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Mansour v. Kmart Corporation, Inc.

United States District Court, D. Maryland, Southern Division

July 25, 2018

AMAL MANSOUR, Plaintiff,
v.
KMART CORPORATION, INC., Defendant.

          MEMORANDUM OPINION

          PAUL W. GRIMM UNITED STATES DISTRICT JUDGE

         Plaintiff Amal Mansour filed suit, alleging that her former employer, Kmart Corporation, Inc. (“Kmart”), subjected her to a hostile work environment and caused an intentional infliction of emotional distress, falsely imprisoned her, and terminated her employment based on her national origin and religion in violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e et seq. Compl., ECF No. 1. Kmart seeks to dismiss the complaint and compel arbitration based on its allegation that the parties entered into an arbitration agreement (“Arbitration Agreement”) when Mansour's employment commenced. Def.'s Mot. to Dismiss Compl. & Compel Arbitration, ECF No. 17.[1] As Plaintiff sees it, the Arbitration Agreement is not valid because she never received a copy of it or assented to its terms in Kmart's online employee portal. Because I must treat Defendant's motion to dismiss the complaint as a motion for summary judgment, and a genuine dispute exists as to the validity of the Arbitration Agreement, I will deny the motion. The motion to compel arbitration is denied without prejudice to being resubmitted on request, as this case will proceed with limited discovery (followed by a renewed summary judgment practice or trial, depending on what is revealed by the limited discovery) on whether or not the plaintiff in fact agreed to arbitrate this dispute.

         Standard of Review

         Defendant moves to dismiss the complaint and compel arbitration under the Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1-16.[2] Congress enacted the FAA “to promote the enforceability of arbitration agreements and to make arbitration a more viable option to parties weary of the ever-increasing ‘costliness and delays of litigation.'” Saturn Distribution Corp. v. Williams, 905 F.2d 719, 722 (4th Cir. 1990) (quoting Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213, 220 (1985) (quoting H.R. Rep. No. 96, 68th Cong., 1st Sess. 2 (1924) (quotation marks omitted))). It “reflects ‘a liberal federal policy favoring arbitration agreements.'” Adkins v. Labor Ready, Inc., 303 F.3d 496, 500 (4th Cir. 2002) (quoting Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983)). If an issue is “‘referable to arbitration under an agreement in writing for such arbitration, '” then a stay is mandatory and a motion to compel must be granted. Id. (quoting 9 U.S.C. § 3).

         Relevantly, “‘even though arbitration has a favored place, there still must be an underlying agreement between the parties to arbitrate.'” Adkins, 303 F.3d at 501 (quoting Arrants v. Buck, 130 F.3d 636, 640 (4th Cir. 1997)). Here, Plaintiff challenges the very existence of the Arbitration Agreement, rather than its scope, insisting that she never agreed to its terms and, alternatively, that the Agreement is unconscionable, given its fee sharing provisions. See Pl.'s Opp'n 1, 5-6. As both parties acknowledge, when a party moves to compel arbitration and the validity of the purported arbitration agreement between the parties is disputed, the motion is treated as one for summary judgment. See Rose v. New Day Fin., LLC, 816 F.Supp.2d 245, 251 (D. Md. 2011); see also Id. at 252 n.5 (“If the parties dispute the existence of an arbitration agreement, the court must ‘hear the parties' on the issue, and the party alleged to have violated the arbitration agreement is entitled to a jury trial on the existence of an agreement. Standard summary judgment rules apply.” (quoting 9 U.S.C. § 4 and citing Shaffer v. ACS Gov't Servs., Inc., 321 F.Supp.2d 682, 684 n.1 (D. Md. 2004))). Therefore, I will treat Defendant's motion as one for summary judgment on the validity of the Arbitration Agreement. See id.; see also Fed. R. Civ. P. 12(d) (requiring conversion of motion to dismiss to motion for summary judgment where, as here, movant attaches affidavits in support that are not integral to the pleadings).

         Summary judgment is proper when the moving party demonstrates, through “particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations . . ., admissions, interrogatory answers, or other materials, ” that “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a), (c)(1)(A); see Baldwin v. City of Greensboro, 714 F.3d 828, 833 (4th Cir. 2013). The question here is “whether a contract to arbitrate was formed, ” and “unless there is no genuine issue of fact as to whether a contract was formed, the court must submit the question to the jury.” Galloway v. Santander Consumer USA, Inc., No. CCB-13-3240, 2014 WL 4384641, at *2 (D. Md. Sept. 3, 2014). To determine whether an arbitration agreement exists, “[c]ourts apply ‘ordinary state-law principles that govern the formation of contracts.'” Id. (quoting Noohi v. Toll Bros., Inc., 708 F.3d 599, 607 (4th Cir. 2013) (internal quotation marks and citations omitted)).

         Discussion

         Under Maryland law, [3] a contract exists where there is “‘mutual assent (offer and acceptance), an agreement definite in its terms, and sufficient consideration.'” Spaulding v. Wells Fargo Bank, N.A., 714 F.3d 769 (4th Cir. 2013) (quoting CTI/DC, Inc. v. Selective Ins. Co. of Am., 392 F.3d 114, 123 (4th Cir. 2004)). Here, the parties dispute whether Plaintiff accepted the Arbitration Agreement. Kmart contends that

Plaintiff cannot dispute that she agreed to arbitrate her claims. All requirements are met. Kmart's mutual promise to arbitrate any claims arising out of Plaintiff's employment constitutes sufficient consideration under Maryland law. Hill, 412 F.3d at 544 (adequate consideration for arbitration agreement exists where both parties were required to arbitrate). Additionally, mutual assent exists because Kmart offered to be mutually bound to an alternate dispute resolution process by disseminating the Arbitration Agreement and related materials to Plaintiff in or around October 2014, and on December 13, 2014, Plaintiff accepted Kmart's offer both expressly (by electronically acknowledging consent) and implicitly (by continuing her employment and opting not to revoke her acceptance of the Arbitration Agreements).

Def.'s Mem. 8-9. Specifically, Kmart's contention is that it provided Ms. Mansour the Arbitration Agreement in its online employee portal and she clicked through the various prompts to receive and acknowledge it and did not file a notice opting out of the agreement. Id. at 3, 9.

         In support, Defendant attached a declaration from Laura A. Novak, the Manager of Administrative Operation in the Legal Department of Sears Holding Management Corporation, to which are attached the Arbitration Agreement, Novak Decl. Ex. A, ECF No. 17-3, as well as screenshots of the online employee portal, Novak Decl. Ex. B, ECF No. 17-4; Plaintiff's alleged acceptance of the agreement (“Acceptance Screenshot”), Novak Decl. Ex. C, ECF No. 17-5; and a screenshot allegedly demonstrating Plaintiff did not opt-out of the agreement (“Opt-Out Screenshot”), Novak Decl. Ex. D, ECF No. 17-6. According to Ms. Novak, Ms. Mansour “participated in online training and acknowledged receipt of the Arbitration Agreement using Kmart's ‘My Personal Information' (“MPI”) online portal.” Novak Decl. ¶ 7. To do so, “[e]mployees log into the MPI portal using a unique Enterprise ID and Password. Once logged into the MPI portal, employees may print any documents or pages viewed in the portal using Kmart-owned equipment and supplies and at no cost to the employee.” Id. ¶ 8.

[U]pon opening the link to acknowledge the Arbitration Agreement, the employee is presented with four additional links, labeled: (i) “Arbitration Policy/Agreement (PDF);” (ii) “Arbitration Policy/Agreement (Text);” (iii) “Opt Out Form: Action is required to protect your legal rights to sue the Company in court and/or to participate in any way in a class action, collective action or representative action;” and (iv) “Acknowledge receipt of the Arbitration Policy/Agreement. . . .”
Upon clicking on the acknowledgement link, the employee receives the following message:
By clicking below, I acknowledge that I have reviewed and agree to the terms and conditions set forth in the Arbitration Policy/Agreement. I also understand that I may change my mind and opt out of the Agreement within 30 days of today's date by returning the Arbitration ...

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