Soto-Fonalledas v. Ritz-Carlton San Juan Hotel Spa & Casino

United States Court of Appeals
For the First Circuit

No. 10-1638

DIANA SOTO-FONALLEDAS, ET AL.,

Plaintiffs, Appellants,

v.

RITZ-CARLTON SAN JUAN HOTEL SPA & CASINO,

Defendant, Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO

[Hon. José Antonio Fusté, U.S. District Judge]

Before

Lynch, Chief Judge,
Boudin and Thompson, Circuit Judges.

Juan Rafael Gonzáles Muñoz, with whom Maria E. Margarida
Franco, Gonzáles Muñoz Law Offices, PSC, Carlos M. Vergne, and Law
Offices of Carlos M. Vergne were on brief, for appellants.
Radamés A. Torruella, with whom Patricia M. Marvez-Valiente
and McConnell Valdés LLC were on brief, for appellee.

May 4, 2011
 LYNCH, Chief Judge. On September 30, 2009, Diana Soto-

Fonalledas ("Soto"), her husband, and their conjugal partnership

filed an employment discrimination suit against the Ritz-Carlton

San Juan Hotel, Spa & Casino in federal court. The complaint

alleged discrimination on the basis of sex and disability and

retaliation in violation of Title VII of the Civil Rights Act, 42

U.S.C. § 2000e et seq., the Americans with Disabilities Act, 42

U.S.C. § 12101 et seq., and various Puerto Rico laws.

The Ritz-Carlton filed a motion to dismiss and compel

arbitration pursuant to the Federal Arbitration Act ("FAA"), 9

U.S.C. § 1 et seq., on the grounds that the dispute was covered by

an arbitration agreement. Soto's opposition argued that the

arbitration agreement invoked by the Ritz-Carlton was invalid and

unenforceable on several grounds.

The district court granted the Ritz-Carlton's motion to

compel arbitration and dismissed all of the claims in the

complaint, without prejudice to Soto filing the claims under Puerto

Rico law in Commonwealth courts. Soto-Fonalledas v. Ritz Carlton

San Juan Hotel Spa & Casino, No. 09-2005, 2010 WL 1328944, at *4

(D.P.R. Mar. 26, 2010). Soto filed a timely appeal.

We affirm the judgment of the district court, albeit on

different reasoning.

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 I.

In support of its motion to compel, the Ritz-Carlton

argued that arbitration was required by its employment agreement,

which it submitted in English together with a receipt for the

Spanish version of the agreement that had been signed by Soto on

August 8, 2001. Within days of filing its motion to compel, the

Ritz-Carlton filed a copy of the Spanish version of the agreement

mentioned in its motion, as instructed by the district court.

The Ritz-Carlton's employee agreement outlines the rights

and obligations of its employees. One section of the agreement

identifies a three step alternative dispute resolution process that

employees must follow to resolve workplace incidents before filing

a lawsuit or administrative action. The first step requires that

the employee discuss the incident in an informal open door process

with his or her supervisor, manager, division head, and general

manager. Under the second step, the employee must, with some

exceptions, request a more formal review of the matter by a panel

of coworkers. The third step requires that the employee submit to

arbitration claims of discrimination or termination on the basis of

age, color, sex, religion, national origin, sexual orientation,

marital status, or disability.

In Soto's opposition to the motion to compel arbitration,

she did not challenge the Ritz-Carlton's claim that she had signed

an agreement to arbitrate, but rather argued that the Ritz-Carlton

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had not met its burden of demonstrating that a "valid agreement"

existed. Challenging the terms and conditions, rather than the

existence, of the agreement, she argued that it was invalid and

unenforceable because: (1) it deprived her of her Title VII and ADA

remedies; (2) the Ritz-Carlton did not provide her with a copy of

the governing AAA rules; (3) she did not receive consideration for

the agreement; (4) the clause did not provide adequate notice that

she was agreeing to arbitrate statutory employment discrimination

claims; and (5) the contract imposed a probationary period that

violated Puerto Rico law. Only some of these claims are asserted

on appeal.

II.

Because abstract questions of "whether particular

disputes do (or do not) come within the four corners of an

expressly limited arbitration provision are legal in nature," we

review the district court's grant of the motion to compel

arbitration de novo. Paul Revere Variable Annuity Ins. Co. v.

Kirschhofer, 226 F.3d 15, 18-19 (1st Cir. 2000). We "may affirm

its order on any independent ground made manifest by the record."

InterGen N.V. v. Grina, 344 F.3d 134, 141 (1st Cir. 2003).

A party who is seeking to compel arbitration must

demonstrate "that a valid agreement to arbitrate exists, that the

movant is entitled to invoke the arbitration clause, that the other

party is bound by that clause, and that the claim asserted comes

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within the clause's scope." Dialysis Access Ctr., LLC v. RMS

Lifeline, Inc., No. 10-1872, 2011 WL 1139144, at *4 (1st Cir. Mar.

30, 2011) (quoting InterGen, 344 F.3d at 142) (internal quotation

marks omitted). At issue here is only the first requirement--the

validity of the agreement.

Under Section 2 of the FAA, a written provision in a

contract "to settle by arbitration a controversy thereafter arising

out of such contract . . . 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. The Supreme

Court has stated that "the FAA was designed to promote

arbitration," AT&T Mobility LLC v. Conception, No. 09-893, slip op.

at 11 (U.S. Apr. 27, 2011), and that "Section 2 embodies the

national policy favoring arbitration and places arbitration

agreements on equal footing with all other contracts," Buckeye

Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 443 (2006).

In challenging the agreement's validity, Soto advances

just three of the arguments that she made to the district court.

She argues that the arbitration agreement is unenforceable because

she did not receive any consideration for signing it; because she

did not receive adequate notice of which claims would be subject to

arbitration; and because the agreement deprives her of remedies

granted by Title VII and the ADA.

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 Soto grounds her remedies-based argument on a certified

English translation of the Spanish version of the arbitration

agreement submitted for the first time on appeal. She argues that

there is a material difference between certain language of the

Spanish version--for which she admits signing a receipt--and the

language of the English version on which the district court based

its decision.1

Although as a rule this court will not consider

translations of documents provided on appeal that were not part of

the record before the district court, Gonzalez-De-Blasini v. Family

Dept., 377 F.3d 81, 88 (1st Cir. 2004); Estades-Negroni v. Assocs.

Corp. of N. Am., 359 F.3d 1, 3 (1st Cir. 2004), we retain the

discretion to waive this requirement, cf. United States v.

Catalan-Roman, 585 F.3d 453, 464 n.10 (1st Cir. 2009); United

States v. Colon-Munoz, 192 F.3d 210, 223 n.22 (1st Cir. 1999).

Here, we waive the requirement in the interest of judicial economy.

Taking Soto's newly offered English translation of the Spanish

version of the agreement as the controlling document, we find as a

matter of law that the claims made by Soto on the basis of this

translation do not require reversal of the district court's

judgment.

1
Neither the Ritz-Carlton nor Soto provided the district
court with a certified English translation of the Spanish version
of the agreement, nor did Soto put the district court on notice
that there was a reason not to rely on the English version
submitted by the Ritz-Carlton.

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A. Validity of Consideration

The FAA represents "the fundamental principle that

arbitration is a matter of contract," Dialysis Access, 2011 WL

1139144, at *5 (quoting Rent–A–Center, W., Inc. v. Jackson, 130

S. Ct. 2772, 2776 (2010)) (internal quotation mark omitted), and in

general, "principles of state contract law control the

determination of whether a valid agreement to arbitrate exists,"

Campbell v. Gen. Dynamics Gov't Sys. Corp., 407 F.3d 546, 552 (1st

Cir. 2005). Under Puerto Rico contract law, "'a bilateral

obligation assumed by each one of the parties to the contract, has,

as its consideration, the promise offered in exchange.' Both

parties must be bound based on 'mutual consideration' that yields

either a benefit or a detriment to each party." Adria Int'l Grp.,

Inc. v. Ferre Dev., Inc., 241 F.3d 103, 107 (1st Cir. 2001)

(citations omitted) (quoting United States v. Perez, 528 F. Supp.

206, 209 (D.P.R. 1981)).

Soto argues that the district court erred in holding

that, in return for signing the agreement, she received valid

consideration in the form of an offer of continued employment. She

argues that the Ritz-Carlton never made such an offer, and that in

any event, it would not constitute valid consideration under Puerto

Rico law. We need not address this issue, as the arbitration

clause contains two sets of bilateral obligations that

independently constitute valid consideration for the agreement.

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 The agreement expressly invokes one set of bilateral

obligations. It states that in exchange for Soto's "agree[ment]

that [she] will not initiate any legal action whatsoever" without

first using each step in the company's alternative dispute

resolution process, the Ritz-Carlton "agrees to suspend all

jurisdictional prescriptive terms and limitations to file

grievances and/or lawsuits" for the period that the process lasts.

This waiver of defenses by the Ritz-Carlton for any claims covered

by its alternative dispute resolution process constitutes valid

consideration for Soto's promise to submit her discrimination

claims against the Ritz-Carlton to arbitration.

Further, implicit in the arbitration agreement is a

second set of bilateral obligations. Both parties are required to

arbitrate Soto's claims, which constitutes independent mutual

consideration. See Soto v. State Indus. Prods., Inc., No. 10-1638,

2011 WL 1447757, at *7-8 (1st Cir. Apr. 15, 2011) (holding that

bilateral obligation to arbitrate constitutes mutual consideration

under Puerto Rico law).2

2
Soto also advances a second argument under Puerto Rico
contract law. She argues that the Spanish version of the employee
agreement imposed a probationary period on her employment, almost
four years after she began to work for the Ritz-Carlton, which
rendered the entire agreement void under a provision of Puerto Rico
law that states that "[e]very probatory work contract agreed upon
after the employee starts to render services shall be null and
void." P.R. Laws Ann. tit. 29, § 185h. As this argument is only
made briefly in a footnote on appeal, it is waived. See Nat'l
Foreign Trade Council v. Natsios, 181 F.3d 38, 60 n.17 (1st Cir.
1999) ("We have repeatedly held that arguments raised only in a

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B. Availability of Remedies Under the Arbitration Agreement

Although the enforceability of an arbitration clause

often turns on state contract law, there is, at times, an

additional requirement that "grows out of the principle that while

federal statutory claims can come within an arbitration agreement

that is enforceable pursuant to the FAA, some federal statutory

claims may not be appropriate for arbitration." Campbell, 407 F.3d

at 552 (citing Gilmer v. Interstate/Johnson Lane Corp., 500 U.S.

20, 26 (1991)). Here, "the burden is on the party resisting

arbitration to show (by means of statutory text, legislative

history, or some inherent conflict between arbitration and the

statute's purposes) that Congress, in enacting a particular

statute, intended to preclude a waiver of a judicial forum for

certain statutory claims." Id. (citing Gilmer, 500 U.S. at 26).

This court has previously held that employers and

employees may agree to submit Title VII and ADA claims to

arbitration and that this does not violate congressional intent.

Rosenberg v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 170 F.3d

footnote or in a perfunctory manner are waived."). But even if it
were not waived, the argument about the probationary period would
still fail, as it does not go to the merits of the question before
us. "As a matter of federal law, the arbitration clause is
unaffected even if the substance of the contract is otherwise void
or voidable." Sleeper Farms v. Agway, Inc., 506 F.3d 98, 103 (1st
Cir. 2007); see also Prima Paint Corp. v. Flood & Conklin Mfg. Co.,
388 U.S. 395, 403-04 (1967); Dialysis Access Ctr., LLC v. RMS
Lifeline, Inc., No. 10-1872, 2011 WL 1139144, at *12 (1st Cir. Mar.
30, 2011).

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1, 7-12 (1st Cir. 1999); Bercovitch v. Baldwin Sch., Inc., 133 F.3d

141, 148-51 (1st Cir. 1998). Soto is bound by these holdings.

She argues, however, that her arbitration agreement is

unenforceable because in her view it impermissibly deprives the

arbitrator of power to grant all of the remedies available under

Title VII and the ADA. Cf. Awuah v. Coverall N. Am., Inc., 554

F.3d 7, 12 (1st Cir. 2009) ("If arbitration prevents plaintiffs

from vindicating their rights, it is no longer a 'valid alternative

to traditional litigation.'" (quoting Kristian v. Comcast Corp.,

446 F.3d 25, 37 (1st Cir. 2006))). Soto bases this challenge on

the fact that the Spanish language agreement states that if the

arbitrator rules in her favor, she "may be reinstated or granted

another remedy according to the rules of [the] Ritz-Carlton San

Juan," and that the arbitrator "will be authorized to impose any

remedy that the Ritz-Carlton, San Juan rules allow." Soto argues

that these provisions allow the Ritz-Carlton to define and limit

the remedies available in arbitration. But as Soto does not point

to any "rules" so limiting the remedies and the meaning of these

provisions is not otherwise clear on their face, Soto's challenge

fails under controlling Supreme Court and First Circuit precedent.

The Supreme Court has made it clear that when a party

challenges an arbitration agreement on the grounds that the

agreement will prevent the party from vindicating his or her

statutory rights, and the party's claim turns on a construction of

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ambiguous terms of the agreement, the challenge does not present a

"question of arbitrability" to be decided by a court, but rather an

issue of contract interpretation to be resolved in the first

instance by an arbitrator. See PacifiCare Health Sys., Inc. v.

Book, 538 U.S. 401, 407 (2003); see also Green Tree Fin. Corp. v.

Bazzle, 539 U.S. 444, 452-53 (2003) (plurality opinion) ("The

question here--whether the contracts forbid class arbitration--

. . . should be for the arbitrator, not the courts, to decide.");

Vimar Seguros y Reaseguros, S.A. v. M/V Sky Reefer, 515 U.S. 528,

541 (1995) (holding that the question "must be decided in the first

instance by the arbitrator").

The Supreme Court's decision in PacifiCare is

instructive. There, the Court faced a potential conflict between

an arbitration agreement that prohibited punitive damages and

statutory language entitling the plaintiff to treble damages. See

PacifiCare, 538 U.S. at 403. The Court rejected plaintiff's claim

that this conflict made the agreement unenforceable, explaining

that it would not, "on the basis of 'mere speculation' that an

arbitrator might interpret . . . ambiguous agreements in a manner

that casts their enforceability into doubt, take upon [itself] the

authority to decide the antecedent question of how the ambiguity is

to be resolved." Id. at 406-07. Reasoning that an arbitrator

could interpret the agreement to avoid a direct conflict, the Court

found no question of arbitrability and compelled arbitration. See

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id. at 407 ("[S]ince we do not know how the arbitrator will

construe the remedial limitations, the questions whether they

render the parties' agreements unenforceable and whether it is for

courts or arbitrators to decide enforceability in the first

instance are unusually abstract. . . . [T]he proper course is to

compel arbitration.").

In Anderson v. Comcast Corp., 500 F.3d 66 (1st Cir.

2007), this court followed Pacificare, holding that although there

were "direct conflicts" between an arbitration agreement's multiple

damages prohibition and a statute's multiple damages provision, the

conflicts did not raise a question of arbitrability because one of

the conflicts would only emerge under certain factual findings, and

the other turned on an interpretation of state law. Id. at 72-75.

Likewise, in Kristian, we explained that when a vindication of

statutory rights claim is based on an ambiguity in "the scope of a

remedies limitation of an arbitration agreement," it is the

arbitrator who should "decide the question of enforceability in the

first instance." Kristian, 446 F.3d at 45; see also Skirchak v.

Dynamics Research Corp., 508 F.3d 49, 56 (1st Cir. 2007) ("[W]hen

claims are submitted to arbitration, the question of whether class

arbitration is forbidden is not a question of arbitrability, but

initially a question of contract interpretation and should be

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decided in the first instance by an arbitrator." (footnote

omitted)).3

Applying this framework, we find that Soto's challenge

fails, as what is meant by the contract's references to the "rules"

of the Ritz-Carlton is ambiguous and open to different

constructions. These include constructions under which there would

be no conflict between the remedies available in arbitration and

those provided by the ADA and Title VII.

The arbitrator could interpret the agreement's reference

to remedies "according to the rules of [the] Ritz-Carlton" to be

the same as the remedies "consistent with the laws governing The

Ritz-Carlton," which is the language in the original English

version. Those laws governing the Ritz-Carlton include the federal

laws at issue here. Supporting this interpretation is the Ritz-

Carlton's argument that the original English version contains the

parties' obligations and that the reference to "rules" is just a

sloppy translation error in translating the English form to

Spanish.

3
Other circuits have adopted a similar approach. See
Booker v. Robert Half Int'l, Inc., 413 F.3d 77, 81 (D.C. Cir. 2005)
(holding that when a party resists arbitration on the grounds that
the terms of the arbitration agreement "interfere with the
effective vindication of statutory rights," that party "bears the
burden of showing the likelihood of such interference," and "this
burden cannot be carried by 'mere speculation' about how an
arbitrator 'might' interpret or apply the agreement"); see also In
re Cotton Yarn Antitrust Litig., 505 F.3d 274, 283 (4th Cir. 2007)
(same).

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 Further, the arbitrator could read the agreement's

reference to the "rules" of the Ritz-Carlton as invoking the clause

of the agreement that states that the arbitration is to be governed

by the rules of the American Arbitration Association (AAA). Under

Rule 39(d) of the AAA's Employment Arbitration Rules and Mediation

Procedures, the "arbitrator may grant any remedy or relief that

would have been available to the parties had the matter been heard

in court."

These readings of the ambiguous language would prevent

the conflict alleged by Soto. This ends her challenge.

C. Adequacy of Notice

This court has, based on case-specific factual analysis,

found it inappropriate to enforce agreements to arbitrate Title VII

and ADA claims when, under the totality of the circumstances, an

employee has had no minimal level of notice sufficient to appraise

the employee of the arbitral clause. See Campbell, 407 F.3d at

555; Rosenberg, 170 F.3d at 21.

Soto does not deny that she received the agreement or

that she signed for it, but nonetheless makes a general argument

that the arbitration clause is unenforceable because she received

inadequate notice that she was agreeing to arbitrate statutory

employment discrimination claims.

Her argument is contradicted by the plain text of the

agreement, which identifies the types of claims covered: "I will

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request Arbitration if I have been terminated or feel that I have

been discriminated against for reason of my age, color, sex

(including sexual harassment and stalking), religion, national

origin, sexual orientation, marital status, age or physical or

mental defect." It also clearly identifies the scope and nature of

her obligation: "I agree that I will not initiate any legal action

whatsoever without using in the first term each step in the Process

of Open Appeal and Resolution of Incidents." Soto's claim is

without merit.

III.

The judgment of the district court is affirmed.

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