F I L E D
United States Court of Appeals
Tenth Circuit
PUBLISH
MAY 1 1998
UNITED STATES COURT OF APPEALS
PATRICK FISHER
Clerk
TENTH CIRCUIT
HARRY H. McWILLIAMS, II
Plaintiff-Appellant,
v. No. 97-3190
LOGICON, INC., a Delaware corporation;
LOGICON TECHNICAL SERVICES, INC.,
a California corporation,
Defendants-Appellees.
Appeal from the United States District Court
for the District of Kansas
(D.C. No. 95-2500-GTV)
Before SEYMOUR, BRORBY, and BRISCOE, Circuit Judges.
BRORBY, Circuit Judge.
Plaintiff Harry H. McWilliams II appeals the district court’s order granting
Defendants Logicon, Inc.’s and Logicon Technical Services, Inc.’s motion to stay
his employment discrimination lawsuit pending arbitration. We exercise
jurisdiction pursuant to 9 U.S.C. § 16(a)(1)(D) and 28 U.S.C. § 1291 and affirm. 1
Mr. McWilliams was employed by Logicon, Inc. and Logicon Technical
Services, Inc. (collectively, “Logicon”) as a “work area controller” from 1989
through part of 1995. Logicon designs and conducts computer simulated military
exercises for the United States military.
When first hired in 1989, Mr. McWilliams executed an acceptance of
employment letter supplied by Logicon in which he agreed “any controversies,
claims, and/or disputes arising out of the termination of [his] employment with
[Logicon], shall be settled exclusively through binding arbitration ... pursuant to
the Federal Arbitration Act.” In 1990, Mr. McWilliams accepted a transfer by
executing a similar acceptance letter containing the same arbitration clause.
Logicon terminated Mr. McWilliams on May 9, 1995.
Mr. McWilliams filed suit against Logicon in federal district court on
December 13, 1995, alleging that during the course of his employment with
1
After examining the briefs and appellate record, this panel has
determined unanimously to grant parties' requests for a decision on the briefs
without oral argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1.9.
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Logicon, he suffered from a number of disabling conditions for which he
requested accommodation, and that Logicon discriminatorily terminated his
employment as a result of his disabling conditions in violation of the Americans
with Disabilities Act, 42 U.S.C. § 12101, et. seq.
Logicon responded to Mr. McWilliams’ complaint on January 3, 1996, with
a motion requesting the court dismiss the complaint for lack of subject matter
jurisdiction or, in the alternative, stay litigation pending arbitration pursuant to
the clauses contained in the above-referenced acceptance letters. 2 The district
court entered an order granting a stay pending arbitration on July 9, 1996 and at
Mr. McWilliams’ request, appointed a former state court judge as arbitrator. On
May 23, 1997, the district court entered judgment on the arbitration award in
favor of Logicon. This appeal followed.
We review the district court’s ruling regarding the arbitrability of Mr.
2
As to the merits of Mr. McWilliams’ Americans with Disabilities Act
claims, Logicon contends, prior to terminating his employment, it repeatedly
counseled, warned and disciplined Mr. McWilliams for sleeping on the job and
failing to report to work. According to Logicon, Mr. McWilliams never advised
Logicon of any health or medical condition that affected his performance and
never requested accommodation for any disability prior to his termination. To the
contrary, when questioned about his performance problems, Mr. McWilliams
repeatedly denied suffering from any debilitating condition.
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McWilliams’ claims de novo. Armijo v. Prudential Ins. Co, 72 F.3d 793, 796
(10th Cir. 1995). The issues presented are straightforward: (1) whether Mr.
McWillliams’ Americans with Disabilities Act claims are subject to binding
arbitration in accordance with the Federal Arbitration Act; and (2) if Mr.
McWilliams’ claims are subject to arbitration, whether Logicon waived its right to
compel arbitration by waiting until after Mr. McWilliams filed suit to invoke the
arbitration agreement.
Arbitrability
Mr. McWilliams posits two reasons why his claims against Logicon are not
arbitrable. He first asserts the Federal Arbitration Act does not apply to him
because of its express exemption for “workers engaged in foreign or interstate
commerce.” 9 U.S.C. § 1. Curiously, however, he concludes this argument by
suggesting the nature of his employment relationship was “something less than
contractual,” and therefore “the alleged arbitration clause [is] not worthy of
enforcement.” Second, Mr. McWilliams argues the arbitration clause at issue is
limited in scope to claims or disputes “arising out of the termination” of his
employment. By characterizing his claims as arising “mainly from Logicon’s
denial of reasonable accommodation during the course of his employment,” not
from his termination, Mr. McWilliams attempts to insulate his complaint from the
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scope of the arbitration clause.
Mr. McWilliams cannot have his cake and eat it too -- he either had an
employment contract potentially within the ambit of the Federal Arbitration Act’s
“workers engaged in interstate commerce” exemption, 3 or he did not. For
purposes of considering his first argument, we therefore will assume, without
deciding, the requisite employment contract existed between Mr. McWilliams and
Logicon. The question then becomes whether we should construe the exemption
broadly to include all contracts of employment affecting commerce, or limit its
application to that class of workers, such as transportation workers, who actually
are engaged in the movement of goods in foreign or interstate commerce.
Many courts have considered this precise issue, however, the Tenth Circuit
has not.
Of the courts that have addressed the intended scope of the workers
3
The exclusionary clause at issue provides: “nothing herein contained
shall apply to contracts of employment of seamen, railroad employees, or any
other class of workers engaged in foreign or interstate commerce.” 9 U.S.C. § 1
(emphasis added).
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engaged in interstate commerce exemption, all but one 4 have concluded the
exceptions specified in 9 U.S.C. § 1 extend only to those individuals employed
directly in the channels of commerce itself. See, e.g., Cole v. Burns Int’l Sec.
Servs., 105 F.3d 1465, 1470-71 (D.C. Cir. 1997); Great Western Mortgage Corp.
v. Peacock, 110 F.3d 222, 227 (3d Cir.). cert. denied, 118 S. Ct. 299 (1997);
Rojas v. TK Communications, Inc. 87 F.3d 745, 747-48 (5th Cir. 1996); Asplundh
Tree Expert Co., 71 F.3d at 596-601; Miller Brewing Co. v. Brewery Workers
Local Union No. 9, AFL-CIO, 739 F.2d 1159, 1162 (7th Cir. 1984), cert. denied,
469 U.S. 1160 (1985); Erving v. Virginia Squires Basketball Club, 468 F.2d 1064,
1069 (2d Cir. 1972); Dickstein v. duPont, 443 F.2d 783, 785 (1st Cir. 1971); see
also Paladino v. Avnet Computer Tech., Inc., 134 F.3d 1054, 1069-61 (11th Cir.
1998) (Cox, J. and Tjoflat, J. concurring). We agree with the majority of our
sister circuits that a narrow construction of 9 U.S.C. § 1 to include only
employees actually engaged in the channels of foreign or interstate commerce
comports with both the text and history of the Federal Arbitration Act. A narrow
construction of the § 1 exclusion also furthers the modern federal policy favoring
4
United Elec., Radio & Mach. Workers of Am. v. Miller Metal Prod., Inc.,
215 F.2d 221, 224 (4th Cir. 1954) (rejecting a narrow construction of the
exemption, but expressly limiting its holding to collective bargaining
agreements). Because the Fourth Circuit has not reaffirmed this holding in over
forty years, some question whether it is still good law. See Asplundh Tree Expert
v. Bates, 71 F.3d 592, 600 (6th Cir. 1995).
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arbitration. See Armijo, 72 F.3d at 797. We therefore follow the prevailing trend
among courts to hold that the workers engaged in interstate commerce exclusion
does not encompass all employment contracts, just those of employees actually
engaged in the channels of interstate commerce.
The products and services Logicon provides to the United States military
undoubtedly affect interstate commerce at some level. Logicon and its employees
cannot, however, be said to directly affect the channels of commerce. Thus,
applying the rule we have adopted here today, we hold Mr. McWilliams' claims
are not insulated from the Federal Arbitration Act.
Mr. McWilliams’ argument that his claims fall outside the scope of the
arbitration clause fares no better. The allegations and relief requested in Mr.
McWilliams’ complaint can be fairly interpreted to arise from Logicon’s
termination of Mr. McWilliams’ employment. Such interpretation obviously
furthers the strong federal policy favoring arbitration. It also comports with cases
from this circuit and the Supreme Court that apply the presumption in favor of
arbitrability even where a party’s claims are founded on statutory rights. See
Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 26 (1991); Armijo, 72 F.3d
at 797. As the district court noted, there is nothing in the Americans with
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Disabilities Act that prohibits arbitration of claims asserted under that Act. In
fact, the Act encourages arbitration of Americans with Disabilities disputes,
where appropriate. See 42 U.S.C. § 12212. For these reasons, and because all
doubts must be resolved in favor of arbitrability, Armijo, 72 F.3d at 797, we hold
Mr. McWilliams’ claims fall within the scope of the arbitration clause at issue.
Waiver
In light of our conclusion that Mr. McWilliams’ claims are indeed subject
to arbitration, we must proceed to address the issue whether Logicon waived its
right to demand arbitration. The parties agree this court’s decision in Metz v.
Merrill Lynch, Pierce, Fenner & Smith, Inc., 39 F.3d 1482, 1489 (10th Cir. 1994),
sets forth the factors relevant to a determination whether a party has waived its
right to enforce an arbitration agreement. The six factors identified in Metz are:
(1) whether the party’s actions are inconsistent with the right to
arbitrate; (2) whether “the litigation machinery has been substantially
invoked” and the parties “were well into preparation of a lawsuit”
before the party notified the opposing party of an intent to arbitrate;
(3) whether a party either requested arbitration enforcement close to
the trial date or delayed for a long period before seeking a stay; (4)
whether a defendant seeking arbitration filed a counterclaim without
asking for a stay of the proceedings; (5) “whether important
intervening steps [e.g., taking advantage of judicial discovery
procedures not available in arbitration] had taken place”; and (6)
whether the delay “affected, misled, or prejudiced” the opposing
party.
39 F.3d at 1489 (quoting Peterson v. Shearson/American Express, Inc., 849 F.2d
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464, 467-68 (10th Cir. 1988)). The parties disagree over whether Logicon’s
conduct satisfied the Metz test.
Mr. McWilliams argues Logicon waived its rights by failing to even
mention its intent to enforce the arbitration agreement prior to his filing a lawsuit,
despite being given ample notice of and opportunity to respond to his claims.
According to Mr. McWilliams, he was “forced to file this lawsuit” when Logicon
chose to remain silent regarding the arbitration agreement, and was “‘affected,
misled or prejudiced’” by such conduct. This argument is conclusory and fails to
establish a waiver of rights under Metz.
It is beyond dispute Logicon filed its motion to dismiss or stay proceedings
pending arbitration shortly after Mr. McWilliams filed his complaint in federal
district court. Accordingly, the litigation machinery had not been substantially
invoked, nor were the parties well into preparation of the lawsuit. Mr.
McWilliams was not required to defend against a counterclaim, and Logicon had
no opportunity to exploit discovery or other judicial procedures not available in
arbitration. While it is possible Mr. McWilliams may have pursued a different
strategy had he known of Logicon’s position prior to filing his complaint, it is
difficult to imagine how, as a plaintiff denying his claims are even arbitrable, he
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was in any way misled or prejudiced by Logicon’s course of action. Finally, Mr.
McWilliams cites no authority requiring a party to invoke arbitration prior to the
filing of a lawsuit. We cannot see how Logicon’s conduct was in any way
inconsistent with its right to arbitration pursuant to Mr. McWilliams’ signed
acceptance letters.
For all these reasons, we AFFIRM the district court’s orders compelling
arbitration and entering judgment on the arbitration award in favor of Logicon.
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