PHILADELPHIA – Arbitration has been chosen to resolve a dispute between a former manager at The Ritz-Carlton Hotel and the hotel company itself, with the plaintiff believing the business violated the Age Discrimination in Employment Act and Pennsylvania Human Relations Act when it terminated him almost five years ago.
On Aug. 2, U.S. District Court for the Eastern District of Pennsylvania Judge Gerald J. Pappert suspended a case between plaintiff Eric Schwartz and defendant The Ritz-Carlton Hotel Company, LLC, pending the results of an arbitration session intended to handle the disposition of the dispute.
According to Pappert, Ritz-Carlton hired Schwartz in 2000 as a manager and he received the training provided to new employees. As part of that training, employees receive an Employee Agreement that describes their rights and Ritz-Carlton’s three-stage procedure for resolving disputes that arise in the workplace.
At the first stage, employees will attempt to resolve concerns with their immediate supervisor, division head or general manager. If this does not resolve the dispute, the employee proceeds to the second stage and seeks further help through a Peer Review Panel, which typically consists of three employees and two managers. Failing resolution, the employee proceeds to stage three, arbitration.
The arbitration provision in the Employee Agreement provides:
“I shall request arbitration if I have been terminated or feel I have been discriminated against based on race, color, sex (including sexual harassment), religion, national origin, sexual orientation, marital status, age or disability. arbitration is a process in which my workplace issue is presented to a neutral third party, the arbitrator, for a final and binding decision.”
Schwartz was given a copy of the Employee Agreement and trained on the three-stage dispute resolution process. On Nov.15, 2000, Schwartz and Assistant Director of Human Resources Vanessa Bryant-Jackson signed the Employee Agreement, which included the arbitration provision. The signature page was placed in Schwartz’s personnel file and he kept the remainder of the Employee Agreement.
“After completing orientation and training, Schwartz began working as a PBX Manager, but was transferred to the accounting department after his position was eliminated. He became a Banquet Captain in 2003 and remained in that role until 2012, when he began receiving criticism for his job performance. Schwartz received three written disciplinary actions before he was terminated on Nov. 14, 2013. He was 53 years old at the time and believes he was really fired because of his age, alleging that Ritz-Carlton sought to get rid of older employees,” Pappert said.
Schwartz filed his complaint on Aug. 18, 2017, and Ritz-Carlton then filed a motion to dismiss or stay proceedings, arguing Schwartz’s claims should be dismissed because he agreed to arbitrate his age discrimination claims. The Court denied the motion without prejudice and ordered limited discovery on the question of arbitrability.
Discovery consisted of declarations and supplemental declarations from Bryant-Jackson and Crystal Champion, Director of Human Resources for Ritz-Carlton Philadelphia, to which Champion was also deposed. Per court records, Schwartz was “not deposed, nor did he provide an affidavit or declaration which could constitute record evidence to support any of the arguments made in his response to Ritz-Carlton’s motion.”
With discovery complete, Ritz-Carlton’s renewed its motion to dismiss under the pre-text of summary judgment.
“The Court must first determine if the arbitration provision contained in Schwartz’s Employee Agreement is valid. If it is, the Court must then decide if Schwartz’s complaint falls within the scope of that provision. Although the Federal Arbitration Act, creates a presumption of arbitrability, that presumption only applies to the determination of whether a claim falls within the scope of an arbitration agreement,” Pappert said.
According to Pappert, Pennsylvania law “requires district courts to stay judicial proceedings and compel arbitration of claims covered by a written and enforceable arbitration agreement.”
Pappert explained Pennsylvania “has a well-established public policy that favors arbitration, and this policy aligns with the federal approach expressed in the FAA,” based on three criteria: “(1) Whether both parties manifested an intention to be bound by the agreement; (2) Whether the terms of the agreement are sufficiently definite to be enforced; and (3) Whether there was consideration.”
“Schwartz contends that he did not manifest an intention to be bound by the arbitration agreement because it is unclear ‘whether plaintiff did in fact sign an [employee] agreement containing the arbitration provisions in question.’ According to her supplemental declaration, however, Bryant-Jackson trained Schwartz on the arbitration provision and they both signed the Employee Agreement containing it,” Pappert stated.
“Schwartz also argues, somewhat alternatively, that there is a genuine issue as to whether he is bound by any employment agreement. Specifically, he contends that in 2005, the terms of the Employee Agreement were updated, with the new version intended to supersede the version he signed in 2000.”
According to Champion, the signed 2000 Agreement was the only Employee Agreement in Schwartz’s personnel file, and there is no evidence he signed anything else. Therefore, Pappert said Schwartz was bound by his signed 2000 Employee Agreement, and its provision requiring him to request arbitration if he is fired or feels he has been discriminated against.
It was next for the Court to determine whether Schwartz’s arbitration clause was enforceable.
Citing U.S. Court of Appeals for the Third Circuit precedent in Great W. Mortg. Corp. v. Peacock, Pappert said there is a “strong presumption in favor of arbitration, and doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration,” and was “particularly applicable where the clause is broad.”
“The clause here is broad and specifically includes claims of age discrimination among disputes which must be arbitrated, and Schwartz does not contend otherwise. The arbitration agreement is a valid, enforceable contract requiring Schwartz to arbitrate the claims set forth in his complaint,” Pappert said.
“The FAA directs that if a case referable to arbitration is brought in federal court, the court before which the lawsuit is pending ‘shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement.’ This section ‘affords district courts no discretion to dismiss a case where one of the parties applies for a stay pending arbitration.’ Ritz-Carlton moved to dismiss, or in the alternative to stay proceedings to compel arbitration. This case will be stayed and placed in civil suspense pending the outcome of arbitration.”
The plaintiff is represented by Michael J. Salmanson of Salmanson Goldshaw, in Philadelphia.
The defendant is represented by Danielle Van Katwyk, Dawn Siler-Nixon and Mark A. Saloman of Ford Harrison, in West Hartford, Conn., Berkeley Heights, N.J., and Tampa, Fla.
U.S. District Court for the Eastern District of Pennsylvania case 2:17-cv-03751
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at firstname.lastname@example.org