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Anthony Pacaldo v. Halliburton Energy Services

November 26, 2012

ANTHONY PACALDO,
PLAINTIFF,
v.
HALLIBURTON ENERGY SERVICES, INC.,
DEFENDANT.



The opinion of the court was delivered by: Jennifer L. Thurston United States Magistrate Judge

ORDER GRANTING DEFENDANT'S MOTION TO COMPEL ARBITRATION (Doc. 12)

Halliburton Energy Services, Inc. ("Defendant" or "Halliburton") seeks to compel arbitration and stay this action initiated by Plaintiff Anthony Pacaldo ("Plaintiff"). (Doc. 12). Plaintiff filed his opposition to the motion on October 24, 2012 (Doc. 18), to which Defendant replied on October 30, 2012 (Doc. 19). The Court heard oral arguments of counsel on November 7, 2012. For the following reasons, Defendant's motion to compel arbitration is GRANTED.

I. Relevant Factual and Procedural History

Plaintiff alleges "he was exposed to radiation in excess of allowable regulatory and statutory limits, including but not limited to radiation from Cesium-137" while an employee of Halliburton. (Doc. 2 at 1). According to Plaintiff, "named and unnamed Defendants failed to identify high-levels of radiation and the risks of potential exposure, and as a result, failed to provide Plaintiff with proper safety protection and other equipment, and implement proper safety procedures to safely work as a Service Operator." Id. at 4.

For these actions, Plaintiff filed a complaint on July 2, 2012, asserting causes of action including assault, battery, and intentional infliction of emotional distress by Halliburton and the 3 unnamed defendants. (Doc. 2 at 6-7, 14). In addition, Plaintiff asserted the "Doe" defendants are 4 liable for negligence; negligence per se; failure to warn; defect in design, manufacturing, and 5 assembly; breach of an implied warranty; breach of express warranty; and strict liability for 6 ultrahazardous activities. Id. at 7-13. Notably, Plaintiff provided a sparse description of the Doe 7 defendants but noted alleged, "each Defendant was the agent, representative and/or employee of each 8 of the remaining Defendants and was acting within the course and scope of said agency, representation 9 and/or employment." Id. at 3.

On August 2, 2012, Halliburton filed its Answer to the complaint, including in its affirmative defenses that an agreement to arbitrate governed the claims presented by Plaintiff. (Doc. 9 at 9-10). According to Halliburton,

Plaintiff has contractually agreed to submit all claims related in any way to his employment with Halliburton, including personal injury claims occurring at or in the vicinity of his workplace, to final and binding arbitration as provided for under the Halliburton Dispute Resolution Program.. Plaintiff's agreement to arbitrate applies to claims asserted against Halliburton itself, as well as to claims asserted against Halliburton's affiliates, employees, agents, contractors and customers. Plaintiff has agreed that such arbitration before an arbitrator appointed under the auspices of the American Arbitration Association or other designated neutral organization shall be the exclusive forum for the determination of all claims asserted in this action.

Id. Asserting the initiation of the lawsuit constitutes a breach of Plaintiff's agreement to arbitrate his claims, Halliburton filed its motion to compel arbitration pursuant to the Federal Arbitration Act on October 1, 2012. (Doc. 12).

II. Legal Standard

The Federal Arbitration Act ("FAA") provides that written arbitration agreements "shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. A party seeking to enforce arbitration agreement may petition the Court for "an order directing the parties to proceed to arbitration in accordance with the terms of the agreement." 9 U.S.C. § 4.

The Court's role in applying the FAA is "limited to determining whether a valid agreement to arbitrate exists and, if so, whether the agreement encompasses the dispute as issue." Lifescan, Inc. v. 3 Premier Diabetic Servs., Inc., 363 F.3d 1010, 1012 (9th Cir. 2004). To determine whether an 4 arbitration agreement encompasses particular claims, the Court looks to the plain language of the 5 agreement, and "[i]n the absence of any express provision excluding a particular grievance from 6 arbitration . . . only the most forceful evidence of a purpose to exclude the claim from arbitration can 7 prevail." United Steelworkers of Am. v. Warrior & Gulf Navigation Co., 363 U.S. 574, 584-86 (1960). 8

Because the FAA "is phrased in mandatory terms," "the standard for demonstrating arbitrability is not 9 a high one [and] a district court has little discretion to deny an arbitration motion." Republic of Nicaragua v. Standard Fruit Co., 937 F.2d 469, 475 (9th Cir. 1991).

"[A]ny doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration." Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983). As a result, arbitration should only be denied when "it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute." AT&T Tech., Inc. v. Communs. Workers of Am., 475 U.S. 643, 650 (1986). It is well-established that "arbitration provides a forum for resolving disputes more expeditiously and with greater flexibility than litigation." Lifescan, 363 F.3d at 1011.

III. The Arbitration Agreement and Terms

On January 1, 1998*fn1 , Halliburton implemented a dispute resolution program for "all Halliburton employee disputes." (Doc. 13-1 at 27). Employees were notified of the program in November 1997 through the mail, which included a cover letter explaining the program's adoption, a 2 booklet entitled "Resolution: The Halliburton Dispute Resolution Program," a tri-fold summary 3 brochure, and a pamphlet entitled "Dispute Resolution Plan and Rules" that contained the formal 4 statement of the program and its rules. Miner Decl. ¶ 3; Davidson Decl. ¶ 3 (see also Doc. 13-1 at 23-5 65).

In the cover letter, employees were informed: "Your decision to . . . continue your current 6 employment after January 1, 1998 means that you have agreed to and are bound by the terms of this 7 Program as contained in the Plan Document and Rules . . ." (Doc. 13-1 at 23). Likewise, the booklet 8 informed employees: "[I]f you accept or continue your job at Halliburton after that date, you will 9 agree to resolve all legal claims against Halliburton through this process instead of through the court system." Id. at 42. Further, the booklet explained assent to the terms "means you waive any rights you may have to bring a lawsuit against your employer and to a jury trial regarding any such dispute . . ." Id. at 48 (emphasis omitted).

Disputes covered by Halliburton's dispute resolution program ("the Program") include "any legal or equitable claim, demand or controversy in tort, in contract, under statute, or alleging violation of any legal obligation between persons bound by the Plan . . ." (Doc. 13-1 at 55). Under the Program, employees have four avenues to seek resolution of a dispute: (1) the "Open Door Policy," which allow an employee to present a concern to an immediate supervisor, another individual at any level of the organization, or the Employee Relations Department; (2) a conference with a company representative and program facilitator; (3) mediation with the American Arbitration Association or Judicial Arbitration and Mediation Services; and (4) arbitration, if the employee's dispute involves a legally protected right. (Doc. 13-1 at 29). Halliburton explained: "Arbitration is the process in which a dispute is presented to a neutral third party, the arbitrator, for a final and binding decision. The arbitrator makes the decision after both sides present their arguments." Id. at 40.

Under the terms of the Program, employees are required to pay a $50 fee to initiate arbitration, and Halliburton will "pay any costs that exceed this $50 fee." (Doc. 13-1 at 40). In addition, Halliburton "will pay the major part of [the employee's] legal fees . . . up to a maximum of $2,500. Id. at 41. If an employee elects to not have legal representation at the arbitration, "the Company will also participate without a lawyer." Id. Halliburton explained that if an employee filed a lawsuit regarding a workplace issue in violation of the arbitration agreement, Halliburton will ask the court to 2 dismiss it and will refer it to the Dispute Resolution Program." Id. at 45.

IV. Discussion and Analysis

A. Validity of the arbitration agreement

When determining whether a valid and enforceable agreement to arbitrate has been established 6 for the purposes of the FAA, the Court should apply "ordinary state-law principles that govern the 7 formation of contracts to decide whether the parties agreed to arbitrate a certain matter." First Options 8 of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995); Circuit City Stores v. Adams, 279 F.3d 889, 892 9 (2002). Here, the parties agree the law of the state of California governs the determination of whether the agreement is valid. (Docs. 13 at 14, 18 at 5).

Pursuant to California contract law, the elements for a viable contract are "(1) parties capable of contracting; (2) their consent; (3) a lawful object; and (4) sufficient cause or consideration." United States ex rel. Oliver v. Parsons Co., 195 F.3d 457, 462 (9th Cir. 1999) (citing Cal. Civ. Code § 1550; Marshall & Co. v. Weisel, 242 Cal. App. 2d 191, 196 (1966)). The Supreme Court explained, an agreement to arbitrate may be "invalidated by generally applicable contract defenses, such as fraud, duress, or unconscionability, but not by defenses that apply only to arbitration or that derive their meaning from the fact that an agreement to arbitrate is at issue." AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740, 1746 (2011).

Under California law, an arbitration agreement may only be invalidated for the same reasons as other contracts. Cal. Code Civ. Proc. ยง 1281. For example, a contract "is unenforceable if it is both procedurally and substantively unconscionable." Davis v. O'Melveny & Myers, 485 F.3d 1066, 1072 (9th Cir. 2007)). Procedural unconscionability focuses on "oppression and surprise," while substantive unconscionability focuses upon "overly harsh or one-sided results." Stirlen v. Supercuts, Inc., 51 Cal.App.4th 1519, 1532 (1997) (citations omitted). Both forms of unconscionability must be present in order for a court to find a contract unenforceable, but it is not necessary that they be present in the same degree. Davis, 485 F.3d at 1072; Stirlen, 51 Cal. App. 4th at 1532. Consequently, "[c]courts apply a sliding scale: 'the more substantively ...


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