Karen Summers v. Dillard's Inc.

[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR TH E ELEV ENTH C IRCUIT FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
No. 03-11334 November 26, 2003

Non-Argument Calendar THOMAS K. KAHN
CLERK
________________________

D. C. Docket No. 02-02912-CV-S-NE

KAR EN S UM MER S,

Plaintiff- Appe llee,

versus

DILL ARD S, INC .,
a.k.a. Cas tner-K nott Dr y Goo ds Co., I nc.
d.b.a. Dillard's

Defen dant-A ppellant.

________________________

Appeal from the United States District Court
for the Northern District of Alabama
_________________________

(November 26, 2003)

Before BIRC H, DUB INA and G ODBO LD, Circuit Judges.

PER CURIAM:
This su it concern s the effec t of an atto rney fee- shifting c lause con tained in

an arbitration agreement. Karen Summers brought suit under various federal

statutes including Title VII, the Age Discrimination in Employment Act of 1967,

and state law tort claims against Dillard’s, her previous employer. She alleges that

Dillard’s violated her state and federal constitutional rights by discriminating

against her based on her gender and age and retaliating against her for reporting

incidents of harassment by the store manager. Dillard’s sought to compel

arbitration and filed a motion to dismiss, or in the alternative, to stay this action

and to co mpel arb itration.

The district court refused to compel arbitration on the ground that the

arbitration agreement violated Title VII because it placed an undue burden on the

employee by providing relief for attorneys fees only if the plaintiff completely won

at arbitration. The court held that this provision violated Title VII, which a llows a

partially victorious party to still recover at least partial attorney costs.

The court erred. This case is gov erned by Musnick v. King Motor Co. of

Fort L auderd ale, 325 F.3d 1255 (11th Cir. 2003). In that case the arbitration

agreement contained a “loser pays” provision. The employee challenged the

enforcement of the arbitration agreement, arguing that the “loser pays” provision

denied th e remed y he wo uld othe rwise h ave had under T itle VII. Id at 1257. On

2
appeal, th is court n oted that “a Title VI I plaintiff s eeking to avoid h is agreem ent to

arbitrate h is discrim ination cla im by arg uing tha t prohib itive arbitra tion cost w ould

undermine his statutory remedy has to demonstrate that he is likely to bear such

costs.” Id at 1258 (citing Bess v. Check Ex press, 294 F.3d 1298, 1303 (11th Cir.

2002). We held that this burden cannot be satisfied by a party’s showing that there

is a mere p ossibility th at he may have to b ear such costs. Id. Thus, a party cannot

avoid an arb itration agreeme nt “merely becau se it may involv e some ‘fee-sh ifting’.

. . . [He must show] that enforcement of the agreement would ‘preclude’ him from

‘effectively vindicating [his] federal statutory rights in the arbitral forum.” Id at

1259 (quoting Green Tree, 531 U.S. at 90). Anything less is too speculative and,

upon finding that arbitration is an appropriate forum, the district court must compel

arbitration . Id at 1260.

Moreover in Musnick we no ted that if a p arty cons iders his lia bility for co sts

to be excessive or to deprive him of his statutory remedy, he may seek judicial

review of the award; “judicial review of arbitration award is sufficient to protect

statutory rights.” Musnick, 325 F.3d 1261 (quoting Koveleskie v. SBC Capital

Markets, Inc., 167 F .3d 361 , 366 (7 th Cir. 19 99). A t that stage th e issue of costs is

ripe, and thus, the district court can make an informed judgment as to whether the

appellan t’s statutory available r emedies were hindered by the arb itration. Id.

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In the pr esent case the district c ourt refu sed to co mpel arb itration be cause it

believed that the fee-shifting clause might harm Summers by limiting her potential

recover y under the statute. T his conc ern wa s too spe culative. It is unclear a t this

time which party may prevail at arbitration and Summers may seek judicial review

of an aw ard if she feels that h er availab le remed ies were hindere d. Musnick, 325

F.3d 1261.1

The order denying the motion to stay and compel arbitration is VACATED,

and this action is REMANDED to the district court for further proceedings

consistent with this opinion.

1
Goggins v. Dillards, No. 03-11333 (11th Cir. Sept. 24, 2003) concerned the same fee-shifting
provision involved in the present case. We held that the trial court erred in denying a motion to
stay and to compel arbitration. However, we have not relied upon that case as precedent because
it was unpublished and has no binding precedential effect in this case. F.R.A.P 11th Cir. R. 36-
2. The decision is, however, persuasive and we have considered it to that extent.