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John Fouts v. Milgard Manufacturing

April 25, 2012


The opinion of the court was delivered by: Howard R. Lloyd United States Magistrate Judge

** E-filed April 25, 2012 **



Plaintiff John Fouts brought this action in Monterey County Superior Court against Milgard

Manufacturing, Inc. ("Milgard"), his former employer, alleging employment discrimination and 19 wrongful termination. Dkt. No. 1, Exh. A ("Complaint"). Milgard timely removed the case to this 20 court. Dkt. No. 1 ("Notice of Removal"). Fouts worked as a Sales Representative at Milgard from 21 2003 to 2005, and a Senior Sales Representative from 2005 until approximately March of 2010. 22

Complaint ¶¶ 1, 5. In October 2009, he was diagnosed with stage two squamous cell carcinoma and 23 shortly thereafter underwent surgery to treat the cancer. Id. ¶ 6. Following his diagnosis, Fouts 24 alleged he repeatedly attempted to discuss potential accommodations with his supervisors at 25

Milgard, but these attempts were denied or ignored. Id. ¶ 8. In early 2010, Fouts had to undergo 26 radiation therapy five days a week for several weeks, which precluded him from working. Id. ¶ 9. In 27

March of 2010, Milgard contacted Fouts to notify him that he had been placed on personal leave and 28 was required to return his company car, laptop, and cellular phone, which he did. Id. ¶ 13. Several months later, Milgard's Director of Employee Relations contacted Fouts to assure him that he would 2 not be terminated due to his absence, but when Fouts checked his online employment information, 3 he discovered he had already been listed as terminated. Id. ¶ 14. According to the pending motion, 4

Resolution Policy that the parties entered into when Fouts began working in 2003. Dkt. No. 8, Exh. 6 2, p. 4. The parties participated in a mediation session in December 2010, which did not resolve 7 their dispute. Dkt. No. 8, p. 4. Approximately seven months after the mediation session, Fouts filed 8 the instant action. 9

12. Both parties have consented to the undersigned's jurisdiction pursuant to 28 U.S.C. § 636(c).

The court has held a hearing on the motion on April 10, 2012. Based on the moving papers, arguments presented at hearing, and applicable authority, the court rules as follows. 13

The Federal Arbitration Act ("FAA") states that a "written provision in any maritime 15 transaction or contract evidencing a transaction involving commerce to settle by arbitration a 16 controversy thereafter arising . . . shall be valid, irrevocable, and enforceable, save upon such 17 grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2; AT&T 18

Mobility LLC v. Concepcion, 131 S. Ct. 1740, 1744 (2011). The FAA applies to employment 19 contracts. Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 123 (2001). Pursuant to the FAA, a 20 party may petition a court for an order compelling arbitration, staying the suit, and retaining 21 jurisdiction to confirm the arbitration award. See 9 U.S.C. §§ 3, 4, and 9. In ruling on a motion to 22 compel arbitration, the court may only determine 1) whether there is a valid agreement to arbitrate; 23 and 2) whether the claims at issue are covered by the agreement. Chiron Corp. v. Ortho Diagnostic 24

Systems, Inc., 207 F.3d 1126, 1130 (9th Cir. 2000). The court must also have both subject matter 25 and personal jurisdiction to compel arbitration. Schwarzer et al., Cal. Prac. Guide: Fed. Civ. Pro. 26


A. The Agreement to Arbitrate

Fouts contacted Milgard in 2010 to request that the parties begin mediation pursuant to the Dispute 5 Now, Milgard moves to compel arbitration. Dkt. No. 8. Fouts opposes the motion. Dkt. No.


Before Trial § 16:94-16:95 (The Rutter Group 2004). 27

Milgard, which governs the manner of addressing nearly all grievances that might arise between the 3 parties (hereinafter, the "Agreement"). The Agreement provides that "the disputes covered by this 4

Policy include any claim the Company might have against the employee. Also included is any claim 5 under applicable state or federal law an [sic] claims for: . . . violations of public policy; . . . all forms 6 of unlawful discriminating including . . . disability." Agreement p. 1. The Agreement exempts 7 several types of claims not at issue in this action. Id. p. 1-2. The Agreement lays out a two-step 8 process for the resolution of all claims. Any dispute that the parties cannot resolve through 9

Arbitration Association ("AAA") mediator. If the parties cannot resolve their dispute through mediation, "the dispute shall be resolved by exclusive, final and binding arbitration by the AAA before a single neutral Arbitrator knowledgeable in employment law who shall follow applicable 13 state and federal law and whose decision shall be final and binding upon both the Company and the 14 employee." Id. at 2. Milgard pays all costs associated with both steps of the proceedings, except that 15 the employee must pay for his own legal representation. Id. 16

Defendant argues that because plaintiff voluntarily participated in mediation, the first of the 17 two-step dispute resolution process agreed upon by the parties, he has waived his right to challenge 18 the enforceability of the Agreement. Plaintiff argues that he has not waived his right to challenge the 19

California public policy; and (2) because it is unconscionable. Defendant ...

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