Vanhorn v. Locklear Automotive Group, Inc.
MEMORANDUM OPINION. Signed by Judge James H Hancock on 7/22/2015. (JLC)
2015 Jul-22 AM 09:41
U.S. DISTRICT COURT
N.D. OF ALABAMA
IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ALABAMA
The court has before it the June 17, 2015 Motion (Doc. #3) to Dismiss Without
Prejudice, Or, In the Alternative Motion to Stay Action and To Compel Arbitration
filed by Defendant Locklear Automotive Group, Inc. Pursuant to the court’s June 18,
2015 order (Doc. # 4), Plaintiff filed a Response (Doc. #5) in Opposition on July 2,
2015, and Defendant filed a Reply (Doc. #6) on July 8, 2015. The Motion (Doc. #3)
is now under submission, without oral argument, and due to be granted for the
A. Procedural History
Plaintiff filed the instant Complaint (Doc. #1) on March 19, 2015, alleging
violations of 42 U.S.C. § 1981 and Title VII of the Civil Rights Act of 1964, as
amended, 42 U.S.C. §§ 2000e et seq.
Specifically, Vanhorn alleges that his
employment with Locklear Automotive was discriminated against and ultimately
terminated because of his race, African American. (See generally Compl.) On June
17, 2015, Defendant filed a Motion (Doc. #3) to Dismiss Without Prejudice, Or, In
the Alternative Motion to Stay Action and To Compel Arbitration. The Motion, as
supported by the accompanying Memorandum of Law, asserts that Plaintiff signed
an Arbitration Agreement whereby he agreed that any dispute relating to his
employment would be resolved through arbitration. (See Exh. A to Doc. #3.)
B. Arbitration Agreement
At the inception of his employment with Locklear Automotive, on September
16, 2013, Vanhorn
and Defendant mutually executed a written Arbitration
Agreement (the “Agreement”). (Exh. A to Doc. #3.) The Agreement provides:
[T]he Employer and Employee mutually agree that all
disputes not barred by applicable statutes of limitations,
resulting from or arising out of said employment (including
but not limited to . . . the benefits and conditions of
employment . . . ; the relationship between the Employer
and the Employee and other Employees of the Employer;
the working conditions while employed; the terms, manner
and conditions of termination (voluntary or involuntary);
the Employer’s compliance with any state and/or federal
employment and civil rights rules, regulations and laws . .
.) shall be submitted to BINDING ARBITRATION,
pursuant to the provisions of 9 U.S.C. Section 1, et seq.
and according to the Commercial Rules of the American
Arbitration Association then exiting in the County where
the Employer maintains its principal place of business . . .
(Exh. A. to Doc. #3) (emphasis in original.)
Defendant’s Motion (Doc. #3) to Compel Arbitration asserts the following
grounds for ordering the case to proceed under the terms of the Agreement: (1) that
the Federal Arbitration Act (“FAA”) governs the case; (2) that the Agreement is valid
and binding; and (3) that Plaintiff’s claims are within the scope of the Agreement.
(Doc. #3 at 2-6). Plaintiff opposes the motion to compel arbitration and argues that
the Agreement is unenforceable because it is unconscionable. (See Doc. #5 at 2-3).
The court agrees with Defendant for the following reasons.
The Federal Arbitration Act Governs the Case
There is no dispute that the arbitration agreement in this case is subject to the
Federal Arbitration Act, 9 U.S.C. § 1 et seq. (“FAA”). (See generally Doc. #5 at 4).
The FAA carries with it certain standards applicable to this court’s review of the
“In enacting the FAA, Congress demonstrated a ‘liberal federal policy favoring
arbitration agreements.’” MS Dealer Serv. Corp. v. Franklin, 177 F.3d 942, 947 (11th
Cir. 1999) (citation omitted). As such, “questions of arbitrability must be addressed
with a healthy regard for the federal policy favoring arbitration.” Franklin, 177 F.3d
at 947. “By its terms, the Act leaves no place for the exercise of discretion by a
district court, but instead mandates that district courts shall direct the parties to
proceed to arbitration on issues as to which an arbitration agreement has been
signed.” Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218 (1985) (emphasis in
original). Arbitration “should not be denied unless it may be said with positive
assurance that the arbitration clause is not susceptible of an interpretation that covers
the asserted dispute.” AT&T Techs., Inc. v. Communications Workers of America,
475 U.S. 643, 650 (1986). Pursuant to the FAA, a claim is arbitrable if the following
three criteria are satisfied: (1) there is a valid agreement to arbitrate; (2) the claim
falls within the scope of the agreement to arbitrate; and (3) the claim, if a statutory
one, must not be one which the legislative body enacting it intended to be precluded
from arbitration. See Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 26
(1991). Here, all three criteria are satisfied, and the claim is therefore arbitrable, for
the following reasons.
Valid Agreement to Arbitrate
Where the FAA applies, the district court’s next step is to determine whether
a valid agreement to arbitrate exists. Prima Paint Corp. v. Flood & Conklin, 388 U.S.
395 (1967). Judicial determinations on the validity of an agreement to arbitrate are
to be decided as a matter of contract. See AT&T Techs., Inc. v. Communs. Workers
of Am., 475 U.S. 643, 648-649 (1986). Under Alabama law, “[t]he elements of a
valid contract include: an offer and an acceptance, consideration, and mutual assent
to terms essential to the formation of a contract.” Shaffer v. Regions Financial
Corp., 29 So.3d 872, 880 (Ala. 2009) (citations and internal quotations omitted). The
burden is on the party opposing arbitration to proffer evidence demonstrating that the
agreement is invalid. Gilmer, 500 U.S. at 26.
When he was hired by Defendant, Plaintiff signed the above-quoted Arbitration
Agreement. Plaintiff was required to sign the Agreement as a condition of his offer
of employment, and she was an at-will employee of Defendant. Plaintiff’s at-will
employment establishes the acceptance and consideration necessary to form a binding
contract. See Maeriquest Mortg. Co. v. Bentley, 851 So.2d 458, 464 (Ala. 2002).
Therefore, under Alabama law, the Agreement was valid and binding.
Plaintiff’s Claim Are Within the Scope of the Agreement
Under the Agreement, Plaintiff agreed to arbitrate “all disputes . . . resulting
from or arising out of said employment (including but not limited to . . . the benefits
and conditions of employment . . . ; the relationship between the Employer and the
Employee and other Employees of the Employer; the working conditions while
employed; the terms, manner and conditions of termination (voluntary or
involuntary); the Employer’s compliance with any state and/or federal employment
and civil rights rules, regulations and laws “all claims . . . which arise out of or are
related in any way to the employment relationship . . . .” (Def. Exh. A.) Plaintiff’s
Complaint states a claim for a violation of 42 U.S.C. § 1981 and Title VII based on
alleged discrimination during his employment and the termination of his employment
because of his race. Such claims clearly “arise out of” and are “related to” his
employment relationship with Defendant. As such, they fall within the scope of the
Discrimination Claims are Arbitrable Statutory Claims
The last issue the court must decide is whether the statutory claims involve
rights which Congress did not intend to be subject to arbitration. See Gilmer, 500
U.S. at 26. The burden is on Plaintiff to prove that the legislature intended to
preclude a waiver of judicial remedies for the statutory right asserted. Id.
Case law clearly establishes that claims arising under the federal discrimination
statutes are subject to arbitration. See id. at 29-30 (ADEA claims are arbitrable);
Bender v. A/G/ Edwards & Sons, Inc., 971 F.2d 698, 700 (11th Cir. 1992) (Title VII
claims are arbitrable); Kelly v. UHC Mgmt. Co., 967 F. Supp. 1240, 1250 (N.D. Ala.
1997) (Section 1981 claims are subject to arbitration with a valid agreement to
arbitrate). The well-established case law precludes Plaintiff from successfully
arguing that the legislature intended to preclude a waiver of judicial remedies for the
statutory rights asserted here.
B. The Arbitration Agreement is not Unconscionable
Under Alabama law, “there is nothing inherently unfair or oppressive about
arbitration clauses . . . and arbitration agreements are not in themselves
unconscionable.” Ryan's Family Steakhouse, Inc. v. Kilpatric, 966 So.2d 273,
284–85 (Ala.Civ.App. 2006) (internal quotations and citations omitted); see also
Sloan Southern Homes, LLC v. McQueen, 955 So.2d 401, 404 (Ala. 2006). This is
equally true in employment cases, where courts have stressed that “[m]ere inequality
in bargaining power ... is not a sufficient reason to hold that arbitration agreements
are never enforceable in the employment context.” Service Corp. Int’l v. Fulmer,
883 So.2d 621, 633 n.15 (Ala. 2003). An unconscionable contractual provision is one
“such as no man in his sense and not under delusion would make on the one hand,
and as no honest and fair man would accept on the other.” Ryan's, 966 So.2d at
284–85 (citations omitted).
“Under Alabama law, unconscionability is an affirmative defense to the
enforcement of a contract, and the party asserting that defense bears the burden of
proving it by substantial evidence.” Bess v. Check Express, 294 F.3d 1298, 1306–07
(11th Cir. 2002). The Alabama Supreme Court has enumerated the two essential
elements of unconscionability: “(1) terms that are grossly favorable1 to a party that
has (2) overwhelming bargaining power.” American Gen. Fin., Inc. v. Branch, 793
So.2d 738, 748 (Ala. 2000).
More generally, Alabama courts require parties
objecting to arbitration clauses on unconscionability grounds to prove both
procedural unconscionability, that the imposed-upon party lacked meaningful choice
about whether and how to enter into the transaction, and substantive
unconscionability, that the contract terms are unreasonably favorable to the more
powerful party. See Blue Cross Blue Shield of Alabama v. Rigas, 923 So.2d 1077,
1086-87 (Ala. 2005).
On the issue of substantive unfairness, there is no legal or factual basis to
establish that the Arbitration Agreement’s terms are grossly unfavorable to Plaintiff.
Plaintiff does not identify any particular aspect of the Agreement that he believes to
be oppressive,2 but, relying on American General Finance, Inc. v. Branch, 793 So.2d
“To satisfy the grossly favorable standard, courts look to whether the agreement
includes (a) terms that impair the integrity of the bargaining process or otherwise contravene the
public interest or public policy, (b) terms that would impermissibly alter fundamental legal
duties, (c) terms that seek to negate the reasonable expectations of the nondrafting party, and (d)
unreasonably and unexpectedly harsh terms having to do with central aspects of the transaction.”
Patriot Mfg., Inc. v. Dixon, 399 F.Supp.2d 1298, 1311 (S.D.Ala. 2005).
Plaintiff’s argument regarding the exemption of Defendant from the duty to arbitrate
claims under $10,000 in the District Courts of Alabama is mistaken. The Agreement clearly
allows both parties to file in the District Courts of Alabama if the claim does not exceed $10,000.
(See Exh. A to Doc. #3.)
738 (Ala. 2000), argues generally that the Agreement is over broad.
The mere fact that an arbitration is broad does not require a court to conclude
that its terms are necessarily grossly favorable to one particular party under Alabama
law. See Leeman. v. Cook’s Pest Control, Inc., 902 So. 2d 641, 652 (Ala. 2004).
“An arbitration provision constitutes an agreement between the parties to submit their
disputes to arbitration, as opposed to litigation. It is only natural that, pursuant to that
preference, an arbitration provision be designed to actually cover many potential
disputes between the parties, not just some disputes.” Id. at 652-53. Further, with
regard to Branch, the Alabama Supreme Court explained:
[W]hile our decision in Branch considered the breadth of
the arbitration provision as an indicium of
unconscionability, this Court has subsequently noted that
our consideration of that factor in Branch also took into
account numerous other factors: . . . this Court did not rely
solely on the breadth of the arbitration clause, rather, it
noted that there were several indicia that the provisions of
the contract were ‘so grossly favorable as to pass the first
prong of the unconscionability test’. The Court identified
‘the breadth of the clause,’ ‘the provision purporting to
invest the arbitrator with the threshold issues of
arbitrability,’ ‘the provision exempting the Lenders from
the duty to arbitrate and expressly reserving for them the
right to try to a jury their claims against Branch up to
$10,000,’ and the ‘provision purporting to limit the right of
the arbitrator to award an amount exceeding five times the
amount of economic loss.’
Additionally, Plaintiff has not demonstrated that the Defendant had
overwhelming bargaining power.
There is no evidence before the court that
Defendant placed this agreement before the Plaintiff on a take-it-or-leave-it basis,
threatened to fire him if he refused to sign the agreement, forced him to sign the
agreement on the spot or forbade him from reviewing the agreement with counsel or
anyone else he saw fit.3 Instead, Plaintiff relies on “unabashed conjecture” and selfserving statements that the Agreement was a transaction involving “man power for
pay”, that he was required to sign it on a take-it-or-leave it basis and was not given
a change to negotiate or seek advice from counsel. Unsupported allegations in a brief
do not amount to evidence of a lack of meaningful choice. See Ryan’s Family
Steakhouse, Inc., 966 So. 2d at 285-86 (rejecting employee’s argument that arbitration
agreement was procedurally unconscionable where employee “offered no evidence
indicating that she lacked a meaningful choice in signing the arbitration agreement
or that Ryan’s exercised overwhelming bargaining power.”)
Instead, Plaintiff has “provided no evidence showing how h[is] situation is
different from any other contract of at-will employment.” Potts v. Baptist Health
Plaintiff “does not submit any evidence that [h]e attempted to negotiate the terms of
h[is] agreement . . . or tried to find . . . [employment] without an arbitration clause.” Powell v.
AT&T Mobility, LLC, 742 F. Supp.2d 1285, 1290 (N.D. Ala. 2010). “It is difficult to conclude
that a plaintiff lacks a meaningful choice - and that this lack of choice could render the arbitration
provision unconscionable - when in fact they never undertook to actually make a choice.” Id.
System, Inc., 853 SO. 2d 194, 206 (Ala. 2002). “T]he possibility of termination
flowing from [a plaintiff’s] refusal to sign . . . is not, in and of itself, unconscionable”
and “Alabama law does not allow a mere showing of financial hardship to invalidate
an arbitration agreement.” Id.
For the foregoing reasons, the court finds that Plaintiff has failed to meet his
burden of establishing the affirmative defense that the Arbitration Agreement in
question is unconscionable.
The Motion (Doc. # 3) to Compel Arbitration is GRANTED. A separate order
will be entered dismissing the case without prejudice.
DONE this the
day of July, 2015.
SENIOR UNITED STATES DISTRICT JUDGE
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