Underwood v. Chapman Bell Road Imports LLC

Filing 15

ORDER Defendant's motion to compel arbitration 12 is granted. Plaintiff's complaint 1 is dismisssed. The Clerk is directed to terminate this action. Signed by Judge David G Campbell on 3/15/13. (TLJ)

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1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 Roxann Underwood, a married woman, Plaintiff, 10 11 ORDER v. 12 No. CV-12-1835-PHX-DGC Chapman Bell Road Imports, LLC, an Arizona limited liability company, 13 Defendant. 14 15 On August 29, 2012, Plaintiff Roxann Underwood filed a complaint against 16 Defendant Chapman Bell Road Imports, LLC, alleging violations of Title VII of the Civil 17 Rights Act. Doc. 1. On February 5, 2013, Defendant filed a motion to compel arbitration 18 (Doc. 12), as allowed by the Federal Arbitration Act. 9 U.S.C. § 4 (“A party aggrieved 19 by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement 20 for arbitration may petition any United States district court . . . for an order directing that 21 such arbitration proceed.”). The motion has been fully briefed and no party has requested 22 oral argument. For the following reasons, the motion will be granted. 23 I. Federal Arbitration Act. 24 The Federal Arbitration Act (“FAA”) applies to contracts “evidencing a 25 transaction involving commerce.” 9 U.S.C. § 2. This includes contracts for employment. 26 Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 113–15 (2001). The FAA states that 27 written agreements to arbitrate disputes “shall be valid, irrevocable, and enforceable, save 28 upon such grounds as exist at law or in equity for the revocation of any contract.” 9 1 U.S.C. § 2. Absent a valid contractual defense, the FAA “leaves no place for the exercise 2 of discretion by a district court, but instead mandates that district courts shall direct the 3 parties to proceed to arbitration on issues as to which an arbitration agreement has been 4 signed.” Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218 (1985). The district 5 court's role under the FAA is “limited to determining (1) whether a valid agreement to 6 arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute at 7 issue.” Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000) 8 (citing 9 U.S.C. § 4). 9 On February 15, 2011, Plaintiff, while working for Defendant, signed a form 10 entitled “Member Acknowledgment and Agreement” (“Agreement”). Doc. 12-1 at 2. 11 The Agreement provided that any legal claim relating to Plaintiff’s work for Defendant 12 would be “submitted to and determined exclusively by binding arbitration under the 13 Federal Arbitration Act.” Id. The Agreement to arbitrate explicitly included any claim 14 arising under Title VII of the Civil Rights Act. Id. Plaintiff argues that the Agreement is 15 unenforceable because it is both procedurally and substantively unconscionable. Doc. 13. 16 II. Enforceability of the Agreement. 17 A. Procedural Unconscionability. 18 Plaintiff argues that the Agreement is procedurally unconscionable under Arizona 19 law. Doc. 13 at 3. Procedural unconscionability is “concerned with ‘unfair surprise,’ 20 fine print clauses, mistakes or ignorance of important facts . . . that mean bargaining did 21 not proceed as it should.” Maxwell v. Fid. Fin. Servs., Inc., 907 P.2d 51, 57–58 (Ariz. 22 1995). The Court considers various factors affecting “the real and voluntary meeting of 23 the minds of the contracting party: age, education, intelligence, business acumen and 24 experience, relative bargaining power, who drafted the contract, [and] whether the terms 25 were explained to the weaker party.” Id. at 57 (quoting Johnson v. Mobil Oil Corp., 415 26 F. Supp. 264, 268 (E.D. Mich. 1976)). 27 procedural unconscionability: she has a limited education and lacks business experience; 28 Defendant gave her the Agreement to sign in the middle of a busy work day; Defendant Plaintiff highlights various facts showing -2- 1 did not explain the Agreement; and Plaintiff did not understand the concept of arbitration 2 at the time. Doc. 13 at 4. Strongly militating against Plaintiff’s arguments is the fact that 3 she signed similar agreements with Defendant on two previous occasions. Doc. 14-1 at 4 5, 8. In all of these agreements, the sentence by which Plaintiff gave up her right to a 5 jury trial and agreed to arbitration was in bold. Id. at 2, 5, 8. Moreover, the terms of the 6 Agreement are not unusual for employment contracts, and this Court has not found 7 procedural unconscionability in similar situations. See, e.g., Smith v. Autonation, Inc., 8 No. CV-10-987-PHX-DGC, 2011 WL 380517, at *2 (D. Ariz. Feb. 2, 2011). Therefore, 9 the Court finds that there was no procedural unconscionability. 10 B. Reasonable Expectations. 11 Although not explicitly raised by Plaintiff, the reasonable expectations doctrine is 12 more appropriate for determining the enforceability of standardized agreements. See 13 Darner Motor Sales, Inc. v. Universal Underwriters Ins. Co., 682 P.2d 388, 396–97 14 (Ariz. 1984). 15 unconscionability. See Maxwell, 907 P.2d at 57. Under this doctrine, the Agreement is 16 “presumptively valid and enforceable, whether or not [Plaintiff] read it or appreciated its 17 full effect, unless the reasonable-expectations limitation . . . applies.” Harrington v. 18 Pulte Home Corp., 119 P.3d 1044, 1050 (Ariz. Ct. App. 2005); see Darner, 682 P.2d at 19 396. Terms of an agreement “are beyond the range of reasonable expectation if one party 20 to the contract ‘has reason to believe that the other party would not have accepted the 21 agreement if [she] had known that the agreement contained the particular term.’” 22 Harrington, 119 P.3d at 1050 (quoting Darner, 682 P.2d at 396–97). 23 Agreement does not contain bizarre or oppressive terms that show Plaintiff would not 24 have signed had she understood the Agreement. Doc. 12-1. Moreover, the fact that 25 Plaintiff signed similar agreements with Defendant on two other occasions and those 26 contracts, like the Agreement, emphasized that she was waiving her right to a jury trial 27 (Doc. 14-1 at 5, 8), strongly suggest that the Agreement did not defy her reasonable 28 expectations. This doctrine is similar to, although distinct from, procedural -3- Here, the 1 C. Substantive Unconscionability. 2 Plaintiff argues that the Agreement is substantively unconscionable because it “is 3 unconscionable for a large car dealership with substantial financial resources to have 4 Plaintiff sign an arbitration agreement without any agreement as to how these costs are to 5 be paid.” Doc. 13 at 4. Plaintiff emphasizes that she is unemployed and might be unable 6 to pay for arbitration. Id. “[W]here, as here, a party seeks to invalidate an arbitration 7 agreement on the ground that arbitration would be prohibitively expensive, that party 8 bears the burden of showing the likelihood of incurring such costs.” Green Tree Fin. 9 Corp.-Ala. v. Randolph, 531 U.S. 79, 92 (2000). Plaintiff has not shown a likelihood of 10 incurring such costs, and the mere risk of such costs is insufficient to invalidate the 11 Agreement. Id. at 91; see also Harrington, 119 P.3d at 1055–56. Therefore, the Court 12 finds that the Agreement is not substantively unconscionable. 13 D. Superseded Terms. 14 Plaintiff also argues that the Agreement erroneously stated that the procedures of 15 the Arizona Arbitration Act (“AAA”) would govern the arbitration. Doc. 13 at 2. In fact, 16 as Plaintiff indicates, Arizona’s Revised Uniform Arbitration Act (“RUAA”) had 17 superseded the AAA by the time Plaintiff signed the Agreement. See Ariz. Rev. Stat. 18 § 12-3003(A)(3) (stating that on or after January 1, 2011, the RUAA “governs an 19 agreement to arbitrate whenever made”). Plaintiff does not explain how this fact makes 20 the Agreement unenforceable, beyond saying that these “are important issues which may 21 substantially impact Plaintiff’s claim.” 22 differences between the RUAA and the AAA that Plaintiff cites, however, none is so 23 significant or unfavorable as to unfairly surprise or prejudice Plaintiff.1 Therefore, the 24 Court finds that this provision does not render the Agreement unenforceable. Doc. 13 at 3. Of the various procedural 25 1 26 27 28 For example, the RUAA prescribes the procedure for initiating an arbitration, while the AAA does not; the RUAA requires an arbitrator to disclose any facts that might affect impartiality, while the AAA does not; the RUAA allows arbitrators to award punitive damages, while the AAA does not; and the RUAA allows an arbitrator to be appointed by a court of competent jurisdiction in this state, while the AAA requires that the appointment be made by an Arizona Superior Court. Doc. 13 at 2–3. -4- 1 III. Conclusion 2 Given the “liberal federal policy favoring arbitration,” Lozano v. AT & T Wireless 3 Services, Inc., 504 F.3d 718, 725 (9th Cir. 2007), the Court will compel arbitration and 4 dismiss the complaint. See Kam–Ko Bio-Pharm Trading Co., Ltd.-Austl. v. Mayne 5 Pharma (USA), Inc., 560 F.3d 935, 940 (9th Cir. 2009) (finding that the court has 6 discretion to dismiss or stay the action to allow arbitration to proceed); Simula, Inc. v. 7 Autoliv, Inc., 175 F.3d 716, 726 (9th Cir. 1999) (affirming dismissal to allow arbitration); 8 Sparling v. Hoffman Constr. Co., 864 F.2d 635, 638 (9th Cir. 1988) (same). 9 IT IS ORDERED: 10 1. Defendant’s motion to compel arbitration (Doc. 12) is granted. 11 2. Plaintiff’s complaint (Doc. 1) is dismissed. 12 3. The Clerk is directed to terminate this action. 13 Dated this 15th day of March, 2013. 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -5-

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