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Green v. Zachry Industrial, Inc.

United States District Court, W.D. Virginia, Roanoke Division

March 25, 2014

TEDDY A. GREEN, Plaintiff,

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For Teddy A. Green, Plaintiff: Brittany Michelle Haddox, Terry Neill Grimes, Terry N. Grimes, ESQ., P.C., Roanoke, VA; Melvin E. Williams, Mel Williams PLC, Roanoke, VA.

For Zachry Industrial, Inc., Zachry Construction Corp., Defendants: Elizabeth Hope Cothran, LEAD ATTORNEY, Frank H. Hupfl , III, WOODS ROGERS PLC, ROANOKE, VA.

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Hon. Glen E. Conrad, Chief United States District Judge.

This case is presently before the court on (1) the defendant's motion to dismiss the complaint for lack of subject matter jurisdiction or, in the alternative, to stay litigation and compel arbitration on an individual basis, and (2) the plaintiff's motion for leave to add party plaintiffs and file an amended complaint. For the reasons set forth below, the court finds that the instant dispute is subject to a valid and enforceable arbitration agreement. Therefore, the defendant's alternative motion to stay litigation and compel arbitration will be granted, and the plaintiff's motion will be denied.


The plaintiff, Teddy A. Green, brings this action on behalf of himself and all other former employees of the defendant, Zachry Industrial, Inc. (" Zachry" )[*], who were terminated from employment at the MeadWestvaco plant in Covington, Virginia, on or about September 30, 2010. Zachry, a national, privately owned construction and industrial maintenance firm, contracted with MeadWestvaco to perform paper mill maintenance work. Zachry hired the plaintiff to work at the MeadWestvaco plant beginning on August 3, 2009. According to the complaint, on September 29, 2010, the defendant announced its intention to lay off the employees at the MeadWestvaco facility the following day. On September 30, 2010, or shortly thereafter, the plaintiff and approximately 270 other employees were terminated.

On August 25, 2011, the plaintiff filed this class action lawsuit, alleging that the defendant violated several federal statutes in connection with the mass layoff at the MeadWestvaco plant. First, Green complains that Zachry did not provide the terminated employees with 60-days advanced written notice of their termination, and failed to pay the employees 60-days wages and benefits, as required by the Worker Adjustment and Retraining Notification Act (" WARN Act" ). Next, Green asserts that Zachry failed to inform the terminated employees and their beneficiaries of their right to elect continued health insurance coverage at a subsidized rate, as required by the Consolidated Omnibus Budget Reconciliation Act of 1985 (" COBRA" ) and American Recovery and Reinvestment Act of 2009 (" ARRA" ). Finally, Green alleges that Zachry neglected to notify the Plan Administrator about a COBRA-qualifying event, namely the mass layoff at the Covington facility, and failed to give participants and beneficiaries of the group health plan a Summary Plan Description, as required by the Employee Retirement Income Security Act of 1974 (" ERISA" ).

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In response to the plaintiff's class action lawsuit, Zachry filed the instant motion to dismiss or, in the alternative, stay litigation and compel arbitration, under the Federal Arbitration Act, on the basis that each of Zachry's employees, including Green, had agreed in writing to adhere to the Zachry Dispute Resolution Process, which includes binding arbitration as its final step. Green opposed the defendant's motion, and also filed a motion seeking leave to add party plaintiffs and amend his complaint. The court held a hearing on the parties' motions on June 5, 2012. Because the plaintiff's opposition to the defendant's motion relied heavily upon a case on appeal to the United States Court of Appeals for the Fifth Circuit, the court decided to hold this matter in abeyance pending the Fifth Circuit's decision. On December 3, 2013, the Fifth Circuit issued an opinion in that case. The parties have each submitted additional briefing, and the motions are now ripe for review.


The defendant asks the court to dismiss this matter for lack of subject matter jurisdiction or, in the alternative, stay litigation and compel arbitration. In the absence of the Zachry Dispute Resolution Process (" DRP" ) agreement, it is clear that the court would be vested with subject matter jurisdiction over the plaintiff's federal claims under the WARN Act, ERISA, COBRA, and ARRA. 28 U.S.C. § 1331. However, it is not clear whether the existence of a contractual agreement to arbitrate divests the court of jurisdiction to hear the matter.

While the Federal Arbitration Act (" FAA" ) requires a district court to stay the trial of any action referable to arbitration under a written agreement, the FAA also allows the court to retain some authority over a matter that is subject to arbitration. See, e.g., Bayer CropScience AG v. Dow AgroSciences LLC, No. 2:12cv47, 2012 WL 2878495, at *7 (E.D. Va. July 13, 2012) (noting that the FAA requires a court to stay, rather than dismiss outright, an action subject to arbitration, and further permits a district court to compel arbitration by court order); see also DiMercurio v. Sphere Drake Ins., PLC, 202 F.3d 71, 78 (1st Cir. 2000) (" Because the term 'subject-matter jurisdiction' is 'often misused,' cases to the effect that a court lacks authority to act in the face of a valid arbitration agreement do not necessarily implicate 'jurisdiction in the basic sense, but may stand merely for the proposition that if either party seasonably claims his right to arbitrate, the agreement must be recognized.'" ) (internal citations omitted).

In Choice Hotels Int'l, Inc. v. BSR Tropicana Resort, Inc., the United States Court of Appeals for the Fourth Circuit suggested that a motion to dismiss in favor of arbitration should be treated as a motion to stay litigation and compel arbitration. 252 F.3d 707, 709-10 (4th Cir. 2001). Therefore, the court will address the defendant's alternative motion to stay litigation and compel arbitration.

I. Defendant's Motion to Stay Litigation and Compel Arbitration

The Federal Arbitration Act (" FAA" ) reflects " a liberal federal policy favoring arbitration agreements." Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983). The FAA provides that a written arbitration agreement " 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 requires a court to stay " any suit or proceeding" pending arbitration of " any issue referable to arbitration under an agreement in writing for

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such arbitration." 9 U.S.C. § 3. When a party refuses to arbitrate despite the existence of a valid and enforceable written agreement to arbitrate, the aggrieved party may petition the court " for an order directing that such arbitration proceed in the manner provided for in such agreement." 9 U.S.C. § 4.

The court has previously recognized that " [a]lthough the FAA does not expressly identify the evidentiary standard a party seeking to avoid arbitration must meet, 'courts that have addressed the question have analogized the standard to that required of a party opposing summary judgment under Rule 56(e) of the Federal Rules of Civil Procedure.'" S. Elec. Servs., Inc. v. Cornerstone Det. Prods., Inc., 2010 WL 2233664, at * 3 (W.D. Va. June 3, 2010) (citing Fed.R.Civ.P. 56(e); Tinder v. Pinkerton Sec., 305 F.3d 728, 735 (7th Cir. 2002). " Thus, as in summary judgment proceedings, a party cannot avoid compelled arbitration by generally denying the facts upon which the right to arbitration rests; instead, the party must identify specific evidence demonstrating a material factual dispute." Id.

" In the Fourth Circuit, a litigant can compel arbitration under the FAA if he can demonstrate '(1) the existence of a dispute between the parties, (2) a written agreement that includes an arbitration provision which purports to cover the dispute, (3) the relationship of the transaction, which is evidenced by the agreement, to interstate or foreign commerce, and (4) the failure, neglect or refusal of the [plaintiff] to arbitrate the dispute.'" Adkins v. Labor Ready, Inc., 303 F.3d 496, 500-01 (4th Cir. 2002) (quoting Whiteside v. Teltech Corp., 940 F.2d 99, 102 (4th Cir. 1991)). Here, only the second factor is in dispute.

As a preliminary matter, the plaintiff raises some doubt as to whether he ever signed a written agreement to be bound by the defendant's Dispute Resolution Process (" DRP" ), which includes binding arbitration as its final step. The plaintiff also argues that the arbitration provision in the DRP is unenforceable, and further argues that even if the arbitration provision is enforceable, the scope of the ...

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