CURTIS et al v. CONTRACT MANAGEMENT SERVICES LLC

Filing 76

ORDER ON DEFENDANTS' MOTIONS TO COMPEL ARBITRATION - granting 70 Motion to Compel; granting 71 Motion to Compel. By JUDGE NANCY TORRESEN. (mnw)

UNITED STATES DISTRICT COURT
DISTRICT OF MAINE
ROBERT CURTIS and ROBERT
LOWELL on behalf of themselves and
all others similarly situated,
Plaintiffs,
v.
CONTRACTOR MANAGEMENT
SERVICES, LLC; 3RD PARTY
LOGISTICS ME, LLC; and MICHAEL
WILLIAMS,
Defendants.

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ORDER ON DEFENDANTS’ MOTIONS TO COMPEL ARBITRATION
Plaintiffs Robert Curtis and Robert Lowell filed this putative class and
collective action against Defendants 3RD Party Logistics ME, LLC (“3PL”) and
Michael Williams (together the “3PL Defendants”) and Defendant Contractor
Management Services, LLC (“CMS”) to assert federal and state wage and hour law
violations and related state-law tort claims. Before me are CMS’s renewed motion to
compel arbitration (“CMS Motion”) (ECF No. 70) and the 3PL Defendants’ motion
to compel arbitration (“3PL Motion”). (ECF No. 71.) For the reasons that follow, I
GRANT the Defendants’ motions.
PROCEDURAL BACKGROUND
On November 25, 2015, the Plaintiffs filed their initial Complaint in this action
solely against CMS. On April 25, 2016, CMS moved to compel arbitration of the
Plaintiffs’ claims and for a stay of proceedings in this Court. At the time of CMS’s

motion, the First Circuit had yet to decide whether employee arbitration agreements
containing class action waivers were enforceable in light of the National Labor
Relations Act (“NLRA”), and the Circuits were split on that issue. On September 29,
2016, I denied CMS’s motion to compel arbitration, joining those courts that had
found that class action waivers like those in the CMS Agreement violated the NLRA
and therefore were unenforceable under the savings clause of the Federal Arbitration
Act (“FAA”). (ECF No. 42.)
On October 17, 2016, CMS appealed my order on the motion to compel
arbitration to the First Circuit. (ECF No. 45.) Shortly thereafter, on November 3,
2016, the Plaintiffs filed a First Amended Complaint (“FAC”) to add claims against
the 3PL Defendants. (ECF No. 50.) On February 16, 2017, I stayed the action as
against the 3PL Defendants until CMS’s appeal was resolved. (ECF No. 63.)
While CMS’s appeal was pending, the United States Supreme Court decided
Epic Systems Corp. v. Lewis, which held that class action waivers in employee
arbitration agreements do not violate the NLRA and are enforceable under the FAA.
584 U.S. __, 138 S.Ct. 1612 (2018). On June 14, 2018, the First Circuit vacated my
September 29, 2016, order in light of Epic Systems and remanded this action to me
for further proceedings. (ECF No. 64.) On July 11, 2018, I directed CMS to resubmit
its motion to compel arbitration. On August 10, 2018, CMS filed its renewed motion
and the 3PL Defendants filed a motion to compel arbitration of the claims asserted
against them in the FAC. CMS Mot.; 3PL Mot.

2

FACTUAL BACKGROUND
Curtis and Lowell, both Maine residents, worked as delivery drivers for
Scholarship Storage, Inc., which did business under the name Business as Usual
(“BAU”), and subsequently for 3PL. CMS is an Arizona-based company that markets
itself as the “leading full-service firm for companies utilizing Independent
Contractors.” FAC ¶ 44. The Plaintiffs allege that CMS provided a number of services
for BAU and later for 3PL, including drafting employment contracts, processing
payroll checks, and “taking out deductions for equipment drivers were . . . required
to lease or purchase” and for other expenses. See FAC ¶ 45. CMS also allegedly
deducted a payroll processing fee from the Plaintiffs’ BAU and 3PL paychecks. FAC
¶ 45. The Plaintiffs allege that CMS and 3PL improperly classified the Plaintiffs and
their fellow drivers as independent contractors and, as a result, failed to adequately
compensate the Plaintiffs for their hours worked and required the Plaintiffs to remit
fees and to bear costs that they should not have been required to pay. FAC ¶ 1.
CMS seeks to compel arbitration pursuant to a “System Resource
Subscription” agreement entered into between CMS and each of the Plaintiffs (the
“CMS Agreement”). CMS Ex. B (ECF No. 70-4); CMS Ex. C (ECF No. 70-5). CMS
asserts that both Plaintiffs accessed CMS’s online platform, ICMPower, opened the
CMS Agreement, clicked through each page of it, and electronically signed the
agreement. Stultz Decl. ¶¶ 5-8. (ECF No. 20-1).
The 3PL Defendants have moved to compel arbitration under an “Independent
Contractor Owner/Operator Agreement” purportedly signed by Defendant Williams
on behalf of 3PL and by each of the Plaintiffs (the “3PL Agreement”). 3PL Ex. A
3

(ECF No. 71-2); 3PL Ex. B (ECF No. 71-3). The Plaintiffs assert that they do not recall
signing the 3PL Agreement. Opp’n to 3PL Mot. 4 (ECF No. 73). The 3PL Defendants
assert that the Plaintiffs accessed, reviewed, and signed the 3PL Agreement using
CMS’s ICM Power online platform. Stultz Decl. ¶¶ 13-14 (ECF No. 75-1).
The CMS Agreement and the 3PL Agreement contain nearly-identical
arbitration provisions (the “Arbitration Provisions”) in which the parties agree to
resolve certain disputes through arbitration, including “disputes arising out of or
related to [the Plaintiffs’] relationship with” CMS or 3PL and, more specifically:
without limitation, . . . claims regarding any city, county, state or federal
wage-hour law, . . . compensation, meal or rest periods, expense
reimbursement, uniform maintenance, training, termination . . . and
claims arising under the . . . Fair Labor Standards Act . . . and state
statutes, if any, addressing the same or similar subject matters, and all
other similar federal and state statutory and common law claims
(excluding workers’ compensation, state disability insurance and
unemployment insurance claims).
CMS Agreement 4 ¶ i; 3PL Agreement 13 ¶ A(i).
The Arbitration Provisions set out the procedures for arbitration, including a
requirement that “[e]xcept as may be permitted or required by law, as determined by
the Arbitrator, neither a party nor an Arbitrator may disclose the existence, content,
or results of any arbitration hereunder without the prior written consent of the
parties,” CMS Agreement 6 ¶ E; 3PL Agreement 15 ¶ F, and the following fee and
cost provision:
ATTORNEYS’ FEES AND ARBITRATION COSTS: Each party will
pay the fees for its own attorneys, subject to any remedies to which that
party may later be entitled under applicable law. Costs incidental to the
arbitration, including the cost of the Arbitrator and the meeting site
(“Arbitration Costs”) will be borne by [the parties] equally, unless
otherwise required by applicable law, as determined by the Arbitrator,
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and any dispute regarding a party’s obligation to pay Arbitration Costs
will be determined by the Arbitrator. In the event I contend that, as a
matter of law, I am not responsible for payment of any arbitration Costs,
I will have no obligation to pay any portion of the contested Arbitration
Costs until, and only if, the Arbitrator determines that I am responsible
for such costs. If necessary for arbitration of the dispute, [CMS/3PL]
agrees to cover the amount of the Arbitration Costs contested by me
until such time as the Arbitrator determines payment responsibility. If
the Arbitrator determines that I am responsible for any amount of the
Arbitration Costs already paid by [CMS/3PL], then I will remit payment
of that amount to [CMS/3PL] within 30 days of the Arbitrator’s
determination.
CMS Agreement 5-6 ¶ D; see 3PL Agreement 14 ¶ E.
The Arbitration Provisions each include a paragraph headed “THIRTY-DAY
OPT-OUT PERIOD” that states:
If I do not want to be subject to this Arbitration Provision, I may opt out
of this Arbitration Provision by notifying [CMS/3PL] in writing of my
desire to opt out of this Arbitration Provision, which writing must be
dated, signed and submitted by U.S. Mail or hand delivery to
[CMS/3PL’s address]. In order to be effective, the writing must clearly
indicate my intent to opt out of this Arbitration Provision and the
envelope containing the signed writing must be post-marked within
30 days of the date I sign this [agreement]. . . . Should I not opt out of
this Arbitration Provision within the 30-day period, [CMS/3PL] and I
will be bound by the terms of this Arbitration Provision.
CMS Agreement 6 ¶ G; see 3PL Agreement 15 ¶ H. The Arbitration Provisions also
contain severability clauses, which state that “[i]n the event that any portion of this
Arbitration Provision is deemed unenforceable, the remainder of this arbitration
provision will be enforceable.” CMS Agreement 6 ¶ H; 3PL Agreement 15 ¶ I.
The only relevant difference between the arbitration provisions in the CMS
Agreement and in the 3PL Agreement is their choice of forum. The CMS Agreement
states that the “location of the arbitration proceeding must be in Maricopa County,
Arizona, unless the parties to the arbitration agree in writing otherwise.” CMS
5

Agreement 5 ¶ A. In contrast, the 3PL Agreement provides that the “location of the
arbitration proceeding may be no more than 45 miles from the geographic area where
[Curtis and/or Lowell] performed delivery services arranged by [3PL], unless each
party to the arbitration agrees in writing otherwise.” 3PL Agreement 14 ¶ B.
LEGAL STANDARD
The FAA provides that “[a] party aggrieved by the alleged failure, neglect, or
refusal of another to arbitrate under a written agreement for arbitration may petition
any United States district court . . . for an order directing that such arbitration
proceed in the manner provided for in such agreement.” 9 U.S.C. § 4. It also provides
for the stay of suits already in federal court pending arbitration. Id. § 3.
Federal courts will grant a motion to dismiss or stay a case and compel
arbitration pursuant to the FAA when “(i) there exists a written agreement to
arbitrate, (ii) the dispute falls within the scope of that arbitration agreement, and (iii)
the party seeking an arbitral forum has not waived its right to arbitration.” Combined
Energies v. CCI, Inc., 514 F.3d 168, 171 (1st Cir. 2008) (quoting Bangor Hydro-Elec.
Co. v. New England Tel. & Tel. Co., 62 F. Supp. 2d 152, 155 (D. Me. 1999)).
DISCUSSION
The Defendants assert that the Plaintiffs’ claims must be submitted to
arbitration under the binding terms of the Defendants’ respective agreements with
the Plaintiffs. “A party seeking to compel arbitration ‘must demonstrate that a valid
agreement to arbitrate exists, that the movant is entitled to invoke the arbitration
clause, that the other party is bound by that clause, and that the claim asserted comes
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within the clause’s scope.’ ” Nat’l Fed’n of the Blind v. The Container Store, Inc., 904
F.3d 70, 80 (1st Cir. 2018) (quoting Soto-Fonalledas v. Ritz-Carlton San Juan Hotel
Spa & Casino, 640 F.3d 471, 474 (1st Cir. 2011)). Through their motions, the
Defendants have presented signed agreements between themselves and the Plaintiffs
that purport to bind both parties and that allow either party to invoke arbitration,
and the Defendants have asserted that the Plaintiffs’ claims come within the
Arbitration Provisions’ scope.
With respect to 3PL, the Plaintiffs contend that they cannot be compelled to
arbitrate under the 3PL Agreement because they did not sign it and no valid contract
was ever formed. Opp’n to 3PL Mot. 3-4. The Plaintiffs further argue that the 3PL
Agreement’s arbitration provisions are invalid because enforcing them would prevent
the Plaintiffs from effectively vindicating their statutory rights or, alternatively,
because the arbitration provisions are unconscionable under applicable state law.
Opp’n to 3PL Mot. 5-12.
As to CMS, the Plaintiffs do not contest that they signed the CMS Agreement.
Opp’n to CMS Mot. 1-2 (ECF No. 72). The Plaintiffs do argue that, as with the 3PL
Agreement, the CMS Agreement’s arbitration provisions prevent the Plaintiffs from
vindicating their rights or are unconscionable. Opp’n to CMS Mot. 4-9. Anticipating
the Plaintiffs’ arguments, CMS has executed a covenant not to enforce the CMS
Agreement’s cost-splitting, forum selection, and confidentiality provisions. CMS Ex.
A (ECF No. 70-1).

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I.

The 3PL Agreement
A.

Contract Formation

“ ‘[A] court should not compel arbitration unless and until it determines that
the parties entered into a validly formed and legally enforceable agreement covering
the underlying claims(s).’ ” Nat’l Fed’n of the Blind, 904 F.3d at 80 (quoting EscobarNoble v. Luxury Hotels Int’l of P.R., Inc., 680 F.3d 118, 121 (1st Cir. 2012)). “ ‘To
satisfy itself that such agreement exists, the court must resolve any issue that calls
into question the formation or applicability of the specific arbitration clause that a
party seeks to have the court enforce.’ ” Id. (quoting Granite Rock Co. v. Int’l Bhd. of
Teamsters, 561 U.S. 287, 297 (2010)). I assess issues of contract formation under the
law of the state that governs the agreement, which in the case of the 3PL Agreement
is New York. See id. 1
The Plaintiffs assert that no contracts were formed between themselves and
the 3PL Defendants. 2 In support of this point, the Plaintiffs aver that they do not
recall signing the 3PL Agreement. Opp’n to 3PL Mot. 3-4. The Plaintiffs also state
that the 3PL Defendants had access to the Plaintiffs’ electronic signatures, thereby
The 3PL Agreement provides that it will be governed by the law of the state where the
“Broker,” 3PL, is headquartered. 3PL Agreement at 9 ¶ 15. The 3PL Agreement states that 3PL has
its principal place of business in New York. 3PL Agreement 2. The Plaintiffs therefore assert, and the
3PL Defendants do not dispute, that New York law governs the 3PL Agreement.

1

I note that the Plaintiffs appear to be challenging the formation of the entire 3PL Agreement,
rather than its arbitration provisions alone. The First Circuit has “yet to decide whether challenges
regarding the formation of a contract, where arbitration is but one provision in that contract, should
be decided by an arbitrator or a court.” Nat’l Fed’n of the Blind, 904 F.3d at 86. Here, however, the
Defendants do not argue that the question of formation is properly for the arbitrator, and in any event
I agree with those courts that have decided that it would be inappropriate to require a party to submit
to the jurisdiction of an arbitrator where that party never entered into a contract of any kind. See
Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 444 n.1 (2006) (collecting cases); Sphere Drake
Ins. Ltd. v. All Am. Ins. Co., 256 F.3d 587, 590-91 (7th Cir. 2001) (collecting cases).
2

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implying, although never directly asserting, that the signatures on the 3PL
Agreement are electronic forgeries. Opp’n to 3PL Mot. 4-5.
The 3PL Defendants respond by providing the declaration of Mr. Greg Stultz,
a CMS employee, and a set of transaction records from CMS. Mr. Stultz’s declaration
states that CMS provides and manages “ICMPower,” the digital platform through
which the Plaintiffs purportedly signed the 3PL Agreement. Stutlz Decl. ¶ 4 (ECF
No. 75-1). Mr. Stultz explains the process through which a user may access and sign
an agreement using ICMPower. The user must first register for the platform by
submitting her name, date of birth, and social security number. Stutlz Decl. ¶ 8. Then
the user must create a unique electronic signature. Stutlz Decl. ¶ 9. To do that, the
user must correctly answer three of four security questions related to her personal
history. Stutlz Decl. ¶ 9. Once the electronic signature is created, in order to sign a
document, the user must log in to ICMPower. Stutlz Decl. ¶ 11. ICMPower records
users’ interactions with the system, including registration, identity verification, and
the affixing of an electronic signature to a document. Stutlz Decl. ¶ 11. Mr. Stultz
asserts, and the records he provides corroborate, that both of the Plaintiffs completed
ICMPower’s identity verification process, created a unique electronic signature, and
later reviewed and electronically signed the 3PL Agreement. Stutlz Decl. ¶¶ 14-15;
see 3PL Ex. B (ECF No. 75-3). 3
I note that the CMS Defendants submitted a similar explanation of the ICMPower system with
their motion to compel arbitration, as the Plaintiffs also signed the CMS Agreement using that system.
Stultz Decl. (ECF Nol. 20-1); see also Stultz Decl. (ECF No. 70-2). I further note that the Plaintiffs
have not challenged the validity of their signatures to the CMS Agreement even though the ICMPower
transaction logs suggest that Plaintiff Curtis electronically signed the CMS Agreement just four
minutes after electronically signing the 3PL Agreement. 3PL Ex. B at 4-6 (ECF No. 75-3).
3

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This evidence overcomes the Plaintiffs’ unsupported implication that 3PL
forged the Plaintiffs’ signatures. The Plaintiffs’ remaining argument, that they do not
recall authorizing anyone to affix their electronic signatures to the 3PL Agreement,
does not suffice to call the agreement’s formation into question under New York law.
Victorio v. Sammy’s Fishbox Realty Co., LLC, No. 14 CIV. 8678 (CM), 2015 WL
2152703, at *11 (S.D.N.Y. May 6, 2015) (applying New York law, rejecting challenge
to arbitration agreement’s existence where plaintiffs’ sole argument was that they
did not recall signing the agreement); see also Tsadilas v. Providian Nat’l Bank, 13
A.D.3d 190, 190 (N.Y. App. Div. 1st Dep’t 2004) (“Plaintiff is bound by the arbitration
provision even if she did not read it.”).
B.

Effective Vindication of Statutory Rights

Having found that the 3PL Agreement binds the Plaintiffs, I turn to whether
its arbitration provisions are otherwise invalid. 4 The FAA provides that written
arbitration agreements “shall be valid, irrevocable, and enforceable, save upon
grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2.
The Plaintiffs bear the “heavy burden” of proving unenforceability. Rosenberg v.
Merrill Lynch, Pierce, Fenner & Smith, Inc., 170 F.3d 1, 17 (1st Cir. 1999).
The Plaintiffs claim that the 3PL Agreement’s arbitration provisions are
invalid because they prevent the Plaintiffs from vindicating their statutory rights.
Specifically, the Plaintiffs assert that (1) the arbitration provisions require the
Generally, while “[a] challenge to the validity of an entire contract containing an arbitration
provision must go to an arbitrator . . . , a challenge to the validity of the arbitration provision itself
must be decided by the court.” Nat’l Fed’n of the Blind v. The Container Store, Inc., 904 F.3d 70, 81
(1st Cir. 2018) (citation omitted).

4

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Plaintiffs to pay their own attorneys’ fees and to split the costs of arbitration with the
Defendants, which the Plaintiffs say conflicts with their rights under the FLSA to
recover fees and costs if they are ultimately successful; and (2) the Plaintiffs’ shares
of the arbitration costs are so high when compared to the Plaintiffs’ means that those
expenses would effectively prevent the Plaintiffs from accessing the arbitral forum.
Courts may enforce an arbitration agreement only “so long as the prospective
litigant effectively may vindicate [his or her] statutory cause of action in the arbitral
forum.” Am. Exp. Co. v. Italian Colors Rest., 570 U.S. 228, 235 (2013) (quoting
Mitsubishi Motors v. Soler-Chrysler-Plymouth, Inc., 473 U.S. 614, 637 n.19 (1985)).
The Supreme Court has clarified that this “effective vindication” exception “finds its
origin in the desire to prevent ‘prospective waiver of a party’s right to pursue statutory
remedies.’ ” Id. (quoting Mitsubishi Motors, 473 U.S. at 637 n.19). The exception
“would certainly cover a provision in an arbitration agreement forbidding the
assertion of certain statutory rights,” and “would perhaps cover filing and
administrative fees attached to arbitration that are so high as to make access to the
forum impracticable.” Id.
The Plaintiffs insist that the 3PL Agreement’s arbitration provisions conflict
with the FLSA’s requirement that courts “shall, in addition to any judgment awarded
to the plaintiff or plaintiffs, allow a reasonable attorney’s fee to be paid by the
defendant, and costs of the action.” 29 U.S.C. § 216(b). No such conflict exists. The
arbitration provisions specify that “[e]ach party will pay the fees for its own attorneys,
subject to any remedies to which that party may later be entitled under applicable

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law.” 3PL Agreement 14 ¶ E (emphasis added). The arbitration provisions further
state that “[c]osts incidental to the arbitration, including the cost of the Arbitrator
and the meeting site . . . will be borne by [the parties] equally, unless otherwise
required by applicable law.” 3PL Agreement 14 ¶ E (emphasis added). Both of these
clauses allow for Plaintiffs to collect any fees and costs to which they may be entitled
under applicable law—which here would include the FLSA. 5 The arbitration
provisions therefore do not require the Plaintiffs to relinquish any right to fees or
costs. See Escobar-Noble, 680 F.3d at 123-24 (when assessing an effective vindication
argument, “[i]n the absence of . . . a direct conflict” between the statutory requirement
and the arbitration agreement “the inquiry ends”); see also Foshey v. Home Depot
USA, Inc., No. CV 12-11866-DJC, 2013 WL 12210107, at *6 (D. Mass. Aug. 26, 2013)
(no conflict between statute’s fee award requirement and arbitration agreement’s feeshifting provision where agreement provided that the defendant had to pay plaintiff’s
fees “to the extent required by law”). 6

In addition to these caveats, a savings clause in the arbitration provisions states that “no
remedies that otherwise would be available to an individual in a court of law will be forfeited by virtue
of this Arbitration Provision.” 3PL Agreement 15 ¶ F.
These provisions render Nesbitt v. FCNH, Inc., 811 F.3d 371 (10th Cir. 2016), on which the
Plaintiffs rely, inapposite. The arbitration agreement at issue in Nesbitt barred the plaintiff from
seeking attorneys’ fees or costs. Id. at 378. The court held that the defendants’ proposed workaround—
applying to the arbitrator for deferral or reduction of costs under the rules of the American Arbitration
Association—was not adequate to ensure that the plaintiff would receive any fees to which she was
statutorily entitled. Id. at 379. Here, however, the arbitration provisions themselves entitle the
Plaintiffs to any remedies that they could receive from this court, including costs and attorneys’ fees
under the FLSA.
5

To the extent the Plaintiffs’ concern is that the arbitrator will misread the arbitration
provisions’ unambiguous fee and cost provisions and disallow the Plaintiffs from collecting remedies
to which they are entitled, the Plaintiffs’ issue is with the arbitral process and not this particular
agreement—a grievance that must be addressed to Congress and not to the courts. See Epic Sys. Corp.
v. Lewis, 138 S. Ct. 1612, 1621-22 (2018) (“You might wonder if the balance Congress struck in 1925
between arbitration and litigation should be revisited in light of more contemporary developments.

6

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Moving on to the Plaintiffs’ second argument: “[W]here, as here, a party seeks
to invalidate an arbitration agreement on the ground that arbitration would be
prohibitively expensive, that party bears the burden of showing the likelihood of
incurring such costs.” Green Tree Fin. Corp.-Ala. v. Randolph, 531 U.S. 79, 92 (2000).
On this point, the Plaintiffs refer me to the declarations that they submitted with
their opposition to CMS’s initial motion to compel arbitration under the CMS
Agreement. Opp’n to 3PL Mot. 8. In their declarations, the Plaintiffs represented that
they could “reasonably expect” their half of the arbitration costs to be between $ 4,000
and $ 5,000 for a single-day arbitration, as compared to the $ 400 filing fee that the
two Plaintiffs split to bring this action in federal court. Am. Curtis Decl. ¶ 9 (ECF No.
26); Am. Lowell Decl. ¶ 8 (ECF No. 26-1). The Plaintiffs further represented that
Curtis’s weekly pre-tax take-home pay was approximately $ 754, and Lowell’s was
approximately $ 641. Am. Curtis Decl. ¶ 4; Am. Lowell Decl. ¶ 4.
Again, the Plaintiffs’ argument is forestalled by the law of this Circuit. The
3PL Agreement does not definitively require the Plaintiffs to pay the costs of
arbitration. Instead, the arbitration provisions permit the Plaintiffs to contest costs
ahead of arbitration, in which case 3PL must bear those expenses until the arbitrator
has decided whether the costs may lawfully be imposed. 3PL Agreement 14 ¶ E. Any
assumption that the Plaintiffs will be required to pay costs is, therefore, speculative,
and it is not the case that arbitration costs will keep the Plaintiffs from reaching the

You might even ask if the Act was good policy when enacted. But all the same you might find it difficult
to see how to avoid the statute’s application.”).

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arbitral forum. In similar circumstances, the First Circuit has allowed actions to
proceed to arbitration with the understanding that the Plaintiffs may challenge an
unlawful imposition of forum costs after the close of the proceedings. Rosenberg, 170
F.3d at 15-16; Thompson v. Irwin Home Equity Corp., 300 F.3d 88, 91-92 (1st Cir.
2002). 7 I share my colleague’s reservations that this “wait and see” approach strongly
discourages workers and other plaintiffs with limited resources and small claims from
seeking to enforce their rights. See Fusco v. Plastic Surgery Ctr., P.A., No. 2:15-CV460-DBH, 2016 WL 3077843, at *1 (D. Me. May 31, 2016) (Hornby, J.) (citing the
Sixth Circuit’s persuasive analysis in Morrison v. Circuit City Stores, Inc., 317 F.3d
646, 657-65 (6th Cir. 2003)). I am, however, bound to follow the law of this Circuit.
Id. 8 The Plaintiffs’ effective vindication arguments fail.

Neither Thompson nor Rosenberg appears to have been abrogated. In Kristian v. Comcast
Corp., 446 F.3d 25, 51 (1st Cir. 2006), and Awuah v. Coverall N. Am., Inc., 554 F.3d 7, 12-13 (1st Cir.
2009), the First Circuit found that when a plaintiff claims that arbitration costs are so high as to
prohibit the plaintiff from even accessing the arbitral forum, that creates a question of arbitrability to
be decided by the district court. Awuah, 554 F.3d at 12-13 (remanding for a determination of whether
high costs of arbitration would prevent access to the forum and thereby render the arbitration
agreement illusory); Kristian, 446 F.3d at 52-53 (finding that arbitration agreement’s absolute bar on
recovery of attorneys’ fees and costs would burden plaintiffs with prohibitive arbitration costs and
severing the bar provision from the agreement). These decisions are not applicable here, where the
arbitration provisions allow plaintiffs to avoid paying forum fees until the arbitrator decides whether
cost-splitting is permissible.
7

8
Even setting aside the 3PL Agreement’s cost-shifting provision, the Plaintiffs’ evidentiary
showing is inadequate. The Plaintiffs offer no support for their assertion that they can “reasonably
expect” their arbitration costs to run between $ 4,000 and $ 5,000. See Green Tree, 531 U.S. at 90 n.6
(rejecting plaintiff’s unsupported assumption that the American Arbitration Association would
conduct her arbitration at a rate of $ 700 per day). Further, in supplemental declarations submitted
in response to the motions at bar, the Plaintiffs represented that they are no longer employed by 3PL
but failed to provide updated information regarding their income. Supp. Curtis Decl. ¶ 9 (ECF No. 731); Supp. Lowell Decl. ¶ 9 (ECF No. 73-2). At this juncture, therefore, the Plaintiffs have not
established their inability to pay for arbitration.

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C.

Unconscionability

The Plaintiffs argue that the confidentiality and cost-shifting clauses of the
3PL Agreement are unconscionable and unenforceable. The Plaintiffs further argue
that those clauses render the 3PL Agreement’s arbitration provisions unconscionable
in their entirety, because by including multiple unconscionable provisions in one
arbitration agreement, 3PL has discouraged the Plaintiffs (and others similarly
situated) from seeking relief to which they might otherwise be entitled.
Section two of the FAA “permits agreements to arbitrate to be invalidated by
‘generally applicable contract defenses, such as fraud, duress, or unconscionability,’
but not by defenses that apply only to arbitration or that derive their meaning from
the fact that an agreement to arbitrate is at issue.” AT&T Mobility LLC v.
Concepcion, 563 U.S. 333, 339 (2011). To evaluate the Plaintiffs’ unconscionability
arguments, I look to New York law.
New York’s courts consider an agreement unconscionable if it is “so grossly
unreasonable as to be unenforc[able] because of an absence of meaningful choice on
the part of one of the parties together with contract terms which are unreasonably
favorable to the other party.” King v. Fox, 851 N.E.2d 1184, 1191 (N.Y. 2006). In line
with this definition, the New York Court of Appeals has explained that “[a]
determination of unconscionability generally requires a showing that the contract
was both procedurally and substantively unconscionable when made.” Gillman v.
Chase Manhattan Bank, N.A., 534 N.E.2d 824, 828 (N.Y. 1988) (quoting Matter of
State of New York v. Avco Fin. Serv., 406 N.E.2d 1075, 1078 (N.Y. 1980)). New York’s
courts will break from this rule only in “exceptional cases where a provision of [a]
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contract is so outrageous as to warrant holding it unenforceable on the ground of
substantive unconscionability alone.” Id. at 829.
When courts assess procedural unconscionability, “the focus is on such matters
as the size and commercial setting of the transaction, whether deceptive or highpressured 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.” Id. at 828 (citations omitted). For substantive
unconscionability, courts analyze “the substance of the bargain to determine whether
the terms were unreasonably favorable to the party against whom unconscionability
is urged.” Id. at 829.
The Plaintiffs have not shown that the 3PL Agreement’s arbitration provisions
are procedurally unconscionable under New York law. The 3PL Agreement provided
the Plaintiffs with 30 days to consider the contracts and to decide whether to opt out
of the arbitration provisions. The agreement attaches no adverse consequences to the
decision to opt out, and the Plaintiffs have not offered any evidence that they faced
outside pressure to accept the arbitration provisions. “Courts applying New York law
have considered an opt-out provision as an important, if not dispositive, factor in
rejecting challenges of procedural unconscionability.” Kai Peng v. Uber Techs., Inc.,
237 F. Supp. 3d 36, 55 (E.D.N.Y. 2017); see also Tsadilas, 786 N.Y.S.2d at 480-81
(“The arbitration provision . . . is not unconscionable because plaintiff had the
opportunity to opt out without any adverse consequences.”); Johnson v. Chase
Manhattan Bank USA, N.A., 2 Misc. 3d 1003(A), at *9, 784 N.Y.S.2d 921 (Table) (Sup.

16

Ct., N.Y. Cty.) (rejecting claim that arbitration agreement was unconscionable in part
because it permitted the plaintiff to opt out), aff’d, 13 A.D.3d 322 (N.Y. App. Div. 1st
Dep’t 2004). Moreover, the arbitration provisions were not buried in a mammoth
document or couched in impenetrable jargon, but rather were set out in a separate
document that the Plaintiffs were required to initial independently. And courts
applying New York law have repeatedly held that “the fact that there is inequality in
bargaining power between an employer and a potential employee is not a sufficient
reason to hold that arbitration agreements are not enforceable in the employment
context.” Isaacs v. OCE Bus. Servs., Inc., 968 F. Supp. 2d 564, 570 (S.D.N.Y. 2013)
(citing Ragone v. Atl. Video at Manhattan Ctr., 595 F.3d 115, 121 (2d Cir. 2010)).
Thus, the Plaintiffs have not shown that they lacked a “meaningful choice” when
faced with the decision of whether or not to accept the 3PL Agreement’s arbitration
provisions. See King, 851 N.E.2d at 1191.
I have already found the Plaintiffs’ arguments regarding the 3PL Agreement’s
cost-shifting provisions lacking, 9 and I find no indication that New York’s courts
would find the confidentiality clause “so outrageous as to warrant holding [that
provision] unenforceable on the ground of substantive unconscionability alone.”
Gillman, 534 N.E.2d at 829; see Suqin Zhu v. Hakkasan NYC LLC, 291 F. Supp. 3d
378, 392 (S.D.N.Y. 2017) (applying New York law, finding confidentiality clause not

“Courts applying New York law have refused to find that fee-splitting provisions in arbitration
agreements are unenforceable where plaintiffs have not affirmatively demonstrated that the feesplitting provisions would preclude them from pursuing their rights in the arbitral forum.” Kai Peng
v. Uber Techs., Inc., 237 F. Supp. 3d 36, 57 (E.D.N.Y. 2017) (citing Brady v. Williams Capital Grp.,
L.P., 928 N.E.2d 383, 384 (N.Y. 2010)).

9

17

unconscionable where its terms were equally applicable to both parties and defendant
employer bore any unreasonable arbitration costs); see also Chatziplis v.
PriceWaterhouseCoopers LLP, No. 17 CIV. 4109 (ER), 2018 WL 3323820, at *3
(S.D.N.Y. July 6, 2018) (same). I therefore find that the Plaintiffs have failed to
establish that the 3PL Agreement’s arbitration provisions are unconscionable under
the laws of New York. The Plaintiffs offer no further arguments against enforcement
of those arbitration provisions, and the 3PL Defendants’ motion to compel arbitration
is GRANTED. 10
II.

The CMS Agreement
The Plaintiffs argue that the CMS Agreement’s arbitration provisions should

not be enforced for largely the same reasons they advanced against the 3PL
Agreement. CMS responds that the Plaintiffs’ arguments are moot because CMS has
covenanted not to enforce the arbitration provisions with which the Plaintiffs find
fault. 11

10
Because I do not find any part of the 3PL Agreement to be unconscionable under New York
law I need not consider whether, as the Plaintiffs argue, courts should decline to sever unconscionable
provisions from an arbitration agreement because those provisions discourage plaintiffs from seeking
to vindicate their rights. In any event, New York’s courts have not adopted the “chilling effect” theory
on which the Plaintiffs rely. See Ragone v. Atl. Video at Manhattan Ctr., 595 F.3d 115, 124 (2d Cir.
2010).
11

Specifically, CMS has covenanted:
1. . . . to refrain from enforcing against plaintiffs that provision of the [CMS]
agreement at Section A that requires “[t]he location of the arbitration proceeding
must be in Maricopa County, Arizona” and to refrain from objecting on the basis of
venue to any arbitration in connection with the Action that plaintiffs pursue in
Maine, or such other location mutually agreed to by the parties in writing.
2. . . . to refrain from enforcing against plaintiffs that provision of the [CMS]
agreement at Section E that provides that the parties may not “disclose the

18

First Circuit precedent not cited by either party supports CMS’s position. In
Large v. Conseco Financial Servicing Corp., the plaintiffs opposed the defendant’s
motion to compel arbitration and requested discovery into whether the costs of
arbitration would be prohibitive. 292 F.3d 49, 51 (1st Cir. 2002). In response, the
defendant offered to cover all arbitration costs incurred by the plaintiffs in connection
with the case and to hold the arbitration in the plaintiffs’ home forum. Id. at 51. The
district court denied the plaintiffs’ request for discovery and the First Circuit
affirmed, finding that the “[defendant’s] offer to pay the costs of arbitration and to
hold the arbitration in the [plaintiffs’] home state of Rhode Island mooted the issue
of arbitration costs.” Id. at 56-57; see also id. at 57 (noting that “the district court was
not required to permit discovery on an issue that no longer had any bearing on the
outcome of the dispute before it”); Sleeper Farms v. Agway, Inc., 211 F. Supp. 2d 197,
203 (D. Me. 2002) (finding plaintiffs failed to show that arbitration was prohibitively
expensive because “it appears that [the] fees in this case have been waived by the
arbitrator”), aff’d, 506 F.3d 98 (1st Cir. 2007). 12 In light of Large, I find that CMS’s
existence, content or results of any arbitration hereunder without the prior written
consent of the parties.”
3. . . . to refrain from enforcing against plaintiffs that provision of the [CMS]
agreement at Section D that provides that “[c]osts incidental to the arbitration,
including the cost of the Arbitrator and the meeting site (“Arbitration Costs”) will
be borne by CMS and I equally,” and . . . that [CMS] will be fully responsible for
the arbitration costs.
CMS Ex. A (ECF No. 70-1). I will hold CMS to these covenants.
I note that some courts have persuasively argued that parties should not be allowed to waive
enforcement of selected clauses in an arbitration agreement because doing so amounts to unilaterally
amending a contract—an effort that some courts reject. E.g. Goodwin v. Branch Banking & Tr. Co.,
699 F. App’x 274, 276 (4th Cir. 2017) (per curiam) (“[A] party’s offer to waive certain limitations in
arbitration provisions should be rejected because one party cannot unilaterally alter the terms of a
contract after it is formed and courts are not authorized to remake a contract.”). In Large, however,
12

19

covenant not to enforce moots the Plaintiffs’ statutory vindication argument
regarding the CMS Agreement arbitration provisions’ cost-splitting and forum
selection clauses and moots the Plaintiffs’ unconscionability arguments regarding the
cost-splitting, confidentiality, and forum selection clauses, taken individually. 13
This does not, however, fully resolve the Plaintiffs’ arguments regarding the
CMS Agreement. The Plaintiffs also argue that the contested clauses are symptoms
of a broader disease—that is, the problematic clauses are proof that the entire
arbitration agreement is unconscionable and cannot be enforced. Opp’n to CMS Mot.
9 (citing Capili v. Finish Line, Inc., 116 F. Supp. 3d 1000, 1009 (N.D. Cal. 2015)). By
this logic, CMS’s waiver is irrelevant because excising the problematic clauses would
not cure the deeper rot.
The authorities on which the Plaintiffs rely for their theory apply California
law. See Opp’n to CMS Mot. 9-10 (citing Capili, 116 F. Supp. 3d at 1009; Martinez v.
Master Prot. Corp., 12 Cal. Rptr. 3d 663, 671 (Cal. Ct. App. 2d Dist. 2004); Armendatiz
v. Found. Health Psychcare Servs., Inc., 6 P3d 669, 698-99 (Cal. 2000)). The CMS
Agreement does not contain a choice of law clause, but the parties appear to agree
that Maine law applies to the construction of that agreement. Because

the First Circuit seems headed in the opposite direction. Moreover, even if I were to reject CMS’s
waiver and to consider each of the contested provisions individually, in light of the CMS Agreement’s
opt-out provision I would find the arbitration provisions enforceable.
13
CMS’s covenant not to enforce does not mention the CMS Agreement’s attorney’s fees
provision. As with the 3PL Agreement, the Plaintiffs argue that the CMS Agreement prevents the
Plaintiffs from vindicating their statutory rights because it limits their ability to collect attorney’s fees
under the FLSA. The relevant provisions of the CMS and 3PL Agreements are identical, and the
Plaintiffs’ argument fails as to the CMS Agreement for the same reasons stated above. See supra § I.B.

20

unconscionability is a state-law matter, I will not stretch the doctrine beyond the
bounds set by the Law Court. I will, however, consider whether Maine’s courts would
deem the CMS Agreement’s arbitration provisions collectively unconscionable.
The Law Court has set a high bar for unconscionability, stating that courts will
grant relief from a contract “if upon the whole circumstances, the contract appears to
be grossly against conscience, or grossly unreasonable and oppressive.” Bither v.
Packard, 98 A. 929, 933 (1916); Bordetsky v Charron, No. BCD-RE-10-8, 2011 WL
4528211, at *4 (Me. B.C.D. Aug. 16, 2011) (same). The CMS Agreement’s arbitration
provisions do not reach this bar. The Plaintiffs have presented authority that
suggests that, in some circumstances, Maine’s courts may find forum selection, costsplitting,

and

confidentiality

provisions

in

arbitration

agreements

to

be

unconscionable. 14 The Plaintiffs cannot, however, avoid the fact that here, they did
not need to agree to those restrictions. CMS gave the Plaintiffs 30 days to review the
arbitration provisions and to opt out of them if they so desired. The Plaintiffs have
not suggested that there were any express or implied adverse consequences to opting
out of the arbitration provisions, nor have they shown that the Plaintiffs lacked the
opportunity or ability to read the opt-out provision. Under “the whole circumstances,”
14
See Wayward v. Get Air Portland ME, LLC, No. CV-17-200, 2017 WL 6804951, at *2 (Me.
Super. Ct. Nov. 17, 2017) (severing California forum selection clause from arbitration agreement
because it “would be entirely unfair to require a family of Maine residents to travel to California to
mediate and arbitrate a claim for an injury that occurred in Maine at Defendant’s Portland, Maine
location,” as “the travel expense alone would likely be prohibitive of Plaintiffs’ pursuit of their claim”);
Barrett v. McDonald Investments, Inc., 870 A.2d 146, 155 (Me. 2005) (Alexander, J., concurring)
(suggesting (1) whether “arbitration proceedings [are] shrouded in secrecy so as to conceal illegal,
oppressive or wrongful business practices” and (2) whether “arbitrators’ fees . . . make small claims
prohibitive . . . [or] discriminate against consumers or workers of modest means” as two factors among
eight that courts should “address[] in determining whether a mandatory arbitration clause in a
contract of adhesion may be unconscionable”).

21

therefore, I do not find the arbitration agreement “to be grossly against conscience,
or grossly unreasonable and oppressive.” Bither, 98 A. at 933. In turn, I find that the
CMS Agreement’s arbitration provisions are enforceable and I GRANT CMS’s motion
to compel arbitration.
All that remains is the disposition of this action. “Where one side is entitled to
arbitration of a claim brought in court, in this circuit a district court can, in its
discretion, choose to dismiss the law suit, if all claims asserted in the case are found
arbitrable.” Dialysis Access Ctr., LLC v. RMS Lifeline, Inc., 638 F.3d 367, 372 (1st
Cir. 2011). Here, having decided that the Plaintiffs’ claims are arbitrable, I find that
dismissal is warranted.
CONCLUSION
For the reasons stated above, the Court GRANTS Defendant CMS’s motion to
compel arbitration and GRANTS the 3PL Defendants’ motion to compel arbitration.
The case will be DISMISSED as to Plaintiffs Curtis and Lowell.
The parties make only cursory mention of the individuals other than Curtis
and Lowell who have opted in to this case as collective action plaintiffs (the “Opt-In
Plaintiffs”). Counsel for the Opt-In Plaintiffs is hereby ORDERED TO SHOW
CAUSE within 14 days why this action should not be dismissed in its entirety. If
cause is not shown, this action will be dismissed.
SO ORDERED.
/s/ Nancy Torresen
United States Chief District Judge
Dated this 20th day of November, 2018.
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