Southern Glazer's Wine and Spirits, LLC v. Denyer

Filing 18

ORDER GRANTING PETITION TO COMPEL ARBITRATION re: 2 . Signed by CHIEF JUDGE J. MICHAEL SEABRIGHT on 12/15/2017. (afc) WRITTEN ORDER following hearing held 12/11/2017. Minutes of hearing: ECF no. 17 . CERTIFI CATE OF SERVICEParticipants registered to receive electronic notifications received this document electronically at the e-mail address listed on the Notice of Electronic Filing (NEF). Participants not registered to receive electronic notifications were served by first class mail on the date of this docket entry

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
SOUTHERN GLAZER’S WINE AND
SPIRITS, LLC,

CIV. NO. 17-00407 JMS-RLP
ORDER GRANTING PETITION
TO COMPEL ARBITRATION

Petitioner,
vs.
JANET DENYER,
Respondent.

ORDER GRANTING PETITION TO COMPEL ARBITRATION
I. INTRODUCTION
Before the court is Petitioner Southern Glazer’s Wine and Spirits,
LLC’s (“SGWS” or “Petitioner”) Petition to Compel Arbitration of Respondent
Janet Denyer’s (“Denyer”) claims arising from the termination of her employment
with Petitioner. ECF No. 2. For the reasons discussed below, the Petition to
Compel Arbitration is GRANTED.
II. BACKGROUND
Denyer began working for Southern Wine & Spirits of America, Inc.
(“SWSA”) 1 on or about March 7, 2016. Denyer Decl. ¶ 8; Kauther Decl. ¶ 3. That

1

As analyzed below, SGWS is the successor corporation to SWSA, following a merger
on or about June 30, 2016. Declaration of Janet Denyer ¶ 8, ECF No. 14-1; Declaration of Jamie
Kauther ¶ 3, ECF No. 15-1.

same day, as part of her “onboarding” process, Denyer signed a “Notice to
Prospective Employees” (“Notice”), ECF No. 15-2, and a “Mutual Agreement to
Arbitrate Claims” (“Agreement”), ECF No. 2-5. See Declaration of Lauren Mutti,
ECF No. 2-2 ¶ 12; Kauther Decl. ¶ 9.
By signing the Notice, Denyer agreed “to be bound by . . . arbitration
procedures for employer-employee disputes,” including but not limited to “claims,
demands or actions” for violation of any federal, state or local law “regarding . . .
the termination of employment[.]” Notice at 1. The Notice specified the use of the
American Arbitration Association arbitration procedures, “as modified and
expanded by the SOUTHERN Employment Arbitration Policy [(“Policy”)],” id.,
and advised Denyer that,
. . . it is your responsibility to read and understand
the arbitration procedures, and your agreement to be
bound by those procedures is a condition of employment.
....
. . . We therefore ask that you read the attached
Employment Arbitration Policy and then sign and return
the attached [Agreement] in order to signify both your
acceptance of our offer of employment and your
agreement to the above.
By signing below, you are attesting that you have
read and understood this document, and are knowingly
and voluntarily agreeing to its terms.
Id. at 1-2.
2

Under the Agreement, Denyer agreed to arbitrate all disputes arising
from her employment or termination from employment, as well as disputes with
Petitioner that are unrelated to her employment. See Agreement at 1. More
specifically, the Agreement provides:
The Company and I mutually consent to the
resolution by arbitration of all claims or controversies
(“claims”), past, present, or future, whether or not arising
out of my employment, or its termination, that the
Company may have against me or that I may have
against the Company or against its officers, directors,
employees or agents in their capacity as such or
otherwise. The claims covered by this Agreement
include – but are not limited to – claims for breach of
any contract or covenant (express or implied); tort
claims; claims of discrimination and harassment . . . and
any other federal, state or local statute, regulation,
ordinance or common law doctrine, regarding
employment discrimination, conditions of employment or
termination of employment; claims for wages, benefits or
other compensation due; and claims for violation of any
federal, state, or other governmental law, statute,
regulation, or ordinance or common law doctrine[.]”
. . . I knowingly and willingly forego my statutory
and common law remedies, whether state or federal,
whether explicitly mentioned in this Agreement or not,
in favor of submitting any disputes with the Company to
arbitration. Except as otherwise provided in this
Agreement or by law, both the Company and I agree that
neither of us shall initiate or prosecute any lawsuit or
administrative action . . . in any way related to any claim
covered by this Agreement.
....
3

I understand that any reference in the Agreement
to the Company will also refer to all subsidiary and
affiliated entities, agents, and all successors and assigns
of any of them.
Id. at 1-2.
And on the signature page (page 4), the Agreement provides:
I ACKNOWLEDGE THAT I HAVE CAREFULLY
READ THIS AGREEMENT (AND THE POLICY
INCORPORATED HEREIN) AND THAT I
UNDERSTAND AND AGREE TO BE BOUND BY
ITS TERMS. . . .
I UNDERSTAND THAT BY SIGNING THIS AGREEMENT I
AM GIVING UP MY RIGHT TO A JURY TRIAL IN REGARD
TO THE TYPES OF CLAIMS COVERED BY THIS
AGREEMENT. . . .
I FURTHER ACKNOWLEDGE AND UNDERSTAND THAT
PURSUANT TO THIS AGREEMENT, ARBITRATION OF
DISPUTES COVERED BY THIS AGREEMENT IS
MANDATORY AND BINDING.
I FURTHER ACKNOWLEDGE THAT I HAVE BEEN GIVEN
THE OPPORTUNITY TO DISCUSS THIS AGREEMENT
WITH MY PRIVATE LEGAL COUNSEL AND HAVE
AVAILED MYSELF OF THAT OPPORTUNITY TO THE
EXTENT I WISH TO DO SO.
Id. at 4.
Notwithstanding the above, Denyer now asserts that she was unaware
“of the existence of the arbitration agreement” because at the time she signed the

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Agreement, she had not received a copy of the Policy, or the first three pages of the
Agreement. ECF No. 14 at 2-3; Denyer Decl. ¶¶ 3, 4, 7, 9.
In response to Denyer’s assertion, SGWS provided the declaration of
Jamie Kauther (“Kauther”), Senior Director, Labor and Employment Counsel for
SGWS. Kauther states that she is familiar with the “business operations and
employment policies and practices of both [SGWS and SWSA including] . . . the
record-keeping practices of [SWSA] for employee personnel files.” Kauther Decl.
¶¶ 3, 4. She further states that SWSA’s “uniform policy and practice” was to
provide copies of the Notice, Policy, and Agreement to new employees on their
first day of work, and that after review and signature, the documents were
“immediately stored and maintained in employee personnel files, copies of which
were created and continue to be maintained in the normal course and scope of
business.” Id. ¶ 5. Kauther has regular access to SWSA’s personnel files,
including Denyer’s. Id. ¶¶ 6-7. And she states that her review of Denyer’s file,
which contains the Notice, four-page Agreement, and Policy, shows that Denyer
received a complete copy of each document and that she signed the Notice and
Agreement on March 7, 2016. Id. ¶¶ 8, 9.
Denyer’s employment with SGWS ended on or about April 11, 2017,
when she was allegedly wrongfully terminated. ECF No. 2-4 ¶ 5. On June 15,
2017, Denyer’s counsel sent SGWS a demand letter and a draft of a Complaint
5

alleging claims of whistleblower retaliation; violation of wage and hour laws;
hostile work environment; constructive termination; interference with
compensation, terms, conditions, and privileges of employment; conspiracy, fraud,
and retaliation in violation of employment laws; intentional interference with the
economic advantages of employment; and intentional and negligent infliction of
emotional distress. Pet. at 5, 11, ECF No. 2-1; Compl. ¶¶ 11-20, ECF No. 2-4.
SGWS filed the instant Petition to Compel Arbitration (“Petition”) on
August 16, 2017. ECF No. 2. On November 15, 2017, Denyer filed an
Opposition, ECF No. 14, and Petitioner filed a Reply on November 27, 2017, ECF
No. 15. A hearing was held on December 11, 2017.
III. STANDARD OF REVIEW
The Federal Arbitration Act (“FAA”), 9 U.S.C. § 1 et seq., which
applies to arbitration agreements in contracts involving transactions in interstate
commerce, 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; see also Kramer v. Toyota Motor
Corp., 705 F.3d 1122, 1126 (9th Cir. 2013) (“With limited exceptions, the [FAA]
governs the enforceability of arbitration agreements in contracts involving
interstate commerce.”). Under the FAA, “any doubts concerning the scope of
arbitrable issues should be resolved in favor of arbitration, whether the problem at
6

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). Nevertheless, “the federal policy in favor
of arbitration does not extend to deciding questions of arbitrability,” that is, the
question “who decides whether a claim is arbitrable.” Oracle Am., Inc. v Myriad
Group A.G., 724 F.3d 1069, 1072 (9th Cir. 2013) (emphasis omitted).
In determining whether to compel arbitration, a district court may not
review the merits of the dispute; rather, “the court must determine (1) whether a
valid agreement to arbitrate exists and, if it does, (2) whether the agreement
encompasses the dispute at issue.” Lowden v. T-Mobile USA, Inc., 512 F.3d 1213,
1217 (9th Cir. 2008) (quotation and citation omitted). “If the answer is yes to both
questions, the court must enforce the agreement.” Lifescan, Inc. v. Premier
Diabetic Servs., Inc., 363 F.3d 1010, 1012 (9th Cir. 2004) (citing Chiron Corp. v.
Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000)); see also Momot
v. Mastro, 652 F.3d 982, 986 (9th Cir. 2011) (“Because arbitration is
fundamentally a matter of contract, the central or primary purpose of the FAA is to
ensure that private agreements to arbitrate are enforced according to their terms.”)
(quotation marks and citations omitted).
To determine whether a valid agreement to arbitrate exists, a district
court must apply “ordinary state-law principles that govern the formation of
7

contracts.” Norcia v. Samsung Telecomms. Am., LLC, 845 F.3d 1279, 1283 (9th
Cir. 2017) (quoting First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 944
(1995)). “[A]greements to arbitrate [may] be invalidated by generally applicable
[state-law] contract defenses” to enforceability such as “fraud, duress, or
unconscionability.” AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2001);
see Lowden, 512 F.3d at 1217 (“[Determining] whether . . . a valid agreement to
arbitrate exists . . . requires [a court] to consider what is unconscionable and
unenforceable under . . . state law.”). “The party seeking to compel arbitration
carries the initial burden of establishing that an arbitration agreement exists,” and if
met, the burden then “shifts to the opposing party to present evidence on its
defenses to the arbitration agreement.” Siopes v. Kaiser Found. Health Plan, Inc.,
130 Haw. 437, 446, 312 P.3d 869, 878 (2013).
IV. DISCUSSION
Denyer argues that there is no valid arbitration agreement because
(1) she did not agree to arbitrate her claims, and (2) there was no consideration for
the waiver of her right to a jury trial. She also argues that the arbitration agreement
is unenforceable because (1) she was hired by SWSA, not SGWS, and therefore
SGWS cannot compel arbitration, (2) she did not receive the Policy and pages 1-3
of the Agreement when she signed page 4 of the Agreement, and (3) she cannot
afford to travel to the mainland to participate in arbitration. See Opp’n ¶¶ 1-5;
8

Denyer Decl. ¶¶ 3-5, 7, 9. Denyer does not dispute that the arbitration agreement
(if otherwise valid) encompasses her claims.
A.

The Existence of a Valid Arbitration Agreement
Under Hawaii 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 arbitration; and (3) there must
be bilateral consideration.” Id. at 447, 312 P.3d at 879 (quoting Douglass v.
Pflueger Hawaii, Inc., 110 Haw. 520, 531, 135 P.3d 129, 140 (2006)).
1.

Written Arbitration Agreement
The parties do not dispute that the arbitration agreement is in writing.

The record reflects that Denyer signed paper copies of both the Notice and the
Agreement. See Notice at 2; Agreement at 4; Denyer Decl. ¶ 3 (verifying that she
signed page 4 of the Agreement). And during the hearing, Denyer conceded that
she signed both documents. Thus, the first element is met.
2.

Unambiguous Intent to Submit to Arbitration
For the second element, “there must be a mutual assent or a meeting

of the minds on all essential elements or terms to create a binding contract.”
Siopes, 130 Haw. at 447, 312 P.3d at 879 (citation and emphasis omitted). “The
existence of mutual assent or intent to accept is determined by an objective
standard.” Douglass, 110 Haw. at 531, 135 P.3d at 140.
9

Here, Denyer argues that she was unaware of the existence of the
arbitration agreement because neither the Policy nor pages 1-3 of the Agreement
were provided to her when she signed page 4 of the Agreement, and therefore she
never agreed to arbitration. Opp’n at 2.
To establish mutual assent, SGWS provides Kauther’s declaration that
SWSA had a “uniform policy and practice to provide copies of these documents to
employees on their first day of employment” and that after reviewing the
documents, they “were then immediately stored and maintained in employee
personnel files, copies of which were created and continue to be maintained in the
normal course and scope of business.” Kauther Decl. ¶ 5. Kauther further states
that Denyer’s personnel file contains copies of the Policy, the signed Notice, and
the signed 4-page Agreement. Id. ¶¶ 7-9. Thus, Kauther states that “at or near the
time of the beginning of [Denyer’s] employment, [she] was provided with a copy
of [these three documents].” Id. ¶ 7.
SGWS further argues that the documents themselves demonstrate
Denyer’s intent to arbitrate claims. The Notice expressly states that “you and we
agree that any employment dispute . . . will be submitted to binding arbitration,”
and that “[b]y signing below, you are attesting that you have read and understood
this document, and are knowingly and voluntarily agreeing to its terms.” Notice at
1, 2. And page 4 of the Agreement expressly provides that by signing the
10

Agreement, Denyer “ACKNOWLEDGE[S] AND UNDERSTAND[S] THAT
PURSUANT TO THIS AGREEMENT, ARBITRATION OF DISPUTES . . . IS
MANDATORY AND BINDING,” and that she is “GIVING UP” her “RIGHT TO
A JURY TRIAL.” Agreement at 4.
Hawaii courts have found that similar language “reflected mutual
assent on its face.” Siopes, 130 Haw. at 451, 312 P.3d at 883 (quotation marks
omitted) (citing Douglass, 110 Haw. at 532, 135 P.3d at 141 and Brown v. KFC
Nat’l Mgmt. Co., 82 Haw. 226, 240, 921 P.2d 146, 160 (1996)). Nevertheless,
before ruling on the issue of mutual assent, Hawaii courts also consider the
surrounding circumstances. Id. In Douglass, the arbitration provision at issue
consisted of two paragraphs hidden on page 20 of a 60-page employee handbook,
the signed acknowledgement form at the end of the handbook did not mention the
arbitration provision, immediately preceding the acknowledgement form was a
disclaimer section indicating in bold text that the policies are guidelines and do not
create a contract, and the acknowledgement form itself stated that the handbook
provisions did not create an employment contract. 110 Haw. at 532, 135 P.3d at
141. Under those circumstances, Douglass found that the plaintiff “was [not]
informed of the existence of the arbitration provision, let alone that he would be
bound by it.” Thus, Douglass concluded that the unambiguous intent to submit to
arbitration element was not met. Id. at 143, 135 P.3d at 534.
11

In Siopes, the court found that when enrolling in an employee healthcare plan, the plaintiff-enrollee did not assent to an arbitration provision contained
in a separate service agreement between the health plan and the employer union
health benefits trust fund. 130 Haw. at 453, 312 P.3d at 885. In that case, to enroll
in the health-care plan, the plaintiff completed an enrollment form that contained
no reference to the service agreement or to an arbitration agreement. Id. at 452,
312 P.3d at 884. Nor did the enrollment form include a statement that a separate
service agreement exists, or that the enrollee has read and understood the service
agreement or any separate document affecting the enrollee’s rights. Id. Rather, the
enrollment form merely provided that the enrollee agreed to the terms and
conditions of the selected health-care plan. Id.
Here, the record includes copies of the Policy, the signed Notice, and
the signed 4-page Agreement from Denyer’s personnel file as well as Kauther’s
declaration regarding SWSA’s “uniform policy and practice” regarding the
provision and storage of such documents in connection with new employees.
Denyer’s argument — that she was not aware of the existence of the arbitration
policy, based solely on her assertion that she was not given copies of the Policy
and pages 1-3 of the Agreement on March 7, 2016 — is insufficient to negate
evidence of mutual assent on the face of the documents. See Leong v. Kaiser
Found. Hosps., 71 Haw. 240, 246, 788 P.2d 164, 168 (1990) (holding that in light
12

of affidavits attesting to the usual manner of distributing a booklet to employees
containing notice and a summary of an arbitration provision in a separate healthcare contract and averring that the routine was adhered to, plaintiffs’ “averment
that they did not receive the booklet” was insufficient to negate the existence of a
binding arbitration provision in the contract).
Further, even if Denyer had only the Notice (which she signed) 2 and
page 4 of the Agreement, those pages alone are sufficient to establish mutual
assent. Unlike Douglass and Siopes, not only do the signature pages of both the
Notice and the Agreement explicitly reference the arbitration agreement and
Policy, they both include language verifying that by signing, Denyer attests that
she agrees to the binding arbitration procedures. See Notice at 2, Agreement at 4.
Denyer concedes that it is her signature on both the Notice and the Agreement.
See Denyer Decl. ¶ 3. Under these circumstances, the court finds that the second
element of mutual assent is satisfied.
3.

Bilateral Consideration
Under Hawaii law, bilateral consideration exists where there is mutual

assent to arbitrate — that is, where the employer and employee both agree 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
2

During the hearing, Denyer conceded that she received and signed the two-page Notice.
13

from the resulting time and cost savings” of arbitration. Brown, 82 Haw. at 15960, 921 P.2d at 239-40.
Here, both parties agreed to submit to binding arbitration and forego
their respective rights to a judicial forum. Specifically, the Notice provides that
“you and we agree that any employment dispute . . . will be submitted to binding
arbitration[.]” Notice at 1. And the Agreement provides that “[t]he Company and
I mutually consent to the resolution by arbitration of all claims . . . [and] both the
Company and I agree that neither of us shall initiate or prosecute any lawsuit or
administrative action . . . in any way related to any claim covered by this
Agreement.” Agreement at 1. Because both parties agreed to accept binding
arbitration and forego their respective rights to a judicial forum, the third element
of bilateral consideration is met.
Based on the foregoing, SGWS has met its initial burden of
establishing the existence of a valid arbitration agreement. The burden now shifts
to Denyer to establish defenses to enforceability.
B.

Defenses to Enforceability of the Arbitration Agreement
Denyer contends that SGWS cannot enforce the arbitration agreement

because (1) it is not a party to that agreement, and (2) the arbitration agreement is
unconscionable. The court disagrees.

14

1.

SGWS as successor to SWSA
Denyer contends that SGWS cannot compel arbitration because she

was hired by SWSA. See Opp’n at 3 (“SGWS was not the company who hired Ms.
Denyer.”). During the hearing, Denyer clarified her position arguing that a
successor corporation cannot enforce an arbitration agreement to which it was not
a signatory. Denyer is mistaken.
The Hawaii Supreme Court has recognized that “a nonsignatory to an
arbitration agreement may invoke the arbitration agreement against a signatory to
that agreement under certain circumstances.” Luke v. Gentry Realty, Ltd., 105
Haw. 241, 247, 96 P.3d 261, 267 (2004). One such circumstance, for example, is
that “[n]onsignatory successors . . . are entitled to compel arbitration under clauses
signed by the corporations whose liability they are alleged to have assumed.” Levi
Strauss & Co. v. Aqua Dynamics Sys., Inc., 2016 WL 6082415, at *9 (N.D. Cal.
Oct. 18, 2016) (quoting Prograph Int’l Inc. v. Barhydt, 928 F. Supp. 983, 991
(N.D. Cal. 1996)); see also Jenks v. DLA Piper Rudnick Gray Cary I.S. LLP, 196
Cal. Rptr. 3d 237, 244 & n.5 (Cal. Ct. App. 2015) (recognizing that following
merger, nonsignatory corporation which assumed the rights and obligations of
acquired corporation may enforce arbitration agreement against a signatory);
Marenco v. DirecTV LLC, 183 Cal. Rptr. 3d 587, 596 (Cal. Ct. App. 2015)
(“[Plaintiff’s] continued employment with [successor employer] served as his
15

implied consent to preserving the original terms of employment, including the
arbitration agreement.”).
Here, there is no dispute that following a 2016 merger, SGWS “is the
successor to [SWSA].” Kauther Decl. ¶ 3; Denyer Decl. ¶ 8. A merger generally
results in the surviving entity having assumed “[a]ll debts, liabilities, obligations
. . . rights, privileges, immunities, powers, and purposes” of “each entity that is a
party to the merger[.]” Hawaii Revised Statutes § 428-906(a)(3), (5). And the
Agreement itself provides that “any reference . . . to the Company will also refer to
. . . all successors and assigns[.]” Agreement at 2. Thus, the court finds that
SGWS assumed SWSA’s rights and obligations under the arbitration agreement.
Denyer relies on Santander v. Caris Med Surg, LLC, 2017 WL
3784619 (Haw. Ct. App. Aug. 31, 2017), which is easily distinguishable. In that
case, the court found that defendant employer Caris, with whom temporary workplacement agency Altres placed the plaintiff employee, failed to establish the
existence of an arbitration agreement between it and the plaintiff. Id. at *2-3.
Prior to her placement at Caris, the plaintiff and Altres entered into an agreement
requiring plaintiff to “submit to binding arbitration any controversies concerning
compensation, employment, or termination of employment . . . between myself and
ALTRES, and/or between myself and the ALTRES customer . . . .” Id. at *2.

16

Santander found that Caris was not a party to the arbitration
agreement between plaintiff and Altres for two reasons: (1) the agreement did not
identify Caris as plaintiff’s employer, but rather “specifically and exclusively
reference[d] Altres’s requirement for Altres employees”; and (2) the agreement’s
“reference to an Altres customer” did not unambiguously mean Caris because the
plaintiff “was not hired by Caris until months later.” Id. at *2. Santander also
found that the arbitration agreement lacked bilateral consideration — the
agreement “requires [plaintiff] to submit to binding arbitration, but does not
impose that requirement on Altres, or indicate that Altres’s customers have
mutually agreed to submit to binding arbitration.” 2017 WL 3784619, at *2.
Here, unlike Santander, SGWS established the existence of a valid
arbitration agreement, and the Agreement specifically and unambiguously provides
that it applies to SWSA’s successors. Additionally, unlike Santander, the
arbitration agreement has bilateral consideration. And Santander does not address
enforcement of a valid arbitration agreement by a successor corporation. In short,
by succeeding SWSA and assuming SWSA’s rights and obligations, SGWS is
entitled to enforce the arbitration agreement between Denyer and SWSA. See, e.g.,
Levi Strauss & Co., 2016 WL 6082415, at *9.
///
///
17

2.

Unconscionability
Arbitration agreements may be “invalidated by generally applicable

contract defenses.” AT&T Mobility LLC, 563 U.S. at 339. And courts look to
state-law principles governing the formation of contracts when determining the
applicability of a defense to the enforcement of an arbitration agreement. See
Doctor’s Assocs., Inc. v. Casarotto, 517 U.S. 681, 686-87 (1996); Ingle v. Circuit
City Stores, Inc., 328 F.3d 1165, 1170 (9th Cir. 2003); Siopes, 130 Haw. at 447
n.14, 312 P.3d at 879 n.14.
Hawaii courts recognize unconscionability as a defense to
enforcement of an arbitration agreement. Gabriel v. Island Pac. Acad., Inc., 140
Haw. 325, 336-37, 400 P.3d 526, 537-38 (2017); Siopes, 130 Haw. at 459, 312
P.3d at 891. “Unconscionability encompasses two principles: one-sidedness
(substantive unconscionability) and unfair surprise (procedural
unconscionability).” Gabriel, 140 Haw. at 337, 400 P.3d at 538 (citing Balogh v.
Balogh, 134 Haw. 29, 41, 332 P.3d 631, 643 (2014)). “‘Generally, a determination
of unconscionability requires showing that the contract was both procedurally and
substantively unconscionable when made,’ but an impermissibly one-sided
contract can be unconscionable and unenforceable without a showing of unfair
surprise.” Id. (quoting Balogh, 134 Haw. at 41, 332 P.3d at 643.

18

a.

Procedural unconscionability

“Procedural unconscionability . . . focuses on the process by which the
allegedly offensive terms found their way into the agreement.” Narayan v. The
Ritz-Carlton Dev. Co., Inc., 140 Haw. 343, 351, 400 P.3d 544, 552 (quoting
Joseph M. Perillo, 7 Corbin on Contracts § 29.1 (Rev. ed. 2002)). Factors for a
court to consider when determining procedural unconscionability include “whether
deceptive or high-pressured tactics were employed, the use of fine print in the
contract, the experience and education of the party claiming unconscionability, and
whether there was disparity in bargaining power between the parties.” Id.
(quotation marks and citation omitted).
Denyer argues that the arbitration agreement is procedurally
unconscionable because (1) she did not receive the Policy and pages 1-3 of the
Agreement when she signed page 4 of the Agreement, and (2) she was hired by
SWSA, not SGWS, and therefore does not know “if the documents provided are
actually those used to hire me”). Opp’n at ¶¶ 1, 3, 4; Denyer Decl. ¶¶ 3, 4, 7, 8, 9.
The court disagrees.
i.

Provision of documents

Although the record includes evidence that Denyer did receive copies
of the Policy and complete Agreement, see Kauther Decl. ¶¶ 4-9; Notice at 1
(providing that the “Policy is attached to this letter”), even if Denyer did not
19

receive these documents, she was notified of their existence and provided an
opportunity to review them. The Notice provides that (1) all of SWSA’s
employment “policies are available in the Human Resources Department should
you desire to review them prior to your acceptance of employment,” (2) “[i]f you
have any questions . . . please ask [SWSA] and/or consult with your own counsel,”
and (3) “[SWSA] ask[s] that you read the . . . Policy” before signing the
“Agreement[.]” Notice at 1-2. Further, by signing the Notice, Denyer “attest[ed]
that [she] read and understood this document[.]” Id. at 2. And the signature page
of the Agreement (the page which Denyer admits that she received and signed)
includes Denyer’s acknowledgement that she “READ THIS AGREEMENT (AND
THE POLICY INCORPORATED HEREIN) . . . [AND WAS] GIVEN THE
OPPORTUNITY TO DISCUSS THIS AGREEMENT WITH MY PRIVATE
LEGAL COUNSEL AND HAVE AVAILED MYSELF OF THAT
OPPORTUNITY TO THE EXTENT I WISH TO DO SO.” Agreement at 4.
Thus, at the very least, prior to signing the Notice and Agreement,
Denyer was informed of the existence of the Policy and Agreement and of her
ability to review those documents with the Human Resources Department and/or
her own counsel before accepting employment with SWSA. There is no evidence
that SWSA employed deceptive or high-pressured tactics or hid the documents
through the use of fine print. Under these circumstances, Denyer has failed to
20

establish unfair surprise, or procedural unconscionability. Cf. Peng v. First
Republic Bank, 219 Cal. App. 4th 1462, 1472 (2013) (finding “the failure to attach
the AAA rules . . . is insufficient grounds to support a finding of procedural
unconscionability”). But even if this were sufficient to establish procedural
unconscionability, the failure to attach such documents “would only render the
agreement unenforceable if [the arbitration policy was] substantially
unconscionable.” Lucas v. Gund, Inc., 450 F. Supp. 2d 1125, 1131 (C.D. Cal.
2006). And as discussed below, Denyer fails to establish that the Policy and
Agreement are substantively unconscionable.
ii.

Authenticity of the documents

In her declaration, Denyer suggests that because she was hired by
SWSA, not SGWS, Petitioner may not have produced the actual documents from
her hiring. See Denyer Decl. ¶ 8 (“I don’t know if the documents provided are
actually those used to hire me.”).
But in her position as Senior Director, Labor and Employment
Counsel for SGWS, Kauther has “regular access to and [has] reviewed personnel
files for former and current employees of SWSA.” Kauther Decl. ¶¶ 1, 3, 6. And
Kauther states that the Policy, Notice, and Agreement produced by SGWS came
from Denyer’s personnel file that was kept and maintained in the normal course of
business. Id. ¶¶ 7, 8.
21

During the hearing, Denyer conceded that she signed the Notice and
page 4 of the Agreement, and that the documents produced are copies of the ones
she signed upon being hired by SWSA. Thus, to the extent Denyer seeks to
establish unfair surprise or procedural unconscionability on this basis, she fails.
b.

Substantive unconscionability

“Substantive unconscionability . . . focuses on the content of the
agreement and whether the terms are one-sided, oppressive, or unjustly
disproportionate.” Narayan, 140 Haw. at 351, 400 P.3d at 552 (quoting Balogh,
134 Haw. at 41, 332 P.3d at 643). That is, a contract is substantively
unconscionable where it “is the result of coercive bargaining between parties of
unequal bargaining strength” and “unfairly limits the obligations and liabilities of,
or otherwise unfairly advantages, the stronger party.” Brown, 82 Haw. at 247, 921
P.2d at 167.
Denyer contends that the arbitration agreement is substantively
unconscionable because (1) she did not receive copies of the Policy and pages 1-3
of the Agreement, and (2) she cannot afford to travel to the mainland to participate
in arbitration. See Opp’n ¶ 1; Denyer Decl. ¶¶ 3-7, 9. Denyer’s arguments are
without merit.
First, to the extent Denyer contends that SWSA’s failure to provide
the Policy and complete Agreement constitute “coercive bargaining between
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parties of unequal bargaining strength,” that alone is insufficient to establish
substantive unconscionability. See Brown, 82 Haw. at 247, 921 P.2d at 167
(explaining that substantive unconscionability also requires that the “contract
unfairly limit[] the obligations and liabilities of, or otherwise unfairly advantage[],
the stronger party”). Denyer does not explain how the Policy, Agreement, or
Notice unfairly advantages or limits SGWS’ obligations or liability. Thus, Denyer
fails to establish substantive unconscionability based solely on SWSA’s alleged
failure to provide the documents when Denyer was hired.
Second, Denyer appears to contend that the arbitration agreement
unfairly requires her to incur expenses that she cannot afford in order to participate
in arbitration. See Denyer Decl. ¶ 5 (“I cannot afford to travel around the country,
including to San Francisco, California, to go through AAA arbitration.”). Denyer
does not provide any estimate of the expected arbitration costs or of her financial
circumstances. The Policy, however, provides that SGWS “shall pay 100 percent
in excess of one hundred dollars ($100) of the administrative fee required. The
remaining $100 is to be paid by the complaining party.” Policy at 6-7.
The Hawaii Supreme Court recently declined to hold a cost-splitting
requirement in an arbitration agreement to be “per se unconscionable.” Gabriel,
140 Haw. at 337, 400 P.3d at 538. There, it found that requiring “a terminated
school teacher to pay, up-front a deposit amounting to one-quarter to one-third of
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her former annual salary in order to access the arbitral forum” was substantively
unconscionable. Id. at 337-38, 400 P.3d at 538-39 (emphasis omitted).
Here, the arbitration agreement requires Denyer to pay no more than
$100 toward the administrative costs of arbitration and obligates SGWS to pay all
fees above $100. Policy at 6-7. The Policy further provides that “[i]f the parties
disagree as to the locale, the AAA may initially determine the place of arbitration
. . . having regard for the contentions of the parties and the circumstances of the
arbitration.” Id. at 9. Denyer does not allege that a site for arbitration has been
chosen, let alone whether that site is outside of Hawaii. During the hearing, SGWS
stated that an arbitrator from San Francisco has been chosen, but that no decision
has been made regarding the site for the arbitration. And finally, Denyer does not
provide any facts from which the court could determine that requiring her to pay
$100 in administrative fees would be unconscionable. Thus, Denyer fails to
establish substantive unconscionability based on cost.
In sum, the court finds that Denyer fails to establish a meritorious
defense to the enforceability of the arbitration agreement.
C.

The Arbitration Agreement Encompasses Denyer’s Claims
Denyer does not dispute that the arbitration agreement encompasses

her claims. She did not oppose SGWS’s Petition on that point, and she conceded
as much during the hearing. The court agrees.
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The Agreement expressly provides that the parties agree to arbitrate
“all claims” between them “whether or not arising out of [Denyer’s] employment,
or its termination.” Agreement at 1. Denyer’s draft Complaint includes claims for
whistleblower retaliation; violation of wage and hour laws; hostile, intimidating,
and abusive work environment; wrongful constructive termination of employment;
interference with compensation, terms, conditions, and privileges of employment;
conspiracy, fraud, and retaliation in violation of employment laws; intentional
interference with the economic advantages of employment; and work-related
infliction of emotional distress. See ECF No. 2-4 ¶¶ 11-20. All of these claims
arise from Denyer’s employment and/or termination of employment by Petitioner
and are therefore encompassed by the Agreement.
Based on the foregoing, the court finds that the arbitration agreement
is valid, that it encompasses Denyer’s claims, and that Denyer has not raised any
meritorious defense to enforcement of the arbitration agreement.
///
///
///
///
///
///
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V. CONCLUSION
The Motion to Compel Arbitration is GRANTED. The Clerk of Court
is directed to enter judgment and close this case.
IT IS SO ORDERED.
DATED: Honolulu, Hawaii, December 15, 2017.

/s/ J. Michael Seabright
J. Michael Seabright
Chief United States District Judge

Denyer v. S. Glazer’s Wine & Spirits, LLC, Civ. No. 17-00407 JMS-RLP, Order Granting
Petition to Compel Arbitration

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