Young v. Granite Constr., Inc.

MICHAEL YOUNG,individually and on behalf of other similarly situated employees, Plaintiff, v. GRANITE CONSTRUCTION, INC.,and KENNY CONSTRUCTION CO., Defendants.

19 C 3922

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

September 11, 2019

Judge John Z. Lee

MEMORANDUM OPINION & ORDER

Plaintiff Michael Young has brought this suit against Defendants Granite Construction, Inc. ("Granite") and Kenny Construction Company ("Kenny), alleging that Defendants failed to pay overtime wages to him and a putative class of employees in violation of the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 203 et seq. Defendants have filed a motion to compel Plaintiff to arbitrate his claims on an individual basis. For the reasons stated herein, Defendants' motion [19] is granted. This case is stayed pending the resolution of arbitration proceedings.

Background

Granite is a "full-service general contractor, construction management firm[,] and construction materials producer." Compl. ¶ 2, ECF No. 1. In January 2013, Kenny became a wholly owned subsidiary of Granite. Id. ¶ 3. Plaintiff worked for Defendants as a Field Construction/Commissioning Manager from March 2015 to December 2017. Id. ¶ 19.

During the period alleged in this suit, Plaintiff worked as an hourly employee, and Defendants set his schedule. Id. ¶¶ 41-42. If he worked fewer than 40 hours in a week, he would be paid only for the hours he actually worked. Id. ¶ 46. But when Plaintiff worked more than 40 hours, he alleges, he was not paid overtime. Id. ¶¶ 5-6, 54-61.

Plaintiff brought this lawsuit in July 2019, asserting claims under the FLSA and the New York Labor Law ("NYLL") on behalf of himself and a class of workers allegedly subjected to the same wage practices during the previous three years. Id. ¶¶ 27, 30. Defendants have moved to compel arbitration and to stay or dismiss this action pending the arbitration proceeding. In the alternative, Defendants ask the Court to strike Plaintiff's jury demand.

Legal Standard

The Federal Arbitration Act ("FAA") mandates that courts enforce valid, written arbitration agreements. Tinder v. Pinkerton Sec., 305 F.3d 728, 733 (7th Cir. 2002) (citing 9 U.S.C. § 2). This mandate reflects a federal policy that favors arbitration and "places arbitration agreements on equal footing with all other contracts." Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 443 (2006).

Courts are responsible for deciding whether an agreement to arbitrate exists before ordering arbitration. Janiga v. Questar Capital Corp., 615 F.3d 735, 741-42 (7th Cir. 2010). Once a court is satisfied that an agreement to arbitrate exists, the FAA instructs the court to stay the proceedings on issues subject to arbitration andprovides a mechanism for parties to request that the court compel arbitration pursuant to the agreement. 9 U.S.C. §§ 3-4; see also Tinder, 305 F.3d at 733.

A party opposing a motion to compel arbitration bears the burden of identifying a triable issue of fact as to the existence of the purported arbitration agreement. Tinder, 305 F.3d at 735. The opponent's evidentiary burden is akin to that of a party opposing summary judgment under Rule 56. Id. "[A] party cannot avoid compelled arbitration by generally denying the facts upon which the right to arbitration rests; the party must identify specific evidence in the record demonstrating a material factual dispute for trial." Id. The Court must believe the evidence of the party opposing arbitration and draw all justifiable inferences in its favor. Id. If the party opposing arbitration identifies a genuine issue of fact as to whether an arbitration agreement was formed, "the court shall proceed summarily to the trial thereof." 9 U.S.C. § 4; see Tinder, 305 F.3d at 735.

Discussion

At the center of the parties' dispute is a form Plaintiff signed at the beginning of his employment entitled "Employee Dispute Resolution Program (EDRP) Agreement Form." Defs.' Mem. Supp. Mot. Compel Arbitration, Ex. 1, EDRP Agreement Form, ECF No. 20-1. In that form (the "EDRP Agreement"), dated March 23, 2015, Plaintiff agreed to the following procedure:

Both the Company¹ and I agree that any dispute that may arise out of my employment must be settled in a manner that is fair to both of us.

Both the Company and I agree that a consistent set of procedures will ensure fairness and promote timely resolution. Therefore, both the Company and I agree to use the methods and procedures contained in the Employee Dispute Resolution Program Handbook to identify and resolve any dispute that may arise out of my employment or the termination of my employment. The Employee Dispute Resolution Program includes neutral and binding arbitration as a final step, if necessary. As a result of this agreement, both the Company and I agree to waive any right to a jury trial.

Id. The EDRP Handbook, incorporated into the agreement, sets forth four steps (described as "options"): (1) The Open Door Policy; (2) The Conference; (3) The Mediation; and (4) The Arbitration. EDRP Handbook at 3-8.

Defendants argue that Plaintiff agreed to binding arbitration as a final step of the EDRP and, thus, this action must be stayed or dismissed pending arbitration of his claims on an individual basis. For his part, Plaintiff argues that, because arbitration is but one of several options set forth in the EDRP Handbook, it is not mandatory.

In determining whether to compel arbitration, the Court must first resolve whether a valid agreement to arbitrate exists. Gupta v. Morgan Stanley Smith Barney, LLC, ___ F.3d ___, No. 18-3584, 2019 WL 3886452, at *3 (7th Cir. Aug. 19, 2019).² If a valid agreement exists, the Court must then consider whether Plaintiff'sclaims fall within the scope of the agreement. Id. State common law of contract formation governs this analysis. Id.

The parties appear to agree that Illinois law applies to the contract-interpretation analysis, and the Court will follow their lead. See Faulkenberg v. CB Tax Franchise Sys., LP, 637 F.3d 801, 809 (7th Cir. 2011) (applying the state's law cited by the parties in the absence of any argument that applying one state's law over another would affect the outcome). In Illinois, the analysis of contract formation begins "with the language of the contract itself. If the language unambiguously answers the question at issue, the inquiry is over." Emergency Med. Care, Inc. v. Marion Mem'l Hosp., 94 F.3d 1059, 1060-61 (7th Cir. 1996).

The EDRP Agreement Plaintiff signed is unequivocal—the parties agreed to use the EDRP "to identify and resolve any dispute that may arise out of [Plaintiff's] employment or the termination of [Plaintiff's] employment," and acknowledged that the EDRP "includes neutral and binding arbitration as a final step, if necessary." EDRP Agreement Form (emphasis added). The parties further confirmed their understanding that litigation was unavailable by noting that they "agree[d] to waive any right to a jury trial." Id. This language leaves no room for dispute that the EDRP, including arbitration as a final step, is the exclusive dispute-resolution mechanism.

Still, the parties focus their energies on the language of the ERDP Handbook, which is referenced and incorporated in the EDRP Agreement. But Defendant has the better argument here. When the EDRP Handbook is considered as a whole, itreflects the parties' intent to utilize arbitration to resolve employment-related disputes, if the first three steps of the EDRP are unsuccessful. See Curia v. Nelson, 587 F.3d 824, 829 (7th Cir. 2009) (explaining that, in Illinois "[a] contract is to be construed as a whole, viewing each part in light of the others" (internal quotation marks omitted)); Markin v. Chebemma, Inc., 526 F. Supp. 2d 890, 893 (N.D. Ill. 2007) (same). For instance, in the background section, the Handbook explains that "[f]or those situations involving legally protected rights that, for whatever reason, cannot be resolved in-house, Granite has adopted a private, professional way outside the Company to settle them. This outside process will involve either mediation and / or arbitration led by the American Arbitration Association (AAA)." EDRP Handbook at 2. Similarly, in describing arbitration, the Handbook explains that "[i]f the dispute involves a legally protected right . . . and has not been resolved in Options One, Two or Three, you or the Company may request arbitration." Id. at 8. And although the Handbook acknowledges that employees need not proceed through the steps in order, it clearly envisions arbitration as the final step, noting that "the Program is designed with multiple steps to maximize the possibility of a resolution prior to Option 4." Id. (emphasis added).

Additionally, the EDRP Handbook manifests the parties' intention to foreclose litigation as an avenue for resolving employment disputes. This understanding is first reflected in the description of the EDRP's purpose:

Employee disputes can be time-consuming and very costly, particularly when they end up in lawsuits between the employee and the Company—especially in those cases involving a legally protected right (any claim or controversy that requires or allows one to resort to any court or othergovernmental dispute resolution forum between the employee and Granite arising from the employment relationship with Granite).

Id. at 2. And the Handbook ends with a similar admonishment: "[The EDRP] saves all of us the expense and emotional trauma of a long court battle." Id. at 16. Furthermore, the Handbook clarifies that if an employee subject to it files a lawsuit, "Granite will ask the court to dismiss the case and refer it to [the EDRP]." Id. at 14. And, throughout the EDRP Handbook, arbitration is discussed as a favorable alternative to litigation. See id. at 14 (describing how arbitration "differ[s] from a court trial"), 15 (explaining that in arbitration "it's possible for you to recover anything you might seek through the court system" and...