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Nsaif v. The Cheesecake Factory

United States District Court, W.D. Kentucky, Louisville Division

October 17, 2018

LUAY NSAIF, Plaintiff,
v.
THE CHEESECAKE FACTORY, Defendant.

          MEMORANDUM OPINION AND ORDER

          Claria Boom, District Judge.

         When Luay Nsaif began working at The Cheesecake Factory (“TCF”) in Louisville, Kentucky, he signed a Mutual Agreement to Arbitrate Claims (“Arbitration Agreement”) in which he agreed to arbitrate any claims that he may have against TCF as a result of his employment. Nsaif later sued TCF in Kentucky state court, alleging that TCF discriminated against him based on his race and religion, that TCF created a hostile work environment, and that TCF caused intentional infliction of emotional distress. TCF removed this action and now moves to dismiss the case and compel arbitration. Nsaif's primary argument in response is that since he cannot read or write English, the Arbitration Agreement he signed was both procedurally and substantively unconscionable. Under well-established Kentucky law, however, “one who signs a contract is presumed to know its contents, and . . . if he has had an opportunity to read the contract which he signs is bound by its provisions, unless he is misled as to the nature of the writing which he signs or his signature has been obtained by fraud.” Hathaway v. Eckerle, 336 S.W.3d 83, 89-90 (Ky. 2011) (quoting Clark v. Brewer, 329 S.W.2d 384, 387 (Ky. 1959)). Nsaif had a duty to request that someone read him the contract before he signed it. If he signed the contract anyway, he is bound by its terms. That is precisely what happened in this case. The Court, therefore, grants TCF's motion to dismiss and compel arbitration.

         I. Factual Background

         When Nsaif began his employment with TCF on August 20, 2013, he received an Arbitration Agreement and signed it. [R. 5, at p. 1] This agreement required Nsaif and TCF to “arbitrate before a neutral arbitrator any and all disputes or claims between [TCF] and [Nsaif] that arise out of or relate to [Nsaif's] . . . employment . . .with [TCF] . . .” [R. 5-1, Ex. A, at. pp.1-2] Pursuant to the Arbitration Agreement, covered claims include ones for “violation of public policy, ” “infliction of emotional distress, ” “discrimination, ” and “[c]laims under any and all federal, state, or municipal statutes, regulations, or ordinances, including but not limited to laws that prohibit discrimination, harassment, or retaliation in employment (for example, those related to or based upon . . . a person's race, sex, religion, national origin, age . . . or being in another protected class) . . .” Id. at p. 3. (emphasis added). Nsaif signed this Arbitration Agreement the day he was hired.

         On September 19, 2018, Nsaif sued TCF in Kentucky state court. [R. 1-1] In his complaint, Nsaif brought two claims for discrimination, one claim for hostile work environment, and one claim for intentional infliction of emotional distress, all under Kentucky state law. See Id. at pp. 6-7, ¶¶ 46 - 70. The hostile work environment Nsaif complains about arises from two interactions with TCF supervisors following Nsaif's complaints over his steady decline in available work hours. See id., at pp. 3-6, ¶¶ 5 - 45. Nsaif alleges he notified his supervisors of the two interactions, but no corrective action was taken. Id. As a result, Nsaif alleges he has experienced “shortness of breath, emotional exhaustion, and anxiety due to [his supervisors'] behavior . . .” Id. He has not returned to work, though he was never terminated. See id.

         TCF removed this action from Jefferson County Circuit Court on October 17, 2017 on the basis of diversity jurisdiction. [R. 1] Shortly thereafter, TCF filed a Motion to Dismiss and Compel Arbitration pursuant to Fed.R.Civ.P. 12(b)(1), 12(b)(3), or 56.[1] [R. 4; R. 5] Nsaif filed a Response opposing the Motion. [R. 8]

         II. Analysis

         A. Arbitration Standard

         In this circuit, “[i]n order to show that the validity of the agreement is ‘in issue,' the party opposing arbitration must show a genuine issue of material fact as to the validity of the agreement to arbitrate, ” a showing that mirrors the summary judgment standard. Great Earth Cos. v. Simons, 288 F.3d 878, 889 (6th Cir. 2002). Therefore, district courts in Kentucky evaluate a motion to compel arbitration as one for summary judgment under Fed.R.Civ.P. 56(c). See Freeman v. Easy Mobile Labs, Inc., No. 1:16-CV-00018-GNS, 2016 WL 4479545, at *1 (W.D. Ky. Aug. 24, 2016) (citing Arnold v. Rent-a-Center, Inc., No. 11-18-JBC, 2011 WL 1810145, at *2 (E.D. Ky. May 12, 2011) (“This court will treat the motion to compel arbitration as one for summary judgment ....”)); Weddle Enters., Inc. v. Treviicos-Soletanche, J.V., No. 1:14CV-00061-JHM, 2014 WL 5242904, at *2 (W.D. Ky. Oct. 15, 2014) (“A motion to dismiss based on the existence of a valid arbitration agreement is not evaluated under the usual Fed.R.Civ.P. 12(b)(6) standard. Instead, courts apply the standard applicable to motions for summary judgment.”) (internal citation omitted) (citation omitted). “In order to show that the validity of the agreement is in issue, the party opposing arbitration must show a genuine issue of material fact as to the validity of the agreement to arbitrate.” Great Earth Cos., 288 F.3d at 889. (internal quotation marks omitted) (citation omitted).

         B. FAA Overview

         The Federal Arbitration Act (“FAA”) was enacted “to ensure judicial enforcement of privately made agreements to arbitrate.” Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 219 (1985). The statute “embodies [a] national policy favoring arbitration . . .” Richmond Health Facilities v. Nichols, 811 F.3d 192, 195 (6th. Cir. 2016) (citing Seawright v. Am. Gen. Fin. Servs., Inc., 507 F.3d 967');">507 F.3d 967, 972 (6th Cir. 2007)). The FAA applies to written agreements to arbitrate disputes that arise out of contracts involving transactions in interstate commerce.[2]Under its terms, such agreements “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 FAA “leaves no place for the exercise of discretion by a district court, but instead mandates that a district court shall direct the parties to proceed to arbitration on issues as to which an arbitration agreement has been signed.” Byrd, 470 U.S. at 218 (emphasis in original).

         When a party invokes the FAA and asks a federal court to dismiss or stay a case and compel arbitration, the court must determine whether the parties agreed to arbitrate the dispute at issue. Stout v. J.D. Byrider, 228 F.3d 709, 714 (6th Cir. 2000). This requires an examination of the contract language in light of the strong federal policy favoring arbitration, resolving any ambiguities in the contract or doubts as to the parties' intentions in favor of arbitration. Id. Courts should engage in the following four-step inquiry: (1) determine whether the parties agreed to arbitrate; (2) determine the scope of that agreement; (3) if federal statutory claims are asserted, the court must consider whether Congress intended those claims to be non-arbitrable; and (4), if the court concludes that some, but not all, of the claims in the action are subject to arbitration, it must determine whether to stay the remainder of the proceedings pending arbitration. Id.

         C. Motion to ...


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