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Gillespie v. Colonial Life & Accident Insurance Co.

March 30, 2009

DIANA LYNN GILLESPIE, PLAINTIFF,
v.
COLONIAL LIFE & ACCIDENT INSURANCE COMPANY, DEFENDANT.



The opinion of the court was delivered by: Lenihan, M. J.

Doc. No. 6

OPINION

Currently before the Court for disposition is Defendant's Motion to Dismiss pursuant to Fed.R.Civ.P. 12(b)(6), or in the alternative, Motion to Compel Arbitration*fn1 (Doc. No. 6). Plaintiff Diana Lynn Gillespie ("Gillespie") filed this action against Defendant Colonial Life & Accident Insurance Company ("Colonial") to recover damages on the following claims: (1) sexual harassment and retaliation in violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000-e, et seq. ("Title VII") and the Pennsylvania Human Relations Act, 43 Pa. Cons. Stat. § 951, et seq. ("PHRA")(Count I); (2) breach of contract (Count II);(3) battery-negligent entrustment (Count III); and (4) battery-vicarious liability (Count IV). (Compl., Doc No. 1.)

For the reasons set forth below, the Court will grant Colonial's Motion to Dismiss to the extent that it seeks to compel arbitration of this matter.

I. RELEVANT FACTS AND PROCEDURAL HISTORY

Colonial is a South Carolina corporation that sells disability, life, supplemental accidental and health insurance in 49 states, including Pennsylvania, through a nationwide sales force of agents. (Compl. at ¶ 2-3.) Colonial maintains an office in Pittsburgh, Pennsylvania. (Id. at ¶ 4). On or about January 1, 2005, Gillespie entered into a District General Agent Agreement ("Agreement") with Colonial, and has been affiliated with Colonial since that date. (Compl. at ¶ 7; Doc. No. 7 at 1.)

On or about May 22, 2006, Gillespie alleges that William Leary ("Leary"), a former employee of Colonial who served as a regional vice president, began acting inappropriately in an offensive and sexual manner towards her. (Compl. at ¶ 9.) Gillespie reported Leary's behavior and he was eventually discharged. (Id. at ¶ 15). Believing that "Colonial created, permitted, tolerated, and failed to correct or prevent a sexually hostile, intimidating, demeaning, and demoralizing workplace," and that Colonial retaliated against her for her report of Leary's conduct, Gillespie instituted*fn2 the present action by filing a complaint on May 20, 2008. (Compl. at ¶ 20.)

At issue here is certain language in the Agreement. In particular, the first page of the Agreement states in bold and capitalized letters "THIS AGREEMENT IS SUBJECT TO ARBITRATION." (Doc. No. 6-2 at 1). Most critically to the issue at hand, paragraph XIV of the Agreement, entitled "Arbitration", states:

Except as otherwise provided in this section, every claim, controversy or dispute arising out of or related to this agreement, or the breach thereof, which cannot be settled through negotiation shall be settled by binding arbitration administered by the American Arbitration Association (AAA) pursuant to the AAA's Commercial Arbitration Rules. A copy of said Commercial Arbitration Rules, as well as forms to demand arbitration thereunder, may be obtained from the American Arbitration Association. In the event a party initiates a lawsuit in court concerning an arbitrable claim, controversy or dispute such party shall be liable to the other party for the costs, including attorney fees, that the other party incurs to obtain an order from the court to stay or dismiss the lawsuit or otherwise compel arbitration. Arbitration hereunder must be demanded within the relevant statute of limitations applicable to the claim, controversy or dispute . . . . However, except as provided elsewhere in the Agreement, each party shall be responsible for its own attorney's fees incurred during the course of arbitration, as well as the costs of any witnesses and other evidence such party produces or causes to be produced.

(Doc. 6-2 at 11-12.)

On July 29, 2008, Colonial filed a Motion to Dismiss pursuant to Fed.R.Civ.P. 12(b)(6), or in the alternative, Motion to Compel Arbitration. (Doc. No. 6.) Subsequently, on August 19, 2008, Gillespie filed her Brief in Opposition to [Colonial's] Motion to Dismiss. (Doc. No. 10.) On August 29, 2008, Colonial filed its Reply to Gillespie's response. (Doc. No. 12.) The Court held oral argument on the pending Motion to Dismiss on January 5, 2009. (Doc. No. 13.) Thereafter, on January 26, 2009, Colonial filed its Brief in Response to Questions Raised by the Court. (Doc. No. 14.) On January 28, 2009, Gillespie filed her Supplemental Brief addressing the same questions raised by the Court during oral argument. (Doc. No. 15.) Thus, the Motion has been fully briefed, responded to, argued, and is therefore ripe for disposition.

II. STANDARD AND APPLICABLE LAW FOR MOTION TO COMPEL ARBITRATION

Arbitration may be compelled only where "there is no genuine issue of fact concerning the formation of the agreement" to arbitrate. Kirleis v. Dickie, McCamey & Chilcote, P.C., - F.3d -, 2009 WL 750415, at *1 (3d Cir. Mar. 24, 2009)(citing Par-Knit Mills, Inc. v. Stockbridge Fabrics Co., 636 F.2d 51, 54 (3d Cir. 1980). "In making this determination, the party opposing arbitration is entitled to 'the benefit of all reasonable doubts and inferences that may arise.'" Id.

The Federal Arbitration Act ("FAA") "creates a body of federal substantive law establishing and regulating the duty to honor an agreement to arbitrate." 9 U.S.C. § 1, et seq.; John Hancock Mutual Life Ins. Co. v. Olick, 151 F.3d 132, 136 (3d Cir. 1998)(quoting Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (1983)). The FAA applies to written arbitration provisions contained in any contract evidencing a transaction involving interstate or foreign commerce, requiring that agreements to arbitrate be enforceable to the same extent as other contracts. 9 U.S.C. §§ 1, 2; Harris v. Green Tree Fin. Corp., 183 F.3d 173, 178 (3d Cir. 1999). The FAA also provides that "[a] party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition any United States District Court . . . for an Order directing that such arbitration proceed in the manner provided in the agreement." 9 U.S.C. ยง 4. However, before a district court orders arbitration, the FAA requires the court to make the following threshold determinations: ...


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