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Knapp v. Zachry Holding Company

August 10, 2010

BENJAMIN F. KNAPP, PLAINTIFF,
v.
ZACHRY HOLDING COMPANY, INC., F/K/A ZACHRY CONSTRUCTION COMPANY, INC., DEFENDANT.



The opinion of the court was delivered by: David G. Bernthal U.S. Magistrate Judge

REPORT AND RECOMMENDATION

In October 2009, Plaintiff Benjamin F. Knapp filed a Complaint (#1) against Defendant Zachry Holding Co., Inc., alleging violations of the Age Discrimination in Employment Act (29 U.S.C. § 626(c)). This Court has jurisdiction pursuant to 28 U.S.C. 1331, because Plaintiff's claim is based on a federal statute.

In January 2010, Defendant filed a Motion for Order Compelling Arbitration and Dismissing, or in the Alternative Staying, Proceedings (#6). Plaintiff subsequently filed a memorandum (#15) in opposition to this motion. After reviewing the parties' memoranda, this Court recommends, pursuant to its authority under 28 U.S.C. § 636(b)(1)(B), that Defendant's Motion for Order Compelling Arbitration and Dismissing, or in the Alternative Staying, Proceedings (#6) be GRANTED.

I. Background

The following information is taken from the complaint. Plaintiff worked for Defendant between June 20, 2005, and March 10, 2008, as a duct installer at Defendant's project with the Archer Daniel Midland Company in Decatur, Illinois. On June 20, 2005, Plaintiff signed an agreement to accept Defendant's Dispute Resolution Process (hereinafter "DRP") (#7-1). Plaintiff was 57 years old when he began his employment with Defendant and signed the agreement.

Plaintiff alleges that he performed his job in a fully satisfactory fashion and in accordance with Defendant's realistic expectations. He alleges he worked in a unit with two other individuals who did similar work to him, and that these individuals were in their early 30's--and therefore younger than him--and had worked for Defendant for a shorter period of time than he did. Plaintiff further alleges that shortly before he was terminated, Defendant hired another employee, who was also in his early 30's, to perform the same work.

Defendant terminated Plaintiff's employment on March 10, 2008. Plaintiff alleges he was told that this was due to a lack of work, but that the volume of work had stayed relatively consistent, and that at the time of his termination there was as much work as there had been earlier. As a result, Plaintiff claims that he was treated differently and less favorably by Defendant because of his age, and that Defendant violated the Age Discrimination in Employment Act (hereinafter "ADEA") by doing so.

II. Legal Standard

The Federal Arbitration Act (9 U.S.C. §§ 1-15) ("hereinafter FAA") mandates enforcing arbitration agreements if such agreements are (1) written, (2) part of a contract or transaction involving interstate commerce, and (3) valid under general principles of contract law. 9 U.S.C. § 2. The FAA embodies a federal policy of favoring arbitration, with any doubts with respect to arbitrability resolved in favor of arbitration. James v. McDonald's Corp., 417 F.3d 672, 676-77 (7th Cir. 2005). However, a party cannot be compelled to arbitrate if that party did not originally agree to submit the dispute to arbitration. Id.; see also Grundstad v. Ritt, 106 F.3d 201, 204 (7th Cir. 1997).

Whether two parties have agreed to arbitrate a dispute is an issue for the courts to decide. AT&T Techs., Inc. v. Communc'ns Workers of Am., 475 U.S. 643, 649 (1986). Arbitration agreements are treated the same as any other contract. Koveleskie v. SBC Capital Markets, Inc., 167 F.3d 361, 367 (7th Cir. 1999). Federal courts look to state law when determining whether an enforceable arbitration agreement has been formed. Id.

To compel arbitration, a party must show that (1) there is an enforceable arbitration agreement; (2) the dispute is within the scope of the agreement; and (3) the opposing party has refused to proceed to arbitration. See Zurich Am. Ins. Co. v. Watts In., Inc., 466 F.3d 577, 580 (7th Cir. 2006). The party opposing arbitration bears the burden of establishing that the arbitration clause should not be enforced. See Shearson/Am. Express, Inc. v. McMahon, 482 U.S. 220, 226-27 (1987).

III. Discussion

Defendant argues that Plaintiff has a legally enforceable contractual obligation to submit his age discrimination claim through the DRP instead of litigating it in a court of law. Specifically, Defendant contends that (1) there is an enforceable agreement to follow the DRP; (2) Plaintiff's claim is within the scope of the agreement; and (3) Defendant has not waived its right to enforce the arbitration provision of the DRP. Accordingly, Defendant contends that the Court should compel Plaintiff to arbitrate the claim.

The agreement that Plaintiff signed is a one-page document titled "Dispute Resolution." (#7-1, p. 1.) This agreement refers to the DRP, described in a separate lengthy document. (#7-2.) The process ...


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