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Nelson v. Carl Black Chevrolet of Nashville, LLC

United States District Court, M.D. Tennessee, Nashville Division

August 2, 2017

CALEB NELSON, Plaintiff,



         This case presents several interesting questions, and, so far as the Court can tell, one novel issue regarding the scope and enforceability of an arbitration agreement. They arise in the context of a “Motion for Stay Pending Arbitration” (Doc. No. 16) filed by Carl Black Chevrolet of Nashville, LLC (“Carl Black”), which Caleb Nelson (“Nelson) opposes (Doc. No. 20). For the reasons that follow, the Motion for Stay will be granted.

         I. Factual Background

         Only a few undisputed facts are necessary to place the parties' arguments in context. On January 6, 2016, Nelson began working as a Sales Manager for Carl Black. A week or so earlier, he signed various employment related documents, including an Agreement to Arbitrate Claims (“Agreement”).

         The Agreement contained the following provision regarding its scope:

Any claim that otherwise would have been decidable in a court of law - whether under local, state, or federal law or otherwise - will instead be heard by arbitration. The claims covered by this Agreement include, but are not limited to, the enforceability and/or interpretation of this Agreement; whether a claim is arbitrable; . . . claims for discrimination or harassment . . . claims for “whistleblowing” or retaliation . . .; and claims for violation of any federal, state, or other governmental law, statute, regulation or ordinance.

(Doc. No. 17-1, Agreement ¶ 5(A)). The Agreement also provided that it “shall survive the termination of the Employee's employment, and may only be revoked or modified in a written document which expressly refers to the ‘Agreement to Arbitrate Claims, ' and which is signed by both the Employee and by an authorized representative of the Company.” (Id. at ¶ 10.) As for consideration, the Agreement provided:

In making this Agreement, Employee recognizes that employment with and continued employment with the Company and the Company's agreement to arbitrate claims against Employee serve as good and valuable consideration for the mutual obligations contained herein. Employee enters into this Agreement knowingly and voluntarily. Employee agrees that final and binding arbitration will lead to more expedient and cost-effective resolution of any claim against the company.

(Id. ¶ 2).

         Nelson resigned on May 2, 2016, but returned as the General Sales Manager on May 14, 2016. The new position had significantly more responsibility (including supervisory authority over the sales force), and a commensurate increase in pay. Nelson did not sign a new arbitration agreement upon his return to work, and claims he was not informed that the Agreement signed when he first went to work some five to six months earlier would cover his renewed employment at Carl Black.

         On July 30, 2016, Nelson was terminated. He alleges his termination was in retaliation for his whistleblowing regarding the sale of vehicles under active safety recalls. He also claims that he was retaliated against on the basis of his race and because he opposed the hostile work environment to which he had been subjected. He filed suit in this Court under Title VII of the Civil Rights Act of 1964; 42 U.S.C. § 2000e, et seq.; 42 U.S.C. § 1981, the Moving Ahead of Progress in the 21st Century Act (“MAP-21), 49 U.S.C. § 30171; and the Tennessee Human Rights Act (“THRA”), Tenn. Code Ann. § 4-21-101, et seq.

         Carl Nelson contends that all of the claims advanced by Nelson are encompassed by the Agreement. Accordingly, and after filing an Answer, it filed the present Motion pursuant to the Federal Arbitration Act (“FAA”), 9 U.S.C. § 1 et seq.

         II. Legal Discussion

         So far as relevant, the FAA provides that a “written provision in . . . a 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. If a court determines that the cause of action is covered by an arbitration clause, it must stay the proceedings until the arbitration process is complete. 9 U.S.C. § 3.

         There is a strong federal policy in favor of arbitration, Huffman v. Hilltop Cos., LLC, 747 F.3d 391, 394 (6th Cir. 2014), and “[i]t is well-established that any doubts regarding arbitrability should be resolved in favor of arbitration.” Glazer v. Lehman Bros., 394 F.3d 444, 451 (6th Cir. 2005) (citing Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983)). Further, “[t]he FAA ensures that arbitration agreements are as enforceable as any other contract.” Nat'l Labor Relations Bd. v. Alternative Entm't, Inc., 858 F.3d 393, 400-01 (6th Cir. 2017) (citing Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 443 (2006)).

         Because “[t]he FAA does not . . . make arbitration agreements more enforceable than other contracts, however, they “may be voided for the same reasons for which any contract may be invalidated, including forgery, unconscionability, and lack of consideration.” Glazer, 394 F.3d 444, 450 (6th Cir. 2005). They may also be challenged if the dispute falls outside the scope of agreement, Fazio v. Lehman Bros., Inc., 340 F.3d 386, 395 (6th Cir. 2003) because “a court may order arbitration of a particular dispute only where the court is satisfied that the parties agreed to arbitrate that dispute, ” Granite Rock Co. v. Int'l Bhd. of Teamsters, 130 S.Ct. 2847, 2856 (2010) (emphasis in original). Therefore, “‘[b]efore compelling an unwilling party to arbitrate, the court must engage in a limited review to determine whether the dispute is arbitrable; meaning that a valid agreement to arbitrate exists between the ...

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