Williams v. 24 Hour Fitness USA, Inc.

Filing 23

ORDER GRANTING DEFENDANT'S MOTION TO COMPEL ARBITRATION AND DISMISS COMPLAINT 16 . Signed by JUDGE DERRICK K. WATSON on 7/9/2015. ~ Because all of Williams' claims must be submitted to arbitration, the Court hereby gra nts 24 Hour Fitness's Motion Compel Arbitration and Dismiss Complaint (Dkt. No. 16). The Clerk of Court is directed to close the case. (ecs, )CERTIFICATE OF SERVICEParticipants registered to receive ele ctronic notifications received this document electronically at the e-mail address listed on the Notice of Electronic Filing (NEF). Participant (Delano Williams)not registered to receive electronic notifications were served by first class mail on 7/9/2015

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAI`I

DELANO WILLIAMS,
Plaintiff,
vs.
24 HOUR FITNESS, USA, INC.,

CIVIL NO. 14-00560 DKW-BMK
ORDER GRANTING
DEFENDANT’S MOTION TO
COMPEL ARBITRATION AND
DISMISS COMPLAINT

Defendant.

ORDER GRANTING DEFENDANT’S MOTION TO COMPEL
ARBITRATION AND DISMISS COMPLAINT
Plaintiff Delano Williams (“Williams”) is a former employee of Defendant
24 Hour Fitness USA, Inc. (“24 Hour Fitness”). Following his termination,
Williams filed an employment discrimination complaint, alleging that 24 Hour
Fitness discriminated against him on the basis of sex and retaliated against him in
violation of Title VII of the Civil Rights Act of 1964. Dkt. No. 1. Prior to his
employment with 24 Hour Fitness, Williams electronically signed an “Arbitration
of Disputes Policy,” which “applies to any employment-related dispute” between
an employee and 24 Hour Fitness. Dkt. No. 16-4. Before the Court is 24 Hour
Fitness’s Motion to Compel Arbitration and Dismiss Complaint (“Motion to
Compel Arbitration”). Dkt. No. 16. Because a valid agreement to arbitrate exists

that encompasses the scope of this action, and because Williams has not presented
any valid defenses, the Court hereby GRANTS 24 Hour Fitness’s Motion to
Compel Arbitration.
BACKGROUND
I.

24 Hour Fitness’s Arbitration of Disputes Policy
The arbitration provision at issue is contained in 24 Hour Fitness’s Team

Member Handbook and is entitled, “Arbitration of Disputes Policy” (the
“Agreement”). Dkt. No. 16-3 (Declaration of Marla Loar) at 1-2; Dkt. No. 16-4
(Exh. A). The Agreement applies to current and former employees alike. Loar
Decl. at ¶2; Exh. A. Relevant to the issues herein, the Agreement “requires all
such disputes to be resolved only by an arbitrator through final and binding
arbitration[,]” including claims regarding the “employment relationship,”
“termination,” “harassment,” discrimination under the Civil Rights Act of 1964
and claims raised under “state statutes . . . addressing the same subject matters,”
and “all other state statutory and common law” claims. Exh. A. The Agreement
permits informal means of resolving disputes, but provides that if an employee
forgoes these informal methods or those methods prove unsuccessful, “the sole and
exclusive means for dispute resolution is through arbitration, as provided in the
[Agreement].” Exh. A.

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When hired, employees are required to initially acknowledge and accept the
arbitration procedure set forth in the Agreement, but may opt out of the arbitration
procedure by signing an “Opt-Out Form” and returning it to human resources
within 30 calendar days. Exhs. A & C. Specifically, the Agreement requires
employees to electronically acknowledge and to agree to the following:
I agree that if there is a dispute arising out of or related to my
employment as described in the [Agreement], I will submit it
exclusively to binding and final arbitration according to its
terms, unless I elect to opt out of the [Agreement] as set forth
below.
I understand that I may opt out of the [Agreement] by signing
the Arbitration of Disputes Opt-Out Form (“Opt-Out Form”)
and returning it through interoffice mail to the CAC/HR File
Room no later than 30 calendar days after the date I click on the
button below. I understand that I can obtain the Opt-Out Form
by calling the Employee Hotline . . . . I understand that if I do
not opt out, disputes arising out of or related to my employment
will be resolved under the [Agreement]. I understand that my
decision to opt out or not opt out will not be used as a basis for
24 Hour Fitness taking any retaliatory action against me.
I UNDERSTAND THAT BY ENTERING MY INITIALS
AND CLICKING THE “CLICK TO ACCEPT” BUTTON, I
AM AGREEING TO THE ARBITRATION OF DISPUTES
POLICY (WHICH INCLUDES MY ABILITY TO OPT-OUT
OF THE POLICY WITHIN THE PERIOD OF TIME NOTED
ABOVE). I ALSO AGREE THAT THIS ELECTRONIC
COMMUNICATION SATISFIES ANY LEGAL
REQUIREMENT THAT SUCH COMMUNICATION BE IN
WRITING.
Exh. A.

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II.

Williams’ Application for Employment With 24 Hour Fitness
Williams initially commenced his employment with 24 Hour Fitness in April

1998, but voluntarily terminated his employment in December 2002. Loar Decl. at
¶6. Relevant to the instant motion, Williams subsequently reapplied for
employment on October 8, 2009. When reapplying, Williams was required to
indicate that he understood that an arbitration agreement and opt-out procedure
exists: “I understand that as an expeditious and economical way to settle
employment disputes without need to go through courts, 24 Hour Fitness agrees to
submit such disputes to final and binding arbitration. I understand that I may opt
out of the arbitration procedure within a specified period of time, as the procedure
provides.” Dkt. No. 16-5 (Exh. B) at 3. The application also required Williams to
acknowledge that both he and 24 Hour Fitness would be bound to final and binding
arbitration if he did not opt out: “24 Hour Fitness and I also understand that if I am
offered employment and do not opt out, we both will submit exclusively to final
and binding arbitration all disputes arising out of or relating to my employment.
This means that a neutral arbitrator, rather tha[n] a court or Jury, will decide the
dispute.” Exh. B at 3.
After Williams submitted his application for employment, Williams
underwent an “onboarding” process, which required him to electronically review
and sign a copy of the aforementioned Agreement. Loar Decl. at ¶7. As set forth
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in the declaration of Marla Loar, the Senior Director of Human Resources for 24
Hour Fitness, Williams “reviewed, acknowledged receipt of, and agreed to the
terms” of 24 Hour Fitness’s Agreement as part of 24 Hour Fitness’s “on-boarding”
process for new employees. Loar Decl. at ¶8. Williams was required to provide
his social security number and verify his identity in order for his electronic
signature to appear. Loar Decl. at ¶8. Williams was also required to enter his
initials on the page containing the Agreement to make his electronic signature
appear. Loar Decl. at ¶8. Loar attests that Williams reviewed and acknowledged
receipt of a document giving him the option of opting out of the Agreement. Loar
Decl. at ¶10. Loar further attests that Williams did not opt out of the Agreement.
Loar Decl. at ¶12. To complete the onboarding process, Williams had to verify his
identity over the phone by providing his social security number for payroll and tax
purposes. Loar Decl. at ¶13.
Williams disputes that he “reviewed, acknowledged receipt of, and agreed to
the terms of the company’s Agreement once hired.” Dkt. No. 18 at 1.
III.

The Instant Litigation
On December 15, 2014, Williams commenced this action, alleging sex

discrimination in violation of Title VII of the Civil Rights Act of 1964 and
retaliation. Dkt. No. 1. In his employment discrimination complaint, Williams
alleged that he was wrongfully terminated from 24 Hour Fitness on June 26, 2014
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following several incidents that had transpired with one of his female co-workers.
Dkt. No. 1 at 4-5; Dkt. No. 1-1. Prior to being terminated, Williams spoke with
this particular female co-worker about her attitude and gave her a hug at the end of
their meeting. Dkt. No. 1-1. The co-worker subsequently filed a complaint against
Williams, which he alleges led to his termination without his side of the story
being considered. Dkt. No. 1-1.
According to 24 Hour Fitness, Williams did not attempt to resolve his
dispute in accordance with the Agreement after he was terminated. Declaration of
Carolyn Wong at ¶¶2-3. The parties have attempted to resolve the matter of
arbitration informally, but failed to do so. Id.
STANDARD OF REVIEW
The Federal Arbitration Act (“FAA”), 9 U.S.C. § 1 et. seq. provides that
written arbitration agreements “shall be valid, irrevocable, and enforceable, save
upon such grounds as exist at law or equity for the revocation of any contract.” 9
U.S.C. § 2. The FAA provides that “any doubts concerning the scope of arbitrable
issues should be resolved in favor of arbitration, whether the problem at hand is the
construction of the contract language itself or an allegation of waiver, delay, or a
like defense to arbitrability.” Moses H. Cone Mem’l Hosp. v. Mercury Constr.
Corp., 460 U.S. 1, 24–25 (1983). “The standard for demonstrating arbitrability is
not high. The Supreme Court has held that the FAA leaves no place for the
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exercise of discretion by a district court, but instead mandates that district courts
direct the parties to proceed to arbitration on issues as to which an arbitration
agreement has been signed.” Simula, Inc. v. Autoliv, Inc., 175 F.3d 716, 719 (9th
Cir.1999) (citing Dean Witter Reynolds v. Byrd, 470 U.S. 213, 218 (1985)).
Indeed, the factual allegations need only “‘touch matters’ covered by the contract
containing the arbitration clause” for arbitration to be triggered. Id. (quoting
Mitsubishi Motors Corp. v. Soler Chrysler–Plymouth, Inc., 473 U.S. 614, 624 n. 13
(1985)).
In deciding whether to compel arbitration, the court may not review the
merits of the underlying dispute. Instead, the court must examine whether: (1)
there exists a valid agreement to arbitrate; (2) the parties’ dispute falls within their
arbitration agreement; and (3) there exists “a defense that would be available to a
party seeking to avoid the enforcement of any contract.” Brown v. Dillard’s, Inc.,
430 F.3d 1004, 1010 (9th Cir.2005); Republic of Nicar. v. Standard Fruit Co., 937
F.2d 469, 477–78 (9th Cir.1991); see also Lowden, 512 F.3d at 1217 (“[T]he court
must determine (1) whether a valid agreement to arbitrate exists and, if it does, (2)
whether the agreement encompasses the dispute at issue.” (citation and quotation
signals omitted)).

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DISCUSSION
Williams opposes 24 Hour Fitness’s Motion to Compel Arbitration on
several grounds, including that he was unaware of the Agreement and that the
National Labor Relations Board (“NLRB”) has found similar types of arbitration
agreements unenforceable. Dkt. No. 18 at 1-2. The Court must first determine
whether a valid agreement to arbitrate exists, and then decide whether the
agreement encompasses the dispute at issue. Chiron Corp. v. Ortho Diagnostic
Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000). If a valid arbitration agreement
exists, the Court must also determine whether Williams presents any valid defenses
to the enforceability of the agreement. As set forth below, the Court concludes that
the first two issues are resolved in favor of arbitration and that Williams has not
raised any meritorious defenses. Accordingly, the Court must “direct the parties to
proceed to arbitration.” Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218
(1985).
I.

A Valid Agreement to Arbitrate Exists
Courts “apply state-law principles that govern the formation of contracts to

determine whether a valid arbitration agreement exists.” Lowden v. T-Mobile USA,
Inc., 512 F.3d 1213, 1217 (9th Cir. 2008). Under Hawaiʻi law, a valid arbitration
agreement must have the following three elements: “(1) it must be in writing; (2) it
must be unambiguous as to the intent to submit disputes or controversies to
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arbitration; and (3) there must be bilateral consideration.” Douglass v. Pflueger
Hawaii, Inc., 110 Hawai’i 520, 531, 135 P.3d 129, 140 (2006). As set forth below,
all three elements are satisfied.
A.

Existence of a Writing

The parties do not dispute that the arbitration agreement in this case was in
writing. See Dkt. Nos. 16 & 18. The record reflects that the Agreement was
contained in the Team Member Handbook and that Williams, by affixing his
electronic signature, agreed that any requirement that the Agreement be in writing
would be satisfied. Exh. A. Thus, the first requirement that the arbitration
agreement be in writing is satisfied.
B.

Unambiguous Intent to Submit to Arbitration

With respect to the second requirement, “there must be a mutual assent or a
meeting of the minds on all essential elements or terms to create a binding
contract.” Douglass, 110 Hawaiʻi at 531, 135 P.3d at 140 (quoting Earl M.
Jorgensen Co. v. Mark Constr. Inc., 56 Haw. 466, 470, 540 P.2d 978, 982 (1975)).
Hawaiʻi courts apply an objective standard in determining whether mutual assent
or intent exists. Douglass, 110 Hawaiʻi at 531, 135 P.3d at 140.
Here, Williams was able to view the Agreement in electronic form prior to
indicating his acceptance of its terms by providing his electronic signature. See
Loar Decl. at ¶¶ 7-9. The Agreement stated unambiguously that, by affixing his
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electronic signature to the Agreement, Williams agreed to be bound thereby. See
Exh. A. The record reflects that Williams submitted his electronic signature after
agreeing to its terms, notwithstanding his assertion that “[h]e was unaware of the
arbitration agreement upon being hired with 24 Hour Fitness USA Inc.” Dkt. No.
18 at 1; see Exhs. A & C.
Specifically, Williams digitally signed the Agreement on October 23, 2009,
as part of 24 Hour Fitness’s onboarding process for new hires. In order to verify
his identity, Williams provided his social security number before signing the
Agreement. Loar Decl. at ¶8. Williams does not dispute that he digitally signed
the Agreement or that he electronically signed 24 Hour Fitness’s Employment
Application, which also contained language informing him of the existence of the
Agreement.
Williams asserts that he “never reviewed” the Agreement and that he was
“unaware” of it until after the commencement of this litigation. This argument
similarly is without merit. Under Hawaiʻi law, a person who signs a contract is
presumed to know it contents and to assent to them. See Ling Wo Leong v. Kaiser
Found. Hosp., 71 Haw. 240, 245, 788 P.2d 164, 168 (1990) (“The general rule of
contract law is that one who assents to a contract is bound by it and cannot
complain that he has not read it or did not know what it contained.”). Nowhere in
his opposition does Williams challenge the authenticity of his signature. Again,
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Williams also offers no evidence to suggest that he did not sign the Agreement, nor
does he challenge the facts set forth in the declaration of Loar, the Senior Director
of Human Resources for 24 Hour Fitness, which establish in detail her basis for
concluding that Williams electronically signed the Agreement. See Loar Decl.
¶¶8-13. Accordingly, the requirement of mutual assent is satisfied.
C.

Bilateral Consideration

With respect to the last requirement, bilateral consideration, the Hawaiʻi
Supreme Court has held that mutual assent to arbitration provides bilateral
consideration. See Brown v. KFC Nat’l Mgmt. Co., 82 Haw. 226, 239-40, 921
P.2d, 146, 159-60 (concluding that the arbitration agreement was supported by
bilateral consideration where the employee and employer agreed to “forego their
respective rights to a judicial forum, given ‘the delay and expense which results
from the use of the federal and state court systems,’ in order to benefit from the
resulting time and cost savings”).
Here, both Williams and 24 Hour Fitness agreed to submit to binding
arbitration and forego their respective rights to a judicial forum. Specifically, the
Agreement provides: “This Policy applies to any employment-related dispute
between a Team Member and 24 Hour Fitness or any 24 Hour Fitness’s agents or
Team Members, whether initiated by a Team Member or by 24 Hour Fitness . . .
This Policy requires all such disputes to be resolved only by an arbitrator through
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final and binding arbitration.” Exh. A. The Employment Application similarly
evinces a mutual assent to arbitration, as provided by the following language: “I
understand that as an expeditious and economical way to settle employment
disputes without need to go through courts, 24 Hour Fitness agrees to submit such
disputes to final and binding arbitration . . . 24 Hour Fitness and I also understand
that if I am offered employment and do not opt out, we both will submit
exclusively to final and binding arbitration all disputes arising out of or relating to
my employment.” Exh. B. Thus, both 24 Hour Fitness and Williams agreed to be
bound by the Agreement, satisfying the bilateral consideration requirement.
II.

The Agreement Encompasses The Claims At Issue
The Court must next determine whether the agreement encompasses the

dispute at issue. Chiron Corp., 207 F.3d at 1130. The Court concludes that the
language contained in the Agreement clearly encompasses Williams’ sex
discrimination and retaliation claims, as they arise out of “the employment
relationship” between the parties.
Interpretation of the scope of the arbitration clause is governed by the FAA.
The FAA “requires courts liberally to construe the scope of arbitration agreements
covered by that Act.” Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, 473
U.S. 614, 627 (1985). Thus, “in construing an exception to an arbitration clause,
all matters will be deemed subject to arbitration unless it may be said with positive
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assurance that the arbitration clause is not susceptible of an interpretation that
covers the asserted dispute.” Leyva v. Certified Grocers of Cal., Ltd., 593 F.2d
857, 860 (9th Cir. 1979). The Court resolves ambiguities as to the scope of
arbitration in favor of arbitration. Moses H. Cone Mem’l Hosp. v. Mercury Const.
Corp., 460 U.S. 1, 24-25 (1983).
In the instant case, it is clear that the Agreement covers the asserted dispute.
Williams asserts a claim for sex discrimination in violation of Title VII of the Civil
Rights Act of 1964 and alleges retaliation. The Agreement expressly refers to
these types of claims as disputes that must be arbitrated. See Loar Decl.; Exh. A.
Specifically, “any employment-related dispute” that could otherwise be resolved
by a court must be arbitrated, including: (1) claims concerning the “employment
relationship,” and (2) “claims arising under the Civil Rights Act of 1964.” Exh. A.
Accordingly, all of Williams’ claims clearly fall within the scope of the dispute
resolution process to which he agreed.
III.

Williams Presents No Meritorious Defenses
In his opposition to 24 Hour Fitness’s Motion to Compel Arbitration,

Williams challenges 24 Hour Fitness’s basis for compelling arbitration by
contending that arbitration agreements by which employees waive their rights to
participate in class or collective actions against their employers are unenforceable
pursuant to the NLRA. Dkt. No. 18 at 2. In support of this position, Williams
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attached a press release describing a decision by an Administrative Law Judge
(“ALJ”) for the NLRB, finding that 24 Hour Fitness’s Agreement violated Section
8(a)(1) of the National Labor Relations Act (“NLRA”), 29 U.S.C. § 158. Dkt. No
18-1. Preliminarily, this Court notes that NLRB decisions that interpret law
outside of the NLRA are not binding on this court. See Litton Fin. Printing Div. v.
NLRB, 501 U.S. 190 (1991). Moreover, Williams did not file his claim as a class
action, nor does the record reflect that he has attempted to join one. Accordingly,
Williams’ argument that the Agreement violates his rights under the NLRA
because it waives his right to participate in a class action lawsuit is tenuous.
In any event, as pointed out by 24 Hour Fitness, the Ninth Circuit has found
no violation of the NLRA in cases in which the arbitration agreement in question
included an “opt out” clause that permitted an employee to preserve his or her
ability to pursue a class action. See Johnmohammadi v. Bloomingdale’s, Inc., 755
F.3d 1072, 1075-77 (9th Cir. 2014) (enforcing an arbitration agreement where
plaintiff had “the right to opt out of the arbitration agreement,” and holding that,
“[h]having freely elected to arbitrate employment-related disputes on an individual
basis,” plaintiff could not claim that enforcement of the agreement violated the
NLRA). Indeed, courts within the Ninth Circuit have refused to invalidate
arbitration agreements containing opt-out provisions on the ground that such
agreements violate the NLRA. See, e.g., Nanavati v. Adecco USA, Inc., Case No.
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14-cv-04145-BLF, 2015 WL 1738152, at *4-6 (N.D. Cal. Apr. 13, 2015)
(enforcing an arbitration agreement where plaintiff was afforded ample opportunity
to opt out of the arbitration agreement, but chose not to do so). In the instant case,
although an opt-out provision existed, Williams chose not to avail himself of it
within the time allotted. See Loar Decl. at ¶12; Exhs A & C. As such, the
opportunity for Williams to avoid the arbitration procedure he agreed to upon
hiring has long since expired.
In sum, Williams has not raised any meritorious defenses or arguments that
would provide a basis for this Court to conclude that the Agreement is
unenforceable.
CONCLUSION
Because all of Williams’ claims must be submitted to arbitration, the Court
hereby grants 24 Hour Fitness’s Motion Compel Arbitration and Dismiss
Complaint (Dkt. No. 16). The Clerk of Court is directed to close the case.
IT IS SO ORDERED.
DATED: July 9, 2015 at Honolulu, Hawai‘i.

Williams v. 24 Hour Fitness USA, Inc.; CV 14-00560 DKW-BMK; ORDER GRANTING
DEFENDANT’S MOTION TO COMPEL ARBITRATION AND DISMISS COMPLAINT

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