The opinion of the court was delivered by: Anita B. Brody, J.
Plaintiff Janice Quilloin ("Plaintiff" or "Quilloin") has brought a nationwide collective*fn1 action under the Fair Labor Standards Act (FLSA), 29 U.S.C. §§ 201-19 (2006), and a state-wide class action under the Pennsylvania Minimum Wage Act of 1968, 43 Pa. Cons. Stat. §§ 333.101-333.115 (2009); the Pennsylvania Wage Payment and Collection Law, 43 Pa. Cons. Stat. §§ 260.1-260.12 (2009); and Pennsylvania common law against Defendants Tenet HealthSystem Philadelphia ("Tenet Philadelphia"), Tenet Healthcare Corporation ("Tenet"), and Tenet HealthSystem Hahnemann, LLC ("Hahnemann") (collectively, "Defendants"). First Am. Compl. 1-2, ECF No. 19. Plaintiff alleges that Defendants forced her and others to work through their meal breaks without pay. Id. This court has jurisdiction pursuant to the FLSA; the Class Action Fairness Act of 2005, 28 U.S.C. § 1332(d)(2) (2006); and 28 U.S.C. § 1367 (2006). In response, Defendants have filed a motion to dismiss or, in the alternative, to stay proceedings and compel compliance with an agreement to arbitrate. Mot. Dismiss, June 10, 2010, ECF No. 28.*fn2 For the reasons set forth below, I will deny Defendants‟ motion without prejudice.
Plaintiff is a Registered Nurse with an Associate Degree in the Science of Nursing. Quilloin Decl. ¶¶ 3-4, ECF No. 34. She worked at Hahnemann University Hospital from October of 2006 until February of 2008, and then again from December of 2008 until November of 2009. Id. ¶¶ 8, 11; First Am. Compl. ¶ 10, ECF No. 19. Defendant Hahnemann owns Hahnemann University Hospital. Simmons Decl. ¶ 2, ECF No. 28. Defendant Tenet Philadelphia helps manage and control two hospitals in Philadelphia, including Hahnemann University Hospital. First Am. Compl. ¶ 14, ECF No. 19. Hahnemann and Tenet Philadelphia are both subsidiaries of Defendant Tenet, a health care services company whose subsidiaries, as of December 31, 2008, operated a total of 55 hospitals with over 14,000 beds. Id. ¶¶ 12-15.
Defendants maintain a "Meal Break Deduction Policy" at all of their facilities, according to which the computerized time and attendance system automatically deducts a thirty-minute meal period per work shift. Id. ¶¶ 26, 27. However, Quilloin alleges that she and other members of the classes often performed compensable work during their uncompensated meal breaks. Id. ¶29.
Thus Quilloin seeks to bring the FLSA collective action on behalf of herself and "[a]ll persons employed within the three years preceding the filing of this action by Defendant whose pay was subject to an automatic 30 minute meal period deduction even when they performed compensable work during the unpaid "meal break.‟" Id. ¶ 45.
She similarly seeks to bring a state law class action on behalf of herself and "[a]ll persons employed within the three years preceding the filing of this action by Defendants at any of its Pennsylvania facilities, whose pay was subject to an automatic 30 minute meal period deduction even when they performed compensable work during the unpaid "meal break.‟" Id. ¶ 46.
On December 4, 2009, Quilloin filed suit in this court against Tenet and Tenet Philadelphia. On February 19, 2010, Tenet Philadelphia answered, and asserted as an affirmative defense the existence of an agreement to arbitrate employee disputes with the employer. Answer 8-9, Feb. 19, 2010, ECF No. 9. Also on February 19, 2010, Tenet filed a motion to dismiss for lack of personal jurisdiction, alleging that it was four corporate layers removed from Quilloin‟s actual employer and lacked minimum contacts with Pennsylvania. Mem. Supp. Mot. Dismiss 1-2, Feb. 19, 2010, ECF No. 10. On March 15, 2010, Quilloin responded to Tenet‟s Motion to Dismiss, and on March 29, 2010, Tenet replied to Quilloin‟s response.
On April 15, 2010, the parties attended a Rule 16 conference. On April 21, 2010, the parties submitted a joint stipulation, according to which Plaintiff would voluntarily dismiss another pending case, Janice Quilloin v. Tenet HealthSystem Philadelphia, Inc. et al., No. 10-1379, and amend her complaint in this matter to include those Pennsylvania state law claims asserted in the other matter. Joint Stipulation ¶¶ 1-2, Apr. 21, 2010, ECF No. 18. The parties further stipulated that such amendment would not moot the pending motion to dismiss for lack of personal jurisdiction, and that the parties would conduct jurisdictional discovery by July 15, 2010. Id. ¶¶ 4-5.
On April 23, 2010, Plaintiff filed her first amended complaint against Tenet, Tenet Philadelphia, and Hahnemann. See First Am. Compl., ECF No. 19. On May 13, 2010, Tenet Philadelphia and Hahnemann answered, again invoking Plaintiff‟s agreement to arbitrate as an affirmative defense. Answer 14, May 13, 2010, ECF No. 25.
On June 10, 2010, Tenet, Tenet Philadelphia, and Hahnemann filed a motion to dismiss or, in the alternative, to stay proceedings and compel compliance with the agreement to arbitrate. Mot. Dismiss, June 10, 2010, ECF No. 28. Six days later, Defendants filed a motion for a protective order in response to allegedly extensive discovery requests from Plaintiff. Mot. Protective Order, ECF No. 29.
Following a telephone conference on August 12, 2010, Tenet withdrew its motion to dismiss for lack of personal jurisdiction, which mooted Defendants‟ motion for a protective order. Notice, Aug. 13, 2010, ECF No. 42. Thus, all that remains for my consideration is Defendant‟s June 10th motion to dismiss or, in the alternative, to stay proceedings and compel compliance with the agreement to arbitrate.
Around the time when Quilloin began her periods of employment, in October of 2006 and in January of 2009,*fn4 she signed an acknowledgment form stating:
I hereby voluntarily agree to use the Company‟s Fair Treatment Process and to submit to final and binding arbitration any and all claims and disputes that are related in any way to my employment or the termination of my employment with Tenet. I understand that final and binding arbitration will be the sole and exclusive remedy for any such claim or dispute against Tenet or its parent, subsidiary or affiliated companies or entities, and each of its and/or their employees, officers, directors or agents, and that, by agreeing to use arbitration to resolve my dispute, both the Company and I agree to forgo any right we each may have had to a jury trial on issues covered by the Fair Treatment Process.
Reply Ex. A, ECF No. 39.*fn5 Quilloin has stated that she was given no time to review the document, that she was not permitted an opportunity to have it reviewed by counsel, that she was presented with the form on a "take it or leave it basis," and that she had no choice but to sign given her need to financially support herself. Resp. 4, ECF No. 33; Quilloin Decl. ¶¶ 15-19, ECF No. 34.
The Fair Treatment Process (FTP) states that it harassment or retaliation under the Americans With Disabilities Act, the Age Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964 and its amendments or any state or local discrimination laws, tort claims, or any other legal claims and causes of action recognized by local, state or federal law or regulations.
Mot. Dismiss Ex. B at 1, ECF No. 28. In the "Exclusions and Restrictions" section, the FTP reads: any non-waivable statutory claims . . . are not subject to exclusive review under the FTP. This means that you may file such non-waivable statutory claims with the appropriate agency that has jurisdiction over them if you wish, regardless of whether you decide to use the FTP to resolve them. However, if such an agency completes its processing of your action against the company, you must use the FTP if you wish to pursue your claim (although Steps 1 through 4 may be skipped).
Id. at 7. Steps 1 through 3 require employees to proceed through the corporate hierarchy before filing a claim in arbitration. At each step, a response "will be provided . . . as soon as possible, usually within seven calendar days." Id. at 3. At Step 4, the dispute is heard by a committee "as soon as possible, usually within 30 days." Id. at 4. If an employee does not accept the committee‟s decision, he or she can submit the dispute to arbitration. Describing the arbitration process, the FTP states:
The arbitration will be administered by the American Arbitration Association ("AAA"). The company and you will share the cost of AAA‟s filing fee and the arbitrator‟s fees and costs, but your share of such costs shall not exceed an amount equal to one day‟s pay (for exempt employees), or eight times your hourly rate (for non-exempt employees), or your local court civil filing fee, whichever is less. You and the company will be responsible for the fees and costs of your own respective legal counsel, if any, and any other expenses and costs, such as costs associated with witnesses or obtaining copies of hearing transcripts.
Id. at 6. The FTP further states that both company and employee "may be represented by counsel at arbitration during Step 5 at each parties‟ own expense." Id. at 8. However, the FTP also grants to the arbitrator "the authority to award any remedy that would have been available to you had you litigated the dispute in court under applicable law," id. at 8, and states as a preliminary matter that "no remedies that otherwise would be available to you or the company in a court of law will be forfeited by virtue of the agreement to use and be bound by the FTP," id. at 2.
Based on this agreement, Defendants assert that Quilloin must proceed with her claims via individual arbitration. Quilloin responds 1) that her claims are not within the scope of the agreement, 2) that the agreement is invalid for being unconscionable and entered into under duress, 3) that Defendants should be judicially estopped from compelling arbitration, and 4) that Defendants have waived their right to compel arbitration.
The Federal Arbitration Act ("FAA") codifies a strong federal policy in favor of arbitration. Alexander v. Anthony Int'l L.P., 341 F.3d 256, 263 (3d Cir. 2003). Section 4 states:
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 for in such agreement . . . . [U]pon being satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue, the court shall make an order directing the parties to proceed to arbitration in accordance with the terms of the agreement.
However, the FAA‟s command that federal courts enforce arbitration agreements also assumes that "the making of the agreement for arbitration . . . is not in issue." Id. When the existence of a valid agreement to arbitrate is in dispute, courts must carefully analyze claims of invalidity. Hopkins v. New Day Fin., 643 F. Supp. 2d 704, 713 (E.D. Pa. 2009) (citing Par-Knit Mills, Inc. v. Stockbridge Fabrics Co., 636 F.2d 51, 54 (3d Cir. 1980)). The standard of review has been described as follows:
The Court, in considering a motion to compel arbitration, which is opposed on the ground that no valid agreement to arbitrate had been entered into by the parties, should view the facts in a light most favorable to the party opposing arbitration and give them the benefit of all reasonable doubts and inferences. This is the same standard used by the Court in resolving a summary judgment motion. Accordingly, the Court may consider all affidavits, exhibits and discovery in the record. If after reviewing the record, the Court finds that there is a doubt as to the existence of a valid agreement to arbitrate, the matter should be submitted to a jury upon a proper demand. . . . Accordingly, the Court must determine whether a factual dispute exists as to the validity of the agreement and, if so, allow a jury to decide whether there was a valid agreement to arbitrate.
Hopkins, 643 F. Supp. 2d at 713-14 (citing Par-Knit Mills, 636 F.2d at 54 & n.9).
As a general principle of contract law, when a genuine issue exists on a matter of contract interpretation, the question should be submitted to a jury for resolution. On a matter of contract construction, however, the question can be resolved by the judge as a matter of law. See Tracinda Corp. v. DaimlerChrysler AG, 502 F.3d 212, 229-30 (3d Cir. 2007) (citing John F. Harkins Co. v. Waldinger Corp., 796 F.2d 657, 659 (3d Cir. 1986) ("Contract interpretation is a question of fact . . . . [C]ontract construction is a question of law . . ..")).*fn6
As a preliminary matter, Defendants should not be judicially estopped from moving to compel arbitration, nor have they waived their right to seek arbitration. Therefore, I will consider the merits of their motion. "A motion to compel arbitration calls for a two-step inquiry into (1) whether a valid agreement to arbitrate exists and (2) whether the particular dispute falls within the scope of that agreement." Trippe Mfg. Co. v. Niles Audio Corp., 401 F.3d 529, 532 (3d Cir. 2005). Because further proceedings are required on several aspects of the validity issue, I will deny without prejudice Defendants‟ motion.
A.Defendants should not be estopped from exercising, and have not waived, their right to compel arbitration.
Plaintiff argues that Defendant Tenet should be judicially estopped from compelling arbitration in light of its previous argument that it was four corporate layers removed from employing Plaintiff and was not subject to personal jurisdiction in Pennsylvania.
Plaintiff correctly identifies the three typical elements of judicial estoppel*fn7 1) "the party to be estopped must have taken two positions that are irreconcilably inconsistent"; 2) the inconsistent positions were taken ""in bad faith-i.e., with intent to play fast and loose with the court‟"; and 3) application of the doctrine is ""tailored to address the harm identified‟ and no lesser sanction would adequately remedy the damage done by the litigant‟s misconduct." Montrose Med. Group Participating Sav. Plan v. Bulger, 243 F.3d 773, 778 (3d Cir. 2001) (quoting Ryan Operations G.P. v. Santiam-Midwest Lumber Co., 81 F.3d 355, 361 (3d Cir. 1996); and Klein v. Stahl GMBH & Co. Maschinefabrik, 185 F.3d 98, 108 (3d Cir. 1999)).
The Third Circuit has elaborated that a party generally cannot display "bad faith for judicial estoppel purposes if the initial claim was never accepted or adopted by a court or agency." Montrose, 243 F.3d at 778; see also G-I Holdings, Inc. v. Reliance Ins. Co., 586 F.3d 247, 261 (3d Cir. 2009) ("[J]udicial estoppel is generally not appropriate where the defending party did not convince the District Court to accept its earlier position."); United States v. Pelullo, 399 F.3d 197, 222-23 (3d Cir. 2005); Dam Things from Denmark v. Russ Berrie & Co., 290 F.3d 548, 559 n.16 (3d Cir. 2002).*fn8 The Montrose court also explained that "judicial estoppel is concerned with the relationship between litigants and the legal system, and not with the way that adversaries treat each other." Id. at 781. Thus, tailoring the harm done requires an inquiry into the damage inflicted upon the dignity or authority of the court, not into the damage suffered by other parties.
In this case, Tenet‟s position that it did not employ Plaintiff may admittedly be inconsistent with its argument that Plaintiff should be forced to arbitrate her disputes with Tenet pursuant to her employment contract.
However, I never accepted or adopted Tenet‟s position that it did not employ Plaintiff and that it was not subject to personal jurisdiction in Pennsylvania.*fn9 Instead, Tenet withdrew the motion to dismiss that asserted those claims. See Notice, Aug. 13, 2010, ECF No. 42. Therefore, because I never adopted Tenet‟s first argument, I find that their second argument was not advanced in bad faith. See Montrose, 243 F.3d at 778; G-I Holdings, 586 F.3d at 261 ("Here the District Court never accepted [defendant‟s] prior position. [Defendant] withdrew that position and asserted its new one . . . before the Court ruled on its motion to dismiss. . . . Because the Court never relied on [defendant‟s] first position, we shall not bar its new one.").*fn10
I also note that Tenet‟s arguably inconsistent positions have not affronted the dignity or authority of the court, and that it would be inappropriate to apply the "extraordinary remedy" of judicial estoppel to bar their attempt to compel arbitration at this juncture. Ryan ...