Payne v. Menard Inc

Filing 23

OPINION AND ORDER GRANTING 6 First MOTION to Dismiss for Improper Venue. The Court directs the Clerk to close this case. ***Civil Case Terminated. Signed by Judge Joseph S Van Bokkelen on 1/17/17. (cc: Plaintiff)(ksp)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
HAMMOND DIVISION
JANET PAYNE,
Plaintiff,
v.

Case No.: 2:15-CV-317-JVB-PRC

MENARD, INC., d/b/a MENARD,
Defendant.
OPINION AND ORDER
Plaintiff Payne sued Defendant Menard pursuant to the Americans with Disabilities Act
and the Age Discrimination in Employment Act. Payne also brought a claim for worker’s
compensation retaliation under Indiana law.1
Menard moved to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(3) on the
ground that, by signing an “EMPLOYEE AGREEMENT” when she started working at
Menard’s, Payne agreed to a mandatory arbitration clause.
Plaintiff moved for a stay, arguing that the charge she filed against Menard with the
National Labor Relations Board on January 6, 2016—in which she complains about the
arbitration agreement—may lead the NLRB to rescind the arbitration agreement, which would
render the motion to dismiss moot. The Court granted the stay on February 18, 2016.
On October 21, 2016, Menard moved to lift the stay given the resolution of the NLRB
charge. The NLRB did not find the arbitration agreement invalid. The Court lifted the stay on
October 24, 2016, and now addresses Menard’s motion to dismiss.

1

The Court reminds Plaintiff of Northern District of Indiana Local Rule 5-4(a)(4), requiring the
use of at least 12-point type.

A.

Summary of Facts
The parties do not dispute the following facts. When Menard hired Payne, she signed an

Employment Agreement. (Mot. Dismiss, DE 6, ¶ 3; Resp. Mot. Dismiss, DE 10 at 2.)
This Agreement sets out a process for resolving claims:
6. Remedy. I agree that all problems, claims, and disputes
experienced within my work area shall first be resolved as outlined in the
Team Member Relations section of the Grow With Menards Team Member
Information Booklet which I have received. If I am unable to resolve the
dispute by these means, I agree to submit to final and binding arbitration.
Problems, claims, or disputes subject to binding arbitration include, but are
not limited to: statutory claims under 42 U.S.C. § 1981, the Age
Discrimination in Employment Act, Fair Labor Standards Act, Title VII of
the Civil Rights Act of 1964, Title I of the Civil Rights Act of 1991,
Americans with Disabilities Act, Family Medical Leave Act, and nonstatutory claims such as contractual claims, quasi-contractual claims, tort
claims, and any and all causes of action arising under state laws or common
law.
These claims shall be resolved by binding arbitration with the
American Arbitration Association (“AAA”) located at 225 North Michigan
Avenue, Suite 252, Chicago, Illinois 60601-7601 under its current version
of the National Rules for the Resolution of Employment Disputes. I
understand that the AAA National Rules for the Resolution of Employment
Disputes shall govern the fees in this matter, and that the costs of filing a
demand for arbitration will not exceed the costs of filing a civil complaint
in federal court. A copy of the National Rules for the Resolution of
Employment Disputes and fee schedule of the American Arbitration
Association may be obtained by contacting it at the address listed above.
I agree that all arbitrators selected shall be attorneys. This provision
shall supersede any contrary rule or provision of the forum state.
Nothing in this Agreement infringes on my ability to file a claim
or charge of discrimination with the U.S. Equal Employment
Opportunity Commission or comparable state or local agencies. These
agencies have the authority to carry out their statutory duties by
investigating the charge, issuing a determination, filing a lawsuit in
Federal or state court in their own name, or taking any other action
authorized under these statutes. I understand that I have the right to
participate in such action.
2

Menard, Inc. is engaged in commerce using U.S. Mail and telephone
service. Therefore, the Agreement is subject to the Federal Arbitration Act,
U.S.C. Sections 1–14 as amended from time to time.
(Employee Agreement, DE 7-1, § 6.)
At this point, the parties’ claims diverge. Payne claims she suffered injury at work on
May 28, 2014, when four cases of ceramic tile fell on her shoulder and arm. (Compl., DE 1, ¶
13.) Plaintiff asserts claims under the ADA and ADEA, as well as a claim for worker’s
compensation retaliation under Indiana law. (Compl., DE 1.)
Menard argues that the Employee Agreement requires Payne to submit her claims to
binding arbitration. (Mot. Dismiss, DE 6, ¶ 4.) Accordingly, Menard moved for dismissal
pursuant to Rule 12(b)(3).
Payne’s NLRB charge challenged the arbitration agreement. (DE 12-1 at 3.) But the
Settlement Agreement regarding that charge provides that Menard’s “arbitration program does
not violate the Act as it relates to individual claims.” (DE 19-1 at 1.) Following the resolution of
the NLRB charge and the lifting of the stay, the Court will now evaluate the motion to dismiss
based on the arbitration clause.

B.

Discussion

(1)

Standard for Evaluating a Motion to Dismiss under Rule 12(b)(3)
When an arbitration agreement requires arbitration outside the district where the lawsuit

pends, a Rule 12(b)(3) motion to dismiss for improper venue is the proper procedure.
Faulkenberg v. CB Tax Franchise Sys., LP, 637 F.3d 801, 808 (7th Cir. 2011) (citing Cont’l Ins.
Co. v. M/V Orsula, 354 F.3d 603, 606–07 (7th Cir. 2003)). Here, the Agreement calls for
arbitration in Chicago, outside this Court’s district. (Employee Agreement, DE 7-1, ¶ 6.)
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When considering a Rule 12(b)(3) motion, the Court must construe the facts in favor of
the plaintiff. Faulkenberg, 637 F.3d at 806.
When ruling on a Rule 12(b)(3) motion, the Court may look to evidence outside the
pleadings. Id. at 809–10.

(2)

Arbitration agreement

(a)

Applicable law
Arbitration agreements between employers and employees are generally covered by the

Federal Arbitration Act. 9 U.S.C. §§ 1–16; See Circuit City Store, Inc. v. Adams, 532 U.S. 105,
118–24 (2001).
The FAA states that a provision in a contract to settle by arbitration any future
controversy arising out of the contract or the subject transaction is valid and enforceable, absent
grounds for revocation:
A written provision in any maritime transaction or a contract evidencing a
transaction involving commerce to settle by arbitration a controversy
thereafter arising out of such contract or transaction, or the refusal to
perform the whole or any part thereof, or an agreement in writing to submit
to arbitration an existing controversy arising out of such a contract,
transaction, or refusal, shall be valid, irrevocable, and enforceable, save
upon such grounds as exist at law or in equity for the revocation of any
contract.
9 U.S.C. § 2.
The FAA is a “congressional declaration of a liberal federal policy favoring arbitration
agreements . . . .” Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983).
The FAA places arbitration agreements on the same level as other contracts. Gilmer v.
Interstate/Johnson Lane Corp., 500 U.S. 20, 24 (1991).

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The FAA “establishes that, as a matter of federal law, any doubts concerning the scope of
arbitrable issues should be resolved in favor of arbitration . . . .” Moses H. Cone Mem’l Hosp.,
460 U.S. at 24–25.
Statutory claims “may be the subject of an arbitration agreement, enforceable pursuant to
the FAA.” Gilmer, 500 U.S. at 26. The party resisting arbitration “bears the burden of
establishing that Congress intended to preclude arbitration of the statutory claims at issue.”
Green Tree Fin. Corp.-Ala. v. Randolph, 531 U.S. 79, 92 (2000).
To determine whether a claim is arbitrable, courts examine: (1) whether the parties
entered into a valid and enforceable arbitration agreement under applicable state law; (2) whether
the claims asserted fall within the scope of the arbitration agreement; and (3) whether the moving
party waived its right to arbitrate. DeGroff v. MascoTech Forming Techs.-Fort Wayne, Inc., 179
F. Supp. 2d 896, 902 (N.D. Ind. 2001) (citing Gilmer, 500 U.S. at 34); Koveleskie v. SBC Capital
Mkts., Inc., 167 F.3d 361, 364 (7th Cir. 1999).
The parties agree that Plaintiff’s claims fall within the scope of the arbitration agreement.
(Br. Supp. Mot. Dismiss, DE 7 at 6–7; Resp. Mot. Dismiss, DE 10 at 2.) Additionally, Plaintiff
does not claim Defendant waived its right to arbitrate. Accordingly, the Court will focus on the
first issue: whether the written agreement is binding under applicable state law.
Indiana law requires four elements to form a valid contract: offer, acceptance,
consideration, and manifestation of mutual assent. In re Paternity of M.F., 938 N.E.2d 1256,
1259 (Ind. Ct. App. 2010) (citing Ind. B.M.V. v. Ash, Inc., 895 N.E.2d 369 (Ind. Ct. App. 2008)).
The written agreement satisfies these elements.

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(b)

The arbitration agreement is sufficiently clear under Indiana law
Plaintiff claims the arbitration agreement is not a valid, enforceable contract under

Indiana law “because it does not expressly state the rights given up, it is silent as to costs, and it
provides misinformation.” (Resp. Mot. Dismiss, DE 10 at 2, emphasis removed.) Plaintiff
complains that the arbitration agreement lacks clarity and does not expressly state that the
employee gives up her right to court proceedings or jury trial. (Id. at 3.)
This Court disagrees. The Agreement might not be a paragon of clarity, but it is clear
enough. It is far from being so incomprehensible as to be unenforceable.
After invoking the principle of subsidiarity—that people should resolve issues at the
smallest, most local level possible—the Agreement’s plain language mandates arbitration:
I agree that all problems, claims, and disputes experienced within my work
area shall first be resolved as outlined in the Team Member Relations
section of the Grow With Menards Team Member Information Booklet
which I have received. If I am unable to resolve the dispute by these means,
I agree to submit to final and binding arbitration.
(Employee Agreement, DE 7-1, § 6.) By signing the Agreement, Plaintiff agreed that if she
failed to resolve any dispute through the procedures outlined in the Information Booklet—which
is not part of the record, but which Plaintiff does not claim permit litigation before this Court—
then she would submit to final and binding arbitration. (Id.) This requirement is clear.
The Agreement identifies the types of claims subject to binding arbitration, and lists by
name most of the claims in this lawsuit: claims under the ADEA and the ADA. (Id.) The
Agreement also states that “any and all causes of action arising under state laws or common
law”—like Plaintiff’s worker’s compensation retaliation claim—are subject to binding
arbitration. (Id.)

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If all that is not clear enough, the Agreement states in bold, capital letters, immediately
above the signature blocks:
THIS DOCUMENT CONTAINS A BINDING ARBITRATION
PROVISION WHICH MAY BE ENFORCED BY THE PARTIES. I
HAVE READ THIS ENTIRE AGREEMENT AND I FULLY
UNDERSTAND THE LIMITATIONS WHICH IT IMPOSES UPON
ME, AND I UNDERSTAND THAT THIS AGREEMENT CANNOT
BE MODIFIED EXCEPT BY THE PRESIDENT OF MENARD, INC.
(Id.) The binding-arbitration requirement is clear, and Plaintiff’s arguments in this regard fail.

(c)

The arbitration agreement is not impossible or unconscionable
Plaintiff further claims the arbitration agreement “must fail due to impossibility and

unconscionability.” (Resp. Mot. Dismiss, DE 10 at 4.) Plaintiff claims “the plain obligations set
out by the contract cannot be followed.” (Id.) Plaintiff notes that the 225 North Michigan Avenue
address given in the arbitration agreement for the AAA is wrong. (Id. at 5.) Plaintiff notes that
the arbitration agreement does not list a website address or telephone number for the AAA. (Id.)
At this procedural stage, the Court accepts as true the contention that the address listed
for the AAA in the Agreement is wrong. Defendant claims the 225 North Michigan Address is
the AAA’s former address. (Reply Supp. Mot. Dismiss, DE 11 at 6.) However, whether the
address listed in the Agreement was correct on the day Plaintiff signed it, or whether it was never
correct due to a typographical error or some other mistake, is immaterial for the following
reasons.
First, Plaintiff does not claim she attempted to contact the AAA before filing this federal
lawsuit, but failed. Plaintiff filed this lawsuit on August 25, 2016. (Compl., DE 1.) Plaintiff
claims she attempted to contact the AAA by mail several days later, on August 28, 2016, and the
mail was returned as undeliverable. (Resp. Mot. Dismiss, DE 10 at 5; Envelope, DE 10-3.)
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Second, the arbitration agreement survives slight discrepancies regarding details because
the arbitration agreement manifests the parties’ basic intent to arbitrate. The Agreement’s plain
language mandates final and binding arbitration if internal procedures fail. (Employee
Agreement, DE 7-1, § 6.) The Agreement specifies the name of the arbitration group charged
with resolution and an address for that group. (Id.) If the address is wrong, the identity of the
charged arbitration group remains.
Indeed, the severability clause of the Agreement provides: “I agree that if the scope or
enforceability of any part of this Agreement is in any way disputed at any time, a court or
arbitrator may modify and enforce the Agreement to the extent that it believes to be reasonable
under the circumstances existing at that time.” (Id.) The Court does not hold that formal
modification of the Agreement is necessary regarding the AAA’s address. But if it were
necessary, the reasonable modification would be to replace the incorrect AAA address with the
correct AAA address.
The ubiquity of the internet, phone books, and public librarians also renders Plaintiff’s
complaint about the Agreement’s lack of a website address or telephone number for the AAA
unavailing. Nor does Plaintiff cite any law in support of the proposition that an arbitration clause
must include the website address or phone number of the arbitration group.

(d)

Arbitration rules
Plaintiff also faults the Agreement for referencing the “National Rules for the Resolution

of Employment Disputes” when, at least as of the date Plaintiff filed her Response to Motion to
Dismiss, a Google search indicated the AAA no longer has rules by that name. (Resp. Mot.
Dismiss, DE 10 at 5.) Plaintiff claims the Agreement purports to mandate that the parties use

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only these rules, which are now extinct. (Id.) But the Agreement doesn’t require that. Moreover,
Plaintiff doesn’t claim there is no current version of these rules. In any event, even if there were
an ambiguity regarding which arbitration rules should apply, this would not render the arbitration
mandate invalid. The parties could raise any dispute regarding which rules to use with the
arbitrators, if necessary.
On April 27, 2006, when Plaintiff and a representative of Defendant signed the
Agreement, neither could predict the address to which the AAA would apparently later move,
and neither could anticipate the exact name of the relevant arbitration rules the AAA would later
adopt regarding employment disputes. The address change and rule update do not render the
contract impossible to perform, or unconscionable, or otherwise invalid.

(e)

Arbitration costs and fees
Plaintiff also argues the Agreement is unconscionable because it is silent regarding who

will bear the costs and fees of arbitration. (Resp. Mot. Dismiss, DE 10 at 9–10.) Plaintiff cites no
law supporting this argument. And Plaintiff acknowledges that the Agreement is not completely
silent regarding the costs and fees of arbitration: the Agreement provides that the AAA’s rules
will govern fees, and that the costs of filing an arbitration demand will not exceed the costs of
filing a complaint in federal court. (Id. at 10.)
Even if the Agreement were completely silent regarding the costs and fees of arbitration,
this fact alone would not render the arbitration mandate unenforceable. In Green Tree Financial
v. Randolph, the arbitration agreement was silent about the costs and fees of arbitration. Id., 531
U.S. at 90. The Supreme Court held that fact alone was “plainly insufficient to render [the
arbitration agreement] unenforceable.” Id. at 91.

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A party seeking to invalidate an arbitration agreement on the ground that arbitration
would be prohibitively expensive “bears the burden of showing the likelihood of incurring such
costs.” Id. at 92. Plaintiff has not met that burden.
One “highly probative” factor is the comparison of arbitration expense to litigation
expense. James v. McDonald’s Corp., 417 F.3d 672, 680 (7th Cir. 2005). Plaintiff has not
offered any compelling arguments in this regard. Indeed, the Agreement provides that “the costs
of filing a demand for arbitration will not exceed the costs of filing a civil complaint in federal
court.” (Employee Agreement, DE 7-1, § 6.)
For all these reasons, the Court holds that the arbitration agreement signed by the parties
is valid and enforceable.

C.

Conclusion
The Court GRANTS the motion to dismiss (DE 6). The Court directs the Clerk to close

this case.

SO ORDERED on January 17, 2017.
s/ Joseph S. Van Bokkelen
JOSEPH S. VAN BOKKELEN
UNITED STATES DISTRICT JUDGE

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