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Chambers v. Hampden Coal, LLC

United States District Court, S.D. West Virginia, Charleston

March 1, 2018

HAMPDEN COAL, LLC, a Delaware limited liability company, and BLACKHAWK MINING, LLC, a Kentucky Corporation, and TONY OSBORNE, individually, Defendants.


          John T. Copenhaver, Jr. United States District Judge

         Pending is a motion to dismiss, or, in the alternative, compel arbitration, filed by defendants Hampden Coal, LLC and Blackhawk Mining, LLC (together “defendants”)[1] on May 12, 2017.

         I. Background

         Plaintiff John Chambers filed his complaint in the Circuit Court of Boone County, West Virginia on December 13, 2016. See Compl. Ex. A to Notice of Removal. Shortly after, he filed his amended complaint on January 17, 2017, adding defendant Hampden Coal, LLC (“Hampden Coal”) to the action. See Am. Compl. Ex. A to Notice of Removal. Invoking this court's diversity jurisdiction pursuant to 28 U.S.C. § 1332(a)(1), defendants timely removed the action to this court on May 5, 2017, within thirty days after service of the amended complaint. Notice of Removal ¶ 3.

         Mr. Chambers states that he was employed with Hampden Coal from June of 2005 until approximately December 14, 2014. Am. Compl. ¶¶ 5, 8. In 2014, Blackhawk Mining, LLC purchased Hampden Coal and sometime thereafter required Mr. Chambers to sign an arbitration agreement. Pl.'s Resp. Defs.' Mot. Dismiss Compel Arbitration (“Pl.'s Resp.”) at 1. He alleges that defendants terminated his employment due to his age, in violation of the West Virginia Human Rights Act. Id. at ¶¶ 8-13; W.Va. Code § 5-11-9. Mr. Chambers seeks compensatory damages, unmitigated front pay, emotional distress and punitive damages, and attorney fees and costs. Am. Compl. ¶ 18.

         Defendants move the court to dismiss this action, or, in the alternative, to compel arbitration according to a mutual arbitration agreement that they argue is binding on Mr. Chambers' claim under the Federal Arbitration Act (“FAA”), 9 U.S.C. § 1, et seq. Defs.' Mem. Supp. Mot. Dismiss Compel Arbitration at 1-3 (“Defs.' Mem.”).

         Mr. Chambers agrees that valid arbitration agreements are governed by the FAA, but he disputes the validity and enforceability of the agreement that he signed. Pl.'s Resp. at 2-3. He claims that the agreement is unenforceable because it lacks proper consideration and, by its own terms, “specifically states that it is not a contract.” II. Legal Standard In an action brought “upon any issue referable to arbitration under an agreement in writing for such arbitration” where the court is “satisfied that the issue involved in such [action] is referable to arbitration, ” the court shall “stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement.” 2 U.S.C. § 3. “A district court therefore has no choice but to grant a motion to compel arbitration where a valid arbitration agreement exists and the issues in a case fall within its purview.” Adkins v. Labor Ready, Inc., 303 F.3d 496, 500 (4th Cir. 2002).

         “The principal purpose of the FAA is to ensure that private arbitration agreements are enforced according to their terms.” AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 344 (2011) (internal quotations omitted). Under the FAA, agreements to arbitrate are “valid, irrevocable, and enforceable, save upon such grounds as exist in law or in equity for the revocation of any contract.” 9 U.S.C. § 2. “[G]enerally applicable contract defenses, such as fraud, duress, or unconscionability, may be applied to invalidate arbitration agreements.” Doctor's Assocs. V. Casarotto, 517 U.S. 681, 687 (1996).

         III. Analysis

         If (1) the arbitration agreement between Mr. Chambers and Hampden Coal is enforceable and (2) his claim is referable to arbitration under that agreement, then the court must compel arbitration. 9 U.S.C. § 3; see Adkins 303 F.3d at 500.

         A. Enforceability of Arbitration Agreement The enforceability of an arbitration agreement is determined by the applicable state contract law. See First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995). The parties are in agreement that West Virginia state law controls the validity of their arbitration agreement. Pl.'s Resp. at 2; Defs.' Mem. at 7.

         Mr. Chambers argues that the arbitration agreement he signed is unenforceable because it lacks proper consideration due to mistaken references to an employer other than Hampden Coal. Pl.'s Resp. at 3. The agreement provides in relevant part:

Consideration. By signing this agreement, Hampden Coal and I are exchanging promises to arbitrate any disputes arising between us. Every individual who works for Hampden Coal must have signed and returned this Agreement to be eligible for employment and continued employment with Blue Diamond. Blue Diamond's employment and continued employment of me as well as, the benefits and compensation provided by Hampden Coal are consideration for this Agreement. Both Hampden Coal and I remain free to end our employment relationship at any time, for any reason.

         Mutual Arbitration Agreement of John Chambers at 3 Ex. 1 to Defs.' Mot. Dismiss (“Chambers Agreement”).[2] Because “[p]laintiff has never worked for or had any association with Blue Diamond” and “Blue Diamond has never been plaintiff's employer nor offered plaintiff employment, ” the consideration “has never come to ...

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