Easterly v. Heritage Christian Schools, Inc

The following case was a 2009 employment dispute against an school that gave an employee a position with a substantially lower salary.  The claimant maintained that it was a breach of contract and discriminatory based on age and disability.

DOROTHY EASTERLY, Plaintiff, vs. HERITAGE CHRISTIAN SCHOOLS, INC., Defendant.
Cause No. 1:08-cv-1714-WTL-TAB

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF INDIANA, INDIANAPOLIS DIVISION
2009 U.S. Dist. LEXIS 76269
August 26, 2009, Decided
August 26, 2009, Filed

COUNSEL:  [*1] For DOROTHY EASTERLY, Plaintiff: Denise K. LaRue, Ryan C. Fox, HASKIN LAUTER & LARUE, Indianapolis, IN.
For HERITAGE CHRISTIAN SCHOOLS, INC., Defendant: Wayne E. Uhl, STEPHENSON MOROW & SEMLER, Indianapolis, IN.

JUDGES: Hon. William T. Lawrence  , United States District Judge.

OPINION BY: William T. Lawrence

OPINION
ENTRY ON MOTION TO COMPEL ARBITRATION AND STAY

This cause is before the Court on the Motion to Compel Arbitration and Stay filed by Defendant Heritage Christian Schools, Inc. (“Heritage”) and a related motion to strike filed by Plaintiff Dorothy Easterly. The motions are fully briefed, and the Court, being duly advised, GRANTS Heritage’s motion and DENIES AS MOOT Easterly’s motion for the reasons set forth below.

The facts as alleged by Easterly in her complaint are as follow. Heritage is a private Christian school for students in grades kindergarten through high school. Easterly was employed by Heritage for approximately twenty years, beginning as a high school English teacher in 1987. Starting in 2004, in addition to teaching, Easterly served as Director of Curriculum and Director of Distance Learning. She also was responsible for producing the school’s yearbook.

Easterly’s employment was governed by a series  [*2] of contracts, the last of which was accepted by Easterly on May 1, 2007. In July 2007, Heritage revoked Easterly’s contract and constructively discharged her by offering her a position with a substantially lower salary. Easterly alleges that in so doing, Heritage not only breached the contract, but also discriminated against her on the basis of her age and disability in violation of the ADEA and the ADA.

The last few contracts between Easterly and Heritage, including the one at issue in this case, contained the following provision:

I agree to resolve differences with others (parents, fellow-workers, Administration) by following the biblical pattern of Matthew 18:15-17. Should the teacher have unresolved issues with the employer after utilizing the Matthew 18 principle, I and the employer agree to be bound by the following mediation and binding arbitration agreement in an attempt to resolve issues and bring reconciliation:

MEDIATION AND BINDING ARBITRATION AGREEMENT

The parties to this agreement are Christians and believe that the Bible commands them to make every effort to live at peace and to resolve disputes with each other in private or within the Christian community in conformity with  [*3] the biblical injunctions of 1 Corinthians 6:1-8, Matthew 5:23-24, and Matthew 18:15-20.

Therefore, the parties agree that any claim or dispute arising out of, or related to, this agreement or to any aspect of the employment relationship, including claims under federal, state, and local statutory or common law, the law of contract, and the law of tort shall be settled by biblically based mediation.

If resolution of the dispute and reconciliation do not result from mediation, the matter shall then be submitted to an independent and objective arbitrator for binding arbitration. The parties agree for the mediation and arbitration process to be conducted in accordance with the “Rules of Procedure for Christian Conciliation” (“Rules”) contained in the Peacemaker Ministries booklet, Guidelines for Christian Conciliation. Consistent with these “Rules,” each party to the agreement shall agree to the selection of the arbitrator. The parties agree that if there is an impasse in the selection of the arbitrator, the Institute for Christian Conciliation division of Peacemaker Ministries of Billings, Montana [(800) 711-7118], shall be asked to provide the name of a qualified person who will serve in  [*4] that capacity. Consistent with the “Rules,” the arbitrator shall issue a written opinion within a reasonable time.

The parties to this contract agree that these methods shall be the sole remedy for any controversy or claim arising out of the employment relationship or this agreement and expressly waive their right to file a lawsuit against one another in any civil court for such disputes, except to enforce a legally binding arbitration decision. The parties to this agreement have had an opportunity to consult legal counsel before signing this agreement.

In the instant motion, Heritage seeks to enforce that provision and stay this case while the parties pursue arbitration.

The Federal Arbitration Act (“FAA”) provides:

A written provision in any . . .contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction . . . shall be 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. “Employment contracts, except for those covering workers engaged in transportation, are covered by the FAA,” E.E.O.C. v. Waffle House, Inc., 534 U.S. 279, 289, 122 S. Ct. 754, 151 L. Ed. 2d 755 (2002)  [*5] (citing Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 121 S. Ct. 1302, 149 L. Ed. 2d 234 (2001)), and provisions of otherwise enforceable employment contracts that require arbitration of federal discrimination claims are equally enforceable. See Oblix, Inc. v. Winiecki, 374 F.3d 488, 491 (7th Cir. 2004) (citing Circuit City and Gilmer v. Interstate/Johnson Lane Corp. 500 U.S. 20, 111 S. Ct. 1647, 114 L. Ed. 2d 26 (1991)). Easterly recognizes these general principles, but argues that the arbitration provision in her employment contract is nonetheless unenforceable for several reasons.

First, Easterly argues that the arbitration provision is unenforceable because its terms are vague and ambiguous. Specifically, Easterly points to the fact that the contract provides that the Rules of Procedure for Christian Conciliation (“RPCC”) are to govern the arbitration process, but those rules are not attached to the contract and no details about the rules are provided in the contract. Easterly then argues “it is  [*6] unequivocal that Ms. Easterly could not have fully understood the terms of the mediation and arbitration agreement she was entering into when it was devoid of any details concerning the alternative dispute resolution forums and procedures — it was unconscionable.” Easterly Response at 5. 1 Easterly likens her situation to that in Penn v. Ryan’s Family Steak Houses, Inc., 269 F.3d 753 (7th Cir. 2001), in which the court found an arbitration agreement unenforceable in part because it contained “only an unascertainable, illusory promise” on the part of the arbitration company with which the plaintiff had contracted. In that case, however, the arbitration company was obligated only to “provide an arbitration forum, Rules and Procedures, and a hearing and decision based on any claim or dispute” raised by the employee; it had the sole, unilateral discretion to modify or amend its rules at any time and therefore could, as the court remarked, “fulfill its promise by providing [the plaintiff and his employer] with a coin toss.” Id. at 759.

FOOTNOTES

1 Easterly also remarks: “Employees entering into agreements related to their employment are naturally at an unfair advantage — e.g., in most instances,  [*7] employees are required to sign one-sided arbitration agreements (like the one in this case) as a condition precedent to obtaining employment with the employer or as part of the employment process. If an employee does not sign the agreement, it is most probably [sic.] that she will not get the job.” Easterly Response at 5. To the extent that Easterly suggests that the typical unequal bargaining power between employees and employers is a reason to find an arbitration clause unenforceable, this argument has been rejected by the Supreme Court. See Gilmer, 500 U.S. at 33 (“Mere inequality in bargaining power, however, is not a sufficient reason to hold that arbitration agreements are never enforceable in the employment context.”).

This case is readily distinguishable from Penn. While the RPCC were not attached to the contract, they were available from Heritage and are readily available on the internet, and there is no indication that Easterly could not have obtained them with minimal effort if she had been so inclined. Unlike the situation in Penn, where one of the parties to the arbitration agreement maintained the right to essentially make up the rules as it went along, the RPCC have been  [*8] promulgated by an uninvolved third party, much like the rules established by the American Arbitration Association. “[U]nder the FAA the parties are free to agree to any governing rules, and the courts will enforce whatever system they choose.” Webster v. A.T. Kearney, Inc., 507 F.3d 568, 573 (7th Cir. 2007) (citing Volt Info. Sci., Inc. v. Bd. of Tr. of Leland Stanford, 489 U.S. 468, 476, 109 S. Ct. 1248, 103 L. Ed. 2d 488 (1989) (“There is no federal policy favoring arbitration under a certain set of procedural rules; the federal policy is simply to ensure the enforceability, according to their terms, of private agreements to arbitrate.”)). Easterly has pointed to nothing that supports her assertion that the arbitration clause is unconscionably vague.