Peruvian Connection, Ltd. v. Christian

977 F. Supp. 1107, 1997 U.S. Dist. LEXIS 13477, 1997 WL 547221
CourtDistrict Court, D. Kansas
DecidedAugust 29, 1997
DocketCivil Action 97-2242-EEO
StatusPublished
Cited by6 cases

This text of 977 F. Supp. 1107 (Peruvian Connection, Ltd. v. Christian) is published on Counsel Stack Legal Research, covering District Court, D. Kansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Peruvian Connection, Ltd. v. Christian, 977 F. Supp. 1107, 1997 U.S. Dist. LEXIS 13477, 1997 WL 547221 (D. Kan. 1997).

Opinion

MEMORANDUM AND ORDER

EARL E. O’CONNOR, District Judge.

This matter is before the court on the application of defendant R. Scott Christian to stay proceedings until completion of pending arbitration (Doc. # 8). Plaintiff Peruvian Connection (“PC”) has responded and opposes the motion. Defendant has filed a reply. In addition, Christian has, by separate motion, requested the court to extend the deadline to answer or otherwise respond to the complaint until twenty days after the stay is terminated or denied (Doc. # 6). The court has carefully reviewed the parties’ briefing, exhibits, and the applicable law, and is now prepared to rule. For the reasons stated below, the motions are granted.

I. Factual Background.

From September 1993 until August 1996, Christian was Chief Operating Officer of PC, a private, closely-held corporation engaged in the business of selling imported knitwear through mail-order catalogues and outlets. PC is controlled by Anne G. Hurlbut and her mother, M.L.M. “Biddie” Hurlbut (collectively “the Hurlbuts”), who hold the positions of Chief Executive officer and Chairman of the Board, respectively. On July 16, 1996, Christian received a “Notice of Termination Under the Employment Contract.” The Notice stated that Christian’s employment with PC was being terminated “without cause” pursuant to Section 6(b)(i) of the Employment Agreement. The Notice also stated that “in accordance with Section 3 of the September 3, 1993 Phantom Stock Agreement between you and the Company (‘PSAR’), any rights that you hold under the PSAR will be forfeited upon your termination of employment.” On the same day that PC gave notice it was terminating his employment agreement, PC offered to hire Christian as Chief Operating Officer at an increased salary but without the PSAR agreement. Christian declined the offer.

Both the employment agreement and the PSAR Agreement contained an identical arbitration provision, as follows:

Disputes under the Agreement shall be settled pursuant to binding arbitration be *1109 fore an arbitrator in the States of either Kansas or Missouri, in accordance with the voluntary labor arbitration rules of the American Arbitration Association, as then in effect. The arbitrator’s sole authority shall be to interpret and apply the provisions of this Agreement, the arbitrator shall not change, add to, or subtract from, any of the provisions of the Agreement. The arbitrator shall have the power to compel attendance of witnesses at the hearing. Any court having jurisdiction over this matter may enter a judgment based upon such arbitration.

PC’s Complaint for Declaratory Judgment, Ex. B § 17; Ex. C ¶ 11.

On February 13, 1997, Christian initiated arbitration proceedings against PC by filing with the American Arbitration Association (“AAA”) a demand for arbitration addressed to PC and its owners. In the demand for arbitration, Christian asserted claims for (1) violation of § 510 of the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1140; (2) wrongful termination; (3) breach of implied covenant of good faith and fair dealing; (4) quantum meruit; and (5) violation of Kansas Statutes Annotated § 17-1264(a). On March 31,1997, in response to Christian’s demand for arbitration, PC submitted to AAA an answering statement and a counterclaim for accounting. PC’s answering statement contains the sentence: “The PSAR agreement does not constitute an employee benefit plan governed by ERISA 29 U.S.C. §§ 1001, et seq.” Neither the answering statement nor the counterclaim contain any allegation challenging the arbitrability of the ERISA claim or any other claim raised by Christian. On April 8, 1997, Christian filed with AAA a reply to the counterclaim.

On May 15, 1997, PC filed suit in this court seeking a declaratory judgment that its actions do not expose it to liability under ERISA, 29 U.S.C. § 1001, et seq. PC contends that the agreement under which Christian was to receive phantom stock appreciation rights (the “PSAR Agreement”) is not an ERISA plan.

II. Standards for Arbitration.

The Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1-16, “evinces a strong federal policy in favor of arbitration.” ARW Exploration Corp. v. Aguirre, 45 F.3d 1455, 1462 (10th Cir.1995) (citing Shearson/American Express, Inc. v. McMahon, 482 U.S. 220, 226, 107 S.Ct. 2332, 2337, 96 L.Ed.2d 185 (1987)). The purpose of the FAA “was to reverse the longstanding judicial hostility to arbitration agreements ... and to place arbitration agreements upon the same footing as other contracts.” Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 24, 111 S.Ct. 1647, 1651, 114 L.Ed.2d 26 (1991). “If a contract contains an arbitration clause, a presumption of arbitrability arises.” ARW, 45 F.3d at 1462 (citing AT & T Technologies, Inc. v. Communications Workers of America, 475 U.S. 643, 650, 106 S.Ct. 1415, 1419, 89 L.Ed.2d 648 (1986)). This presumption may be overcome only if “it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute.” Id. All doubts should be resolved in favor of coverage. Id. As the Supreme Court stated in Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 24-25, 103 S.Ct. 927, 941, 74 L.Ed.2d 765 (1983):

The Arbitration Act establishes that, as a matter of federal law, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration, whether the problem at hand is the construction of the contract language itself or an allegation of waiver, delay, or a like defense to arbitrability.

See also Esposito v. Hyer, Bikson & Hinsen, Inc., 709 F.Supp. 1020, 1022 (D.Kan.1988) (quoting Moses H. Cone, and noting that the Supreme Court has given its “stamp of approval” to the principle that arbitration provisions are to be construed broadly to effectuate the strong federal policy evidenced by the Federal Arbitration Act). Courts are to “rigorously” enforce agreements to arbitrate. ARW 45 F.3d at 1462 (citing McMahon, 482 U.S. at 226, 107 S.Ct. at 2337).

Section 3 of the FAA provides:

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977 F. Supp. 1107, 1997 U.S. Dist. LEXIS 13477, 1997 WL 547221, Counsel Stack Legal Research, https://law.counselstack.com/opinion/peruvian-connection-ltd-v-christian-ksd-1997.