Knezovich v. DIRECTV, LLC
OPINION AND ORDER REGARDING DEFENDANTS MOTION TO COMPEL ARBITRATION AND TO DISMISS - DIRECTVs August 30, 2017, Motion To Compel Arbitration And To Dismiss (docket no. 6 ) is granted, as follows: 1. The parties are ordered to arbitration, pursuant to their signed Arbitration Agreement and the Arbitration Procedure General incorporated therein by reference, as to all claims in Knezovichs Complaint; and 2. Knezovichs Complaint is dismissed in its entirety. IT IS SO ORDERED. Signed by Judge Mark W Bennett. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (cjs)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
BRENTON R. KNEZOVICH,
DIRECTV, L.L.C., a California limited
OPINION AND ORDER
MOTION TO COMPEL
ARBITRATION AND TO DISMISS
TABLE OF CONTENTS
Background .......................................................................... 2
Arguments Of The Parties ........................................................ 7
LEGAL ANALYSIS ...................................................................... 10
Procedure For Deciding A Motion To Compel Arbitration ............... 10
Standards For Enforcement Of An Arbitration Agreement .............. 12
Application Of The Standards .................................................. 15
Existence of a valid agreement ........................................ 15
Coercion ........................................................... 16
Incorporation by reference ..................................... 17
Applicability To The Dispute At Issue ................................ 21
Summary ................................................................... 23
Stay Or Dismissal ................................................................. 23
CONCLUSION ............................................................................ 24
Plaintiff Brenton R. Knezovich filed his Complaint And Demand For Jury Trial
on April 17, 2017, asserting claims of discrimination on the basis of disability and
perceived disability pursuant to the Americans with Disabilities Act (ADA) and the Idaho
Human Rights Act (IHRA) against his former employer, defendant DIRECTV.
DIRECTV responded, on August 30, 2017, by filing its Motion To Compel Arbitration
And To Dismiss. That Motion is now before me.
Knezovich alleges in his Complaint, and his personnel file shows, that he was
hired by DIRECTV as an installer on May 10, 2010. The parties agree that, on that date,
Matt Nelson, the Site Manager, who had hired Knezovich, had Knezovich sign numerous
documents. Knezovich avers in his Declaration that the documents he signed were in “a
large stack of papers,” and that Mr. Nelson had him sign the paperwork without
explaining to Knezovich what any of it was or meant. Knezovich Declaration, ¶ 4.
When he turned to the “Mutual Agreement to Arbitrate
Claims,” I stopped and said, “What is this all about?”
Mr. Nelson said, “If you get fired because you screw up, you
can’t sue us.” Mr. Nelson then said I would have to sign all
of this paper work in order to get signed on with the company.
I went ahead and signed it because I wanted the job.
Knezovich Declaration, ¶ 5. Knezovich avers that the “Mutual Agreement to Arbitrate
Claims,” that Mr. Nelson asked him to sign is in his personnel file, that he understands
that a copy of it has been submitted as Exhibit B with DIRECTV’s Motion, that he does
recall signing that document, and that it appears to be his signature on that document.
Id. at ¶ 10. Thus, there is no dispute that the copy of the Mutual Agreement to Arbitrate
Claims (which for simplicity I will call the Arbitration Agreement) signed by Knezovich
on May 10, 2010, is the document submitted by DIRECTV as Exhibit B to its Motion.
The Arbitration Agreement provides, in part, as follows:
Disputes which shall be submitted to binding arbitration for
final resolution include; all claims or controversies, past,
present or future, except claims identified in the Arbitration
Procedure under the heading “Claims Not Covered by the
Agreement,” arising out of an employee’s employment or its
termination, that the Company may have against an employee
or that an employee may have against any of the following 
the Company;  its officers, directors, employees or agents
in their capacity as such or otherwise,  the Company’s
parent, subsidiary and affiliated entities,  the benefit plans
or the plans’ sponsors, fiduciaries, administrators, affiliates
and agents, and or  all successors and assigns of any of
them [“claims] (sic).
Claims and disputes by employees hired after January 1, 1993
shall be governed by this Agreement. Employee understands
that any reference in this Agreement to the Company will be
a reference only to the DIRECTV subsidiary and affiliated
entities who have adopted mandatory arbitration, and all
successors and assigns of any of them.
Except as set forth in the Arbitration Procedure, the decision
of the Arbitrator shall be final and binding upon all parties.
The parties’ mutual promise to arbitrate differences, rather
than litigate them before courts or other tribunals, provides
adequate consideration for each other.
By entering into this Agreement, Employee does not waive
his/her right to file an administrative claim or complaint with
the appropriate administrative agency, but does waive his/her
right to file a civil action and a jury trial, because the
Agreement provides for an adequate and equal opportunity for
the vindication of claims and complaints through this
This is the complete Agreement of the parties on the subject
of arbitration of disputes [except for any arbitration agreement
in connection with any pension or benefit plan]. This
Agreement supersedes any prior or contemporaneous oral or
written understandings on the subject. No party is relying on
any representations, oral or written, specifically set forth in
this Agreement (sic).
I ACKNOWLEDGE THAT I HAVE READ THIS
AGREEMENT AND THE ARBITRATION PROCEDURE.
THAT I UNDERSTAND THEIR TERMS, AND THAT I
VOLUNTARILY AND NOT IN RELIANCE ON ANY
PROMISES OR REPRESENTATIONS BY THE
COMPANY OTHER THAN THOSE CONTAINED
WITHIN THE AGREEMENT AND THE ARBITRATION
Arbitration Agreement, unnumbered ¶¶ 2-5, 9-10 (brackets in original).
Knezovich also avers that he does “not recall or believe any other documents were
presented to me at the time that discussed or referenced arbitration other than the one
page document entitled ‘Mutual Agreement to Arbitrate Claims.’”
Declaration at ¶ 6. Notwithstanding his signature below the acknowledgment in the last
paragraph of the Arbitration Agreement and the repeated references to an “Arbitration
Procedure” in the Arbitration Agreement, Knezovich contends that there was no
document called “Arbitration Procedure” or “Arbitration Procedure General” in his
personnel file when it was provided to his counsel by DIRECTV’s counsel; that the
document entitled Arbitration Procedure General, submitted by DIRECTV as Exhibit A
to its Motion, was not familiar to him; that he was not given a copy of it at the time he
signed the packet of documents; and that he “do[es] not believe [he] was ever given an
opportunity to read or review [it] at any time.” Id. at ¶¶ 11-12. He avers that he did
not receive copies of any of the documents that he signed and never saw any of them
again until recently. Id. at ¶ 8.
The Arbitration Procedure General attached to DIRECTV’s Motion as Exhibit A
begins with the following paragraph:
DIRECTV [the “Company”] Arbitration Procedure is
intended to be an impartial, cost effective and speedy
mechanism for resolving employment or other disputes
between the Company and its employees. Employees may
obtain final and binding arbitration of all claims in accordance
with the Mutual Agreement to Arbitrate Claims [“Arbitration
Agreement”] and the procedure described herein. Since
January 1, 1993 all new hires of DIRECTV companies that
have adopted this Procedure, have been required to execute a
Mutual Agreement to Arbitrate Claims as a condition of
Arbitration Procedure General, unnumbered ¶ 1 (brackets in original).
The Arbitration Procedure General then specifies claims covered and not covered
by the Arbitration Agreement, as follows:
Claims Covered by the Agreement
Disputes which shall be submitted to binding arbitration for
final resolution include: all claims or controversies
[“claims”], past, present or future, arising out of an
employee’s employment or termination, that the Company
may have against an employee or that an employee may have
against any of the following  the Company;  its officers,
directors, employees or agents in their capacity as such or
otherwise,  the Company’s parent, subsidiary and affiliated
entities,  the benefit plans or the plans’ sponsors,
fiduciaries, administrators, affiliates and agents, and or  all
successors and assigns of any of them.
The only claims that are arbitrable are those that, in the
absence of the Arbitration Agreement, would have been
justiciable under applicable state or federal law. The claims
covered by the Arbitration Agreement include, but are not
limited to: claims for wages or other compensation due;
claims for breach of any contract or covenant [express or
implied]; tort claims; claims for discrimination [including, but
not limited to, race, sex, sexual orientation, religion, national
origin, age, marital status, physical or mental disability, or
medical condition]; claims for benefits [except claims under
an employee benefit or pension plans that either  specifies
that its claims procedure shall culminate in an arbitration
procedure different from this one, or  is underwritten by a
commercial insurer which decides claims]; and claims for
violation of any federal, state, or other governmental law,
statute, regulation, or ordinance, except claims excluded
below under the heading “Claims Not Covered by the
Claims Not Covered by the Agreement
Claims for Workers’ Compensation or Unemployment
Compensation benefits cannot be submitted to binding
arbitration under the Arbitration Agreement. Also not
covered are claims by the Company or by the employee for
temporary restraining orders or preliminary injunctions
[“temporary equitable relief”] in cases in which such
temporary equitable relief would be otherwise authorized by
law. Such resort to temporary equitable relief shall be in aid
of arbitration only, and in such cases the trial on the merits of
the action will occur in front of, and will be decided by, the
Arbitrator, who will have the same ability to order legal or
equitable remedies as could a court of general jurisdiction.
Arbitration Procedure General (bolds and brackets in the original). The Arbitration
Procedure General provides that the arbitrator’s decision is final, except as provided
therein, and subject to judicial review. Id.
As mentioned at the outset of this opinion, on August 30, 2017, DIRECTV filed
its Motion. In support of its Motion, DIRECTV filed a Memorandum and the Declaration
Of Jennifer Tate, the former Senior Manager, Human Resources Information Systems
for DIRECTV, L.L.C. To the latter document, DIRECTV attached, as Exhibit A, its
Arbitration Procedure General and, as Exhibit B, the Arbitration Agreement signed by
Knezovich on May 10, 2010. On September 20, 2017, Knezovich filed a Memorandum
In Opposition to which he attached the Declaration of Deanne Casperson, one of his
attorneys; copies of emails between counsel for the parties (Exhibit A); a copy of
Knezovich’s personnel file provided by DIRECTV’s counsel (Exhibit B); and the
Declaration of Brenton R. Knezovich. On October 4, 2017, DIRECTV filed a Reply,
but no additional documents.
Neither party requested oral argument or an evidentiary hearing on the issues
presented in the Motion, and I conclude that neither is necessary. Therefore, I will
resolve that Motion on the parties’ written submissions.
Arguments Of The Parties
DIRECTV argues that federal policy favors arbitration and that arbitration is
required in this case, because a valid and enforceable Arbitration Agreement exists and
plainly applies to Knezovich’s claims.
Indeed, DIRECTV argues, the Arbitration
Agreement is neither procedurally nor substantively unconscionable and, at most,
Knezovich has argued only procedural unconscionability. DIRECTV points out that
Knezovich knowingly and voluntarily entered into the Arbitration Agreement.
DIRECTV also argues that Knezovich’s claims fall squarely within the broad scope of
the Arbitration Agreement, which specifically encompasses “all claims . . . arising out
of [his] employment or its termination.”
Somewhat more specifically, as to procedural matters, DIRECTV argues that
Knezovich knowingly and voluntarily entered into the Arbitration Agreement, because
he had the time to consider its terms and ask any questions he may have had, the
Arbitration Agreement is in a separate, clearly labeled document, and it is supported by
valuable consideration because of the mutual promises to arbitrate. DIRECTV points out
that Knezovich signed the Arbitration Agreement right beneath a conspicuous
acknowledgment that he had read and understood both the Arbitration Agreement and the
“Arbitration Procedure.” DIRECTV also argues that Knezovich did so in the absence of
any circumstances that would constitute coercion.
Knezovich counters that the Arbitration Agreement cannot be specifically
enforced, because of the fatal flaw that DIRECTV has not provided evidence that he ever
agreed to, or received, the Arbitration Agreement in its entirety. He contends he was
never given a copy of any “Arbitration Procedure” to review and none was included in
his personnel file or otherwise available. He contends that he never saw the Arbitration
Procedure General, submitted by DIRECTV as the “Arbitration Procedure” in question,
until this litigation commenced and his counsel was given a copy by DIRECTV’s counsel.
He also contends that the Arbitration Procedure General is not necessarily the
“Arbitration Procedure” referred to in the Arbitration Agreement, because it has a
More specifically, Knezovich argues that the “Arbitration Procedure,” whatever
it is, was not properly incorporated into the Arbitration Agreement by reference. This
is so, he contends, because the document DIRECTV offers has a different title from the
one that the Arbitration Agreement purports to incorporate by reference.
contends that the “Arbitration Procedure,” whatever it is, was not readily available for
inspection when he signed the Arbitration Agreement, and no purported version of it was
provided until he commenced this litigation. He argues that he was not given a chance
to ask questions about the Arbitration Agreement or the “Arbitration Procedure,” because
when he asked what the Arbitration Agreement was, the site manager misrepresented its
terms and directed him to sign it if he wanted the job. He likens his circumstances to
those of a consumer in Perez v. DIRECTV Group Holdings, L.L.C., No. 8:16–cv–1440–
JLS–DFMx, 2017 WL 1836357 (C.D. May 1, 2017), in which the court found DIRECTV
had invalidly incorporated its arbitration agreement. Knezovich argues that, without
proper incorporation by reference of an “Arbitration Procedure,” the terms of the
Arbitration Agreement cannot be enforced, because they are too indefinite, particularly
where the “Arbitration Procedure” purportedly identifies what claims are and are not
In reply, DIRECTV contends that Knezovich is trying to sow doubt where there
is none: Knezovich does not dispute that he knowingly and voluntarily agreed to arbitrate
his claims and signed the Arbitration Agreement. DIRECTV argues that Knezovich’s
claims for disability discrimination arise out of the termination of his employment, which
is clearly encompassed within the Arbitration Agreement, and that Knezovich knew,
definitely and for certain, from the plain reading of the Arbitration Agreement, that he
must arbitrate such claims.
DIRECTV reiterates that, because Knezovich only challenges procedural
unconscionability, he cannot invalidate the Arbitration Agreement.
DIRECTV points out that Knezovich knew what he was signing, asked his manager a
question about the Arbitration Agreement, then signed it, because he wanted the job,
which falls well short of any circumstance showing coercion. DIRECTV argues that,
because of the acknowledgment, in all capital letters, above Knezovich’s signature in the
Arbitration Agreement, Knezovich cannot credibly argue that he did not understand that
he was signing an arbitration agreement that required him to waive his right to a civil
action and jury trial for claims related to his employment and termination of employment.
Moreover, DIRECTV asserts that Knezovich’s argument now is contrary to his
acknowledgment that he had read both the Arbitration Agreement and the “Arbitration
Procedure,” understood them, and voluntarily agreed to them, without reliance on any
promises or representations other than those in the documents.
DIRECTV also reiterates that the “Arbitration Procedure” was properly
incorporated by reference into the Arbitration Agreement, because the “Arbitration
Procedure” was adequately identified and readily available for Knezovich’s inspection.
DIRECTV contends that the Arbitration Procedure General is that “Arbitration
Procedure.” DIRECTV points out that the Arbitration Procedure General is identified
in its first line as “DIRECTV . . . Arbitration Procedure,” thus matching the reference
in the Arbitration Agreement, and that the declaration of DIRECTV’s human resources
manager shows that the Arbitration Procedure General was readily available for
inspection by Knezovich at all times—and Knezovich signed the acknowledgment in the
Arbitration Agreement that he had read and understood the “Arbitration Procedure.”
Next, DIRECTV argues that the Arbitration Agreement plainly encompasses
Knezovich’s claims, because of its broad language, subject only to exclusions listed in
the Arbitration Procedure General, concerning claims for unemployment compensation,
workers’ compensation claims, and injunctive relief claims, which are not at issue here.
In any event, DIRECTV contends that the arbitrator, not the court, decides procedural
matters, such as what arbitration procedures apply to Knezovich.
Procedure For Deciding A Motion To
The Federal Arbitration Act (FAA) provides, in pertinent part, that when a party
petitions a federal court for an order directing arbitration pursuant to an arbitration
agreement, the following procedures apply:
The court shall hear the parties, and upon being satisfied that
the making of the agreement for arbitration or the failure to
comply therewith is not in issue, the court shall make an order
directing the parties to proceed to arbitration in accordance
with the terms of the agreement. . . . If the making of the
arbitration agreement or the failure, neglect, or refusal to
perform the same be in issue, the court shall proceed
summarily to the trial thereof. If no jury trial be demanded by
the party alleged to be in default, or if the matter in dispute is
within admiralty jurisdiction, the court shall hear and
determine such issue. Where such an issue is raised, the party
alleged to be in default may, except in cases of admiralty, on
or before the return day of the notice of application, demand
a jury trial of such issue, and upon such demand the court
shall make an order referring the issue or issues to a jury in
the manner provided by the Federal Rules of Civil Procedure,
or may specially call a jury for that purpose.
9 U.S.C. § 4.
Thus, § 4 provides for a trial, before a jury or the court, “[i]f the making of the
arbitration agreement . . . be in issue.” Hendrix v. Branton, 38 F.3d 1218 (9th Cir.
1994) (“Once the district court determines that the making of the agreement to arbitrate
is in issue, it is to proceed ‘summarily’ to trial of that issue.” (citing 9 U.S.C. § 4)).
Nevertheless, the Ninth Circuit Court of Appeals and the Idaho Supreme Court have
recognized that summary judgment procedures are appropriate to resolve a motion to
compel arbitration. See, e.g., Three Valleys Mun. Water Dist. v. E.F. Hutton & Co.,
925 F.2d 1136, 1141 (9th Cir. 1991) (“‘If there is doubt as to whether such an agreement
exists, the matter, upon a proper and timely demand, should be submitted to a jury. Only
when there is no genuine issue of fact concerning the formation of the agreement should
the court decide as a matter of law that the parties did or did not enter into such an
agreement.’” (quoting with approval Par-Knit Mills, Inc. v. Stockbridge Fabrics Co.,
636 F.2d 51, 54 (3d Cir. 1980)); accord Cox v. Ocean View Hotel Corp., 533 F.3d 1114,
1119 (9th Cir. 2008) (“Because denial of a motion to compel arbitration has the same
effect as a grant of partial summary judgment denying arbitration, Cox’s motion for
partial summary judgment was the functional equivalent of an opposition to Ocean View’s
motion, and we will treat it as such.”); see also Wattenbarger v. A.G. Edwards & Sons,
Inc., 150 Idaho 308, 317 (2010) (“When ruling on a motion to compel arbitration, the
district court applies the same standard as if ruling on a motion for summary judgment.”).
Such a procedure is consistent with § 4’s requirement of a trial only “[i]f the making of
the arbitration agreement . . . be in issue,” that is, only if there are genuine issues of
material fact as to the making of the agreement. In the absence of any genuine issues of
material fact, the court can properly determine the existence and validity of the arbitration
agreement as a matter of law.
Here, there can be no doubt that the parties anticipated resolution of DIRECTV’s
Motion To Compel Arbitration by applying summary judgment procedures. Both parties
submitted declarations and other documents in support of and resistance to that Motion.
Moreover, the parties engaged in some informal exchange of documents, which led to
DIRECTV providing a copy of Knezovich’s personnel file and a copy of the Arbitration
Procedure General to Knezovich’s counsel, and no party has requested any discovery
prior to disposition of DIRECTV’s Motion. Cf. Soltero v. Macy’s, Inc., 607 F. App’x
750, 751 (9th Cir. 2015) (slip op.) (“The parties conferred over a month and a half before
the hearing on Macy’s motion to compel arbitration, but Soltero propounded no discovery
requests. Further, there were no surprises here. Soltero filed a declaration in support of
her opposition to Macy’s motion to compel arbitration, which demonstrates that Soltero
and her counsel had notice that the motion would be treated as a motion for summary
judgment.” (citations omitted)). Also, no party has requested either an evidentiary
hearing or a trial on the Motion.
Therefore, I will consider whether there are any genuine issues of material fact as
to the making of the Arbitration Agreement in this case and, if not, whether to compel
arbitration as a matter of law.
Standards For Enforcement Of An
As the Ninth Circuit Court of Appeals very recently explained,
Since the FAA “mandates ... arbitration on issues as to which
an arbitration agreement has been signed,” Dean Witter
Reynolds, Inc. v. Byrd, 470 U.S. 213, 218, 105 S.Ct. 1238,
84 L.Ed.2d 158 (1985), when, as here, an arbitration
agreement involves “a contract evidencing a transaction
involving commerce,” 9 U.S.C. § 2, our role is limited “to
determining (1) whether a valid agreement to arbitrate exists
and, if it does, (2) whether the agreement encompasses the
dispute at issue.” Chiron Corp v. Ortho Diagnostic Sys., Inc.,
207 F.3d 1126, 1130 (9th Cir. 2000).
United States ex rel. Welch v. My Left Foot Children’s Therapy, L.L.C., 871 F.3d 791,
___, 2017 WL 3976314, at *3 (9th Cir. 2017).1 The party seeking to compel arbitration
bears “‘the burden of proving the existence of an agreement to arbitrate by a
preponderance of the evidence.’” Norcia v. Samsung Telecomm. Am., L.L.C., 845 F.3d
1279, 1283 (9th Cir. 2017) (quoting Knutson v. Sirius XM Radio Inc., 771 F.3d 559, 565
(9th Cir. 2014)).
“Under the FAA, the ‘interpretation of an arbitration agreement is generally a
matter of state law,’” id. (quoting Stolt-Nielse S.A. v. AnimalFeeds Int’l Corp., 559 U.S.
662, 681 (2010)), and since the Arbitration Agreement in this case was signed in Idaho
by an Idaho resident, both parties have argued the motion under Idaho contract law. Cf.
id. Notwithstanding that Idaho law applies,
“the FAA imposes certain rules of fundamental importance”
that must also guide our interpretation “including the basic
precept that arbitration is a matter of consent, not coercion,”
[Stolte-Nielse, 559 U.S. at 681] (internal quotation marks
omitted), and the rule that “questions of arbitrability must be
addressed with a healthy regard for the federal policy favoring
arbitration.” Moses H. Cone Mem’l Hosp. v. Mercury Constr.
Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 74 L.Ed.2d 765
Welch, 871 F.3d at ___, 2017 WL 3976314, at *3.
The Arbitration Agreement states, in part, “The parties agree that the Company
is engaged in transactions involving interstate commerce.” Arbitration Agreement,
unnumbered ¶ 6. No party has argued that the FAA does not apply.
As to unenforceability of agreements, generally, and arbitration agreements, in
particular, the Idaho Supreme Court has explained,
In order for a contractual provision to be voided for
unconscionability, it must be both procedurally and
substantively unconscionable. [Lovey v. Regence Blueshield
of Idaho, 139 Idaho 37, 42, 72 P.3d [877,] 882 [(2003].
Procedural unconscionability concerns the bargaining process
leading to the formation of a contract while substantive
unconscionability focuses on the contract’s terms. Id.
Wattenbarger v. A.G. Edwards & Sons, Inc., 150 Idaho 308, 321 (2010); see also Lovey
v. Regence BlueShield of Idaho, 139 Idaho 37, 41 (2003) (“Because unconscionability is
also a ground for voiding a contract, Smith v. Idaho State Univ. Fed. Credit Union, 114
Idaho 680, 760 P.2d 19 (1988), it can also be a basis for revoking an agreement to
The Idaho Supreme Court explained procedural unconscionability, which is what
Knezovich has put at issue here, in more detail, as follows:
Procedural unconscionability exists “when the contract
‘was not the result of free bargaining between the parties.’”
[Lovey, 139 Idaho at 42] (quoting N.W. Pipeline Corp. v.
Forrest Weaver Farm, Inc., 103 Idaho 180, 183, 646 P.2d
422, 425 (1982)). Indicators of procedural unconscionability
generally include a lack of voluntariness and a lack of
knowledge. Id. Indicators of lack of voluntariness include
“the use of high-pressure tactics, coercion, oppression or
threats short of duress.” Id. A lack of voluntariness can be
shown by an imbalance in bargaining power resulting from
the non-negotiability of the stronger party’s terms and the
inability to contract with another party due to time, market
pressures, or other factors. Id. Indicators of a lack of
knowledge include a “lack of understanding regarding the
contract terms arising from the use of inconspicuous print,
ambiguous wording, or complex legalistic language; the lack
of opportunity to study the contract and inquire about its
terms; or disparity in sophistication, knowledge, or
experience of the parties.” Id.
Wattenbarger, 150 Idaho at 321.2
I turn, next, to application of these standards.
Application Of The Standards
Existence of a valid agreement
There is no dispute that Knezovich signed the Arbitration Agreement, although he
did not sign any “Arbitration Procedure,” and he contends that no such “Arbitration
Procedure” was in his packet of paperwork to be signed at the time of his hire. Thus,
Knezovich argues that he did not know all the terms of the Arbitration Agreement. He
The court in Wattenbarger also explained substantive unconscionability in more
detail, as follows:
The focus of substantive unconscionability is solely on
the terms of the contractual provision at issue. [Lovey, 139
Idaho at 42]. A provision is substantively unconscionable if it
is a bargain no reasonable person would make or that no fair
and honest person would accept. Id. If a contract term is onesided or oppressive, it may be substantively unconscionable.
Id. In determining whether a term is unconscionable, a court
must consider “the purpose and effect of the terms at issue,
the needs of both parties and the commercial setting in which
the agreement was executed, and the reasonableness of the
terms at the time of contracting.” Id. at 42–43, 72 P.3d at
Wattenbarger, 150 Idaho at 321. DIRECTV is correct that none of Knezovich’s
arguments go to the substantive unconscionability of the Arbitration Agreement.
Consequently, it appears that the Arbitration Agreement cannot be invalidated on the
basis of unconscionability, even if Knezovich’s arguments concerning procedural
unconscionability, challenging knowledge and voluntariness, are successful. Id. Even
so, I will address Knezovich’s procedural unconscionability arguments.
also argues that he only signed the Arbitration Agreement, because it was a requirement
for employment, thus suggesting that his agreement was not knowing or voluntary.
“Coercion” is a recognized challenge to the voluntariness of an agreement, such
as an arbitration agreement, under Idaho law. See Wattenbarger, 150 Idaho at 321;
accord Welch, 871 F.3d at ___, 2017 WL 3976314, at *3 (explaining that one rule from
the FAA of fundamental importance is that arbitration is a matter of consent not
Judge Edward Lodge of this court recently explained that requiring an
employee to sign an arbitration agreement as a condition of employment is subject to
Idaho law regarding adhesion contracts:
An adhesion contract is “an agreement between two
parties of unequal bargaining strength, expressed in the
language of a standardized contract, written by the more
powerful bargainer to meet its own needs, and offered to the
weaker party on a ‘take it or leave it basis.’” Lovey, 72 P.3d
at 883. Adhesion contracts are not per se unconscionable. See
AT&T Mobility LLC, 563 U.S. at 346; see also Lovey, 72
P.3d at 883 (“an adhesion contract cannot be held
procedurally unconscionable solely because there was no
bargaining over the terms. Adhesion contracts are a fact of
modern life. They are not against public policy.”). Use of an
unconscionability if [Plaintiff] was prevented by market
factors, timing, or other pressures from being able to contract
with another party on more favorable terms or to refrain from
contracting at all.” Lovey, 72 P.3d at 883.
Simmons v. Rush Truck Centers of Idaho, Inc., No. 4:16-CV-00450-EJL, 2017 WL
2271123, at *5 (D. Idaho May 24, 2017). Judge Lodge then rejected the plaintiff
employee’s contention that the arbitration agreement in his case was an unconscionable
adhesion contract, inter alia, because the plaintiff “ha[d] not shown what factors, timing,
or other pressures would have prevented him from obtaining employment from another
employer who did not require arbitration as a means of dispute resolution.” Id. The
same is true here:
Merely asserting that signing the Arbitration Agreement was a
condition of his employment did not make the Arbitration Agreement involuntary, and
Knezovich has offered nothing more.
Incorporation by reference
In this case, the validity of the Arbitration Agreement turns primarily on whether
the Arbitration Agreement validly incorporated the “Arbitration Procedure” by reference
and the companion question of whether the Arbitration Procedure General, submitted by
DIRECTV, is the “Arbitration Procedure” referred to in the Arbitration Agreement.
Knezovich argues that the “Arbitration Procedure” was not validly incorporated, because
it was unavailable at the time that he signed the Arbitration Agreement. He bases his
“unavailability” argument on his averments that the “Arbitration Procedure” was not in
his packet of documents requiring his signature and that his questions about the
Arbitration Agreement were brushed aside or given misleading answers.
Even where an agreement contains an integration or merger clause, “‘[a] signed
agreement may incorporate by reference to another agreement, which is not signed by
the parties, if the terms to be incorporated are adequately identified and readily available
for inspection by the parties.’” City of Meridian v. Petra Inc., 154 Idaho 425, 435 (2013)
(quoting Harris, Inc. v. Foxhollow Const. & Trucking, Inc., 151 Idaho 761, 777 (2011)).
As the Idaho Supreme Court has explained,
In Loomis v. Cudahy, this Court held that the terms of another
agreement not signed by the parties can be incorporated into
the signed agreement by reference when the unsigned terms
are readily available for inspection by the parties. 104 Idaho
106, 118–19, 656 P.2d 1359, 1371–72 (1982). The new
account card signed by Tifani makes clear reference to the
portion of the custodial account agreement that contains the
arbitration clause. Furthermore, as noted above, there is no
evidence that Tifani was not provided with the custodial
account agreement or that it was not available to her. Thus,
Tifani is bound by the arbitration clause even though it is not
contained in the signed agreement.
Wattenbarger v. A.G. Edwards & Sons, Inc., 150 Idaho 308, 320 (2010).
In this case, much as in Wattenbarger, the Arbitration Agreement “makes clear
reference[s]” to the “Arbitration Procedure” adequately identifying the terms
incorporated. Id.; City of Meridian, 154 Idaho at 435. The Arbitration Agreement states
that disputes subject to arbitration are “all claims or controversies, past, present or future,
except claims identified in the Arbitration Procedure under the heading ‘Claims Not
Covered by the Agreement,’”; “Except as set forth in the Arbitration Procedure, the
decision of the Arbitrator shall be final and binding upon all parties”; the arbitration
“shall be conducted in accordance with the Arbitration Procedure”; “This Agreement,
and/or the Arbitration Procedure, do not create nor are either to be construed to create
any contract of employment, expressed or implied, and is in no way intended to alter or
affect Employee’s status as an employee”; “If any part of this Agreement or the
Arbitration Procedure is found to be void or otherwise unenforceable, the remainder of
the Agreement/Arbitration Procedure will continue to be in full force and effect.”
Arbitration Agreement; see also id., unnumbered ¶ 1 (“The Company’s Arbitration
Procedure is intended to be an impartial, cost effective and speedy mechanism for
resolving employment or other disputes between the Company and its employees.”);
id. “Acknowledgment” para. (acknowledging that the employee has read and understood
the Arbitration Agreement and the Arbitration Procedure and that the employee is not
relying on any promises or representations other than those in those documents).
Knezovich contends that, notwithstanding the acknowledgment in the Arbitration
Agreement he signed, he did not read and did not have ready access to the “Arbitration
Procedure.” See Wattenburger, 150 Idaho at 320. DIRECTV’s failure to make sure the
“Arbitration Procedure” was included in Knezovich’s packet of documents at the time he
was required to sign the Arbitration Agreement is an extremely poor business practice
and borders on the deceptive. While it isn’t illegal, it is inexcusable for employers not
to provide prospective employees with a copy of an
arbitration procedure at the same time they ask
prospective employees to review and sign an
arbitration agreement incorporating that arbitration
procedure by reference as a condition of employment.
Nevertheless, “‘[t]he rule in Idaho is well established that a party’s failure to read
a contract will not excuse his performance.’” Allen v. Reynolds, 145 Idaho 807, 811
(2006) (quoting Irwin Rogers Ins. Agency, Inc. v. Murphy, 122 Idaho 270, 273, 833 P.2d
128, 131 (Ct. App. 1992)). To put a still finer point on the matter, “a written contract
cannot be avoided by one of the parties to it on the ground that he signed it without
reading it and did not understand it; failing to read the contract or to have it read to him
or to otherwise inform himself as to the nature, terms and conditions of the contract
constitutes nothing more than gross negligence on the part of that party and is an
insufficient ground upon which to set the contract aside.” Liebelt v. Liebelt, 118 Idaho
845, 848–49 (Ct. App. 1990). It is all the more negligent for a party to fail to read a
contract or incorporated document, and to fail to ask for any incorporated document that
appears to be missing, when the party signs an acknowledgment that the party has read
and understood those documents.
Even if the “Arbitration Procedure” was not in Knezovich’s paperwork at the time
he signed the Arbitration Agreement, Knezovich’s contentions that the “Arbitration
Procedure” was not readily available to him are not enough to present a triable issue.
Knezovich asked what the Arbitration Agreement was, so he could also have asked to see
the “Arbitration Procedure” if he did not think it was in his paperwork. Because he
signed the Arbitration Agreement right below the acknowledgment, in all capital letters,
that he had read and understood the “Arbitration Procedure,” his failure to ask to see a
possibly missing document was also “nothing more than gross negligence.” Cf. Liebelt,
118 Idaho at 848-49. Moreover, the fact that the document was not already in his pile
of paperwork does not mean that it was not “readily available.” That contention is merely
conclusory. In contrast, the human resources manager has averred, “Employees could
also request a copy of the Arbitration Agreement and Arbitration Procedure at any time,”
and that company practice was that an employee’s manager or site administrator would
reach out to human resources if a new hire had any questions. Declaration of Jennifer
Tate, ¶ 12.
Although Knezovich asserts that the possibility that the “Arbitration
Procedure” was readily available to him is merely speculative, ultimately, his negligence
in failing to ask to see it at the time he signed the Arbitration Agreement, representing
that he had read it, defeats his challenge to the availability of the “Arbitration Procedure.”
Knezovich’s argument that it is unclear whether the Arbitration Procedure General
submitted by DIRECTV is the “Arbitration Procedure” incorporated by reference in the
Arbitration Agreement is also insufficient to raise a triable issue. It is true that the
Arbitration Agreement could not incorporate by reference a later-dated “Arbitration
Procedure,” see City of Meridian, 154 Idaho at 435, but there is no evidence that the
Arbitration Procedure General is a later-dated or later-created document. As DIRECTV
points out, the Arbitration Procedure General expressly identifies itself as “DIRECTV
[the ‘Company’] Arbitration Procedure,” thus matching the references in the Arbitration
Agreement. Arbitration Procedure General, unnumbered ¶ 1. Furthermore, both the
Arbitration Agreement and the Arbitration Procedure General refer to the arbitration
scheme in place since January 1, 1993. Id.; Arbitration Agreement, unnumbered ¶ 3
(“Claims and disputes by employees hired after January 1, 1993 shall be governed by
this Agreement.”). Once again, Knezovich’s speculation that some other “Arbitration
Procedure” might have been the document incorporated by reference into the Arbitration
Agreement founders on his negligence in failing to ask for and read the “Arbitration
Procedure,” where he acknowledged by his signature that he had read and understood it,
as well as the Arbitration Agreement. Cf. Liebelt, 118 Idaho at 848-49.3
Thus, I conclude, as a matter of law, that a valid Arbitration Agreement existed,
that the “Arbitration Procedure” to which it refers is the Arbitration Procedure General,
and that the Arbitration Procedure General was validly incorporated by reference into the
Applicability To The Dispute At Issue
The second determination that I must make is “whether the agreement
encompasses the dispute at issue.” Welch, 871 F.3d at ___, 2017 WL 3976314, at *3
(citation omitted). In other words, I must “consider whether the text of the [Arbitration
Agreement] is broad enough to encompass this lawsuit.” Id. at ___, 2017 WL 3976314,
at *5. In doing so, I must recognize that “the specific governs the general,” so that a
provision broadly defining the kinds of claims encompassed by an arbitration agreement,
such as “any and all disputes,” may be limited by “plain language imposing a textual
limitation” on the kinds of claims that must be arbitrated, such as claims that “arise from,
relate to, or [are] connected with [an employee’s] employment or association with [the
employer].” Id. at 797.
Knezovich’s attempt to liken his case to that of the plaintiff consumer in Perez
v. DIRECTV Group Holdings, L.L.C., No. 8:16–cv–1440–JLS–DFMx, 2017 WL
1836357 (C.D. May 1, 2017), fails. In Perez, the arbitration agreement was purportedly
incorporated by reference into a consumer’s Equipment Lease Agreement (ELA), but
reference to the arbitration provision was inconspicuously placed and did not have a
conspicuous acknowledgment that the consumer had read and understood it and any
documents incorporated by reference. 2017 WL 1836357, at *5-*6.
Here, the “provision identifying claims encompassed by the Arbitration
Agreement, in the Arbitration Agreement itself, states a very general scope, that the
Arbitration Agreement encompasses “all claims or controversies, past, present or future,
except claims identified in the Arbitration Procedure under the heading ‘Claims Not
Covered by the Agreement,’” but then imposes a specific limitation, that the Arbitration
Agreement applies only to claims “arising out of an employee’s employment or its
termination.” Arbitration Agreement, unnumbered ¶ 2 (emphasis added). The Ninth
Circuit Court of Appeals “h[as] held[ ] the words arising out of are ‘relatively narrow as
arbitration clauses go,’ and ‘understood to mean originating from[,] having its origin in,
growing out of or flowing from.’” Welch, 871 F.3d at ___, 2017 WL 3976314, at *5
Knezovich’s disability discrimination claims are plainly
encompassed by this “relatively narrow” scope, because his claims do have their origin
in, grow out of, or flow from his employment, in that he would not have such claims if
he had not been employed by DIRECTV. Id. (considering whether the plaintiff would
have had the same claims, even if he had never been employed by the defendant, where
the arbitration agreement at issue in that case encompassed both claims “arising out of”
and “relat[ing] to” employment). Nor are Knezovich’s claims excluded from the scope
of the Arbitration Agreement by the further specific limitations in the Arbitration
Procedure General, properly incorporated by reference, which exclude unemployment
compensation claims, workers’ compensation claims, and injunctive relief claims, which
are not at issue here. Indeed, because Knezovich acknowledged that he had read and
In Welch, the court also “recognized that the phrase ‘relate to’ is broader than
the phrase ‘arising out of’ or ‘arising under,’” but that it, nevertheless, “marks a
boundary by indicating some direct relationship.” 871 F.3d at ___, 2017 WL 3976314,
at *5. Although DIRECTV sometimes argues, in its brief, that the Arbitration
Agreement, here, encompasses claims “relating to” Knezovich’s employment, neither
the Arbitration Agreement nor the Arbitration Procedure General states that the
Arbitration Agreement includes claims “relating to” Knezovich’s employment.
understood both the Arbitration Agreement and the Arbitration Procedure General, he
must be deemed to have known and understood that the claims at issue, here, were
encompassed within the Arbitration Agreement and not excluded by the Arbitration
Thus, the Arbitration Agreement exists, is valid, and encompasses the dispute at
issue. Welch, 871 F.3d 791, ___, 2017 WL 3976314, at *3. Knezovich has failed to
generate any triable issues to the contrary. Three Valleys Mun. Water Dist., 925 F.2d at
1141 (explaining that the court should decide as a matter of law whether the parties
entered into a valid arbitration agreement, only if “there is no genuine issue of fact
concerning the formation of the agreement”); Wattenbarger, 150 Idaho at 317 (“When
ruling on a motion to compel arbitration, the district court applies the same standard as
if ruling on a motion for summary judgment.”). Thus, I will compel arbitration of
Stay Or Dismissal
Because I will compel arbitration, I must decide whether to stay this case pending
arbitration or outright dismiss it. DIRECTV argues that I should dismiss Knezovich’s
Complaint in its entirety, rather than stay this case pending arbitration, because that is
the course favored by the greater weight of authorities. Knezovich requests that, even if
I find that his claims must be arbitrated, I should retain jurisdiction and only stay these
proceedings pending arbitration. He does not explain, however, why that is the better
“The FAA provides that district courts must stay pending proceedings on issues
subject to arbitration until such arbitration has been had.” Tillman v. Tillman, 825 F.3d
1069, 1075 (9th Cir. 2016) (citing 9 U.S.C. § 3); Johnmohammadi v. Bloomingdale’s,
Inc., 755 F.3d 1072, 1073 (9th Cir. 2014) (“In these circumstances § 3 of the FAA, 9
U.S.C. § 3, seems to direct that the action ‘shall’ be stayed pending completion of
arbitration.” (citing cases so holding)). The Ninth Circuit Court of Appeals “ha[s] held
that, notwithstanding the language of § 3, a district court may either stay the action or
dismiss it outright when, as here, the court determines that all of the claims raised in the
action are subject to arbitration.” Johnmohammadi, 755 F.3d at 1073-74 (citing Sparling
v. Hoffman Constr. Co., 864 F.2d 635, 638 (9th Cir. 1988)). As the Ninth Circuit Court
of Appeals explained,
The choice matters for purposes of appellate jurisdiction: An
order compelling arbitration and staying the action isn’t
immediately appealable, 9 U.S.C. § 16(b)(1)-(2); Green Tree
Fin. Corp.–Ala. v. Randolph, 531 U.S. 79, 87 n. 2, 121 S.Ct.
513, 148 L.Ed.2d 373 (2000), but an order compelling
arbitration and dismissing the action is. § 16(a)(3); Green
Tree, 531 U.S. at 89, 121 S.Ct. 513.
Johnmohammadi, 755 F.3d at 1074.
It appears that the primary consideration is whether “the arbitration clause [i]s
broad enough to bar all of the plaintiff’s claims [by] requir[ing] [the plaintiff] to submit
all claims to arbitration,” and if it is, dismissal is appropriate. Sparling, 864 F.3d at
638. Here, all of Knezovich’s claims must be submitted to arbitration. Id. Moreover,
I personally prefer to clear the way for a party’s prompt appeal of an adverse ruling, if
possible, rather than subject the parties to the delay and expense of further proceedings
that might otherwise lead to a disposition that could be undone in a much later appeal.
Only a dismissal will do that, here. Johnmohammadi, 755 F.3d at 1074. Under these
circumstances, I conclude that the proper course is to dismiss Knezovich’s federal action,
in its entirety, without prejudice.
Upon the foregoing, DIRECTV’s August 30, 2017, Motion To Compel
Arbitration And To Dismiss (docket no. 6) is granted, as follows:
The parties are ordered to arbitration, pursuant to their signed
Arbitration Agreement and the Arbitration Procedure General incorporated therein by
reference, as to all claims in Knezovich’s Complaint; and
Knezovich’s Complaint is dismissed in its entirety.
IT IS SO ORDERED.
DATED this 13th day of October, 2017.
MARK W. BENNETT
U.S. DISTRICT COURT JUDGE
NORTHERN DISTRICT OF IOWA
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