Horowitz v. O.E.M of Connecticut (2010)

MEMORANDUM OF DECISION ON MOTION TO DISMISS/STAY

-I-

In this unlawful termination action the facts alleged in the complaint are not in dispute.   The plaintiff was employed by the defendant as a human resources employee from January 2001, until January 20, 2010.   In that capacity, the plaintiff managed the 401K plans for O.E.M. of Connecticut employees, created employee handbooks and policies and advised O.E.M. of Connecticut and its client companies on issues relating to compliance with various federal and state statutes.   Additionally, the plaintiff was also responsible for administering O.E.M. of Connecticut's internal payroll and accounting for the associated payroll deductions.

The plaintiff was terminated from her employment on January 20, 2010.

The plaintiff filed her application for a prejudgment remedy on March 2, 2010.   The plaintiff alleges claims against the defendants for wrongful discharge, two claims for breach of contract, breach of the covenant of good faith and fair dealing, tortious interference, failure to pay wages and intentional spoilation of evidence.

On April 1, 2010, the defendants filed this motion to dismiss the plaintiff's application for prejudgment remedy and/or to compel arbitration and stay the proceedings arguing that the arbitration agreement, signed by the plaintiff at the commencement of her employment, is valid and the proceedings relating to the plaintiff's employment, including her application for a prejudgment remedy, until the arbitration process is completed.

Plaintiff argues that the signed arbitration agreement is unenforceable because she was not provided with consideration for signing it.   Specifically, she contends that because the parties entered into the arbitration agreement on her first day of employment, after she had already agreed to the terms of her employment, no additional consideration for signing it was provided to her and, the agreement is therefore not enforceable.   Because of the unenforceability of the agreement, she contends, the application for prejudgment remedy is appropriate in the present case and the defendants' motion should be denied.

An affidavit submitted by defendant states that the plaintiff was provided with an employee manual which included a written explanation of the “O.E.M. of Connecticut Arbitration Procedure,” although it failed to specify that arbitration was a condition of her employment.   On January 3, 2001, the plaintiff's first day of work, numerous documents were offered by the defendant and were signed by the plaintiff, including the arbitration procedure agreement.

Two of these documents are particularly relevant.   The first, titled “Human Resource Coordinator Employment Agreement” was entered into by the plaintiff and the defendant on January 3, 2001 and provides, in relevant part, that:

[i]n consideration for the mutual promises covenants and [a]greements made below ․ the parties ․ agree as follows ․ [to] abide by O.E.M. of Connecticut, Inc.'s arbitration [a]greement procedure ․ [and that] [t]his [a]greement may be executed in multiple counterparts, any one of which will be deemed an original, but all of which shall constitute one and the same instrument.

The second document, entitled “O.E.M. of Connecticut Arbitration Procedure” provides, in relevant part:

that any controversy or claim arising out of or relating to [the plaintiff's] employment relationship with O.E.M. of Connecticut or the termination of that relationship, except for claims expressly excluded in this [a]greement, must be submitted for final and binding resolution by a private and impartial arbitrator.

The agreement indicated that “[b]oth parties understand that by agreeing to the terms set forth in this [p]rocedure, both are giving up any constitutional or statutory right that they may possess to have covered claims decided in a court of law before a judge or a jury.”

Our Supreme Court has stated:

Connecticut has adopted a clear public policy in favor of arbitrating disputes.   The policy is expressed in General Statutes § 52-408, which provides in relevant part:  “An agreement in any written contract, or in a separate writing executed by the parties to a written contract, to settle by arbitration any controversy thereafter arising out of such a contract, or out of failure or refusal to perform the whole or any part thereof ․ shall be valid, irrevocable and enforceable, except when there exists sufficient cause at law or in equity for the avoidance of written contracts generally.”   Nussbaum v. Kimberly Timbers, Ltd., 271 Conn. 65, 71, 856 A.2d 364 (2004).

Plaintiff claims there was no valid consideration for the agreement to arbitrate.   While there is a lack of appellate level authority that is directly on point several Superior Court decisions have upheld the enforceability of arbitration agreements that did not provide the employee with additional consideration for entering into the agreement in circumstances in which the employee had “full notice and acknowledgment of the arbitration provision ․ [and entered into the agreement] within the orbit of the formal start of employment.”   Powers v. United Healthcare, Superior Court, judicial district of Hartford, CV 00-0599925 (March 2, 2001, Wagner, JTR) (29 Conn. L. Rptr. 119);  see Hessler v. Smith Barney, Inc., Superior Court, judicial district of Hartford, Docket No. CV 99-0587392 (August 20, 1999, Sullivan, J.) (25 Conn. L. Rptr. 310).   Additionally, “General Statutes § 52-408 is similar to § 2 of the federal Arbitration Act, 9 U.S.C. § 1 et seq.   Section 2 of that act provides that written arbitration agreements shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract ․ In construing a Connecticut statute that is similar to federal law [the court is] guided by federal case law.”  Nussbaum v. Kimberly Timbers, Ltd., supra, 271 Conn. 73 n.6.

Notably, federal court cases have indicated that the presence of additional consideration is not required, under certain circumstances, for an arbitration agreement to be valid.   Specifically, the court in Whitaker v. Clear Channel Broadcasting, Inc., applying Connecticut law but failing to find the presence of a valid arbitration agreement, indicated that where “the offer letter put the employee on clear notice” of the presence of additional terms to the agreement, the additional terms could be incorporated into the original agreement without requiring the presence of additional consideration.   United States District Court, Docket No., 3:04-CV-2041 (D.Conn. December 16, 2005).   Additionally, in Pomposi v. Gamestop, Inc., applying Connecticut law, the court held that continued employment was sufficient consideration for enforcing a valid arbitration agreement, so long as the affected employee is considered employed at-will.   United States District Court, Docket No., 3:09-CV-340 (D.Conn. January 11, 2010).

Superior Court decisions cited by plaintiff which have held that an employee's continued employment was not sufficient consideration to support the enforcement of an arbitration agreement, are distinguishable, because the employees were not provided with the arbitration agreement for several days.   See Norton v. Commercial Credit Corp., Superior Court, judicial district of Hartford, Docket No., CV 98-0578441 (October 6, 1998, Rittenband, J.) [23 Conn. L. Rptr. 102], or several years, Gibbs v. Connecticut General Life Insurance, Co., Superior Court, judicial district of Hartford, Docket No., CV 97-0567009 (March 3, 1998, Hennessey, J.) [21 Conn. L. Rptr. 533], after they began working for their employer, and therefore, their initial employment could not constitute consideration for the new agreement.

In this case, the plaintiff, by signing the arbitration agreement, specifically acknowledged that she agreed that it was “a condition of [her] employment at O.E.M. of Connecticut ․” By signing the employment agreement, she further agreed “that in the event of a disagreement she will abide by O.E.M. of Connecticut, Inc.'s arbitration Agreement procedure.”   Based on the foregoing reasons, it is concluded that the arbitration agreement entered in the present case is valid and enforceable.

-III-

In determining whether the presence of a valid enforceable arbitration agreement stays a proceeding for prejudgment remedy, it is important to consider the relevant statutory provisions governing compelled arbitrations and the effect of such agreements on other proceedings.  General Statutes § 52-409 provides, in relevant part:

If any action for legal or equitable relief or other proceeding is brought by any party to a written agreement to arbitrate, the court in which the action or proceeding is pending, upon being satisfied that any issue involved in the action or proceeding is referable to arbitration under the agreement, shall, on motion of any party to the arbitration agreement, stay the action or proceeding until an arbitration has been had in compliance with the agreement, provided the person making application for the stay shall be ready and willing to proceed with the arbitration.”  (Emphasis added.)

In the present case, the O.E.M. of Connecticut Arbitration Procedure covers “any controversy or claim arising out of or relating to [the plaintiff's] employment relationship with O.E.M. of Connecticut or the termination of that relationship” as well as “any dispute concerning the arbitrability of any such controversy or claim.”   Considering the broad language of the arbitration agreement, along with the fact that the plaintiff's claims for attachment of the defendant's property under the prejudgment remedy statute directly relate to the termination of her employment relationship with the defendant, it is concluded that judgment on the motion to dismiss is deferred but all court proceedings including the application for prejudgment remedy are stayed until arbitration has been completed, in compliance with General Statutes § 52-409.

Wagner, J., JTR

Wagner, Jerry, J.T.R.