HOOTERS OF AMERICA, INC. V. PHILLIPS
39 F.Supp.2d 582 (1998)
NATURE OF THE CASE: Hooters (P) filed a diversity action seeking a judgment that its
arbitration clause was valid and to enjoin Phillips (D) from filing a claim against it.
FACTS: P filed a complaint seeking a declaratory judgment that the arbitration agreements
signed by Phillips were valid and enforceable. D denied she had entered into an enforceable
arbitration agreement covering her dispute with P. D claimed that the agreements were
neither knowingly nor voluntarily entered into, and were unconscionable adhesion contracts
violative of public policy. D also alleged that the procedures deprived her of due process,
substantive protection against sexual harassment, and statutory remedies under Title VII of
the Civil Rights Act of 1964, 42 U.S.C. 2000e et seq. D counterclaimed. D sought damages
and injunctive relief against P for violations of Title VII, based on the alleged hostile
environment and harassing behavior, culminating in a constructive discharge. While D was
bartending at P, Gerald Brooks allegedly grabbed and slapped her buttocks while in the
presence of P management and customers. D responded that Brooks should not touch her, to
which he allegedly responded that 'he would cram her shorts down her face.' Management
witnessing the event advised her that she should let the matter go because nothing could be
done to correct Gerald Brooks' behavior as he was the brother of the CEO. D submitted her
written resignation citing the incident of June 19 and management's alleged failure to take
remedial action as the reason for her constructive discharge. D received her Notice of Right
to Sue from the EEOC on November 25, 1996, for her individual counterclaim and filed the
action within 90 days, on January 15, 1997. Her counterclaim for sexual harassment seeks
damages, injunctive relief, and reinstatement to a harassment-free workplace. The
counterclaim is brought on behalf of D and a proposed class known as 'Hooters Girls.' The
class counterclaim asserts that P will attempt to enforce these purportedly unfair
arbitration procedures against any class member who seeks a judicial forum for violations of
Title VII. The class counterclaim asserts four causes of action. The first claim is for a
declaratory judgment that the purported arbitration agreements deprive class members of
substantive and procedural rights under Title VII and are unenforceable. The second asserts
that promulgation of such mandatory and unfair arbitration procedures deprives the proposed
class of equal employment opportunities because of their sex, and is itself a violation of
Title VII. The third contends that Hooters has retaliated against class members who have
opposed its unlawful employment practices, in violation of 704 of Title VII, 42 U.S.C.
2000e-3. The fourth asserts that by its promulgation of such mandatory unfair arbitration
procedures, P has deprived the class members of the right to an impartial determination of a
civil action and the right to substantive remedies guaranteed by law, on account of their
sex, in violation of 706(f) & (g) of Title VII, 42 U.S.C. 2000e-5(f) & (g). D received
her Notice of Right to Sue on the arbitration issue class counterclaim involving the
arbitration agreement on January 9, 1997, which was within 90 days of the filing of the
counterclaim. P asked that the counterclaim be dismissed with prejudice, and it be awarded
costs and expenses, including attorney's fees. P argues that D knowingly and voluntarily
entered into an arbitration agreement that specifically covered sexual harassment claims and
that any lack of information regarding the Rules was D's own fault.
ISSUE:
RULE OF LAW:
HOLDING AND DECISION:
LEGAL ANALYSIS:
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