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Gordon v. Sterling Jewelers, Inc.

United States District Court, D. Maryland

November 30, 2017

Janvier S. Gordon
v.
Sterling Jewelers, Inc.

         Dear Counsel:

         Pending before the Court is Defendant Sterling Jewelers, Inc.'s (“Sterling”) Motion to Dismiss with Prejudice, or Alternatively, Stay Proceedings Pending Submission to Mandatory Arbitration (ECF No. 3), which the Court will construe as a Motion to Dismiss or Stay and Compel Arbitration.[1] The Motion is ripe for disposition, and no hearing is necessary. See Local Rule 105.6 (D.Md. 2016). For the reasons outlined below, the Court will grant Sterling's Motion.

         Plaintiff Janvier S. Gordon is an African-American male who was a store manager and full-time sales representative for Sterling at locations in Delaware, Maryland, and Texas. (Compl. ¶¶ 1, 12, 15, 41, ECF No. 1).[2] Prior to starting at Sterling in August 2013, Gordon signed an agreement to submit employment-related claims to Sterling's RESOLVE program, which culminates in mandatory arbitration (the “Arbitration Agreement” or “Agreement”). (Id. ¶ 11; Def.'s Mem. Supp. Mot. to Dismiss Ex. A [“Arbitration Agmt.”], ECF No. 3-3). While a manager at Sterling's Frederick, Maryland store, Gordon's staff racially and sexually harassed him on an ongoing basis. (Compl. ¶¶ 19-23). When Gordon reported these incidents of harassment to his managers, they counseled him, demoted him, and denied him relocation expenses when he was transferred to a Texas store. (Id. ¶ 82). Because of these actions, he resigned in January 2015. (See id. ¶¶ 56-58). In June 2015, Gordon filed a claim with the RESOLVE program. (Gordon Decl. ¶ 20, ECF No. 4-1). Gordon also filed a claim with the Equal Employment Opportunity Commission (“EEOC”) at an unspecified time and received his right to sue letter on November 30, 2016. (Compl. ¶ 5).

         On February 26, 2017, Gordon sued Sterling, alleging one count of race discrimination, one count of sex discrimination, and one count of retaliation all in violation of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq. (2012). (ECF No. 1). Gordon seeks monetary damages and declaratory relief. (Compl. ¶ 83). Sterling filed its Motion to Dismiss with Prejudice, or Alternatively, Stay Proceedings Pending Submission to Mandatory Arbitration on April 21, 2017. (ECF No. 3). On May 5, 2017, Gordon filed his Opposition. (ECF No. 4). On May 31, 2017, Sterling filed its Reply. (ECF No. 9). Gordon filed his Surreply on June 27, 2017. (ECF No. 12). Sterling filed its Final Reply on June 30, 2017. (ECF No. 15).

         The Federal Arbitration Act (the “FAA”) codifies a strong federal policy favoring arbitration. Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983). As a result, the FAA provides that written agreements to arbitrate “shall be valid, irrevocable, and enforceable, ” unless there is a basis to revoke the contract. 9 U.S.C. § 2 (2012). Under the FAA, a court may compel arbitration if the parties agreed in writing to arbitrate the dispute. Bey v. Midland Credit Mgmt., Inc., No. GJH-15-1329, 2016 WL 1226648, at *3 (D.Md. Mar. 23, 2016) (quoting Adkins v. Labor Ready, Inc., 303 F.3d 496, 500-01 (4th Cir. 2002)). A court decides as a matter of contract whether the parties agreed to arbitrate a particular dispute. Id. (quoting Johnson v. Circuit City Stores, 148 F.3d 373, 377 (4th Cir. 1998)).

         Motions to compel arbitration “exist in the netherworld between a motion to dismiss and a motion for summary judgment.” Shaffer v. ACS Gov't Servs., Inc., 321 F.Supp.2d 682, 683 (D.Md. 2004). If the parties dispute the validity of an arbitration agreement, motions to compel arbitration “are treated as motions for summary judgment.” Bey, 2016 WL 1226648, at *4 (quoting Rose v. New Day Fin., LLC, 816 F.Supp.2d 245, 251 (D.Md. 2011)). In this case, Gordon contests the Arbitration Agreement's enforceability. Accordingly, the Court will review Sterling's Motion using the summary judgment standard. See Shaffer, 321 F.Supp.2d at 684.

         Under this standard, a court will grant a motion to compel arbitration “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Bey, 2016 WL 1226648, at *4 (quoting Fed.R.Civ.P. 56(a)). In considering the motion, a court must “view the evidence in the light most favorable to . . . the nonmovant, and draw all reasonable inferences in h[is] favor.” Id. (alteration in original) (quoting Dennis v. Columbia Colleton Med. Ctr., Inc., 290 F.3d 639, 645 (4th Cir. 2002)). But, as in all cases, the court must also “abide by the ‘affirmative obligation of the trial judge to prevent factually unsupported claims and defenses from proceeding to trial.'” Id. (quoting Bouchat v. Balt. Ravens Football Club, Inc., 346 F.3d 514, 526 (4th Cir. 2003)).

         Sterling contends that all of Gordon's claims are subject to the Arbitration Agreement, and Gordon does not dispute this contention.[3] Instead, Gordon argues that he should not be required to arbitrate his claims because Sterling materially breached the Agreement and breached the covenant of good faith and fair dealing. Gordon also argues that the Arbitration Agreement is unconscionable.

         Material Breach

         Gordon asserts that Sterling materially breached the Arbitration Agreement by choosing to arbitrate in Texas. Courts have defined a material breach as one that “violates a term essential to the purpose of the contract.” Price v. KNL Custom Homes, Inc., 28 N.E.3d 640, 651 (Ohio Ct. App. 2015); see also Sachs v. Regal Sav. Bank, 705 A.2d 1, 4 (Md.Ct.App. 1998), aff'd sub nom. Regal Sav. Bank, FSB v. Sachs, 722 A.2d 377 (Md. 1999).[4] Here, the Arbitration Agreement provides that “[a]bsent any undue hardship as determined by arbitrator, the arbitration shall occur near where Employee worked for Sterling.”[5] (Arbitration Agmt.). Gordon worked for Sterling in Delaware, Maryland, and, most recently, Texas, making Texas a viable arbitration location under the terms of the Agreement. Thus, the Court concludes that there is no genuine dispute of material fact that Sterling did not materially breach the Agreement.

         Covenant of Good Faith and Fair Dealing

         Gordon claims that Sterling breached the covenant of good faith and fair dealing when it unilaterally selected Midland, Texas as the arbitration location in an attempt to make arbitration prohibitively expensive, thereby forcing Gordon to withdraw his claim. The covenant of good faith and fair dealing requires a party to “do everything that the contract presupposes they will do to accomplish its purpose.” Questar Builders, Inc. v. CB Flooring, LLC, 978 A.2d 651, 675 (Md. 2009) (quoting Photovest Corp. v. Fotomat Corp., 606 F.2d 704, 728 (7th Cir. 1979)). But the duty of good faith and fair dealing does not “interpose new obligations about which the contract is silent, even if inclusion of the obligation is thought to be logical and wise.” E. Shore Mkts., Inc. v. J.D. Assocs. Ltd. P'ship, 213 F.3d 175, 184 (4th Cir. 2000). Rather, the only obligations required are ones “inherent in expressed promises.” Id.

         As discussed above, the Agreement provides that “the arbitration shall occur near where Employee worked for Sterling” absent the arbitrator finding undue hardship. (Arbitration Agmt.). Therefore, Sterling's only obligation under the Agreement was to arbitrate near where Gordon worked for Sterling-Texas-unless the arbitrator determined otherwise. Indeed, Sterling's RESOLVE coordinator identified Midland, Texas as the location for arbitration because it was Gordon's most recent work location. (Gordon Decl. Ex. 1 at 4). Gordon withdrew from arbitration before the parties selected an arbitrator, and therefore he never argued to the arbitrator that arbitration in Texas caused him undue hardship. (See id. at 5). Although it may seem “logical or wise” that Gordon should be permitted to arbitrate in a more cost-effective location without the arbitrator's hardship determination, those were not the terms that Gordon and Sterling agreed to. See E. Shore Mkts., 213 F.3d at 184. Thus, the Court concludes that there is no genuine dispute of material fact that Sterling did not breach the covenant of good faith and fair dealing.

         Uncons ...


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