine whether we have jurisdiction over an appeal." Id.

¶7 Although Gray's notice of appeal included an extraneous comment referencing her amended complaint, the notice plainly stated she was appealing the superior court's dismissal order. Thus, she substantially complied with our appellate rules by identifying the correct order she wished to appeal. See ARCAP 8(c)(3) (stating that a notice of appeal must "[d]esignate the judgment or portion of the judgment from which the party is appealing"). Moreover, GCS has made no argument it was misled as to which order Gray intended to appeal or was otherwise prejudiced. See Hill v. City of Phoenix , 193 Ariz. 570, 572–73, ¶ 10, 975 P.2d 700, 702–03 (1999). We have appellate jurisdiction under A.R.S. § 12-2101(A)(1) to decide issues relating to the dismissal order.

B. Waiver

¶8 GCS argues that Gray waived all arguments on appeal because her opening brief does not comply with ARCAP 13. Among other things, GCS asserts that Gray failed to include a statement of the case, her statement of the facts is incoherent, she did not provide citations to the law or record, and her arguments are a "mishmash of perceived grievances." See Ramos v. Nichols , 252 Ariz. 519, 522, ¶ 8, 505 P.3d 312, 315 (App. 2022) (explaining that an appellant who fails to make a reasonable effort to comply with the rules may waive issues on appeal due to noncompliance). Although the opening brief is deficient in some respects, we decline to apply waiver because Gray has adequately challenged the court's decision to dismiss the case on the merits without first considering whether her claims must be resolved through arbitration. See id.

C. Motion to Compel Arbitration

¶9 Turning to the substance of her appeal, Gray argues the superior court erred when it failed to compel arbitration pursuant to the Agreement. We review de novo the superior court's decision on whether to compel arbitration. Allstate Prop. & Cas. Ins. Co. v. Watts Water Techs., Inc. , 244 Ariz. 253, 256, ¶ 9, 418 P.3d 1026, 1029 (App. 2018). When addressing whether the parties agreed to arbitrate a certain matter, courts generally apply state-law principles governing contract formation. First Options of Chicago, Inc. v. Kaplan , 514 U.S. 938, 944, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995). Once it is determined that the FAA applies to a dispute, federal substantive law regarding arbitrability controls. Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc. , 473 U.S. 614, 626, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985).

¶10 In addressing "whether a dispute is subject to arbitration governed by the FAA, a court is limited to deciding whether an arbitration agreement exists and whether it encompasses the dispute." United Behav. Health v. Maricopa Integrated Health Sys. , 240 Ariz. 118, 126, ¶ 28, 377 P.3d 315, 323 (2016). (citing Chiron Corp. v. Ortho Diagnostic Sys., Inc. , 207 F.3d 1126, 1130 (9th Cir. 2000) ). "If the response is affirmative on both counts, then the Act requires the court to enforce the arbitration agreement in accordance with its terms." Chiron Corp. , 207 F.3d at 1130. The question here is whether the Agreement encompasses the disputes between GCS and Gray.

¶11 Section 1 of the Agreement ("All Disputes Must be Arbitrated") states in part:

Claims subject to arbitration include all legally cognizable claims in the broadest context and include, but are not limited to, any dispute about the interpretation, applicability, validity, existence, enforcement, or extent of arbitrability of or under this Agreement ... This includes, by way of non-exhaustive illustration only, any claim of employment discrimination in any alleged form ... or any other claim, whether contractual, common-law, statutory, or regulatory arising out of, or in any way related to, Individual's application for employment with and/or employment with Company, the termination thereof, this Agreement, or any other matter incident or in any manner related thereto.

¶12 In interpreting a contract, we consider the language used according to its plain and ordinary meaning, viewed in context of the entire contract, unless "it can be shown that the parties intended a special meaning." Terrell v. Torres , 248 Ariz. 47, 50, ¶ 14, 456 P.3d 13, 16 (2020). We also "attempt to reconcile and give effect to all terms of the contract to avoid any term being rendered superfluous." Id.

¶13 "Absent some ambiguity in the agreement, ... it is the language of the contract that defines the scope of disputes subject to arbitration."

Equal Emp. Opportunity Comm'n v. Waffle House, Inc. , 534 U.S. 279, 289, 122 S.Ct. 754, 151 L.Ed.2d 755 (2002). Ambiguities in an agreement "should be resolved in favor of arbitration," but courts will not override parties' intent, "or reach a result inconsistent with the plain text of the contract, simply because the policy favoring arbitration is implicated." Id. at 294, 122 S.Ct. 754; see also Morgan v. Sundance, Inc. , 596 U.S. 411, 418, 142 S.Ct. 1708, 212 L.Ed.2d 753 (2022) (noting that the federal policy favoring arbitration is not intended to "favor arbitration over litigation[,]" but rather to "hold a party to its arbitration contract just as the court would to any other [contract]"). And except in limited circumstances not applicable here, arbitration agreements in employment contracts are valid and enforceable. See Cir. City Stores v. Adams , 532 U.S. 105, 119, 121 S.Ct. 1302, 149 L.Ed.2d 234 (2001) ; see also Hamblen v. Hatch , 242 Ariz. 483, 488, ¶ 20, 398 P.3d 99, 104 (2017).

1. Legally Cognizable Claims

¶14 GCS argues the FAA does not apply because its dispute with Gray is not a "legally cognizable claim" as that phrase is used in the Agreement. But that argument overlooks the Agreement's expansive language requiring arbitration and the FAA's broad applicability to arbitration agreements. See 9 U.S.C. § 2 (establishing the validity and enforceability of agreements to arbitrate disputes arising out of contract "save upon such grounds as exist at law or in equity for the revocation of any contract"); see also S. Cal. Edison Co. v. Peabody W. Coal Co. , 194 Ariz. 47, 51, ¶ 13, 977 P.2d 769, 773 (1999) ("The FAA preempts state law and governs all...