Bridgestone Americas Tire Operations, LLC v. Adams

Citation: 264 So. 3d 833Docket: 1160877

Court: Supreme Court of Alabama; March 16, 2018; Alabama; State Supreme Court

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Bridgestone Americas Tire Operations, LLC, d/b/a GCR Tires Service, is appealing a Tuscaloosa Circuit Court judgment that denied its motion to compel arbitration regarding an employment dispute with Ottis Adams. Adams worked as a sales representative for Bridgestone or a related entity from May 2006 until August 2016, but there is ambiguity about which entity hired him. Bridgestone's submissions imply it hired Adams, while Adams claims he was employed by BFS Retail and Commercial Operations, LLC (BFS), which was affiliated with Bridgestone. Adams signed a "New Employee Agreement and Acknowledgment of the Bridgestone/Firestone, Inc. Employee Dispute Resolution Plan" (EDR Plan) upon hiring, agreeing to resolve disputes through arbitration as outlined in the EDR Plan, despite his contention that some claims are excluded from arbitration. After leaving Bridgestone, Adams was employed by McGriff Tire Company, Inc., where he faced allegations from Bridgestone regarding a noncompetition agreement and potential disclosures of confidential information. Following these allegations, Adams was terminated by McGriff and subsequently sued Bridgestone for interference with his business relationship and defamation. Bridgestone initially did not mention arbitration in its response or counterclaim but later filed a motion to compel arbitration based on the EDR Plan. The trial court's denial of this motion was reversed by the appellate court.

Bridgestone's motion to compel arbitration was denied by the trial court, leading to an appeal by Bridgestone. After the appeal, Adams attempted to continue discovery, prompting Bridgestone to seek a stay on further discovery, which the trial court also denied. The appellate court reviews the denial of a motion to compel arbitration de novo, requiring the party seeking arbitration to establish the existence of an arbitration contract and its applicability to interstate commerce. Once a motion is supported, the burden shifts to the non-movant to challenge the arbitration agreement's validity.

The EDR Plan, which contains an arbitration provision applicable to disputes between Adams and BFS, is central to the case. Adams contends that since he was employed by Bridgestone at the time of his termination, the arbitration provision does not apply to him regarding Bridgestone. However, the agreement explicitly states that disputes covered by the EDR Plan must be submitted to mediation and arbitration, and Adams had agreed to be bound by its terms. The plan was reviewed by Adams before signing, and it applies to all disputes, not just those with BFS.

The EDR Plan defines "Employee" broadly, encompassing applicants, current, and former employees, and "Company" includes BFS and its affiliated entities. Evidence presented indicates that Bridgestone is encompassed within the definition of "Company" as used in the EDR Plan, thus establishing that Adams agreed to arbitrate disputes with Bridgestone under the EDR Plan's terms. In cases of ambiguity regarding arbitration clauses, federal policy favors resolving such ambiguities in favor of arbitration. Consequently, the court concludes that Adams must resolve disputes with Bridgestone according to the EDR Plan.

Bridgestone may enforce the arbitration agreement outlined in the EDR Plan, even if it is not a signatory, based on third-party-beneficiary principles established in *Ex parte Stamey*. The EDR Plan serves as the exclusive method for resolving disputes, which are broadly defined to include claims related to employment and various torts. Adams alleges that Bridgestone accused him of breaching a noncompetition agreement and threatened repercussions against McGriff if Adams was not terminated, claiming defamation and interference with business relations. While Adams acknowledges that his claims would generally fall under the arbitration provision of the EDR Plan, he cites an exclusion for claims related to trade secret violations and noncompetition agreements to argue that his claims are not subject to arbitration. However, the court finds the exclusion ambiguous regarding whether it applies solely to claims alleging breaches or also to claims for damages based on false accusations of such breaches. The principle of resolving ambiguities in favor of arbitration, as noted in *SSC Selma Operating Co. v. Fikes*, suggests that Adams's claims may still be subject to arbitration despite his assertions.

The Court in SSC Selma determined that the arbitration agreement excluded disputes governed by statute that are not subject to a jury trial, such as workers' compensation claims. However, it also emphasized that any ambiguity regarding the arbitration clause should be resolved in favor of arbitration. In the present case, the exclusion is similarly ambiguous, leading to the conclusion that Adams's claims are subject to arbitration. 

Adams contends that Bridgestone waived its right to arbitrate by engaging in litigation, which is subject to de novo review. Under Alabama law, a party may waive the right to arbitration if it substantially engages in litigation and prejudices the opposing party. The determination of waiver is case-specific, with no rigid rules. There is a presumption against finding waiver, placing a heavy burden on the party asserting it.

Adams acknowledges that claims of waiver due to litigation participation are disfavored. Bridgestone filed an answer and counterclaim three months prior to its motion to compel arbitration and responded to Adams's discovery requests before seeking arbitration. However, merely participating in litigation does not equate to waiver. Adams failed to show that Bridgestone's actions constituted a substantial invocation of the litigation process that prejudiced him. Furthermore, after the trial court denied Bridgestone's motion to compel arbitration, Adams indicated that continuing discovery would expedite arbitration if the judgment were reversed. As a result, Adams cannot argue that being required to arbitrate after participating in discovery would cause him significant prejudice.

Bridgestone's motion to compel arbitration was erroneously denied by the trial court. The parties engaged in mediation, which Adams termed "court-approved," but Adams failed to prove that this participation indicated Bridgestone's intent to relinquish its arbitration rights under the EDR Plan, which mandates mediation before arbitration if mediation fails. The court found that Bridgestone's counterclaims fall under the EDR Plan and are not exempt from arbitration. Adams' reliance on Porter v. Williamson is misplaced, as that case involved a specific exclusion from arbitration not present here. Additionally, Bridgestone's failure to mention arbitration in its initial answer does not constitute a waiver of its rights. Actions taken by Bridgestone's attorney and the serving of nonparty subpoenas did not substantially invoke the litigation process to suggest waiver. Adams' claims of potential prejudice due to the perceived unfavorable terms of the EDR Plan do not affect the question of waiver. The judgment is reversed and the case is remanded for proceedings aligned with this opinion.