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Scheurer v. Fromm Family Foods LLC

United States District Court, W.D. Wisconsin

August 18, 2016

ANNE E. SCHEURER, Plaintiff,

          OPINION & ORDER

          JAMES D. PETERSON District Judge.

         This is an employment discrimination case in which plaintiff Anne Scheuer alleges that her former supervisor sexually harassed her while she was working at defendant Fromm Family Foods LLC. Scheurer also alleges that after she complained about the harassment, Fromm fired her in retaliation. She has sued Fromm under Title VII of the Civil Rights Act of 1964. But there is a slight complication: Scheuer was actually an employee of a staffing agency, and when she applied to the agency, she signed an application agreement that contained an arbitration provision. Fromm now seeks to invoke that provision and compel Scheuer to arbitrate her Title VII claims. Scheuer opposes the motion because Fromm was not a party to her application agreement with the staffing agency.

         Fromm has not demonstrated that it is entitled to enforce the arbitration provision in Scheurer’s application agreement. The court will therefore deny Fromm’s motion to compel arbitration.


         The court reviews a motion to compel arbitration like a motion for summary judgment. Tinder v. Pinkerton Sec., 305 F.3d 728, 735 (7th Cir. 2002). The court considers all evidence in the record and draws all reasonable inferences in the light most favorable to Scheurer because she is the non-moving party. Id.

         In 2013, Scheurer applied to work at Richelieu Foods, Inc., which used Remedy Intelligent Staffing LLC to manage its hiring, payroll, and other human resources tasks. Richelieu and Remedy are not parties to this case. As part of Scheurer’s application, she signed an “applicant’s agreement.” Dkt. 15-2, at 6-9. The agreement provided that Scheurer’s employment with Remedy was at-will, and it also included an arbitration provision that required Scheurer to arbitrate any disputes with her “Employer . . . arising out of or relating to [her] employment or the termination of [her] employment.” Id. at 7. Remedy gave Scheurer an employee handbook that reiterated the arbitration clause.

         About a year later, Scheurer’s work at Richelieu had ended, and Remedy assigned her to work at Fromm. Scheurer alleges that while she worked at Fromm, her supervisor made unwanted sexually explicit comments to her. Although she complained about this harassment to her coworkers, to other supervisors, and to human resources personnel at Fromm, her complaints went unanswered. Fromm eventually fired Scheurer (which the court construes to mean that Fromm had Remedy terminate her assignment). Scheurer alleges that this termination was in retaliation for her complaints of sexual harassment.

         Scheurer filed suit on December 2, 2015, alleging claims under Title VII for sexual harassment and retaliation. Fromm now moves to compel arbitration, arguing that Scheurer’s claims are subject to the arbitration clause in the application agreement that she signed.

         The court has subject matter jurisdiction over Scheurer’s claims pursuant to 28 U.S.C. § 1331, because they arise under federal law.


         Fromm moves to compel arbitration pursuant to the Federal Arbitration Act (FAA). Although the FAA does not define the standard that district courts must use to determine whether to compel arbitration, federal courts have held that such motions are “reviewed under a summary judgment standard.” Tickanen v. Harris & Harris, Ltd., 461 F.Supp.2d 863, 866 (E.D. Wis. 2006) (citing Par-Knit Mills, Inc. v. Stockbridge Fabrics Co., 636 F.2d 51, 54 n.9 (3d Cir. 1980)); see also Tinder, 305 F.3d at 735. Because Fromm is moving to compel arbitration, it must demonstrate that the application agreement between Scheurer and Remedy requires Scheurer to arbitrate the claims that she is alleging this case. Vazquez v. Cent. States Joint Bd., 547 F.Supp.2d 833, 868 (N.D. Ill. 2008).

         Under the FAA, the court will compel arbitration if three conditions are present: (1) a written agreement to arbitrate; (2) a dispute within the scope of the arbitration agreement; and (3) a refusal to arbitrate. 9 U.S.C. § 4; Zurich Am. Ins. Co. v. Watts Indus., Inc., 417 F.3d 682, 687 (7th Cir. 2005). Federal policy strongly favors arbitration, and “once it is clear the parties have a contract that provides for arbitration of some issues between them, any doubts concerning the scope of the arbitration clause are resolved in favor of arbitration.” Miller v. Flume, 139 F.3d 1130, 1136 (7th Cir. 1998). In this case, Scheurer does not dispute the scope of the arbitration clause or that she has refused to arbitrate. But she disagrees that Fromm can invoke the arbitration provision in her application agreement.

         The fact that Fromm is not a party to the agreement would usually mean that Fromm cannot invoke it. See Everett v. Paul Davis Restoration, Inc., 771 F.3d 380, 383 (7th Cir. 2014). “However, the obligation to arbitrate a dispute is not always limited to those who have personally signed an agreement containing such a provision.” Id. A nonparty may invoke an arbitration clause if the ordinary principles of state contract law permit it to do so. Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 631 (2009). Those principles include “assumption, piercing the corporate veil, alter ego, incorporation by reference, third-party beneficiary theories, waiver and estoppel.” Id. Here, Fromm contends that the principles of equitable estoppel and third-party beneficiary entitle it to compel Scheurer to arbitrate her claims. The court disagrees and will therefore deny Fromm’s motion to compel arbitration.

         A. ...

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