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McCaskill v. SCI Management Corp.

April 04, 2002


Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 00 C 1543--Suzanne B. Conlon, Judge.

Before Bauer, Manion, and Rovner, Circuit Judges.

The opinion of the court was delivered by: Rovner, Circuit Judge


Gloria McCaskill filed suit in federal court against SCI Management Corporation, Evergreen Cemetery, Sam Smith, and Patrick Comer (collectively "SCI") alleging that she was terminated from her position at SCI in violation of Title VII, 42 U.S.C. sec. 2000e et seq. She further alleges denial of her contract rights in violation of 42 U.S.C. sec. 1981, violation of the Illinois Wage Payment and Collection Act, 820 ILS 115/1 et seq., and tortious interference with contract. The facts underlying those claims are irrelevant to the issues on appeal, but essentially involve allegations that McCaskill forwarded complaints of sexual harassment from her subordinates to her supervisor, who was the alleged harasser, and to the general manager, and that she was denied compensation owed to her and eventually terminated as a result.

SCI moved to dismiss the complaint and compel arbitration pursuant to the Federal Arbitration Act ("FAA"), 9 U.S.C. sec. 1 et seq., and the Illinois Uniform Arbitration Act ("IUAA"), 710 ILCS 5/2 et seq. SCI asserts that McCaskill signed an agreement providing that all employment disputes shall be resolved through binding arbitration. Although acknowledging the applicability of the arbitration provision, McCaskill asserts that the arbitration agreement is not enforceable because it prevents her from fully and effectively vindicating her Title VII rights. She grounds this argument in a provision in the arbitration agreement which (1) requires each party to pay its own costs and attorneys' fees regardless of the outcome and (2) mandates that each party shall pay one-half of the compensation to be paid to the arbitrator as well as one-half of any other costs of arbitration.

Because we agree that the attorney's fee provision renders the agreement unenforceable in this Title VII action, we need not consider the argument regarding the costs. We note that the parties had initially challenged the ability of this court to hear this case, with SCI arguing that this court lacked jurisdiction over the district court's order compelling arbitration based on the distinction between an "embedded" and an "independent" proceeding. Since that time, however, the Supreme Court resolved the matter in Green Tree Financial Corp.-Alabama v. Randolph, 531 U.S. 79 (2000), rejecting the embedded/independent distinction. At oral argument, the parties agreed that the jurisdictional issue is resolved by Green Tree.

The dissent, however, raises a distinct challenge to this court's jurisdiction, arguing that the district court did not actually dismiss the case, and that we must remand in order for the court to determine whether to dismiss or stay the proceeding in compelling arbitration. We certainly agree with the dissent that the district court should have made clear its intent to dismiss this case, and that jurisdiction hinges on whether the case was in fact dismissed. A remand in this case, however, is pointless because all parties agree that the district court dismissed the case. The appellees asked the court to compel arbitration and dismiss the case, and no party requested that the case be stayed. Accordingly, the court could not have intended to grant a stay; in compelling arbitration, it could only have dismissed the case. The parties agree that the case is dismissed, and therefore there seems little point in a remand. Where the intent of the court to dismiss the case is clear, we have appellate jurisdiction. See Kaplan v. Shure Bros., Inc., 153 F.3d 413, 417 (7th Cir. 1998) (appellate court had jurisdic tion even though minute order stated that case was dismissed without prejudice, where record read as a whole evidenced clear intent to end the entire case); Spitz v. Tepfer, 171 F.3d 443, 447-48 (7th Cir. 1999) (finding jurisdiction even though district court order granting summary judgment did not mention the injunction request, where plaintiff failed to pursue injunctive relief and "tenor of summary judgment opinion reflects the trial court's intent to dispose of all the issues in the lawsuit"; court's failure to explicitly address the injunction request "is the sort of technical defect that does not upset the order's finality, for it is clear that the court implicitly found against Spitz on this claim.").

The dissent cites ITOFCA, Inc. v. MegaTrans Logistics, Inc., 235 F.3d 360, 363 (7th Cir. 2000), for the proposition that parties cannot agree to jurisdiction, and an attorney's assertion at oral argument cannot create appellate jurisdiction. The case, however, recognizes that such representations can indeed determine appellate jurisdiction. In that case, the court was deprived of appellate jurisdiction because counterclaims had been dismissed "without prejudice," and thus could be refiled at any time.

The court refused to find appellate jurisdiction based on the parties' mere representation that such jurisdiction existed, because it was inconsistent with the law. Id. at 363. The ITOFCA panel further stated, however, that it asked MegaTrans' attorneys at oral argument if they would represent to the court that MegaTrans would not refile the counterclaims. Id. at 365. The court stated that "[h]ad MegaTrans done so, we could have treated the district court's dismissal of the counterclaims as having been with prejudice, thus winding up the litigation and eliminating the bar to our jurisdiction." Id. Because MegaTrans was unwilling to so represent, we lacked appellate jurisdiction. Id. ITOFCA thus establishes that the representations by the parties can indeed impact our determination of appellate jurisdictions. Here, the parties agree that the case is dismissed, and the record supports that representation. Given that no request for a stay was before it, the court could not have intended a stay rather than a dismissal Accordingly, we have appellate jurisdiction and turn to the validity of the arbitration agreement.

The arbitration agreement at issue here provides for the arbitration of a number of employment-related disputes, including those based on harassment or discrimination. It excludes other types of claims likely to be brought by SCI, such as disputes related to non-competition or confidentiality agreements, and "any claim by the Company against the Employee which is based upon fraud, theft or other dishonest conduct of employee." Agreement para. 2. The arbitration agreement further specifies as follows:

Each party may retain legal counsel and shall pay its own costs and attorneys' fees, regardless of the outcome of the arbitration. Each party shall pay one-half of the compensation to be paid to the arbitrator(s), as well as one-half of any other costs relating to the administration of the arbitration proceeding (e.g. room rental, court reporter, etc.). Agreement, para. 4.

Some courts have refused to enforce arbitration agreements which mandate that the parties each pay half the costs of arbitration, while others have considered whether the cost-shifting provision renders the arbitration proceedings inaccessible for that individual. See, e.g., Green Tree, 531 U.S. 79; Brown v. Wheat First Securities, Inc., 257 F.3d 821 (D.C. Cir. 2001); Bradford v. Rockwell Semiconductor Systems, Inc., 238 F.3d 549 (4th Cir. 2001); Rosenberg v. Merrill Lynch, Pierce, Fenner & Smith, 170 F.3d 1 (1st Cir. 1999); Koveleskie v. SBC Capital Markets, Inc., 167 F.3d 361 (7th Cir. 1999); Shankle v. B-G Maintenance Management of Colorado, Inc., 163 F.3d 1230 (10th Cir. 1999); Cole v. Burns International Security Services, Inc., 105 F.3d 1465 (D.C. Cir. 1997). We need not address the issue here, however, because the attorney's fees provision renders the agreement unenforceable.

In Gilmer v. Interstate Johnson Lane Corp., 500 U.S. 20, 26 (1991), the Supreme Court held that claims under fed eral statutes may be appropriate for arbitration as long as the litigant may effectively vindicate her statutory cause of action in the arbitral forum, and the statute will continue to serve its remedial and deterrent purposes. Williams v. Cigna Financial Advisors Inc., 197 F.3d 752, 763 (5th Cir. 1999). See also Equal Employment Opportunity Commission v. Waffle House, ___ U.S. ___, 122 S. Ct. 754, 761 (2002) (narrowly construing impact of arbitration agreement to hold that the existence of an arbitration agreement between private parties does not affect the EEOC's right to seek all remedies). One of the remedies provided by Title VII is that attorney's fees may be awarded to a prevailing plaintiff, 42 U.S.C. sec. 2000e-5(k), and we noted in Dunning v. Simmons Airlines, Inc., 62 F.3d 863, 872 (7th Cir. 1995), that aprevailing party should ordinarily recover attorney's fee absent special circumstances rendering such an award unjust. In Dunning, we emphasized the importance of the fees provision to the purposes of Title VII:

Attorney's fees in Title VII litigation are not limited to a proportion of the monetary damages assessed in the case because, as Congress has recognized, a plaintiff in any civil rights suit acts "not for himself alone but also as a 'private attorney general,' vindicating a policy that Congress considered of the highest importance." [citations omitted] . . . . A rule of proportionality would make it difficult, if not impossible, for individuals with meritorious civil rights claims but relatively small potential damages to obtain redress from the courts. This is totally inconsistent with Congress' purpose in enacting sec. 1988. Congress recognized that private-sector fee arrangements were inadequate to ensure sufficiently vigorous enforcement of civil rights. In order to ensure that lawyers would ...

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