McCants v. Team Electric, Inc.

Background

Michael S. McCants brought an employment lawsuit against Team Electric, Inc., alleging discrimination, harassment, and retaliation based on sex and race. McCants had been employed by Crewforce, LLC, which supplied contract labor to electrical construction companies, including Team Electric.

When McCants was hired by Crewforce, he received employment documents that included a Dispute Resolution Agreement. The agreement required covered disputes to be resolved through final and binding arbitration rather than in court. It expressly included disputes between a Crewforce employee and an entity to which the employee was dispatched, and stated that such entities were third-party beneficiaries entitled to enforce the agreement. The agreement also covered employment discrimination and harassment claims. It reserved questions about the agreement’s scope and applicability for the court.

Team Electric moved to stay the lawsuit and compel arbitration under the Federal Arbitration Act. Team Electric learned about the agreement after receiving documents from Crewforce during discovery and then notified McCants.

McCants’s Arguments

McCants argued that Team Electric waived its right to seek arbitration by failing to raise the agreement in its answer and by waiting approximately a year after the lawsuit began to file its motion. He also argued that the agreement was between him and Crewforce, not Team Electric. Finally, he disputed the authenticity of the electronic signature on the agreement, stating that he did not distinctly remember signing it.

Court’s Analysis

The court applied a summary-judgment-like standard to the motion. Team Electric first had to make an initial showing that an arbitration agreement existed. The burden then shifted to McCants to show that the agreement did not apply or was invalid.

The court held that Team Electric had shown that an arbitration agreement existed and covered this dispute. McCants was a Crewforce employee dispatched to work at Team Electric, and the agreement expressly identified entities receiving Crewforce workers as third-party beneficiaries. The court therefore held that Team Electric could enforce the agreement. The court also noted that McCants did not dispute that his discrimination and harassment claims fell within the agreement’s subject matter.

The court rejected the waiver argument. Although about a year passed before Team Electric sought arbitration, Team Electric did not learn of the agreement until reviewing documents obtained from Crewforce. The court found that Team Electric notified McCants promptly after discovering the agreement. It also found that little litigation had occurred: the parties were engaged in document discovery, depositions had not yet occurred, expert discovery had not begun, and no significant motions had been made or decided. The court further found no prejudice to McCants from the delay.

The court also rejected the argument that Team Electric could not enforce an agreement to which it was not a signatory. The agreement expressly made entities such as Team Electric third-party beneficiaries entitled to enforce its terms.

Finally, the court found no genuine dispute about the electronic signature. McCants’s lack of a distinct memory of signing was not affirmative evidence that he had not signed. Team Electric provided uncontroverted evidence from a Crewforce manager that McCants electronically signed the agreement. The court therefore found the agreement enforceable against McCants.

Disposition

Magistrate Judge Robert W. Lehrburger granted Team Electric’s motion to compel arbitration and stayed the action pending arbitration. The parties were ordered to file a joint status report every six months, or within ten days after arbitration was completed if that occurred sooner. The court directed the Clerk of Court to close the motion.