Hill v. Builder Servs. Grp.

THOMAS HILL, an individual, Plaintiff, v. BUILDER SERVICES GROUP, INC., a foreign corporation, BRIAN BUNCH and JANE DOE BUNCH and the marital community comprised thereof, Defendants.

No. C20-1478-JCC

United States District Court, W.D. Washington, Seattle

September 3, 2021

ORDER

JOHN C. COUGHENOUR UNITED STATES DISTRICT JUDGE

This matter comes before the Court on Plaintiff Thomas Hill's motion to sever and remand his state law claim (Dkt. No. 8) Defendant Builder Services Group, Inc.'s motion to compel arbitration (Dkt. No. 14), Defendants' motion to disqualify Plaintiff's counsel (Dkt. No. 29), and Plaintiff's motion to seal (Dkt. No. 37). Having thoroughly considered the parties' briefing and the relevant record, the Court finds oral argument unnecessary and hereby GRANTS the motion to sever and remand (Dkt. No 8), GRANTS in part the motion to compel arbitration (Dkt. No 14), DENIES the motion to disqualify (Dkt. No. 29), and GRANTS the motion to seal (Dkt. No. 37) for the reasons explained herein.

I. BACKGROUND

Plaintiff Thomas Hill filed suit in King County Superior Court against his former employer, Builder Services Group, Inc. (“BSG”), and his former supervisor at BSG, Brian Bunch, for violations of the Washington Law Against Discrimination (“WLAD”). (See generally Dkt. No. 1-1.) Mr. Hill alleges that Defendants terminated his employment while he was on leave for inpatient treatment for an addiction issue, and that his firing amounts to both disparate treatment based on his medical disability and a failure to grant him a reasonable accommodation. (Id. at 4.) After Mr. Hill amended his complaint to add a claim against BSG under the Employee Retirement Income Security Act, 29 U.S.C. § 1132, for failing to provide notice of Mr. Hill's Consolidated Omnibus Budget Reconciliation Act (“COBRA”) continuation of health coverage rights, (id. at 5), Defendants removed the action to this Court, (Dkt. No. 1).

II. DISCUSSION

A. Plaintiff's Motion to Sever and Remand

Mr. Hill moves to sever his state WLAD claim from his federal COBRA claim, and to remand the WLAD claim to state court. (See generally Dkt. No. 8.) He argues that the Court lacks supplemental jurisdiction over his WLAD claim, and that even if the Court has supplemental jurisdiction, it should decline to exercise it. (Id. at 9-13.)

When the Court has original jurisdiction over a civil action, it may exercise supplemental jurisdiction over state law claims that “are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution.” 28 U.S.C. § 1367(a). “A state law claim is part of the same case or controversy when it shares a ‘common nucleus of operative fact' with the federal claims and the state and federal claims would normally be tried together.” Bahrampour v. Lampert, 356 F.3d 969, 978 (9th Cir. 2004) (quoting Trs. of the Constr. Indus. & Laborers Health & Welfare Trust v. Desert Valley Landscape Maint., Inc., 333 F.3d 923, 925 (9th Cir. 2003); United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 725 (1966).

Mr. Hill's COBRA and WLAD claims do not share a common nucleus of operative facts. Mr. Hill's failure to accommodate claim under WLAD will involve determining whether Mr. Hill suffered from a disability, was qualified for the job in question, and gave notice of his disability to BSG, and whether BSG failed to reasonably accommodate his disability. See LaRose v. King Cnty., 437 P.3d 701, 721 (Wash. App. 2019). Mr. Hill's WLAD disparate treatment claim will involve also determining whether Mr. Hill was doing satisfactory work and whether his disability was a substantial motivating factor for his termination. See Marin v. King Cnty., 378 P.3d 203, 212 (Wash.Ct.App. 2016). The facts and evidence relevant to these issues have little, if any, overlap with the facts and evidence bearing on Mr. Hill's COBRA claim, which will involve determining whether he received notice of his right to continue his health coverage after he was terminated. See Sheffield v. Goodyear Tire & Rubber Co., 2007 WL 3348428, slip op. at 3 (W.D. Wash. 2007). In the absence of evidentiary overlap between the claims, the mere fact that both claims are related to the employment relationship is not enough to establish supplemental jurisdiction. See Llanes v. Zalewski, 2019 WL 1509992, slip op. at 2 (D. Or. 2019) (“[C]ourts in the Ninth Circuit generally find that they lack supplemental jurisdiction over counterclaims where the only shared fact with the plaintiff's [federal] claim is the employment relationship.”).

BSG argues there will be some evidentiary overlap because Mr. Hill is seeking to recover medical expenses that he incurred for his drug treatment as damages for the alleged COBRA violation. (Dkt. No. 16 at 9.) But the question of whether Mr. Hill's treatment would have been covered by insurance (such that his expenses for it could be recoverable as damages for a COBRA violation) is wholly distinct from the question of whether his opiate addiction amounted to a disability under WLAD and whether time off for treatment was a reasonable accommodation. Any overlap between the evidence relevant to each question is likely to be minimal and is not sufficient to form a “common nucleus of operative facts.”

Accordingly, the Court GRANTS Mr. Hill's motion to sever and remand his WLAD claim to King County Superior Court (Dkt. No. 8).^[1]

B. Defendant's Motion to Compel Arbitration

BSG moves to compel arbitration of Mr. Hill's claims. (Dkt. No. 14.) Because the Court severs and remands Mr. Hill's WLAD claim, BSG's motion is moot in part, and the Court will consider only whether to compel arbitration of Mr. Hill's COBRA claim.

BSG argues that Mr. Hill's claim is subject to the company's Dispute Resolution Policy, which requires arbitration of “any claim under applicable state or federal common or statutory law an employee might have against the Company including, for example, all claims for: . . . all forms of unlawful discrimination” and “any claim an employee might have against any officer, director, employee, or agent of the Company . . . if that claim in any way arises out of or relates to . . . the employment relationship, or the termination of the employment relationship.” (Dkt. No. 15-2 at 2.) During his job training, Mr. Hill electronically signed an Acknowledgement Form incorporating the Dispute Resolution Policy. (Dkt. No. 27 at 2; Dkt. No. 15-3 at 2.) The Acknowledgement Form lists several company policies by name, including the Dispute Resolution Policy, and contains a hyperlink to each one. (Dkt. No. 15-3 at 2.) The Acknowledgement Form provides that Mr. Hill “acknowledge[s] that [he] ha[s] reviewed a copy” of each of the listed policies and “understand[s] that is it [his] responsibility to review, become familiar with, and comply with the policies and procedures by clicking on the links listed above.” (Id.) BSG argues that Mr. Hill's claim is subject to arbitration pursuant to the Dispute Resolution Policy and that if there is any question about arbitrability, it must be decided by an arbitrator because the Policy delegates gateway issues to arbitration. (Dkt. No. 14 at 4-8.)

The Federal Arbitration Act makes agreements to arbitrate “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. When deciding a motion to compel arbitration, the Court generally must decide two gateway issues: (1) whether there is a valid agreement to arbitrate between the parties and (2) whether the agreement covers the dispute. Brennan v. Opus Bank, 796 F.3d 1125, 1130 (9th Cir. 2015). Parties may delegate these issues to an arbitrator if they clearly and unmistakably provide for it. Id. But even if a delegation provision is clear and unmistakable, it may be found unenforceable if the delegation provision itself is unconscionable. Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63, 71-74 (2010). Moreover, the Court retains the power to decide whether the parties mutually assented to a contract containing a delegation provision. MZM Constr. Co., Inc. v. New Jersey Bldg. Laborers Statewide Benefit Funds, 974 F.3d 386, 399 (3d Cir. 2020) (collecting cases from other circuits); Cortez v. Nationstar Mortg. LLC, 2020 WL 2303090, slip op. at 3 (C.D. Cal. 2020) (citing Three Valleys Mun. Water Dist. v. E.F. Hutton & Co., 925 F.2d 1136, 1140-41 (9th Cir. 1991)).

BSG contends that the parties clearly and unmistakably delegated gateway issues to an arbitrator because the Dispute Resolution Policy incorporates the Commercial Arbitration Rules of the American Arbitration Association, which provide that “[t]he arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope, and validity of the arbitration agreement.” (Dkt. No. 15-4 at 3.) Mr. Hill responds by challenging the formation of the entire contract and the enforceability of the delegation provision specifically. He argues that there was no mutual assent to the Dispute Resolution Policy (and the delegation provision contained therein) and that, even if there was, the delegation provision is unconscionable. (Dkt. No. 25 at 9-22.)

In Washington, for a contract to exist there must be mutual assent to its essential terms, including terms that are incorporated by reference. Burnett v. Pagliacci Pizza Inc., 470 P.3d 486, 491-492 (Wash. 2020). Mr. Hill argues that he did not manifest assent to the Dispute Resolution Policy by signing the Acknowledgment Form. (Dkt. No. 25 at 11-12, 16.) His argument relies on Burnett v. Pagliacci Pizza, Inc., where the Washington Supreme Court held that an employee did...