Cecilia Tillman v. Macy's Inc. , 735 F.3d 453 ( 2013 )

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
File Name: 13a0317p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
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CECILIA TILLMAN,
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Plaintiff-Appellee,
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No. 11-2580
v.
,
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Defendant-Appellant. -
MACY’S, INC.,
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Appeal from the United States District Court
for the Eastern District of Michigan at Detroit.
No. 2:11-cv-10994—Sean F. Cox, District Judge.
Argued: April 5, 2013
Decided and Filed: October 31, 2013
Before: ROGERS, WHITE, and ALARCÓN, Circuit Judges.*
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COUNSEL
ARGUED: Michael C. Christman, MACY’S LAW DEPARTMENT, St. Louis,
Missouri, for Appellant. Alistair Elizabeth Newbern, VANDERBILT APPELLATE
LITIGATION CLINIC, Nashville, Tennessee, for Appellee. ON BRIEF: Michael C.
Christman, MACY’S LAW DEPARTMENT, St. Louis, Missouri, Maurice G. Jenkins,
Kimberly A. Yourchock, JACSON LEWIS LLP, Southfield, Michigan, for Appellant.
Alistair Elizabeth Newbern, VANDERBILT APPELLATE LITIGATION CLINIC,
Nashville, Tennessee, for Appellee.
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OPINION
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ROGERS, Circuit Judge. Macy’s appeals the district court’s denial of its motion
to compel arbitration. Relying on Hergenreder v. Bickford Senior Living Group, LLC,
*
The Honorable Arthur L. Alarcón, Senior United States Circuit Judge for the Ninth Circuit,
sitting by designation.
1
No. 11-2580 Tillman v. Macy’s, Inc. Page 2
656 F.3d 411 (6th Cir. 2011), the district court found that there was no agreement
between Macy’s and its former employee, Cecilia Tillman, to arbitrate disputes arising
from her employment. Unlike in Hergenreder, however, Macy’s provided sufficient
notice of its offer to enter into an arbitration agreement, and Tillman accepted by
continuing her employment with Macy’s and not returning either of the two opt-out
forms provided to her. Arbitration should therefore have been required, notwithstanding
the absence of an employee-signed written agreement to arbitrate.
Tillman filed suit pro se in the district court, alleging that Macy’s discriminated
against her on the basis of her race in violation of Title VII when it terminated her
employment in 2009. In response, Macy’s filed a motion to compel arbitration and stay
the action pending arbitration, based on what Macy’s claimed was an agreement entered
into by the parties to participate in a dispute-resolution program called Solutions
InSTORE. This dispute-resolution process had four steps, the last of which was binding
arbitration. Macy’s argued that Tillman assented to participation in the program and
therefore that suit in federal court was impermissible.
The alleged agreement was based on the following facts. Tillman, who was hired
by May Department Stores in 2001, became a Macy’s employee when Macy’s (then
incorporated as Federated Department Stores, Inc.) merged with May in 2005.
Following the merger, Macy’s conducted a roll-out of Solutions InSTORE that extended
the program to former May’s employees, including Tillman. For Tillman, the roll-out
first consisted of a mailing that included a “Welcome to Solutions InSTORE” postcard,
the Plan Document, and an Early Dispute Resolution Program Election Form (“2006
Election Form”). The Plan Document described in detail the dispute-resolution process
and noted that while employees were automatically “covered” by arbitration by virtue
of continuing employment with Macy’s, they could opt out of binding arbitration. The
document stated that if employees did not opt out, they would not be able to bring their
claims in court. The 2006 Election Form provided a procedure and an opportunity to opt
out of arbitration. The form directed employees to return it by October 31, 2006 if they
did not want to be bound to arbitrate employment-related disputes. Macy’s provided
No. 11-2580 Tillman v. Macy’s, Inc. Page 3
records showing that Tillman’s packet was mailed and that it was not returned as
undeliverable. Tillman stated that she did not receive the mailing.
On October 13, 2006, Tillman attended a mandatory video screening where she
was shown a video describing the InSTORE Program. Tillman concedes that she was
at the meeting, as documented by the sign-in sheet from the meeting. Macy’s states that
Tillman was provided with detailed information about the opt-out process and the steps
she would need to take to keep from being bound to arbitrate future disputes. However,
Tillman recalls that Macy’s management “breezed over” the information and did not
offer any “specificity or explanation.” Macy’s also states that employees at the meeting
were provided with a brochure about the program. Tillman does not deny receiving the
brochure.
In April 2007, after Tillman did not return the opt-out form, Macy’s sent a
“You’re In Good Company” brochure that stated that she “now ha[d] all the Steps of the
[Solutions InSTORE] program available to” her, specifically including Step 4
Arbitration. The brochure noted that she, like 97% of her co-workers, had not returned
her opt-out form. Tillman stated that she did not receive this mailing.
Finally, in October 2007, Macy’s sent Tillman another Election Form (“2007
Election Form”), along with a “We’ve Got You Covered” brochure, and an “Opening
the Door to More” program update. The packet directed Tillman to return the opt-out
form by November 15, 2007, unless she agreed to be bound to arbitrate future disputes.
Tillman did not return the form; again she claimed that she did not receive the mailing
despite records indicating that it was sent to her address and was not returned as
undeliverable.
Tillman argued to the district court that the “roll-out” did not amount to an offer
to enter into an agreement to arbitrate, and that she did not accept any such offer. The
district court decided in Tillman’s favor, applying Hergenreder v. Bickford Senior Living
Group, LLC, and denied Macy’s motion to compel arbitration of Tillman’s Title VII
claims. The district court found it significant that Tillman was not “required to read” the
Plan Document, and reasoned that “her failure to send in an opt-out form could simply
No. 11-2580 Tillman v. Macy’s, Inc. Page 4
be the result of her not having read the Plan Document that contains the alleged offer to
arbitrate,” especially since “the company was changing ownership and [Tillman] was
receiving many mailings from her employer.”
The district court also held that Tillman did not knowingly and voluntarily waive
her right to a jury trial. The court noted that Tillman did not sign a written waiver and
that the opt-out form contained “confusing language as to what the employee is agreeing
to.” The court held that the totality of the circumstances—including the volume of mail
Tillman was receiving from Macy’s, the lack of a requirement that Tillman read the
materials, and the lack of any document signed by Tillman—weighed against a finding
of a knowing and voluntary waiver. After the district court denied the motion to compel
arbitration, Macy’s filed an interlocutory appeal pursuant to § 16(a) of the Federal
Arbitration Act, 9 U.S.C. § 16(a).
The district court denied Macy’s motion to stay proceedings during the appeal,
stating that Macy’s would not suffer irreparable harm if the district court allowed
discovery to proceed, since the arbitration agreement also guaranteed discovery to the
same extent as under the Federal Rules. Macy’s filed a motion with this court to stay the
trial proceedings during the appeal, and we granted that motion on June 19, 2012.
A limited review is required before compelling an unwilling party to arbitrate.
Such a review shows that the dispute in this case is arbitrable because “a valid agreement
to arbitrate exists between the parties and . . . the specific dispute falls within the
substantive scope of that agreement.” See Javitch v. First Union Secs., Inc., 315 F.3d
619, 624 (6th Cir. 2003) (prescribing the proper analysis).
Macy’s effectively communicated to Tillman an offer to enter into a binding
arbitration agreement and to waive her right to a jury trial. We reach this conclusion
under Michigan contract law because the parties focus the dispute on a question of basic
contract formation—offer and acceptance. “Because arbitration agreements are
fundamentally contracts, we review the enforceability of an arbitration agreement
according to the applicable state law of contract formation.” See Seawright v. Am. Gen.
Fin. Servs., Inc., 507 F.3d 967, 972 (6th Cir. 2007).
No. 11-2580 Tillman v. Macy’s, Inc. Page 5
Macy’s notified Tillman of the arbitration program in person at a mandatory
meeting where she watched a video and was provided with an informational brochure.
The video informed her that the program would be going into effect and that it included
an arbitration component that would be “final and binding for both sides.” The video
also encouraged her “to read the materials available about Solutions InSTORE and to
talk to [her] supervisor” if she had questions about the program. The brochure that was
distributed at that same meeting provided more detailed information about the program.
The brochure detailed the four steps of the program, including arbitration, which it
compared and contrasted with court proceedings. In addition to graphical
representations of the process, the brochure included the following text:
Your Solutions InSTORE enrollment period will be your opportunity to
decide whether you want to receive all four steps of this program. You
are automatically covered by Step 4 unless you choose to exclude
yourself. When covered by Step 4 final and binding arbitration, you and
the Company agree to use arbitration as the sole and exclusive means to
resolving any dispute regarding your employment; we both waive the
right to civil action and a jury trial. If you decide you want to be
excluded from participating in and receiving the benefits of Step 4, we
need you to tell us in writing by completing a form that will be mailed to
your home this fall. In this case, Steps 1-3 will continue to apply to you
– you will no longer, however, be eligible for the benefits available under
the Step 4: Arbitration process.
We will respect whatever decision you make about Step 4: Arbitration.
We urge you to read the Plan Document when you receive it at home by
mail this fall and educate yourself about the benefits and limitations of
arbitration to make an informed decision that’s best for you. There are
many sources of information and opinions about arbitration. One
excellent source of information is the AAA website, which you can
access at www.adr.org.
Choose to participate in the full program, Steps 1-4. We believe you will
find it a good decision for you. In fact, we feel so positively about what
this program brings employees and our work environments, we’d like to
let you give it a try. If for some reason you find that Step 4: Arbitration
is not for you, we’ll provide you with one final opportunity in October,
2007 to discontinue your election to receive the benefits of Step 4 at that
time. It’s that simple.
No. 11-2580 Tillman v. Macy’s, Inc. Page 6
The brochure notified employees that it was “a summary of some of the provisions,
benefits, and limitations, of the Solutions InSTORE program” and informed them, “[y]ou
are directed to read the Plan Document for the actual details.” In sum, Tillman was
provided with information, in person, that would have informed her: that arbitration was
an optional part of the dispute resolution process, that arbitration was a final and binding
alternative to a civil lawsuit, that agreeing to arbitration meant waiving the right to file
a civil action in court and the right to a jury trial, that she was eligible to opt out of
participation in that program, and that the process for opting out was to fill out a form
that she would receive in the mail.
Macy’s also mailed, to Tillman’s home, information that further clarified its offer
and the method of acceptance—information that, at the meeting, Tillman was informed
would be forthcoming.1 These mailings included (1) the Plan Document and Election
(opt-out) Form, (2) a subsequent confirmation postcard letting Tillman know that
Macy’s did not receive the Election Form and making clear that because she had not
returned the form she accepted its offer to arbitrate disputes, and (3) another Election
Form providing yet another opportunity to refuse to arbitrate. The Election Forms and
Plan Statement made clear that Tillman needed to return the form if she did not want to
be included in the arbitration portion of the Solutions InSTORE program, and the Plan
Document explained the nature and legal consequences of the arbitration portion of the
program. The Plan Document was also available in the Macy’s store and online, and
Tillman was provided with a link to the website containing the document. The Plan
Document stated:
You can request Arbitration (Step 4). This process involves an
Arbitrator. . . . After a hearing, the Arbitrator renders a final decision.
The decision is binding on both the Company and you. Nothing in the
Solutions InSTORE program, however, prevents you from filing, at any
1
Although Tillman maintains that she did not receive the mailings, we proceed on the assumption
that she received the materials sent to her, because properly addressed and posted mail is presumed to have
been delivered and received by the person to whom it was addressed, Hagner v. United States, 285 U.S.
427, 430 (1932), and the operative question hinges on an objective manifestation of intent to enter into an
agreement. See Hergenreder, 656 F.3d at 417.
No. 11-2580 Tillman v. Macy’s, Inc. Page 7
time, a charge or complaint with a government administrative agency like
the EEOC, for example.
All Associates agree to be covered by Step 4 – Arbitration by accepting
or continuing employment with the Company after the Effective Date.
Associates are given the option to exclude themselves from Arbitration
by completing an election form within the prescribed time frame. Until
and unless an Associate elects to be excluded from arbitration within the
prescribed time frame, the Associate is covered by Step 4 – Arbitration.
The Plan Document later stated, in a section titled “Step 4 – Arbitration Rules and
Procedures,” that:
All Associates are automatically covered by all 4 steps of the program by
taking or continuing a job with the Company. That means that all
Associates agree, as a condition of employment, to arbitrate any and all
disputes, including statutory and other claims, not resolved at Step 3.
However, Arbitration is a voluntary condition of employment.
Associates are given the option of excluding themselves from Step 4
arbitration within a prescribed time frame. . . . Arbitration . . . replaces
any right you might have to go to court and try your claims before a jury.
You are covered by Step 4 unless and until you exercise your option to
exclude yourself from employment. . . .
Except as otherwise limited, all employment-related legal disputes,
controversies or claims arising out of, or relating to, employment or
cessation of employment, whether arising under federal, state or local
decisional or statutory law . . . shall be settled exclusively by final and
binding arbitration.
Finally, the Plan Document explained once again the exclusive role of arbitration:
By agreeing to arbitration, the Associate and the Company agree to
resolve through arbitration all claims described in or contemplated by
Article 2 above. This means that neither the Associate nor the Company
can file a civil lawsuit in court against the other party relating to such
claims. If a party files a lawsuit in court to resolve claims subject to
arbitration, both agree that the court shall dismiss the lawsuit and require
the claim to be resolved through the Solutions InSTORE program.
These statements clearly inform employees of the nature of the agreement and describe
their rights under the Solutions InSTORE arbitration program. The Plan Document
further provides information about how to reject the proposed agreement, and this
No. 11-2580 Tillman v. Macy’s, Inc. Page 8
information is reiterated in the Election Forms, which state that, while employees are
automatically “covered by” the first three phases of dispute resolution under the
program, they may elect “not to be covered by the benefits of arbitration” by signing and
returning the form.
This information was sufficient to constitute a valid offer to arbitrate disputes.
“An offer is defined as the manifestation of willingness to enter into a bargain, so made
as to justify another person in understanding that his assent to the bargain is invited and
will conclude it.” Hergenreder, 656 F.3d at 417 (applying Michigan law, quoting
Kloian v. Domino’s Pizza, L.L.C., 733 N.W.2d 766, 770 (Mich. Ct. App. 2006)). The
question of mutual assent “is judged by an objective standard, looking to the express
words of the parties and their visible acts, not their subjective states of mind.”
Hergenreder, 656 F.3d at 417 (quoting Kloian, 733 N.W.2d at 771).
Our conclusion that Macy’s made a valid offer to Tillman is consistent with our
decision in Hergenreder, which hinged primarily on the concept of notice. The plaintiff
in that case was said by her employer to have assented to arbitration based only on a
dispute-resolution policy that was not provided by the employer or made available save
for a vague reference in an employee handbook that did not explicitly mention
arbitration. Hergenreder, 656 F.3d at 414–16. We held that the handbook’s direction
to refer to the company’s dispute-resolution procedure for “details” about the procedure
did not constitute an offer. Hergenreder’s general knowledge that a dispute-resolution
procedure existed did not mean that her employer communicated an offer in the absence
of her knowledge of either the arbitration language or her employer’s desire to create an
agreement through the dispute resolution procedure. Id.The facts of this case are far more similar to the cases this court distinguished in
Hergenreder than they are to the facts of Hergenreder itself. Hergenreder distinguished
Mannix v. County of Monroe, 348 F.3d 526 (6th Cir. 2003), on the ground that the
employer in that case provided significantly more notice of new policies. The County
“posted the revised [employment policies] at least four months before the [plaintiff’s]
termination . . . on an internal database available to employees [and by holding] meetings
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between department heads and employees and put[ting] the policies on the County’s
email system.” Hergenreder, 656 F.3d at 418 (quoting Mannix, 348 F.3d at 536). In
Hergenreder, this level of notice was absent, but we suggested that if the dispute-
resolution procedure had been “‘posted’ in a place—either physical or
electronic—available to Hergenreder, [if] there were meetings at which Hergenreder was
notified of the policies, or [if] Hergenreder was aware of the [dispute-resolution
procedure] at all,” the result may have been different. Id. at 418–19. In Tillman’s case,
the Solutions InSTORE policy was posted electronically, was in fact mailed to her, and
there was a meeting regarding the policy that she was required to—and did—attend.
Therefore she cannot, and does not, claim to have been unaware of the arbitration policy.
Accordingly, the discussions in Hergenreder and Mannix support a conclusion that
Macy’s objectively manifested its intent to enter into an arbitration agreement with
Tillman.
Similarly, the discussion in Hergenreder distinguishing Kettles v. Rent-Way, Inc.,
No. 1:09–cv–230, 2009 WL 1406670 (W.D. Mich. May 18, 2009) (applying Michigan
law), cuts against Tillman. In Kettles, the district court found that an agreement to
arbitrate existed because, although the employer provided information to employees in
terms of “what to expect”—which did not qualify as an offer—it also sent the employee
a document that obligated the employee to submit disputes to the employer’s dispute
resolution program, which included arbitration. Id. at *10. Hergenreder contrasted
Kettles with Hergenreder’s lack of such notice. Hergenreder, 656 F.3d at 419–20. Like
the employer in Kettles, Macy’s included a casual, welcome-to-the-program type of
element in its rollout, but Macy’s also took action similar to the employer’s in
Kettles—and dissimilar to the employer’s in Hergenreder—by mailing the contract-like
Plan Document and the Election Forms.
Moreover, the fact that Tillman was not ordered to read the Plan Document and
other mailings is not, standing alone, dispositive. Macy’s encouraged and directed
employees to read the materials. For example, in the video Tillman viewed, “Nancy”
stated: “Read all of the material and make sure that [employees] understand it. And if
No. 11-2580 Tillman v. Macy’s, Inc. Page 10
they don’t, if they [have] questions, to definitely ask questions of their Human Resources
Manager or their Direct Report Manager because it’s such an awesome program . . . .”
In the same video, another actor stated: “We encourage you to read the materials
available about Solutions In-STORE and talk with your supervisor if you have any
questions about this unique program.” The brochure provided at the video-screening
meeting stated: “You are directed to read the Plan Document for the actual details.”
Tillman did not provide authority under either the Federal Arbitration Act or Michigan
law to support the proposition that for there to be mutual assent an offeror must obligate
the offeree to read an offer that has been conveyed. Contrary to Tillman’s assertions,
Macy’s failure to require reading of the numerous arbitration-related documents that it
provided her does not amount to a failure to provide notice.
Tillman’s conduct following the communication of the offer objectively suggests
that she accepted the arbitration agreement by continuing her employment without
returning an opt-out form. This performance mirrors that called for in the offer, and
“[t]he manifestation of mutual assent may be made wholly or partly by . . . acts or
conduct.” See Ludowici-Celadon Co. v. McKinley, 11 N.W.2d 839, 840 (Mich. 1943).
Several decisions applying Michigan law have held that an offer may be accepted
through continued employment. For instance, in Dawson v. Rent-A-Center, Inc., 490 F.
App’x 727, 730 (6th Cir. 2012), we noted that the plaintiff “demonstrated his assent [to
his employer’s offer to arbitrate disputes] by continuing to work for Rent-Way” and that
“Michigan law permits parties to accept offers through conduct.” See also Kettles,
2009 WL 1406670, at *5. See generally Rembert v. Ryan’s Family Steak Houses, Inc.,
596 N.W.2d 208, 210–11 (Mich. Ct. App. 1999).
The burden was on Tillman to show that she did not voluntarily and knowingly
waive her right to a jury trial. See K.M.C. Co. v. Irving Trust Co., 757 F.2d 752, 758
(6th Cir. 1985). Tillman did not satisfy this burden, and the district court erred in
finding otherwise. The Plan Document stated in plain language: “Arbitration . . .
replaces any right you may have to go to court and try your claims before a jury. You
are covered by [arbitration] unless and until you exercise the option to exclude yourself
No. 11-2580 Tillman v. Macy’s, Inc. Page 11
from arbitration.” The Plan Document also clarified that “all employment-related legal
disputes . . . shall be settled exclusively by final and binding arbitration. . . . Merely by
way of example, Employment-Related Claims include, but are not limited to, claims
arising under the Age Discrimination in Employment Act (ADEA), Title VII of the Civil
Rights Act of 1964, the Americans with Disabilities Act (ADA), the Family and Medical
Leave Act (FMLA), . . . . [and] state discrimination statutes.” Finally, in a section titled
“Article 3 – Dismissal/Stay of Court Proceeding,” the Plan Document provided that:
By agreeing to arbitration, the Associate and the Company agree to
resolve through arbitration all claims described in or contemplated by
Article 2 above. This means that neither the Associate nor the Company
can file a civil lawsuit in court against the other party relating to such
claims. If a party files a lawsuit in court to resolve claims subject to
arbitration, both agree that the court shall dismiss the lawsuit and require
the claim to be resolved through the Solutions InSTORE program.
This information reiterated the language in the brochure that was provided to Tillman
in person, which stated, “you and the Company agree to use arbitration as the sole and
exclusive means to resolving any dispute regarding your employment; we both waive
the right to civil action and a jury trial.” Because the information conveyed in the Plan
Document and brochure was part of a valid offer, and because Tillman accepted that
offer by continuing her employment2 at Macy’s without returning an opt-out form, it
follows that Tillman knowingly and voluntarily assented to all of its terms, including this
clearly stated waiver of the right to trial by jury.
This conclusion is consistent with the five factors this court looks to in evaluating
whether there has been a knowing and voluntary waiver of prospective civil-rights
claims:
(1) plaintiff’s experience, background, and education; (2) the amount of
time the plaintiff had to consider whether to sign the waiver, including
whether the employee had the opportunity to consult with a lawyer;
(3) the clarity of the waiver; (4) consideration for the waiver; as well as
(5) the totality of the circumstances.
2
Contrary to Tillman’s argument, Macy’s advanced this argument in its motion to compel
arbitration.
No. 11-2580 Tillman v. Macy’s, Inc. Page 12
Morrison v. Circuit City Stores, Inc., 317 F.3d 646, 668 (6th Cir. 2003). Tillman claims
that her education level as a high-school graduate means that she lacks the necessary
“experience, background, and education” to consent knowingly to a waiver of her rights.
The language quoted above from the Plan Document and brochure states in
understandable terms that “neither the Associate nor the Company can file a civil lawsuit
in court.” Tillman points to Walker v. Ryan’s Family Steak Houses, Inc., 400 F.3d 370,
381 (6th Cir. 2005), but in that case we upheld the district court’s determination that the
plaintiffs did not knowingly and voluntarily consent to arbitration in part by agreeing
with the district court that most of the plaintiff class had experience, background, and
level of education that was “low to mid-level” for reasons including “dire financial
circumstances” and non-completion of high school for most of the plaintiffs.
Furthermore, we did not rely on that factor alone to support our holding on the waiver
issue. Id. at 381–82.
Based on the language in the Plan Document and brochure, the terms of the
waiver were clear, and Tillman had more than two months to review the Solutions
InSTORE agreement before the program went into effect. She had over a year to opt out
of the agreement—enough time to consult an attorney. She does not argue that the
waiver should fail due to a lack of consideration. In any event, Hergenreder recognizes
that continued employment is sufficient consideration for a waiver. 656 F.3d at 421.
Tillman contends that the language in the waiver could have been clearer or more
stereotypically contractual. We recognize that opt-out schemes for accepting arbitration
contain a risk greater than in opt-in systems that some employees do not know what they
have agreed to. Cases like this one would likely be fewer if companies like Macy’s
would use an opt-in system. But we cannot say that under Michigan law an opt-out
system is inherently insufficient, and under the facts of this case a contract was created.
We reverse the denial of the motion to compel arbitration and remand for proceedings
consistent with this opinion.
In the court of appeals order granting the motion to stay pending appeal, the
motions panel invited the parties to submit additional briefing on the question “whether
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an appeal from the denial of a motion to compel arbitration divests the district court of
jurisdiction to proceed on the merits of the claim.” However, because our answer to this
question would have no effect in the present case, we do not reach that issue. See Pierre
N. Leval, Madison Lecture, Judging Under the Constitution: Dicta About Dicta,
81 N.Y.U. L. Rev. 1249, 1255–56, 1261–63 (2006). We appreciate the parties’
thoughtful briefing of the issue, and regret any inconvenience caused by our invitation.