No. 2013-CA-001568-MR.


Court of Appeals of Kentucky.

Rendered: February 6, 2015.

Attorney(s) appearing for the Case

Marcia A. Smith , Corbin, Kentucky, BRIEFS FOR APPELLANT.

Howard O. Mann , Graham C. Trimble , Corbin, Kentucky, BRIEF FOR APPELLEE.





Amanda Gatliff (f/k/a Howard Gatliff) appeals from the Whitley Circuit Court's findings of fact and conclusions of law order denying Gatliff's motion for summary judgment, granting Firestone Industrial Products, LLC's ("Firestone") motion to compel arbitration and dismissing Gatliff's complaint with prejudice. For the following reasons, we affirm.

Gatliff filed her complaint on December 27, 2011, alleging that Firestone violated the Kentucky Civil Rights Act by discharging her shortly after she completed a gender reassignment, transitioning from male to female, and by creating a hostile work environment in which she was discriminated against as a result of her sex change. Firestone filed a notice of removal to federal court, but the case was ultimately remanded back to the Whitley Circuit Court due to insufficient damages for diversity jurisdiction. Firestone then filed a motion to dismiss or stay litigation and compel mediation and arbitration. In that motion, Firestone alleged that Gatliff agreed to binding arbitration in three separate agreements.

First, on July 16, 1998, Gatliff signed a document entitled "Agreement and Acknowledgment of Bridgestone/Firestone Inc. Employee Dispute Resolution Plan" ("First Acknowledgment") when she applied for a full-time position with Firestone. The First Acknowledgment read:

Bridgestone/Firestone, Inc. is one of a growing number of employers who have established a program that directs any legal disputes relating to application for, initiation, termination, terms or conditions of employment to mediation and arbitration rather than to the courts or to governmental agencies. The purpose of this program, called the Employee Dispute Resolution Plan ("Plan") is to resolve legal disputes fairly, quickly and without burdensome expense to any of the parties involved. As a condition of being considered for employment by Bridgestone/Firestone, I agree that I will be bound by the terms of the Plan. The terms of the Plan are not applicable to post-hiring issues for bargaining unit employees. I acknowledge that I have been given the opportunity to review the plan itself.

The Employee Dispute Resolution Plan in effect at that time and referred to in the First Acknowledgment is the October 1, 1995 Bridgestone/Firestone, Inc. Employee Dispute Resolution Plan ("1995 Plan"). The front cover of the 1995 Plan reads:

The Employee Dispute Resolution Plan becomes effective on October 1, 1995, as the exclusive means of resolving employment-related legal claims. That means if you apply for employment, accept employment, or continue working at Bridgestone/Firestone on or after that date, you agree to resolve all such claims through this process, instead of through the court system or administrative agencies.

After Gatliff was hired to a full-time position with Firestone, she attended a new hire orientation on November 10, 1998, and signed a document entitled "Bridgestone/Firestone, Inc. Employee Dispute Resolution Plan" ("Second Acknowledgment"). The Second Acknowledgment read:

I, Howard R. Gatliff, acknowledge that I have been given a copy of the Bridgestone/Firestone, Inc., Employee Dispute Resolution Plan and agree to comply with its terms as a condition of employment.

The plan referred to in the Second Acknowledgment is also the 1995 Plan.

Finally, on October 7, 2003, Gatliff signed a third document, entitled "Current Employee Acknowledgment" ("Third Acknowledgment") after Firestone amended its Employee Dispute Resolution Plan, adopting the "October 1, 2003 Amended Plan" ("2003 Plan"). The Third Acknowledgment read:

I hereby acknowledge my receipt of the Bridgestone/Firestone Employee Dispute Resolution Plan (October 1, 2003 Amendment to the Bridgestone/Firestone, Inc. Employee Dispute Resolution Plan — October 1, 1995, hereafter referred to as "the EDR Plan"). I also acknowledge that I have had an opportunity to review the EDR Plan. I further acknowledge that the EDR Plan fully defines the disputes that are covered, describes the procedures for mediation and arbitration, and sets forth the remedies I may obtain.

The cover of the 2003 Plan also reads:

The Employee Dispute Resolution Plan is the exclusive means of resolving employment-related disputes. All persons who apply for employment, accept employment, continue working for, or accept any promotions, pay increases, bonuses or any other benefits of employment from Bridgestone Americas Holding, Inc. ("BSAH") or a subsidiary or affiliate of BSAH (collectively, "the company") agree to resolve all such disputes through the mediation and binding arbitration process described herein instead of through the court system.

Gatliff does not deny that she signed the three acknowledgments, but she claims she was never given a copy, or an opportunity to review, either the 1995 Plan or the 2003 Plan.

Gatliff filed a motion for summary judgment. The trial court denied Gatliff's motion, and granted Firestone's motion to compel, ordering the parties to arbitration pursuant to the 2003 Plan and dismissing Gatliff's complaint with prejudice. The trial court found that Gatliff agreed to arbitration by signing the three acknowledgments, Firestone's plan was enforceable under the Federal Arbitration Act ("FAA"), 9 U.S.C. § 1 et seq., and the plan was not unconscionable. Gatliff then filed a CR1 59.05 motion to alter, amend or vacate the court's ruling, which the court denied. This appeal follows.

As an initial matter, we note that Gatliff's appeal is taken from the denial of her motion to alter, amend or vacate the findings of fact and conclusions of law entered by the trial court on June 20, 2013. In that order, the trial court denied Gatliff's motion for summary judgment, and granted Firestone's motion to compel arbitration and dismiss the complaint.2

Gatliff's argument is that the arbitration agreement is unenforceable for a number of reasons: no meeting of the minds occurred; no provision stating that she was waiving her right to a jury trial was included in the acknowledgments; no consideration exists for the 2003 acknowledgment; and the plan is unconscionable for multiple reasons.

CR 59.05 states: "A motion to alter or amend a judgment, or to vacate a judgment and enter a new one, shall be served not later than 10 days after entry of the final judgment." In general, a trial court has unlimited power to alter, amend, or vacate its judgments. Gullion v. Gullion, 163 S.W.3d 888, 891-92 (Ky. 2005). The Supreme Court of Kentucky has limited the grounds for relief under CR 59.05 to those established by its federal counterpart, Federal Rule of Civil Procedure 59(e). Id. at 893.

There are four basic grounds upon which a Rule 59(e) motion may be granted. First, the movant may demonstrate that the motion is necessary to correct manifest errors of law or fact upon which the judgment is based. Second, the motion may be granted so that the moving party may present newly discovered or previously unavailable evidence. Third, the motion will be granted if necessary to prevent manifest injustice. Serious misconduct of counsel may justify relief under this theory. Fourth, a Rule 59(e) motion may be justified by an intervening change in controlling law.

Id. (internal footnote omitted). A trial court's ruling on a CR 59.05 motion is reviewed under an abuse of discretion standard. Bowling v. Kentucky Dept. of Corr., 301 S.W.3d 478, 483 (Ky. 2009). Furthermore, in the context of motions to compel arbitration, "[t]he trial court's factual findings, if any, are reviewed for clear error, but its construction of the contract, a purely legal determination, is reviewed de novo." N. Fork Collieries, LLC v. Hall, 322 S.W.3d 98, 102 (Ky. 2010).

The duty of the trial court when addressing a motion to compel arbitration "is not to weigh the equities of the situation, to assess the merits of the underlying controversy, or to determine whether litigation would or would not `irreparably harm' the movant. Its task generally is simply to decide under ordinary contract law whether the asserted arbitration agreement actually exists between the parties and, if so, whether it applies to the claim raised in the complaint." Id. A written agreement to arbitrate disputes that arise out of a contract "shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2; Hathaway v. Eckerle, 336 S.W.3d 83, 88 (Ky. 2011). Under both the Kentucky Uniform Arbitration Act ("KUAA"), KRS3 417.045 et seq., and the FAA, doubts regarding enforceability of an arbitration agreement should be resolved in favor of arbitration. Louisville Peterbilt, Inc. v. Cox, 132 S.W.3d 850, 854-55 (Ky. 2004); Hill v. Hilliard, 945 S.W.2d 948, 951 (Ky. App. 1996) (holding that state law sexual harassment and retaliation claims were employment claims governed by the FAA and that doubts regarding enforceability should be resolved in favor of arbitration).

Gatliff argues that no binding arbitration agreement exists between the parties. She first alleges that no "meeting of the minds" occurred since she did not read the plans referred to in the acknowledgments and the acknowledgments did not contain a jury waiver provision. We disagree. All three acknowledgments refer to the plan and state in some way that the signor acknowledges that she has had an opportunity to review the plan. If Gatliff had reviewed the plan like she attested by signing the acknowledgment, she would clearly have been aware that she was agreeing to mediation and arbitration. Further, both the First and Third Acknowledgments specifically refer to the plan as directing all legal disputes to mediation and arbitration, so the thrust of the plan could arguably be inferred from the acknowledgments themselves. We believe this language was sufficient to indicate to Gatliff that the signor would be required to submit to Firestone's dispute resolution plan. Kentucky law does not require arbitration agreement acknowledgment forms to include language explicitly stating that the signor is waiving her right to a jury trial. See Burden v. Check Into Cash of Ky., LLC, 267 F.3d 483, 492 (6th Cir. 2001) (holding that a jury waiver provision is not a necessary component of an arbitration agreement since waiver of right to jury trial is an obvious consequence of an agreement to arbitrate). The acknowledgments Gatliff signed, in conjunction with the plans she was provided, were clearly valid agreements to binding arbitration.

Furthermore, a signor to a contract is presumed to know the contents of the contract. Kentucky Road Oiling Co. v. Sharp, 257 Ky. 378, 388, 78 S.W.2d 38, 42 (1934). Gatliff relies on Oakwood Mobile Homes, Inc. v. Sprowls, 82 S.W.3d 193 (Ky. 2002), which held that an arbitration policy was unenforceable against an employee because there had been no "meeting of the minds" as required for mutual assent to a contract when the employer unilaterally adopted the arbitration policy without notice to the employee. However, in Sprowls, no agreement existed between employer and employee — the employer adopted the arbitration policy and never sought the employee's assent or even gave her notice. Indeed, this court distinguished Sprowls in Green Tree Serv., LLC v. Williams, 2007 WL 1378484 at *2 (Ky. App. May 11, 2007), finding that when the arbitration clause was clearly stated in a contract the employee signed, the employee was presumed to know the contents of the contract, including the arbitration plan, even when the employee claimed he was not given a copy of the FAA or the employer's specific arbitration plan. See also Hathaway, 336 S.W.3d at 89 (finding an arbitration agreement enforceable when plaintiff alleged she was not told that signing the contract would result in a waiver of her right to a jury trial although arbitration clause was contained within the contract). Unlike Sprowls, Gatliff had notice of Firestone's arbitration plan evidenced by the acknowledgment forms she signed. Thus, even if Gatliff did not read the plan she was acknowledging she received and was to be bound by, she is still bound by its terms.

In further support of her claim that the arbitration agreement is unenforceable, Gatliff argues that insufficient consideration exists for a binding arbitration agreement in 2003 since she was already employed with Firestone and continued employment does not constitute consideration. Yet, Kentucky precedent holds that continued employment is sufficient consideration to support an arbitration agreement. See Spears v. Carhartt, Inc., 215 S.W.3d 1 (Ky. 2006) (employee's labor union, acting in its capacity as her collective bargaining agent, agreed to an alternative dispute resolution program on her behalf, and her continued employment after the provision took effect indicated assent to terms of the program); Adkinson v. Prof'l Serv. Indus., Inc., 1998 WL 34202235 at *2-3 (W.D. Ky. May 11, 1998) (finding an arbitration plan enforceable where the employee did not sign the arbitration agreement but continued working for six months after the plan was adopted). Gatliff acknowledged that she had received and reviewed the 2003 Plan and continued to work at Firestone for almost eight more years. We believe this constitutes sufficient consideration for the 2003 arbitration agreement.

Additionally, Gatliff argues that her involuntary termination affects the sufficiency of the consideration. We disagree. Gatliff analogizes arbitration agreements to noncompete agreements in her argument that continued employment is insufficient consideration when the employee may be terminated at any time. Kentucky case law instructs otherwise. See Higdon Food Serv., Inc. v. Walker, 641 S.W.2d 750, 751-52 (Ky. 1982) (holding that continued at-will employment, even if employer could discharge employee at any time, is sufficient consideration to enforce a noncompete agreement). Furthermore, involuntary termination has no effect on the agreement's enforceability. See Whalen v. Lord & Moses, 2009 WL 3766327 at *2-3 (E.D. Ky. Nov. 10, 2009) (enforcing arbitration agreement despite plaintiff's assertion that she was terminated involuntarily).

Gatliff further claims that the arbitration agreement is unenforceable because neither the 1995 Plan nor the 2003 Plan provides for arbitration to take place in Kentucky as required by the KUAA, and arbitration agreements between employers and employees are not covered by the KUAA. Gatliff is correct in her assertion that under the KUAA, Kentucky courts have no jurisdiction to enforce agreements to arbitrate unless the arbitration is required to occur in Kentucky. Ally Cat, LLC v. Chauvin, 274 S.W.3d 451, 455 (Ky. 2009). She also correctly states that the KUAA does not apply to arbitration agreements between employees and employers. KRS 417.050.

Nevertheless, we disagree with Gatliff's assertion that neither plan provides for the FAA to govern. Gatliff maintains that Firestone's plans do not provide that the plans must be interpreted exclusively under the FAA, nor do they specifically state that the FAA governs the enforcement and interpretation of the arbitration agreement, so the trial court erred in enforcing binding arbitration under the FAA. However, the 2003 Plan specifically states: "These proceedings and any judicial review of awards under these rules shall be governed by the Federal Arbitration Act, 9 U.S.C. § 1." Kentucky courts have consistently upheld choice of law provisions in arbitration agreements which require disputes to be governed by the FAA. See Hathaway, 336 S.W.3d at 88-89 (upholding FAA choice of law provision in arbitration agreement); Ernst & Young, LLP v. Clark, 323 S.W.3d 682, 687 (Ky. 2010) ("[b]ecause the agreements explicitly require that disputes be governed by the Federal Arbitration Act, 9 U.S .C. § 1, et seq., we need not consider Kentucky's Uniform Arbitration Act, KRS 417.045 et seq."); Conseco Fin. Servicing Corp. v. Wilder, 47 S.W.3d 335, 341 (Ky. App. 2001) (noting that choice of law provisions are generally upheld in arbitration agreements). And, unlike the KUAA, the FAA applies to any disputes arising out of a contract "involving commerce," which has been held to include all employment contracts not specifically exempted from the FAA, including statutory discrimination claims. Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 121 S.Ct. 1302, 149 L.Ed.2d 234 (2001). Accordingly, the trial court properly applied the FAA to this dispute.

Further, we disagree with Gatliff's assertion that because the 2003 Plan does not provide that it must be interpreted exclusively under the FAA, the FAA does not govern. Exclusivity language is unnecessary to enforce a provision that clearly states that the FAA will govern. We also disagree with Gatliff's argument that because the plan does not specifically provide that the FAA governs enforcement and interpretation of the agreement, the FAA only controls "proceedings and judicial review of awards."

If an ambiguity exists, "the court will gather, if possible, the intention of the parties from the contract as a whole, and in doing so will consider the subject matter of the contract, the situation of the parties and the conditions under which the contract was written," by evaluating extrinsic evidence as to the parties' intentions. However, "[i]n the absence of ambiguity a written instrument will be enforced strictly according to its terms," and a court will interpret the contract's terms by assigning language its ordinary meaning and without resort to extrinsic evidence.

Frear v. P.T.A. Indus., Inc., 103 S.W.3d 99, 106 (Ky. 2003) (citations omitted). We believe Firestone intended the FAA to govern in all respects when drafting the plan that Gatliff eventually agreed to as a condition of employment. We also note that Gatliff provides no case law in support of either of these contentions, and thus we are not inclined to agree with her position.

Lastly, Gatliff maintains that the arbitration agreement is substantively unconscionable for a number of reasons. First, she claims that without a Kentucky venue provision, arbitration is cost prohibitive and thus unconscionable. Similarly, Gatliff claims that the agreement is unconscionable because it does not provide for a free record of the proceedings or for attorney's fees and costs. Finally, Gatliff argues that the provision allowing Firestone to make unilateral changes to the plan renders the plan unconscionable. However, Gatliff did not raise any of these arguments, other than the Kentucky venue argument, prior to her motion to alter, amend, or vacate. "A party cannot invoke CR 59.05 to raise arguments and to introduce evidence that should have been presented during the proceedings before the entry of the judgment." Gullion, 163 S.W.3d at 893. Therefore, those arguments are not properly before this court.

We do not believe that Firestone's plans are unconscionable for failing to provide for a Kentucky arbitration venue. Substantive unconscionability "refers to contractual terms that are unreasonably or grossly favorable to one side and to which the disfavored party does not assent." Conseco, 47 S.W.3d at 342, n.22 (quotations and citations omitted). A party resisting arbitration on grounds that it would be unduly burdensome bears the initial burden of showing a likelihood of prohibitive costs. Id. at 343-44. We do not believe Gatliff has met this burden regarding the lack of a venue provision. Also, Firestone's plans have been enforced in a number of jurisdictions, and even enforced against another employee at the Williamsburg facility where Gatliff was employed.4 Thus, we do not believe that Firestone's arbitration plans are unconscionable.

Gatliff has presented no new law or facts, nor a change in facts that would warrant an alteration, amendment, or vacation of the trial court's judgment. We also find no manifest errors of law or facts in the trial court's order, nor do we believe manifest injustice will result from such. Hence, denial of Gatliff's motion to alter, amend or vacate was appropriate and we believe the trial court properly dismissed Gatliff's complaint and ordered the parties to arbitration.

The order of the Whitley Circuit Court is affirmed.



1. Kentucky Rules of Civil Procedure.
2. Gatliff incorrectly classifies her appeal as an appeal of the trial court's denial of her motion for summary judgment and a grant of Firestone's motion for summary judgment. As a general rule, denial of a motion for summary judgment is not a final and appealable order. Transp. Cabinet, Bureau of Highways v. Leneave, 751 S.W.2d 36, 37 (Ky. App. 1988). Additionally, Firestone never filed a motion for summary judgment, and the trial court did not treat Firestone's motion as such. The trial court dismissed Gatliff's complaint and ordered the parties to arbitration pursuant to Section 4 of the FAA, and thus our review is limited to the order compelling arbitration and dismissing the complaint.
3. Kentucky Revised Statutes.
4. See Mason v. BFS Diversified Prods., LLC, 2006 WL 1007269, at *4 (E.D. Ky. Apr. 13, 2006) (compelling arbitration under the 1995 Plan pursuant to the FAA and dismissing the complaint).


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