United States District Court, D. South Dakota, Southern Division
LAWRENCE L. PIERSOL UNITED STATES DISTRICT JUDGE
before the Court is Defendant American Family Life Assurance
Company's (AFLAC's) Motion to Compel Arbitration and
Dismiss or Stay the Proceedings, Doc. 12, filed August 20,
2018. Plaintiff has not responded.
Nancy Claussen is a former independent contractor, referred
to as an "associate," with AFLAC, who entered into
an Associate's Agreement with AFLAC (Agreement) in
January 2003 to work as an AFLAC sales associate. On July 25,
2018, Plaintiff filed the instant complaint alleging one
count of breach of contract and one count of "bad
faith," with the latter including allegations of
tortious interference, breach of the duty of good faith and
fair dealing, and fraud and deceit. Plaintiff asserts that
Plaintiff had an ongoing disagreement with her Supervisor
which ultimately resulted in Plaintiff terminating her work
with AFLAC. Plaintiff states that, contrary to their
agreement and to company custom, Defendant ended her renewal
premiums. Plaintiff also claims that her former Supervisor is
interfering with her ability to work for AFLAC in a different
territory. Defendant moves to compel arbitration and dismiss
or stay the proceedings, arguing that this dispute falls
within the scope of the Agreement's arbitration
provision., STANDARD OF REVIEW
Federal Arbitration Act does not identify what evidentiary
standard a party seeking to avoid arbitration must meet.
Neb. Mack Co. v. Cargotec Solutions, LLC, 762 F.3d
737, 741-42 (8th Cir. 2014); see also Henry Techs.
Holdings, LLC v. Giordano, 2014 WL 3845870, at *3 (W.D.
Wis. Aug. 5, 2014) ("The FAA does not define a standard
for a district court's determination of a motion to
compel arbitration[.]"). Courts that have addressed the
issue have used a summary judgment standard. Id.; see
also Schwalm v. TCF Nat'l Bank, 226 F.Supp.3d 937,
940 (D.S.D. 2016); Technetronics, Inc. v. Leybold-Graeus
GmbH, 1993 WL 197028, at *2 (E.D. Pa. June 9, 1993)
("[I]n a motion to stay proceedings and/or compel
arbitration, the appropriate standard of review for the
district court is the same standard used in resolving summary
judgment motions pursuant to [Federal Rule of Civil
Procedure] 56(c)."). Therefore, the court may consider
all evidence in the record, viewing that evidence in the
light most favorable to the non-moving party. Id.;
see also Lee v. Credit Acceptance Corp., 2015 WL
717637, at *1 (W.D. Wis. Nov. 12, 2015).
state and federal governments have strong policies favoring
arbitration. See Green Tree Fin. Corp.-Alabama
v. Randolph, 531 U.S. 79, 89-90 (2000); Rossi Fine
Jewelers, Inc. v. Gunderson, 648 N.W.2d 812, 814 (S.D.
2002) ("We have consistently favored the resolution of
disputes by arbitration.") Questions of arbitration are
governed by the Federal Arbitration Act (or "FAA"),
9 U.S.C. § 1 et seq. The FAA was enacted to
"reverse the longstanding judicial hostility to
arbitration agreements" and treat arbitration agreements
like any other contract. Green Tree, 531 U.S.at89.
South Dakota has adopted the Uniform Arbitration Act. See
SD.C.L. 21-25A-1, which provides:
A written agreement to submit any existing controversy to
arbitration or a provision in a written contract to submit to
arbitration any controversy thereafter arising between the
parties is valid, enforceable and irrevocable, save upon such
grounds as exist at law or in equity for the revocation of
any contract. This chapter also applies to arbitration
agreements between employers and employees or between their
S.D.C.L. § 21-25A-1.
general, the FAA "provides that written agreements to
arbitrate controversies arising out of an existing contract
'shall be valid, irrevocable, and enforceable, save upon
such grounds as exist at law or in equity for the revocation
of any contract.'" Dean Witter Reynolds, Inc. v.
Byrd, 470 U.S. 213, 218 (1985) (quoting 9 U.S.C. §
2). The FAA "mandates that district courts shall direct
the parties to proceed to arbitration on issues as to which
an arbitration agreement has been signed." Id.
(citing 9 U.S.C. §§ 3, 4). The "court's
role under the FAA is therefore limited to determining (1)
whether a valid agreement to arbitration exists and, if it
does (2) whether the agreement encompasses the dispute.
Pro Tech Indus., Inc. v. URS Corp., 377 F.3d 868,
871 (8th Cir. 2004).
there is a binding arbitration agreement is "an issue
for judicial determination unless the parties clearly and
unmistakably provide otherwise." Howsam v. Dean
Witter Reynolds, Inc. , 537 U.S. 79, 83 (2002) (quoting
AT&T Tech., Inc. v. Commc'ns Workers, 475
U.S. 643, 649 (1986)). In examining whether the parties
agreed to arbitrate, courts must ordinarily apply
"state-law principles that govern the formation of
contracts." First Options of Chicago, Inc. v.
Kaplan, 514 U.S. 938, 944 (1995). In applying state law,
however, "due regard must be given to the federal policy
favoring arbitration, and ambiguities as to the scope of the
arbitration clause itself must be resolved in favor of
arbitration." Volt Info. Sciences, Inc. v. Board of
Trustees of Leland Stanford Jr. Univ., 489 U.S. 468,
present case, the question whether the parties formed a valid
agreement to arbitrate is governed by the contract law of
South Dakota. South Dakota courts apply ordinary
contract principles to arbitration agreements. Masteller
v. Champion Home Builders, Co., 723 N.W.2d 561, 564
(S.D. 2006). The required elements to form a valid contract
in South Dakota are (1) parties capable of contracting; (2)
their consent; (3) a lawful purpose; and (4) sufficient
consideration. 'Setliff v. Akins, 616 N.W.2d 878
(S.D. 2000) (citing S.D.C.L. § 53-1-2).
In determining whether claims come within the scope of an
arbitration provision, the district court does not reach the
potential merits of any claim but construes the clause
liberally, resolving any doubts in favor of arbitration and
granting the motion unless it may be said with positive
assurance that the arbitration clause is not susceptible of
an interpretation that covers the asserted dispute.
3M Co. v. Amtex Sec, Inc.,
542 F.3d 1193, 1199 (8th
Cir. 2008) (internal citations omitted). The employment
agreement contains a broad arbitration clause that applies to
"any dispute arising under or related in any way to this
Agreement ("Dispute"), to the maximum extent
allowed under the Federal Arbitration Act
("FAA")." See Agreement at ¶
10.1. "Disputes" are defined by the Agreement to
include "any dispute arising under or relating in any
way to this Agreement." Id. Specifically, the
provision includes "any Dispute arising under federal,
state or local laws, statutes or ordinances (for example,
statutes prohibiting anti-competitive conduct, unfair
business practices and discrimination or harassment...) or
arising under federal or ...