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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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Roxann Underwood, a married woman,
Plaintiff,

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ORDER

v.

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No. CV-12-1835-PHX-DGC

Chapman Bell Road Imports, LLC, an
Arizona limited liability company,

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Defendant.

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On August 29, 2012, Plaintiff Roxann Underwood filed a complaint against

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Defendant Chapman Bell Road Imports, LLC, alleging violations of Title VII of the Civil

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Rights Act. Doc. 1. On February 5, 2013, Defendant filed a motion to compel arbitration

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(Doc. 12), as allowed by the Federal Arbitration Act. 9 U.S.C. § 4 (“A party aggrieved

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by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement

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for arbitration may petition any United States district court . . . for an order directing that

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such arbitration proceed.”). The motion has been fully briefed and no party has requested

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oral argument. For the following reasons, the motion will be granted.

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I.

Federal Arbitration Act.

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The Federal Arbitration Act (“FAA”) applies to contracts “evidencing a

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transaction involving commerce.” 9 U.S.C. § 2. This includes contracts for employment.

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Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 113–15 (2001). The FAA states that

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written agreements to arbitrate disputes “shall be valid, irrevocable, and enforceable, save

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upon such grounds as exist at law or in equity for the revocation of any contract.” 9

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U.S.C. § 2. Absent a valid contractual defense, the FAA “leaves no place for the exercise

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of discretion by a district court, but instead mandates that district courts shall direct the

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parties to proceed to arbitration on issues as to which an arbitration agreement has been

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signed.” Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218 (1985). The district

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court's role under the FAA is “limited to determining (1) whether a valid agreement to

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arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute at

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issue.” Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000)

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(citing 9 U.S.C. § 4).

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On February 15, 2011, Plaintiff, while working for Defendant, signed a form

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entitled “Member Acknowledgment and Agreement” (“Agreement”). Doc. 12-1 at 2.

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The Agreement provided that any legal claim relating to Plaintiff’s work for Defendant

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would be “submitted to and determined exclusively by binding arbitration under the

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Federal Arbitration Act.” Id. The Agreement to arbitrate explicitly included any claim

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arising under Title VII of the Civil Rights Act. Id. Plaintiff argues that the Agreement is

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unenforceable because it is both procedurally and substantively unconscionable. Doc. 13.

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II.

Enforceability of the Agreement.

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A.

Procedural Unconscionability.

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Plaintiff argues that the Agreement is procedurally unconscionable under Arizona

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law. Doc. 13 at 3. Procedural unconscionability is “concerned with ‘unfair surprise,’

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fine print clauses, mistakes or ignorance of important facts . . . that mean bargaining did

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not proceed as it should.” Maxwell v. Fid. Fin. Servs., Inc., 907 P.2d 51, 57–58 (Ariz.

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1995). The Court considers various factors affecting “the real and voluntary meeting of

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the minds of the contracting party: age, education, intelligence, business acumen and

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experience, relative bargaining power, who drafted the contract, [and] whether the terms

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were explained to the weaker party.” Id. at 57 (quoting Johnson v. Mobil Oil Corp., 415

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F. Supp. 264, 268 (E.D. Mich. 1976)).

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procedural unconscionability: she has a limited education and lacks business experience;

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Defendant gave her the Agreement to sign in the middle of a busy work day; Defendant

Plaintiff highlights various facts showing

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did not explain the Agreement; and Plaintiff did not understand the concept of arbitration

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at the time. Doc. 13 at 4. Strongly militating against Plaintiff’s arguments is the fact that

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she signed similar agreements with Defendant on two previous occasions. Doc. 14-1 at

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5, 8. In all of these agreements, the sentence by which Plaintiff gave up her right to a

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jury trial and agreed to arbitration was in bold. Id. at 2, 5, 8. Moreover, the terms of the

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Agreement are not unusual for employment contracts, and this Court has not found

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procedural unconscionability in similar situations. See, e.g., Smith v. Autonation, Inc.,

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No. CV-10-987-PHX-DGC, 2011 WL 380517, at *2 (D. Ariz. Feb. 2, 2011). Therefore,

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the Court finds that there was no procedural unconscionability.

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B.

Reasonable Expectations.

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Although not explicitly raised by Plaintiff, the reasonable expectations doctrine is

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more appropriate for determining the enforceability of standardized agreements. See

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Darner Motor Sales, Inc. v. Universal Underwriters Ins. Co., 682 P.2d 388, 396–97

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(Ariz. 1984).

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unconscionability. See Maxwell, 907 P.2d at 57. Under this doctrine, the Agreement is

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“presumptively valid and enforceable, whether or not [Plaintiff] read it or appreciated its

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full effect, unless the reasonable-expectations limitation . . . applies.” Harrington v.

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Pulte Home Corp., 119 P.3d 1044, 1050 (Ariz. Ct. App. 2005); see Darner, 682 P.2d at

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396. Terms of an agreement “are beyond the range of reasonable expectation if one party

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to the contract ‘has reason to believe that the other party would not have accepted the

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agreement if [she] had known that the agreement contained the particular term.’”

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Harrington, 119 P.3d at 1050 (quoting Darner, 682 P.2d at 396–97).

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Agreement does not contain bizarre or oppressive terms that show Plaintiff would not

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have signed had she understood the Agreement. Doc. 12-1. Moreover, the fact that

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Plaintiff signed similar agreements with Defendant on two other occasions and those

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contracts, like the Agreement, emphasized that she was waiving her right to a jury trial

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(Doc. 14-1 at 5, 8), strongly suggest that the Agreement did not defy her reasonable

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expectations.

This doctrine is similar to, although distinct from, procedural

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Here, the

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C.

Substantive Unconscionability.

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Plaintiff argues that the Agreement is substantively unconscionable because it “is

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unconscionable for a large car dealership with substantial financial resources to have

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Plaintiff sign an arbitration agreement without any agreement as to how these costs are to

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be paid.” Doc. 13 at 4. Plaintiff emphasizes that she is unemployed and might be unable

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to pay for arbitration. Id. “[W]here, as here, a party seeks to invalidate an arbitration

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agreement on the ground that arbitration would be prohibitively expensive, that party

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bears the burden of showing the likelihood of incurring such costs.” Green Tree Fin.

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Corp.-Ala. v. Randolph, 531 U.S. 79, 92 (2000). Plaintiff has not shown a likelihood of

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incurring such costs, and the mere risk of such costs is insufficient to invalidate the

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Agreement. Id. at 91; see also Harrington, 119 P.3d at 1055–56. Therefore, the Court

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finds that the Agreement is not substantively unconscionable.

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D.

Superseded Terms.

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Plaintiff also argues that the Agreement erroneously stated that the procedures of

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the Arizona Arbitration Act (“AAA”) would govern the arbitration. Doc. 13 at 2. In fact,

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as Plaintiff indicates, Arizona’s Revised Uniform Arbitration Act (“RUAA”) had

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superseded the AAA by the time Plaintiff signed the Agreement. See Ariz. Rev. Stat.

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§ 12-3003(A)(3) (stating that on or after January 1, 2011, the RUAA “governs an

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agreement to arbitrate whenever made”). Plaintiff does not explain how this fact makes

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the Agreement unenforceable, beyond saying that these “are important issues which may

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substantially impact Plaintiff’s claim.”

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differences between the RUAA and the AAA that Plaintiff cites, however, none is so

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significant or unfavorable as to unfairly surprise or prejudice Plaintiff.1 Therefore, the

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Court finds that this provision does not render the Agreement unenforceable.

Doc. 13 at 3.

Of the various procedural

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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.
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III.

Conclusion

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Given the “liberal federal policy favoring arbitration,” Lozano v. AT & T Wireless

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Services, Inc., 504 F.3d 718, 725 (9th Cir. 2007), the Court will compel arbitration and

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dismiss the complaint. See Kam–Ko Bio-Pharm Trading Co., Ltd.-Austl. v. Mayne

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Pharma (USA), Inc., 560 F.3d 935, 940 (9th Cir. 2009) (finding that the court has

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discretion to dismiss or stay the action to allow arbitration to proceed); Simula, Inc. v.

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Autoliv, Inc., 175 F.3d 716, 726 (9th Cir. 1999) (affirming dismissal to allow arbitration);

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Sparling v. Hoffman Constr. Co., 864 F.2d 635, 638 (9th Cir. 1988) (same).

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IT IS ORDERED:

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1.

Defendant’s motion to compel arbitration (Doc. 12) is granted.

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2.

Plaintiff’s complaint (Doc. 1) is dismissed.

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3.

The Clerk is directed to terminate this action.

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Dated this 15th day of March, 2013.

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