United States District Court, E.D. Michigan, Northern Division
ORDER DENYING PLAINTIFF’S MOTION FOR ENTRY OF
JUDGMENT, DENYING PLAINTIFF’S MOTION FOR
ATTORNEYS’ FEES AND COSTS, REMANDING THE CASE TO THE
ARBITRATOR AND STAYING AND ADMINISTRATIVELY CLOSING THE
CASE
THOMAS
L. LUDINGTON UNITED STATES DISTRICT JUDGE.
On
March 1, 2018, Defendant, Menard, Inc., removed this case
from the Circuit Court of Saginaw County, Michigan. ECF No.
1. The Complaint alleged discrimination and retaliation in
violation of the Michigan Elliot Larson Civil Rights Act,
(“ELCRA”), M.C.L. 37.2202. ECF No. 1-2. On March
2, 2018, Defendant filed a motion to compel arbitration,
seeking to enforce the terms of the employment agreement
between Plaintiff and Menard. ECF No. 4. The Court granted
Defendant’s motion to compel arbitration and stayed the
case until the arbitration proceedings were concluded. ECF
No. 11. On August 16, 2019, Plaintiff filed a motion to lift
the stay, reopen the case, and for entry of judgment. ECF No.
13. Also on August 16, 2019, Plaintiff filed a motion for
attorney’s fees, expert witness fees, and costs. ECF
No. 14. On August 27, 2019, the motion to lift the stay and
reopen the case was granted. ECF No. 16.
During
her employment with Menard, Plaintiff signed the
Employee/Employer agreement. ECF No. 17 at PageID.231-232.
The agreement stated in relevant part,
I agree that all problems, claims and disputes experienced
related to my employment area shall first be resolved as
outlined in the Team Member Relations section of the
“Grow With Menards Team Member Information
Booklet” which I have received. If I am unable to
resolve the dispute by these means for any reason, I agree to
submit to final and binding arbitration. Arbitration shall be
the sole and exclusive forum and remedy for all covered
disputes of either Menard, INC or me. . . .
Menard agrees that it will pay all arbitration costs and fees
of the American Arbitration Association incurred by either
party commencing arbitration, regardless of who prevails in
the arbitration, as long as a claim is not found to be
frivolous. Menard further agrees that it will not pursue
costs, arbitration fees, or its attorneys’ fees, if
Menard prevails either on claims which it brings or on
non-frivolous claims which I may bring. ECF No. 13-2 at
PageID.119.
Arbitration
occurred in May 2019. ECF No. 13 at PageID.112. On July 24,
2019 the arbitrator issued his arbitration award, dismissing
Plaintiff’s retaliation claim, but granting her sexual
discrimination and harassment claim under ELCRA. ECF No. 13-3
at PageID.129. The arbitrator specifically granted Plaintiff
$11, 122 backpay from August 14, 2017 to February 11, 2019,
$50, 000 in compensatory damages, pre-judgment interest
compounded annually at 3.848% interest, post-judgment
interest as determined by the Federal Arbitration Act,
administrative fees and expenses of the American Arbitration
Association and the arbitrator totaling $14, 304.72, and $300
to reimburse Plaintiff for the arbitration filing fee.
Id. at 132-134. The arbitrator also included the
following sentence in his final report, “By agreement
of the parties’ counsel at the end of the arbitration
hearing, the question of litigation costs and attorney fees
is to be deferred to the federal court which the parties
apply to for entry of a judgment on this Arbitration
Award.” Id. at 133. Defense counsel
immediately challenged this section of the arbitrator’s
report. ECF No. 17-5 at PageID.254 (email stating “With
all due respect, my colleague and I do not remember agreeing
to this provision at the end of the arbitration hearing.
Moreover, the arbitration agreement does not permit the
federal court to decide this issue. The Arbitrator alone
determines all issues under the arbitration agreement,
including but not limited to the awarding of litigation costs
and attorneys’ fees.”). The arbitrator replied
that “I specifically recall what I understood to be the
parties’ counsel agreeing to defer the question of
litigation costs and attorney fees to the federal court
entering judgment on the Award.” ECF No. 17-6 at
PageID.257. Unfortunately, the court reporter did not
transcribe this conversation and the arbitrator acknowledged
that “it is possible the parties were only referring to
deferring the submission of costs and attorney fees to the
arbitrator for consideration post-award in the event the
Claimant was the prevailing party.” Id. The
arbitrator concludes the dispute is irrelevant though because
“the parties’ consent to entry of judgment on the
Award by the federal court [and] FRCP 54(d) permits the
prevailing party to move for attorney fees after entry of a
judgment when authorized by law.” Id.
Plaintiff cites to FRCP 54(d) and the ELCRA as evidence that
she is eligible for an award of reasonable attorney fees. ECF
No. 14 at PageID.136.
Under
the American rule litigants generally pay their own
attorneys’ fees. Alyeska Pipeline Serv. Co. v.
Wilderness Soc’y, 421 U.S. 240, 247 (1975);
Crossville Med. Oncology v. Glenwood Sys., LLC, 610
F.App'x 464, 467 (6th Cir. 2015). However, there are
exceptions when a statute or contract between the parties
provide otherwise. Crossville, 610 F.App'x at
1009; see also Menke v. Monchecourt, 17 F.3d 1007,
1009 (7th Cir. 1994). ELCRA is one such statute. MCL §
37.2802 provides that a court “may award all or a
portion of the costs of litigation, including reasonable
attorney fees and witness fees, to the complainant in the
action if the court determines that the award is
appropriate.” The award of attorneys’ fees is
discretionary and the decisionmaker must evaluate multiple
factors in determining whether attorneys’ fees are
warranted and if so, the amount. Brocklehurst v. PPG
Indus., Inc., 907 F.Supp. 1106, 1107–08 (E.D.
Mich. 1995).
The
Federal Arbitration Act itself is silent on whether parties
are eligible for attorneys’ fees for the cost of
arbitrating. If the arbitration agreement contains an
“all disputes” clause, “a strict
construction of the agreement would prohibit the court from
awarding [confirmation] costs and fees because that dispute,
too, must be submitted to an arbitrator.” Own
Capital, LLC v. Celebrity Suzuki of Rock Hill, LLC, 2011
WL 3300696 *3 (E.D. Mich. 2011). Similarly, the Sixth Circuit
held that a provision stating “[a]ny dispute arising
out of or in connection with this Agreement . . . shall be
determined by arbitration” “does not authorize a
court to award [post-arbitration confirmation]
attorneys’ fees.” Crossville, 610
F.App'x at 469–70.
In this
case, the arbitration agreement has an “all
disputes” clause directing all conflicts between the
employee and the employer to binding arbitration. The
agreement states that “all problems, claims and
disputes experienced related to my employment” must
first be resolved according to the Grow With Menards Team
Member Information Booklet and if they cannot be resolved,
“to final and binding arbitration.” ECF No. 13-2
at PageID.119. In addition, the agreement states that
“[a]rbitration shall be the sole and exclusive forum
and remedy for all covered disputes of either Menard, INC or
me.” Id. This language is similar to the
agreement in Crossville which the Sixth Circuit found to be
broad enough to include the issue of post-arbitration
attorney fees. Crossville, 610 F.App'x at
469–70 (“[a]ny dispute arising out of or in
connection with this Agreement . . . shall be determined by
arbitration”).
Even
though the case law focuses on confirmation attorneys’
fees, the same logic applies to attorneys’ fees for
arbitration. The purpose of arbitration is to reduce
litigation costs. If the parties agree to submit all claims
to binding arbitration, that logically includes the costs for
arbitration itself. It is clear Menard considered the cost of
attorneys’ fees because the text of the arbitration
agreement states that Menard “will not pursue costs,
arbitration fees, or its attorneys’ fees” if
Menard prevails. ECF No. 17-2 at PageID.241. Since
Plaintiff’s attorneys’ fees are not mentioned in
the agreement, it would fall under the general “all
problems, claims and disputes” part of the contract
that must be sent to binding arbitration.
Parties
can waive an “all disputes” arbitration
agreement, either by their conduct or by express waiver. In
Schlobohm, the Northern District of Texas and the
Fifth Circuit found that “both parties and the
arbitrators ultimately treated the arbitration as covering
only the fair market value issue” and as such, the
court did not view the agreement to be all-inclusive. 806
F.2d at 581 n.3. Here, the agreement language is broad and
the arbitration award itself is also broad – covering
both claims of the lawsuit and damages. The only reference to
attorneys’ fees is the disputed sentence about
reserving argument for the district court. Since this comment
was made off the record, it can be assumed this was not a
conversation the parties’ intended to be on the record
or else someone would have ensured the court reporter was
still transcribing. This one sentence alone is insufficient
to find the parties waived the broad binding arbitration
agreement provision.
The
second option for waiver is an express waiver. There is a
strong preference for arbitration and waiver will “not
be lightly inferred.” Highlands Wellmont Health
Network, Inc. v. John Deere Health Plan, Inc., 350 F.3d
568, 573 (6th Cir. 2003). In that case the two parties
exchanged letters with opposing views on an original and
updated contract. The court found “no evidence that
[one party] expressly waived arbitration” and
“[g]iven the strong preference in favor of arbitration
and against waiver, [the court] cannot infer a waiver of
arbitration.” Id. at 574. Additionally, the
Sixth Circuit stated “[w]here the arbitration clause is
broad, only an express provision excluding a specific
dispute, or ‘the most forceful evidence of a purpose to
exclude the claim from arbitration, ’ will remove the
dispute from consideration by the arbitrators.”
Id. at 577 (citing AT&T Techs., Inc. v.
Commc’n Workers of Am., 475 U.S. 643, 650 (1986)).
In the instant case, the parties mentioned attorneys’
fees at some point in the arbitrator’s presence, but
there is no record of the conversation. Additionally,
Defendant timely objected to the inclusion of the paragraph
in the arbitrator’s award. As such, there is
insufficient information for a waiver of the arbitration
agreement. The arbitration agreement was all inclusive and
there was no waiver of the award, therefore attorneys’
fees must be decided by the arbitrator and not the district
court. The case will be remanded to the arbitrator for a
decision on Plaintiff’s attorneys’ fees and
costs. Plaintiff’s motion for entry of judgment will be
denied without prejudice. Plaintiff’s motion for
attorneys’ fees will be denied without prejudice.
Accordingly,
it is ORDERED that Plaintiff’s motion
for entry of judgment, ECF No. 13, is DENIED
without prejudice.
It is
further ORDERED that Plaintiff’s
motion for attorneys’ fees, expert witness fees, and
costs, ECF ...