Bray v. Reliable Life Insurance Company

Filing 38

MEMORANDUM AND ORDER: IT IS HEREBY ORDERED that defendants motion to dismiss plaintiffs first amended complaint [Doc. #30] is granted. Signed by District Judge Carol E. Jackson on 11/14/2014. (KMS)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
LARISA V. BRAY,
Plaintiff,
vs.
UNITED INSURANCE COMPANY OF
AMERICA,
Defendant.

)
)
)
)
)
)
)
)
)
)

Case No. 4:14-CV-01390-CEJ

MEMORANDUM AND ORDER
This matter is before the Court on defendant’s motion to dismiss this case for
failure to state a claim.

See Fed. R. Civ. P. 12(b)(6). Plaintiff brings this action

claiming that the defendant terminated her employment in violation of Title VII of
the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e, et seq., the Age Discrimination in
Employment Act (ADEA), 29 U.S.C. §§ 621, et seq., and the Americans with
Disabilities Act (ADA), 42 U.S.C. §§ 12101, et seq. The plaintiff has responded to
the motion and the issues are fully briefed.
Background
Plaintiff Larisa V. Bray was employed by defendant United Insurance
Company of America as a claims adjuster beginning on January 7, 2013. When Bray
began her employment, she signed an Arbitration Agreement that contained the
following provision:
[A]ll disputes related to Employee’s employment by Employer
(or any affiliate of Employer), or the termination of that
employment (excepting only the following: (1) charges filed
with the U.S. Equal Employment Opportunity Commission
(“EEOC”) or state fair employment practices agency, for so long
as said charges remain under investigation, and (2) claims
brought by the Employer for injunctive relief and/or breach of

covenant not to compete), shall be settled by arbitration
administered by the American Arbitration Association (“AAA”)
pursuant to the AAA’s National Rules for Resolution of
Employment Disputes (“AAA Rules”), as amended from time to
time.
[Doc. #13-1]
The Arbitration Agreement also provides that arbitration is the “exclusive
method of resolving all disputes relating to Employee’s employment with
Employer or the termination of that employment.” Id. The Arbitration
Agreement incorporates all of the American Arbitration Association’s National
Rules for the Resolution of Employment Disputes. Id.
In an earlier motion, United requested that the proceedings in this
case be stayed pending arbitration. The motion to stay was denied based on
the Court’s belief that “[p]ausing this litigation only to dismiss it once the
arbitration concludes is not in the interest of judicial economy.” [Doc. #26]
United now moves to dismiss the case, asserting that arbitration is Bray’s
exclusive remedy for her claims.

Alternatively, United seeks dismissal of

Bray’s claim based on the ADEA for failure to exhaust administrative
remedies.
Legal Standard
The purpose of a motion to dismiss under Rule 12(b)(6) of the Federal Rules
of Civil Procedure is to test the legal sufficiency of the complaint. The factual
allegations of a complaint are assumed true and construed in favor of the plaintiff,
“even if it strikes a savvy judge that actual proof of those facts is improbable.” Bell
Atlantic Corp. v. Twombly, 550 U.S. 544, 556 (2007) (citing Swierkiewicz v.
Sorema N.A., 534 U.S. 506, 508 n.1 (2002)); Neitzke v. Williams, 490 U.S. 319,
2

327 (1989) (“Rule 12(b)(6) does not countenance . . . dismissals

based on a

judge’s disbelief of a complaint’s factual allegations”); Scheuer v. Rhodes, 416 U.S.
232, 236 (1974) (a well-pleaded complaint may proceed even if it appears “that a
recovery is very remote and unlikely”). The issue is not whether the plaintiff will
ultimately prevail, but whether the plaintiff is entitled to present evidence in
support of his claim. Id. A viable complaint must include “enough facts to state a
claim to relief that is plausible on its face.” Bell Atlantic Corp., 550 U.S. at 570; see
also id. at 563 (“no set of facts” language in Conley v. Gibson, 355 U.S. 41, 45–46
(1957), “has earned its retirement.”) “Factual allegations must be enough to raise a
right to relief above the speculative level.” Id. at 555.
Discussion
Bray argues that the Arbitration Agreement is not a valid contract because
she either signed it under duress or did not understand it. Whether a valid contract
to arbitrate existed is a question for judicial determination. Granite Rock Co. v. Int'l
Bhd. of Teamsters, 561 U.S. 287, 288 (2010) (citing First Options of Chicago, Inc.
v. Kaplan, 514 U.S. 938, 944 (1995)). Bray also argues that the Arbitration
Agreement is substantively unconscionable because she could not have predicted
the consequences of signing it. This argument raises a question of enforceability.
Assuming that a contract to arbitrate was formed, a question about its
enforceability can itself be subject to arbitration by the terms of the arbitration
contract. Rent–A–Center, Inc. v. Jackson, 561 U.S. 63, 68 (2010).
Under Missouri law, “[a] valid contract contains the essential elements of
‘offer, acceptance, and bargained for consideration.’” Topchian v. JPMorgan Chase
Bank, N.A., 760 F.3d 843, 850 (8th Cir. 2014) (quoting Johnson v. McDonnell
3

Douglas Corp., 745 S.W.2d 661, 662 (Mo. 1988) (en banc)). Procedural
unconscionability is a defense to contract formation. State ex rel. Vincent v.
Schneider, 194 S.W.3d 853, 858 (Mo. 2006) (en banc). The defense of
“[p]rocedural unconscionability focuses on such things as high pressure sales
tactics, unreadable fine print, or misrepresentation among other unfair issues in the
contract formation process.” Id.
Here, Bray states that signing the Arbitration Agreement was “an ultimatum
to have a job with the Defendant.”

[Doc. # 32, p. 2].

Requiring a prospective

employee to satisfy a condition precedent to employment is not duress. Likewise,
Bray’s assertion that she did not understand the legal effect of the Arbitration
Agreement because English is not her native language is unpersuasive. Bray does
not contend that she was “tricked” into signing the agreement or that she did not
have the opportunity to have the agreement explained to her. Instead, she states
that she “put her signature there as it was the only way to get a job.” Id. Bray has
not presented any facts plausibly suggesting that the Arbitration Agreement was
substantively unconscionable and therefore invalid. See Bell Atlantic Corp., 550
U.S. at 570.
Under the Federal Arbitration Act (FAA), 9 U.S.C. §§ 1–16, an agreement to
arbitrate “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
manifests the strong federal policy favoring arbitration and requires courts to
enforce arbitration agreements according to their terms. AT&T Mobility LLC v.
Concepcion, 131 S. Ct. 1740, 1745 (2011). Any doubts concerning the scope of

4

arbitrable issues should be resolved in favor of arbitration. Moses H. Cone Mem'l
Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24–25 (1983).
Because the FAA directs that arbitration agreements be treated like other
contracts, they may be invalidated by defenses “such as fraud, duress, or
unconscionability.” Jackson, 561 U.S. at 68. However, that does not always mean a
court determines whether those defenses apply, because “parties can agree to
arbitrate ‘gateway’ questions of ‘arbitrability,’ such as whether the parties have
agreed to arbitrate or whether their agreement covers a particular controversy.” Id.
68–69. Where the person opposing arbitration challenges the enforceability of an
arbitration agreement, that question is one for the arbitrator if there is “clear and
unmistakable” evidence that “the parties agreed to arbitrate arbitrability.” Kaplan,
514 U.S. at 944 (quoting AT & T Technologies, Inc. v. Commc'ns Workers of Am.,
475 U.S. 643, 649 (1986)).
The Arbitration Agreement incorporates the AAA’s Rules. The Eighth Circuit
has held that by incorporating the AAA's Rules in an arbitration agreement, parties
clearly and unmistakably agree to allow the arbitrator to determine threshold
questions of arbitrability. Green v. SuperShuttle Int'l, Inc., 653 F.3d 766, 769 (8th
Cir. 2011). Moreover, this Court has previously held that an arbitration agreement’s
incorporation of the AAA's Rules requires arbitration of a claim that the agreement
was substantively unconscionable. See, e.g., Randazzo v. Anchen Pharm., Inc., No.
4:12-CV-999-CAS, 2012 WL 5051023, at *3 (E.D. Mo. Oct. 18, 2012); Fox v.
Career Educ. Corp., No. 4:11-CV-1584-DDN, 2012 WL 1205155, at *3 (E.D. Mo.
Apr. 11, 2012). Thus, Bray’s claim that the Arbitration Agreement is substantively
unconscionable and should not be enforced is a question for the arbitrator.
5

Under the terms of the Arbitration Agreement, Bray agreed to arbitrate,
rather than litigate, all claims arising from her termination. Therefore, her
complaint fails to state a claim upon which relief can be granted. Fed. R. Civ. P.
12(b)(6). Because the Court finds that arbitration is Bray’s exclusive remedy, it is
unnecessary to address the defendant’s failure-to-exhaust argument.
Accordingly,
IT IS HEREBY ORDERED that defendant’s motion to dismiss plaintiff’s first
amended complaint [Doc. #30] is granted.

___________________________
CAROL E. JACKSON
UNITED STATES DISTRICT JUDGE
Dated this 14th day of November, 2014.

6