Marshall v. Georgetown Mem'l Hosp.

112 F.4th 211

Loretta Sabrina MARSHALL, Individually and on behalf of all others similarly situated, Plaintiff-Appellee, v. GEORGETOWN MEMORIAL HOSPITAL, d/b/a Tidelands Health, Defendant-Appellant.

No. 22-2010

United States Court of Appeals, Fourth Circuit

Argued: January 23, 2024

Decided: August 13, 2024

Appeal from the United States District Court for the District of South Carolina, at Charleston. Richard Mark Gergel, District Judge. (2:21-cv-02733-RMG-JDA)

ARGUED: Thomas Alan Bright, OGLETREE DEAKINS NASH SMOAK & STEWART, PC, Greenville, South Carolina, for Appellant. Shelby Hannah Leighton, PUBLIC JUSTICE, PC, Washington, D.C., for Appellee. ON BRIEF: David A. Nauheim, NAUHEIM LAW OFFICE, LLC, Charleston, South Carolina, for Appellee.

Before KING, GREGORY, and HARRIS, Circuit Judges.

Affirmed by published opinion. Judge Harris wrote the majority opinion, in which Judge King and Judge Gregory joined.

PAMELA HARRIS, Circuit Judge:

Loretta Marshall applied for a nursing job with Tidelands Health, using Tidelands' online application process. After Marshall failed a mandatory physical agility test, she was denied employment. Marshall then sued Tidelands in federal court, alleging that its use of the physical agility test constitutes prohibited discrimination.

Tidelands moved to compel arbitration, arguing that the online application materials submitted by Marshall included an arbitration agreement covering the parties' dispute. The district court denied the motion, concluding that Tidelands had not shown the existence of an agreement to arbitrate. We agree with the district court and affirm its judgment.

I.

A.

This appeal arises from a putative class action against Tidelands Health ("Tidelands"), a South Carolina healthcare provider. The action challenges Tidelands' policy of requiring new hires to pass a physical agility test, alleging principally that this policy discriminates against persons with disabilities in violation of the Americans with Disabilities Act, or the ADA, 42 U.S.C. § 12112, and has a disparate impact on people with disabilities and women in violation of the ADA and Title VII, 42 U.S.C. § 2000e-2.¹

The plaintiff, Loretta Marshall, was originally employed by Tidelands as a registered nurse in 2008. She remained with Tidelands until 2011, when she left to work elsewhere. During this first period of employment, Marshall was not subject to the physical agility test policy for new hires, which was introduced by Tidelands only in 2010.

In 2016, Marshall again applied for a nursing position with Tidelands, this time using Tidelands' then-new online application process. That online employment application included an arbitration clause, and there is no dispute that Marshall entered into a valid arbitration agreement with Tidelands when she submitted her online application in 2016.

In 2016, the process worked as follows. As an initial online applicant, Marshall, after inputting personal information and creating a profile, was required to scroll through — and directed to read — a "PRE-EMPLOYMENT STATEMENT" that included an "Agreement to Arbitrate" governing "all claims, disputes or controversies arising out of or relating to your application for employment and application process." J.A. 49-50. At the end of the pre-employment statement was a box to be checked and the words "I ACCEPT," along with a space for an e-signature that would automatically be date- and time-stamped. Directly beneath the box was clear notice as to the implications of checking and signing: "By checking the box above next to the 'I ACCEPT' button, I am ... agreeing to the PRE-EMPLOY[ME]NT STATEMENT which contains the Agreement to Arbitrate[.]" J.A. 52.

Again, in 2016, Marshall could not submit her application until she scrolled past the pre-employment statement and checked the "I ACCEPT" box. See J.A. 187. The parties agree that Marshall complied with those procedures, checking the box and signing electronically, and that in so doing she entered into an arbitration agreement with Tidelands. But Marshall was not hired in 2016, because she did not pass the physical agility test.

In 2020, Marshall applied for a new position with Tidelands, again using the online application process. And it is at this point that the parties' positions diverge: Tidelands argues that Marshall again entered into a binding arbitration agreement when she submitted her 2020 online application, but Marshall insists that she did not.

As a returning user of Tidelands' online application system, Marshall faced a different process than she had in 2016. After Marshall logged into the online portal with her username and password, a current application appeared, already populated with the information from her previous 2016 application. Marshall could see and make changes to pre-populated information highlighted in yellow, and she updated certain items, such as her anticipated start date. At the top of the webpage there was a "submit" button, allowing the applicant to submit her updated application.

Only by scrolling down further would a returning applicant also see the pre-employment statement containing the proposed arbitration agreement. That statement, too, would be pre-populated with any previous acceptance of the arbitration agreement. If Marshall scrolled all the way down before clicking "Submit," in other words, she would see her 2016 arbitration agreement with the "I ACCEPT" box already checked, and her name and "4/12/2016" — the date of her previous application — already filled in next to the box. But — and in contrast to the process she underwent in 2016 — Marshall was not required to scroll down through that arbitration agreement before submitting a new employment application.

Marshall submitted her application in June 2020.² After a series of emails with Tidelands' human resources coordinator, Marshall scheduled a physical agility test. She again was unable to pass the test, and consistent with its policy, Tidelands did not employ her.

B.

Marshall filed her putative class action lawsuit in federal district court in 2021. Tidelands promptly moved to compel arbitration under the Federal Arbitration Act ("FAA"), see 9 U.S.C. § 4, giving rise to the appeal now before us.

In its initial motion to compel, Tidelands did not argue that Marshall entered into an arbitration agreement in connection with her 2020 application. Instead, it moved to compel based on the arbitration agreement signed by Marshall in 2016, when she first used Tidelands' online employment system. According to Tidelands, that 2016 arbitration agreement governed all future employment applications, including the one submitted by Marshall in 2020. For support, Tidelands submitted a declaration from Angela Traver, its Director of Employee Relations and HR Compliance, expressing her view that Marshall's 2016 application and arbitration agreement "remained active" in 2020, continuing to bind Marshall to arbitration. J.A. 45.

The magistrate judge to whom Marshall's case was assigned disagreed. Marshall v. Georgetown Mem'l Hosp., No. 2:21-cv-02733-RMG-JDA, 2021 WL 6884559 (D.S.C. Dec. 29, 2021) (Marshall I). Nothing about the 2016 arbitration agreement, the magistrate judge concluded, put Marshall on notice that it would remain in effect beyond the 2016 application cycle and cover future job applications, as well. Instead, the language of the agreement was to the contrary, referring in the singular to "differences [that] may arise between [the parties] during the application," and binding the parties to arbitrate claims "arising out of or relating to your application." 2021 WL 6884559, at *5.³ Accordingly, the magistrate judge issued a report and recommendation concluding that Tidelands had not met its burden of showing the existence of an arbitration agreement related to Marshall's 2020 employment application.

Tidelands filed objections to the report and recommendation. Importantly, it did not object to the magistrate judge's dispositive finding: that nothing in the 2016 arbitration agreement would have informed Marshall that it governed her 2020 employment application, as well. Instead, Tidelands advanced a new theory, supported by a new declaration from Traver. Marshall, Tidelands now asserted, entered into the relevant arbitration agreement not in 2016 but in 2020, when she again applied for employment through its online system. This was so, Tidelands argued, because "[i]n order to submit" her new application in 2020, Marshall "had to scroll past the Agreement to Arbitrate language" and "hit the 'submit' button at the bottom of the page." J.A. 135; see also Traver Declaration, J.A. 142 (stating a returning applicant when modifying their application "must scroll to the bottom of the page, passing through the arbitration and class waiver language[.]").

Given Tidelands' new argument and evidence, the district court referred the matter back to the magistrate judge for full briefing of issues related to the purported 2020 agreement to arbitrate. Marshall v. Georgetown Mem'l Hosp., No. 2:21-2733-RMG, 2022 WL 447189 (D.S.C. Feb. 14, 2022) (Marshall II).

In a second report and recommendation, the magistrate judge analyzed Marshall's 2020 application process and again found that Tidelands could not establish the existence of an agreement to arbitrate. Marshall v. Georgetown Mem'l Hosp., No. 2:21-cv-02733-RMG-JDA, 2022 WL 5434226 (D.S.C. July 7, 2022) (Marshall III). The magistrate judge began by rejecting as factually inaccurate Tidelands' latest theory, under which a returning user would be required to scroll through her prior arbitration agreement before hitting the "Submit" button at the bottom of the document. In fact, the magistrate judge explained, the screenshots attached to Traver's new declaration showed the opposite: There was a second "submit" button located at the very top of the document, on the initial screen encountered by a returning user, which would have allowed Marshall to update...