Ramirez-De-Arellano v. American Airlines, Inc.

United States Court of Appeals
For the First Circuit

No. 97-1508

JOSE RAMIREZ-DE-ARELLANO, MARTA SUAREZ DE RAMIREZ DE ARELLANO
AND THE CONJUGAL PARTNERSHIP CONSTITUTED BY THEM,

Plaintiffs, Appellants,

v.

AMERICAN AIRLINES, INC.,

Defendant, Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO

[Hon. Daniel R. Dominguez, U.S. District Judge]

Before

Stahl, Circuit Judge,

Godbold,* Senior Circuit Judge

and Cyr, Senior Circuit Judge.

Carlos A. Del Valle Cruz on brief for appellants.

Luis D. Ortiz Abreu, Vivian Nunez, and Goldman Antonetti &

Cordova on brief for appellee.

December 22, 1997

*Of the Eleventh Circuit, sitting by designation.

Stahl, Circuit Judge. Jose Ramirez de Arellano
Stahl, Circuit Judge

("Ramirez"), together with his wife, child, and conjugal

partnership, appeal from the district court's grant of

summary judgment to American Airlines ("American") in this

wrongful discharge and retaliatory dismissal action brought

primarily under the Fair Labor Standards Act (FLSA) and

Puerto Rico law.1 After carefully reviewing the record and

considering Ramirez's arguments, we conclude that the

district court properly awarded summary judgment to

defendant. We prefer, however, not to rely on that portion

of the district court's order which gave res judicata effect

to American's internal grievance procedure. Instead, we

choose to affirm on the grounds that Ramirez was dismissed

for just cause under Puerto Rico law and that Ramirez failed

to set forth sufficient evidence to trigger a presumption of

discrimination or retaliation on the part of American. See

Polyplastics, Inc. v. Transconex, Inc., 827 F.2d 859, 860-61

(1st Cir. 1987) (explaining that an appellate court can

affirm on any independent ground made manifest in the

record).

1. Ramirez's original district court claims included the
FLSA claim for retaliatory dismissal, an age discrimination
claim under Puerto Rico law, claims for wrongful and
retaliatory dismissal under local severance law, and a
defamation claim. Two of these claims are not included in
the present appeal: the age discrimination claim, which
Ramirez voluntarily dismissed, and the defamation claim,
which the district court rejected on grounds of privilege.

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American employed Ramirez from 1984-1997 as a

ticket agent, and, later, as a baggage handler. After two

written performance advisories, American terminated Ramirez,

citing as reasons his failure to follow company time and

attendance procedures and his attempt to circumvent company

rules to his own benefit.

Following his dismissal, Ramirez submitted a

written grievance to American, pursuant to the internal

grievance procedure set forth in the employee handbook.

American upheld the termination and denied Ramirez an appeal

on the basis of tardy application. Ramirez subsequently

filed suit in Puerto Rico district court, and now appeals the

order of summary judgment rejecting the FLSA claim on the

merits and all other claims under the doctrine of res

judicata. See Ramirez v. American Airlines Inc., 957 F.

Supp. 359 (D.P.R. 1997) (equating American's grievance

procedure with a binding arbitration).

We review the award of summary judgment de novo,

and draw all reasonable inferences in Ramirez's favor.

Grenier v. Vermont Log Bldgs., Inc., 96 F.3d 559, 562 (1st

Cir. 1996). The record is replete with documented

illustrations of Ramirez's performance problems and repeated

failure to follow American's policies and procedures.

Moreover, American had given Ramirez two official advisories

prior to his dismissal. Thus, there can be no basis for

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inferring that American's stated reason for the discharge was

wrongful or pretextual under federal law.

The result is no different under Puerto Rico law,

which provides that an employee is not entitled to statutory

wrongful discharge indemnity if the employee was terminated

for just cause. P.R.Laws Ann.tit 29 185 et seq.

Under Puerto Rico law, just cause for dismissal

includes repeated violations of the employer's rules and

regulations, provided that, as here, the employee has been

provided with a written copy of the relevant policies and

procedures. See P.R. Laws Ann. tit 29 185b; see also

Menzel v. Western Auto Supply Co., 662 F. Supp. 731, 744

(D.P.R. 1987), aff'd, 848 F.2d 327 (1st Cir. 1988). As noted

above, the record here admits of only one conclusion:

Ramirez's repeated transgressions of company policy and

procedures provided American with just cause for termination.

Summary judgment was, therefore, properly granted to the

defendant.

Although summary judgment was properly awarded, we

have some doubt about the district court's ruling that

American's internal company grievance procedure, set forth in

its employee handbook, is the legal equivalent of binding

arbitration and, therefore, bars judicial resolution of

potential statutory and constitutional claims. As Ramirez

points out, there is little in the way of back and forth

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bargaining between a company and its employees when an

employment handbook is created, making this situation

distinguishable from the arbitration provisions of a

collective bargaining agreement. This is especially so

where, as here, the handbook expressly provides that it is

not a contract between the parties and is subject to

unilateral amendments by American at any time.

Although the district court was correct in noting

the existence of a strong federal policy favoring

arbitration, the threshold question for review must always be

whether the agreement to arbitrate was, indeed, voluntary and

intentional. Mitsubushi Motors Corp. v. Solar Chrysler-

Plymouth Inc., 473 U.S. 614, 626 (1985). Given the

apparently unilateral and adhesive nature of American's

employee handbook, we do not embrace the argument that

Ramirez voluntarily waived his right to pursue his claims in

federal court.2

2. We note that two other Circuits have recently addressed this
issue. In Nelson v. Cyprus Bagdad Copper Corp., 119 F.3d 756 (9th

Cir. 1997), the Ninth Circuit held that signing an acknowledgment form
which provided that the employee agrees to "read and understand" a
revised employee handbook did not serve to bind the employee to the
handbook's internal grievance provisions. Id. at 761. The Ninth

Circuit reasoned that:

Merely signing the form did not in any way
constitute a 'knowing agreement to arbitrate,' and
thereby to surrender [the employee's] statutory
right [under the ADA] to a judicial forum . . .
Any bargain to waive the right to a judicial forum
for civil rights claims, including those covered
by the ADA, in exchange for employment or

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Moreover, we have strong concerns about the

fundamental fairness of giving preclusive effect to the

particular grievance procedure in this case. Arbitration

proceedings must meet "the minimal requirements of fairness--

adequate notice, a hearing on the evidence, and an impartial

decision by the arbitrator." Sunshine Mining Co. v. United

Steelworkers, 823 F.2d 1289, 1295 (9th Cir. 1987) (internal

quotations and citations omitted); Bowles Fin. Group, Inc. v.

Stifel, Nicolaus & Co., Inc., 22 F.3d 1010, 1013 (10th Cir.

1994).

First, with respect to notice, we are not convinced

that Ramirez's application for a hearing was appropriately

denied for untimeliness because it appears that American may

continued employment, must at least be express:
the choice must be explicitly presented to the
employee and the employee must explicitly agree to
waive the specific right in question. Id. at 761-

62 (internal quotations and citations omitted).

Similarly, the Eighth Circuit recently instructed that the
absence of such an express waiver precludes a finding that there has
been a knowing agreement. See Patterson v. Tenet Healthcare, Inc.,

113 F.3d 832, 835 (8th Cir. 1997). The Patterson court upheld the

employee handbook arbitration provision because the arbitration clause
was both separate and distinct from other provisions in the handbook
and was introduced by the heading, "IMPORTANT! Acknowledgment Form."
Id. Unlike other provisions within the handbook, the arbitration

clause used contractual language, such as "I understand" and "I
agree." Id. Moreover, the form was signed by the employee, removed

from the handbook, and given to the Human Resources Department to be
stored in the employee's personnel file. Id. It was only because the

court deemed these actions in toto sufficient to render the

arbitration clause "separate and distinct" from the remainder of the
handbook, that the court held that the internal grievance and
arbitration clause constituted an enforceable contract. Id.

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have been equally, if not more, to blame for the late filing.

Second, there was no opportunity for discovery. See Hoteles

Condado Beach v. Union de Tronquistas Local 901, 763 F.2d 34,

39 (1st Cir. 1985)(instructing that an arbitrator must afford

each party an adequate opportunity to present both evidence

and argument); see also Williams v. Katten, 1996 WL 717447,

at *4-5, (N.D. Ill. Dec. 9, 1996) (discussion of the

permissible parameters of limited discovery in an arbitration

proceeding). Third, the decision maker was not a

disinterested party, but rather, an American managerial

employee. See Employers Ins. of Wausau v. National Union

Fire Ins. Co., 933 F.2d 1481, 1491 (9th Cir.

1991)(stipulating that fair arbitration proceedings must

include non-biased decisionmakers). Finally, the record

reveals that Ramirez was actually denied any review by a

hearing officer or panel, which, following the district

court's analysis, effectively rendered all of his claims res

judicata on the basis of one manager's view.3

3. This is a distinctly different scenario from Garcia v.

American Airlines, Inc., 673 F. Supp. 63 (D.P.R. 1987), the

case upon which the district court relied for its res

judicata ruling. In Garcia, the employee utilized step two of

American's grievance procedure and, while represented by
counsel, had an opportunity to appeal his dispute to a
stateside hearing officer. Id. at 66. In contrast, Ramirez

was denied any opportunity to present his claims to a hearing
officer (step two) or panel (step three); he simply spoke
with the General Manager, and was denied any further appeal.

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Because American had ample just cause to terminate

Ramirez's employment and Ramirez presented insufficient

evidence to raise an inference of discrimination or

retaliation, we uphold the award of summary judgment to

American.

Affirmed. No costs.
Affirmed

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