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Ashford v. PricewaterhouseCoopers, LLP

United States District Court, D. South Carolina, Columbia Division

July 18, 2018

Shannon Ashford, Plaintiff,
PricewaterhouseCoopers, LLP, Defendant.



         Through this action, Plaintiff Shannon Ashford (“Ashford”), proceeding pro se, seeks recovery from PricewaterhouseCoopers, LLP (“PwC”), for alleged retaliation and race-based discrimination in employment. See infra Factual Background (addressing Ashford's employment relationship and contracts). Ashford pursues her retaliation claim (first cause of action) under Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e, et seq. (“Title VII”). ECF No. 1-1 at 8, 9. She pursues her discrimination claim (second cause of action) under both Title VII and 42 U.S.C. § 1981 (“Section 1981”). Id. at 9.

         The matter is before the court on PwC's motion to compel arbitration and stay or dismiss the action. ECF No. 7 (“Motion to Compel”). For reasons set forth below, PwC's Motion to Compel is granted to the extent Ashford pursues her second cause of action under Section 1981. The motion is denied to the extent it seeks to compel arbitration and dismiss Ashford's first cause of action, which is pursued solely under Title VII, or second cause of action to the extent pursued under Title VII. However, due to overlapping issues, the Title VII claims are stayed until arbitration proceedings as to the Section 1981 claim are concluded.


         In accordance with 28 U.S.C. § 636(b) and Local Civil Rule 73.02 (B)(2)(g), D.S.C., this matter was referred to United States Magistrate Judge Shiva V. Hodges for pre-trial proceedings and a Report and Recommendation (“Report”). On May 22, 2018, the Magistrate Judge issued a Report recommending the Motion to Compel be granted to the extent Ashford seeks relief under Section 1981 and denied to the extent she seeks relief under Title VII. ECF No. 12. The Report further recommends the matter be stayed as to the Title VII claims pending completion of arbitration. Id.

         The first recommendation rests on two conclusions: (1) Ashford electronically signed an Employment Agreement that incorporates an Arbitration Agreement; and (2) the Arbitration Agreement mandates Ashford's Section 1981 claim be resolved by arbitration. The second recommendation rests on a conclusion the “Arbitration Agreement is unenforceable as unconscionable as to Title VII claims.” ECF No. 12 at 12, 13 (reaching same conclusion under both South Carolina and New York law).

         The recommended finding of unconscionability is based on PwC's proffered interpretation of the Arbitration Agreement's express exclusion of “[c]laims that arise under Title VII . . . unless and until federal law no longer prohibits the Firm from mandating arbitration of such claims.” See ECF No. 12 at 9 (addressing Arbitration Agreement § 1.d. (viii)) (emphasis added). PwC construes “federal law” to refer to the “Franken Amendment, ” which limits use of federal funds for certain contracts unless the contractor agrees not to require arbitration of specified claims. See infra n. 12 (quoting implementing regulations). It also construes the limiting language (“unless and until federal law no longer prohibits the Firm from mandating arbitration of such claims”) to be triggered if PwC is “no longer bound by the provisions of” the Franken Amendment because it “no longer performs the types of work that invoke [that Amendment's] prohibition on mandatory arbitration.” ECF No. 12 at 11 (quoting ECF No. 7.1 at 3, n.2).

         Addressing PwC's proposed construction, the Report concludes it would be unconscionable to allow PwC to invoke the limitation and evade the express exclusion because it was only through an interpretation stated in and a factual declaration attached to PwC's memorandum that Ashford received notice the limitation had been triggered. Id. at 11. Allowing the limitation to defeat the express exclusion under these circumstances would be unconscionable because Ashford “would not be able to independently ascertain whether a Title VII claim was covered by the Arbitration Agreement on the date she signed it, on the date it became effective, on the date she first knew of a potential Title VII claim, or any other date.” Id. at 11, 12.


         The Magistrate Judge advised the parties of the procedures and requirements for filing objections to the Report and the serious consequences if they failed to do so. PwC filed a timely objection on June 5, 2018, arguing the Report errs in recommending a finding of unconscionability and seeking dismissal in favor of arbitration as to all claims. ECF No. 16.

         Ashford did not file an objection. She, instead, filed a response to PwC's objection, arguing the court should adopt the Report in full. ECF No. 20 (filed June 12, 2018). Thus, Ashford does not object to the recommendation arbitration be compelled as to her Section 1981 claim and underlying conclusion she is bound by the Arbitration Agreement. Neither does she object to the recommendation the matter be stayed as to her Title VII claim until arbitration proceedings are concluded.


         The Magistrate Judge makes only a recommendation to this court. The recommendation has no presumptive weight, and the responsibility for making a final determination remains with the court. See Mathews v. Weber, 423 U.S. 261 (1976). The court is charged with making a de novo determination of any portion of the Magistrate Judge's Report and Recommendation to which a specific objection is made. The court may accept, reject, or modify, in whole or in part, the recommendation made by the Magistrate Judge or recommit the matter to the Magistrate Judge with instructions. See 28 U.S.C. § 636(b). In the absence of an objection, the court reviews the Report and Recommendation only for clear error. See Diamond v. Colonial Life & Accident Ins. Co., 416 F.3d 310, 315 (4th Cir. 2005) (stating that “in the absence of a timely filed objection, a district court need not conduct a de novo review, but instead must only satisfy itself that there is no clear error on the face of the record in order to accept the recommendation”) (citation omitted).


         Employment Relationship. In March 2015, Ashford accepted an offer of employment with PwC Advisory LLC.[1] PwC Advisory LLC is an entity affiliated with PwC.[2] Ashford has nonetheless alleged and PwC concedes it is Ashford's employer.[3]

         Offer Letter and Employment Agreement. The terms of Ashford's employment are addressed in both an Offer Letter and Employment Agreement. ECF No. 7-2 at 5-14. The Offer Letter states the “Employment Agreement will become effective on your first day of employment with the Firm.” Id. at 6. Ashford's employment began in April 2015. ECF No. 1-1 ¶ 8; Johnson decl. ¶ 3.

         The Employment Agreement incorporates an “arbitration agreement attached . . . as Exhibit A[, ]” and states the Arbitration Agreement “requires both you and the Firm to submit to final and binding arbitration all claims covered under the arbitration agreement.” Id. at 13. The Employment Agreement defines the “Firm” as PwC Advisory LLC. Id. at 9.[4]

         Arbitration Agreement. The Arbitration Agreement addresses “legal disputes that may arise between you and PricewaterhouseCoopers LLP, and/or any of its subsidiaries or affiliates based in the United States (collectively the ‘Firm').” Id. at 16. It defines “Covered Claims” broadly, essentially to include all disputes between the Firm and the employee except as specifically excluded in a section titled “Claims Not Subject to Arbitration.” Id. at 17. That section includes the following language:

The following types of claims are expressly excluded from the definition of Covered Claims:
* * *
(viii) Claims that arise under Title VII of the Civil Rights Act of 1964, which prohibits employment discrimination on the basis of race, color, religion, sex and national origin, unless and until federal law no longer prohibits the Firm from mandating arbitration of such claims[.]”

ECF No. 7-2 at 17 § 1.d. (viii) (emphasis added).

         Ashford's Complaint. Ashford alleges she was hired by PwC in April 2015 and “informed management of [unspecified] concerns about discrimination” in or about October 2015. ECF No. 1-1 ¶¶ 8, 9. She alleges she was subsequently denied various promotions and opportunities to fill different positions in June, July, and September of 2016, as well as in March and June of 2017. Id. ¶¶ 10-14. “Unable to have her issues and concerns addressed, ” she filed a charge of discrimination on an unspecified date and experienced further discriminatory treatment thereafter. Id. ¶¶ 15-17. Although she does not address when or how her employment ended, her damages demand indicates she was discharged from employment prior to filing this action. Id. at 8, 9 (seeking, inter alia, “backpay . . . from the date of discharge until [she] is restored to a rightful position”). Based on these factual allegations, Ashford asserts two causes of action, the first a retaliation claim under Title VII and the second a claim for disparate treatment under Section 1981 and Title VII.

         Removal and Motion to Compel. PwC removed the action to this court and promptly its Motion to Compel. In a footnote in its opening brief in support of that motion, PwC asserts Ashford's Title VII claims are subject to arbitration because the limitation on the Arbitration Agreement's exclusion of Title VII claims was never effective as to Ashford:

At the time the Arbitration Agreement was initially drafted, the Firm was subject to certain provisions of the Franken Amendment to the 2010 Department of Defense (“DOD”) Appropriations Act (“the Act”) regarding arbitration of employee claims, which prohibited the DOD from entering into non-commercial contracts in excess of $1 million with any employer that required its employees to arbitrate, inter alia, Title VII claims. 48 C.F.R. §§ 222.7402, 222.7403. Accordingly, the Arbitration Agreement excluded Title VII claims from “Covered Claims” subject to mandatory, binding arbitration, “unless and until federal law no longer prohibits the Firm from mandating arbitration of such claims.” [quoting Agreement] From the time Plaintiff's employment with PwC began, through the present, however, PwC is no longer bound by the provisions of the Franken Amendment as it no longer performs the types of work that invoke the prohibition on mandatory arbitration. [citing Johnson Declaration]. Therefore, since federal law no longer prohibits PwC from mandating arbitration of Title VII claims, those claims are subject to mandatory arbitration.

ECF No. 7-1 at 3, n.2.

         The cited Johnson Declaration states, in relevant part, as follows:

3. I understand that Shannon Ashford commenced the Action on November 29, 2017. From that date through the date of this Declaration, PwC has not been a party to any non-commercial contract with the U.S. Department of Defense in excess of $1 million that was executed on or after February 17, 2010. Moreover, PwC has not been a party ...

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