United States District Court, S.D. West Virginia, Huntington Division
December 22, 2016
MISTY ASHWORTH, Plaintiff,
FIVE GUYS OPERATIONS, LLC, and DAVID DEERFIELD Defendants.
MEMORANDUM OPINION & ORDER
C. CHAMBERS CHIEF JUDGE
before the Court is Defendants' Five Guys Operations'
and David Derifield's (collectively
“Defendants”) Motion to Compel Arbitration and
Motion to Dismiss or, in the Alternative, to Stay This
Proceeding Pending Arbitration. ECF No. 3. Plaintiff Misty
Ashworth, a former employee of Five Guys in Huntington, West
Virginia, brought a sexual harassment suit against Five Guys
and her immediate supervisor, Derifield. Defendants assert
that Ashworth executed an arbitration agreement covering
claims arising from her employment with Five Guys and that
the agreement committed the determination of the validity and
the scope of the agreement to the arbitrator and not the
courts. The Court agrees and Defendant's Motion is
began working for Five Guys in Huntington, West Virginia in
April 2015. As a condition of her employment Ashworth signed
an employment agreement which contained an arbitration
agreement. She also signed a separate document entitled
“Arbitration Agreement” which further explained
the rights and duties of the parties if a dispute related to
Ashworth's employment should arise.
arbitration agreement contained in the document titled
“Employment Agreement & Arbitration of Employee
Rights” states in relevant part:
Because of the delay and expense of the court system, Five
Guys and I agree to use confidential binding arbitration,
instead of going to court, for any claims that arise between
me and Five Guys, its related companies, and/or their current
or future employees. This includes any claims concerning
compensation, employment, sexual or other types of harassment
or termination of employment. In any arbitration, the
then prevailing rules of the American Arbitration Association
(and, to the extent not inconsistent, the Federal Arbitration
Act) shall apply. (emphasis added).
document titled “Arbitration Agreement” states in
Employee and Company agree that if any dispute arises from
Employee's application or candidacy for employment,
employment and/or cessation of employment with Company, it
will be submitted to final and binding arbitration. This
means that a neutral arbitrator, rather than a court or jury,
will decide the dispute. Except as provided below, the
procedure for arbitration will be based on the rules for the
resolution of employment disputes of the American Arbitration
Association, and to the extent applicable the provisions of
the Federal Arbitration Act . . . . (emphasis added).
filed suit against Five Guys and her former supervisor,
Derifield, for constructive retaliatory discharge, sexual
harassment, hostile work environment, quid pro quo
sexual harassment, outrage, and negligent hiring,
supervision, and retention. Defendants now move the Court to
compel arbitration and either dismiss the case or stay it
pending arbitration pursuant to section 3 and section 4 of
the Federal Arbitration Act (“FAA”). 9 U.S.C.
§§ 3, 4.
2 of the FAA provides:
A written provision in . . . a contract evidencing a
transaction involving commerce to settle by arbitration a
controversy thereafter arising out of such contract . . .
shall be valid, irrevocable, and enforceable, save upon such
grounds as exist at law or in equity for the revocation of
9 U.S.C. § 2. “The FAA thereby places arbitration
agreements on equal footing with other contracts, and
requires courts to enforce them according to their terms.
Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63,
67-68 (2010) (citing Buckeye Check Cashing, Inc. v.
Cardegna, 546 U.S. 440, 443 (2006); Volt Info.
Scis., Inc. v. Bd. of Trs. Of Leland Standford Junior
Univ., 489 U.S. 468, 478 (1989)).
3 of the FAA permits a party to apply to a federal court for
a stay “upon any issue referable to arbitration under
an agreement in writing for such arbitration.” 9 U.S.C.
§ 3. And Section 4 permits a party to petition a federal
court to compel arbitration “in the manner provided
for” in the arbitration agreement where the opposing
party failed “to arbitrate under” that agreement.
§ 4. The court is required to enforce the arbitration
agreement “upon being satisfied that the making of the
agreement for arbitration or the failure to comply therewith
is not in issue.” Id.
derive their authority to arbitrate disputes, whatever they
may be, from the agreement by the parties in advance to
divert certain disputes to an arbitrator. AT&T
Techs., Inc. v. Commc'ns Workers of Am., 475 U.S.
643, 648-49 (1986). Thus, it follows that “arbitration
is a matter of contract and a party cannot be required to
submit to arbitration any dispute which he [or she] has not
agreed to submit.” Id. (quoting United
Steelworkers of Am. V. Warrior & Gulf Navigation
Co., 363 U.S. 574, 582 (1960)).
general, disputes concerning which controversies are subject
to arbitration are settled by a court. Id. at 649.
Parties may, however, contract around this general rule and
delegate the authority to determine “gateway questions
of arbitrability, such as whether the parties have agreed to
arbitrate or whether their agreement covers a particular
controversy” to the arbitrator by evincing a clear
and unmistakable intent to do so.
Rent-A-Center, 561 U.S. at 68-69 (emphasis added);
AT&T, 475 U.S. at 649. Agreements of this kind
are treated no differently than any other agreement to
arbitrate. Rent-A-Center, 561 U.S. at 70. They are
“simply an additional, antecedent agreement the party
seeking arbitration asks the federal court to enforce, and
the FAA operates on this additional arbitration agreement
just as it does on any other.” Id. In other
words, unless a party challenging a clear and unmistakable
agreement to arbitrate gateway issues can demonstrate
“grounds as exist at law or in equity for the
revocation of any contract, ” the Court must enforce it
pursuant to sections 3 and 4 of the FAA. § 2; see
also id.; §§ 3, 4.
general, and vague agreements will not meet the clear and
unmistakable standard imposed on agreements to commit the
determination of gateway issues to the arbitrator. See
AT&T, 475 U.S. at 645 (holding that the clause
committing all “differences arising with respect to the
interpretation of this contract or the performance of any
obligation hereunder” did not permit the arbitrator to
determine arbitrability issues); Trans World
Airlines, 127 F.3d 337, 338 (4th Cir. 1997) (finding the
clause committing all “disputes between the Union,
employee, and the Company growing out of the interpretation
or application of any of the terms of this agreement”
to arbitration did not permit the arbitrator to determine the
scope and meaning of the agreement). “If contracting
parties wish to let an arbitrator determine the scope of his
own jurisdiction, they must indicate that intent in a clear
and specific manner.” Carson v. Giant Food,
Inc., 175 F.3d 325, 330 (4th Cir. 1999). Incorporation
by reference of an arbitration body's rules for
arbitration that include a rule that the arbitrator will
determine gateway arbitrability issues is considered a clear
and unmistakable intent by the parties to commit
determinations of the arbitrator's jurisdiction to the
arbitrator. See, e.g., Fallo v. High-Tech
Inst., 559 F.3d 874, 878 (8th Cir. 2009).
seek to stay or dismiss the case and compel arbitration
pursuant to the FAA and in accord with the two arbitration
agreements executed by Ashworth. Defendants maintain that the
incorporation by reference of the American Arbitration
Association's (“AAA”) rules, which
consequently state that an arbitrator, not a court, will
determine issues of arbitrability, is enforceable and should
preclude the Court from determining gateway issues of
arbitrability. Ashworth opposes the imposition of arbitration
on a number of grounds. In light of Rent-A-Center,
however, the Court need only address Ashworth's arguments
attacking the sufficiency and validity of the clauses in the
agreements committing controversies about arbitrability to
the arbitrator. See Rent-A-Center, 561 U.S. at 72
(“unless Jackson challenged the delegation provision
specifically, we must treat it as valid under § 2 . . .,
leaving any challenge to the validity of the Agreement as a
whole for the arbitrator.”)
Clear and Unmistakable Delegation
Ashworth's arguments on this matter are availing.
Ashworth first attempts to contend that the delegation
clauses of the two arbitration agreements committing the
determination of arbitrability to an arbitrator are not
“clear and unmistakable.” The Court cannot agree.
majority of circuits that have addressed this specific issue
have found that a delegation clause that incorporates by
reference arbitration rules that contain a provision that
provides that the arbitrator will determine issues of
arbitrability is a “clear and unmistakable”
expression of the parties' intent to have an arbitrator
determine arbitrability. Petrofac, Inc. v. DynMcDermott
Petroleum Ops. Co., 687 F.3d 671, 675 (5ht Cir. 2012);
Fadal Machining Ctrs., LLC v. Compumachine, Inc.,
461 F.App'x 630, 632 (9th Cir. 2011); Fallo, 559
F.3d at 878; Qualcomm Inc. v. Nokia Corp., 466 F.3d
1366, 1373 (Fed.Cir. 2006); Terminix Int'l Co. v.
Palmer Ranch LP, 432 F.3d 1327, 1332 (11th Cir. 2005);
Contec Corp. v. Remote Solution Co., 398 F.3d 205,
208 (2d Cir. 2005); Apollo Computer, Inc. v. Berg,
886 F.2d 469, 472-73 (1st Cir. 1989). Although the Fourth
Circuit has not had an occasion to rule on this specific
issue, a number of district courts in this circuit have
adopted this holding. Milbourne v. JRK Residential Am.,
LLC, No. 3:12-cv-861, 2016 WL 1071564, at *4 (E.D. Va.
Mar. 15, 2016); Green v. Rent-A-Center East, Inc.,
No. 0:15-cv-3245, 2015 WL 8907452, at *4 (D.S.C. Nov. 24,
2015); Innospec Ltd. V. Ethyl Corp., No.
3:14-cv-158, 2014 WL 5460413, at *4 (E.D. Va. Oct. 27, 2014);
United States ex rel. Beauchamp v. Academi Training Ctr.,
Inc., No. 1:11-cv-371, 2013 WL 1332028, at *5 (E.D. Va.
Mar. 29, 2013).
Court must admit that it finds these holdings to be
incongruous with case law mandating delegation clauses be
clear and unmistakable. Incorporation by reference of an
obscure body of rules to show a clear and unmistakable intent
to adhere to one rule specifically is preposterous. It is so
unlikely as to be bordering on the absurd that an
unsophisticated party, such as an employee of a fast food
restaurant, would know what the AAA is, much less the
contents of its governing rules. The intent of the agreement
is undoubtedly clear and unmistakable to the authors, most
likely employers, but the intent is obfuscated, possibly
intentionally, for the employee unless the employee happens
to know the AAA rules, a ridiculous assumption, or takes the
time to read the rules and specifically notices, among all
the other rules, the rule permitting the arbitrator to
determine gateway issues. How this could be considered clear
and unmistakable can only be explained if the true meanings
of “clear” and “unmistakable” are
the Court is unwilling to make such a determination in light
of the unanimity of opinion among federal courts.
Consequently, the Court finds that the incorporation by
reference of the AAA rules which contain a provision
committing the determination of arbitrability to the
arbitrator to be a clear and unmistakable expression of the
parties' intent to leave gateway issues to the arbitrator
and not the court.
Unconscionability of the Delegation Clause
Ashworth argues that the delegation clauses are invalid
because they do not explain that she has a Seventh Amendment
right to a jury trial, she may consult with an attorney, and
she knowingly, intelligently, and voluntarily waives those
rights and accepts that an arbitrator will decide
arbitrability issues. Ashworth's arguments are best
described as an assertion that the delegation clauses are
delegation clause is clear and unmistakable, as the ones here
are, a party seeking its nullification must be able to
present “grounds as exist at law or in equity for the
revocation of any contract.” § 2;
Rent-A-Center, 561 U.S. at 70.
initial matter, Ashworth does not cite, nor is the Court
aware of, any case law that requires the inclusion of the
information Ashworth contends must be present in order for
the delegation clause to be valid. Indeed, such a holding
would be incoherent. A delegation clause is only one clause
among many other clauses of the larger arbitration agreement.
If the delegation clause contained all the information
Ashworth maintains that it must to be valid, it would nearly
become an entire arbitration agreement unto itself contained
within the larger arbitration agreement. Arbitration
agreements are not matryoshka dolls.
delegation clause has the same effect as a clause defining
the controversies that are subject to arbitration. It simply
adds another controversy to the scope of the arbitrator's
jurisdiction. A clause in the arbitration agreement defining
which disputes will be committed to the arbitrator similarly
need not explain every right granted or forsworn as a result
of that specific clause. Other clauses in the agreement can
be committed to explaining the effect of the agreement. It is
absurd to contend that each clause must contain within itself
its own explanation of its effect. Undoubtedly entire
arbitration agreements may be found unconscionable upon the
exclusion of some information, see, e.g., Dalton
v. J. Mann Inc., No. 16-cv-03409, 2016 WL 5909710, at
*4- 5 (N.D. Cal. Oct. 11, 2016), but where an agreement
contains a valid delegation clause the Court may not wade
into that dispute-it must be left for the arbitrator. See
Rent-A-Center, 561 U.S. at 72. To avoid this result a
party must successfully challenge that specific clause which
delegates jurisdictional authority to the arbitrator by
raising defenses tailored to defeat it rather than the entire
arguments aimed at showing the delegation clauses are
unconscionable are not conceptually applicable to that
clause. They are instead more appropriately aimed at the
agreement as a whole. Due to this feature, and because the
agreement contains a valid delegation clause, the Court may
not address the validity or the scope of the agreement.
remainder of Ashworth's arguments are directed at the
validity of the arbitration agreement. Those arguments are
not proper before this Court. They must be brought before the
Grounds for Dismissing the Case
Motion asks the Court to dismiss or alternatively stay the
case pending arbitration. ECF No. 3. The FAA mandates
district courts to “stay the trial of the action until
such arbitration has been had.” 9 U.S.C. § 3.
Although the § 3 mandate requires a stay, federal
circuit courts are divided as to whether a district court
retains the discretion to dismiss an action when all claims
are referred to arbitration. See Reed v. Darden Rests.,
Inc., No. 3:16-cv-3872, 2016 WL 5796900, at *5 (S.D.
W.Va. Oct. 3, 2016) (comparing cases). In the Fourth Circuit,
the court has differentiated procedural outcomes based on
whether all claims within a case are sent to arbitration.
Compare Hooters of Am., Inc. v. Phillips, 173 F.3d
933 (4th Cir. 1999) (mandating a stay) with Choice Hotels
Int'l, Inc. v. BSR Tropicana Resort, Inc., 252 F.3d
707, 709-10 (4th Cir. 2001) (“Notwithstanding the terms
of § 3, however, dismissal is a proper remedy when all
of the issues presented in a lawsuit are arbitrable.”).
In Aggarao v. MOL Ship Management Company, the Court
recognized the tension between these two decisions but
deferred resolving the issue. 675 F.3d 355, 376 n. 18 (4th
Plaintiffs' claims relate directly to her employment with
Five Guys. See Pls.' Compl., ECF No. 1-2. All of
these claims fall within the plain meaning of the arbitration
agreement between the two parties. Following the guidance of
this circuit in Choice Hotels, dismissal pending
arbitration is appropriate when all issues are subject to
Court GRANTS Defendants' Motion to Compel Arbitration and
Motion to Dismiss or, in the Alternative, to Stay This
Proceeding Pending Arbitration. ECF No. 3. The case shall be
DISMISSED without prejudice, pending arbitration.
Court DIRECTS the Clerk to send a copy of this Order to
counsel of record and any unrepresented parties.
 This argument is contained in a
section of Ashworth's Response titled “The Court
Should Hear this Matter Because Ms. Ashworth Did Not Agree to
Have an Arbitrator Decide Jurisdiction.” Pl.'s
Resp. in Op. to Defs.' Mot. To Compel Arbitration 4. The
Court understands this heading to mean that the argument to
follow will challenge the delegation clause specifically.
Yet, the single paragraph devoted to this argument begins
“The ‘Arbitration Agreement' does not explain
. . . .” Id. at 5. It appears that this
argument is directed at the arbitration agreement as a whole.
Nonetheless, the Court will treat the argument as an
attempted challenge to the delegation clause specifically as
required by Rent-A-Center. 561 U.S. at 72.
 The delegation clause is susceptible
to challenge based on common law contract defenses, such as
incapacity, ambiguity, coercion, fraud, or misrepresentation,
but Ashworth failed to bring such challenges. See
Schumacher Homes of Circleville, Inc. v. Spencer, 787
S.E.2d 650, 662-63 ( W.Va. 2016) (listing contract