Biro v. Dillard's et al
ORDER granting Motion to Compel Arbitration and Staying the Case Pending Arbitration (Doc. 8 ). Signed by Judge Timothy S. Black on 5/9/2022. (rrs)
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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
DILLARD’S, et al.,
Case No. 1:21-cv-483
Judge Timothy S. Black
ORDER GRANTING MOTION TO COMPEL ARBITRATION AND
STAYING THE CASE PENDING ARBITRATION (Doc. 8)
This civil case is before the Court on Defendants’ motion to compel arbitration
and dismiss, or alternatively stay, the action pending arbitration (Doc. 8), and the parties’
responsive memoranda. (Docs. 12, 14).
The following factual background is as alleged by Plaintiff Maria Biro in her
complaint. (Doc. 10). Born in Hungary, Biro became a naturalized U.S. citizen in 2015.
(Id. at ¶9). In 2018, she started working for Defendant Dillard’s (“Dillard’s”), a clothing
retailer, in Kenwood, Ohio, as a sales associate. (Id. at ¶¶ 11, 19). 1 In November 2020,
Biro’s manager accused her of wrongly processing a return—essentially, of stealing the
value of the returned item. (Id. at ¶¶47-60). Biro asserts that her manager did not listen to
Officially, there are two Defendants: Dillard’s and Higbee West Main, LP doing business as
Dillard’s. (See Doc. 1). For all purposes, the parties treat the two Defendants as a singular entity
called “Dillard’s.” This Court will do the same.
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her legitimate explanation of the event. (Id. at ¶51). In fact, according to Biro, “[b]ecause
[she] was foreign-born, and because she was harder to understand due to English not
being her first language, [her supervisor] assumed she was guilty and accused her without
proper investigation.” (Id. at ¶53).
After getting a right to sue notice from the Equal Employment Opportunity
Commission, Biro filed this case. (Id. at PageID# 23). She alleges employment
discrimination, retaliation, defamation, malicious prosecution, negligence, failure to pay
final wages, and other causes of action. (Id. at PageID##13-18). Dillard’s has now
moved for dismissal or a stay, arguing an arbitrator should decide the claims. (Doc. 8).
Biro does not dispute that she signed an arbitration agreement (“the Agreement”).
(Docs. 12, 12-1). Rather, she claims that the Agreement is unconscionable and that she
has put the making of the contract “in issue.” (Doc. 12).
II. STANDARD OF REVIEW
Motion to Compel Arbitration
“Under the Federal Arbitration Act, 9 U.S.C. § 2, a written agreement to arbitrate
disputes which arises out of a contract involving transactions in interstate
commerce…‘shall be valid, irrevocable and enforceable’” save any reason in law or
equity to the contrary. Stout v. J.D. Byrider, 228 F.3d 709, 714 (6th Cir. 2000) (quoting
9 U.S.C. § 2). Courts are to examine the language of the contract in light of the strong
federal policy in favor of arbitration. Moses H. Cone Mem’l Hosp. v. Mercury Constr.
Corp., 460 U.S. 1, 24 (1983) (stating that the FAA “is a congressional declaration of a
liberal federal policy favoring arbitration agreements, notwithstanding any state
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substantive or procedural polices to the contrary”). Any ambiguities in the contract or
doubts as to the parties’ intentions should be resolved in favor of arbitration. Id.
The FAA generally applies to employment contracts with arbitration provisions.
McGee v. Armstrong, 941 F.3d 859, 865 (6th Cir. 2019) (citing Circuit City Stores, Inc. v.
Adams, 532 U.S. 105, 109 (2001)). When considering a motion to compel arbitration, a
court has four tasks:
[F]irst, it must determine whether the parties agreed to
arbitrate; second, it must determine the scope of that
agreement; third, if federal statutory claims are asserted, it
must consider whether Congress intended those claims to be
nonarbitrable; and fourth, if the court concludes that some, but
not all, of the claims in the action are subject to arbitration, it
must determine whether to stay the remainder of the
proceedings pending arbitration.
Stout, 228 F.3d at 714 (6th Cir. 2000) (internal citations omitted). However, on the
second task, the Court also may need to resolve who, the Court or an arbitrator, is
responsible for determining whether the scope of the agreement “covers a particular
controversy,” or, in other words, which of those two is responsible for determining
“arbitrability.” Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S. Ct. 524, 527,
Motion to Dismiss
The proper vehicle when requesting dismissal of a case in favor of arbitration is
pursuant to Fed. R. Civ. P. 12(b)(6). “A party’s ‘failure to pursue arbitration’ in spite of a
compulsory arbitration provision means that the party has failed to state a claim upon
which relief can be granted.” Pinnacle Design/Build Grp., Inc. v. Kelchner, Inc., 490 F.
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Supp. 3d 1257, 1262 (S.D. Ohio 2020) (quoting Knight v. Idea Buyer, LLC, 723 F. App’x
300, 301 (6th Cir. 2018)).
In reviewing a Rule 12(b)(6) motion, a court ordinarily would examine the
complaint to determine whether it contained “enough facts to state a claim for relief that
is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). A
district court examining the sufficiency of a complaint must accept the well-pleaded
allegations of the complaint as true. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009);
DiGeronimo Aggregates, LLC v. Zemla, 763 F.3d 506, 509 (6th Cir. 2014). Here,
however, the sufficiency of the allegations in the complaint is not in dispute. Rather, the
motion to dismiss turns on whether the allegations in the complaint must be sent to
arbitration. See Pinnacle Design, 490 F. Supp. 3d at 1262 (applying 12(b)(6) standard to
motion to compel arbitration).
On a Rule 12(b)(6) motion, a district court “may consider exhibits attached [to the
complaint], public records, items appearing in the record of the case and exhibits attached
to defendant’s motion to dismiss so long as they are referred to in the complaint and are
central to the claims contained therein, without converting the motion to one for summary
judgment.” Rondigo, L.L.C. v. Twp. of Richmond, 641 F.3d 673, 681 (6th Cir. 2011)
(internal quotation and citation omitted). Thus, the Sixth Circuit has taken a liberal view
of what matters fall within the pleadings for purposes of Rule 12(b)(6). See Armengau v.
Cline, 7 F. App’x 336, 344 (6th Cir. 2001). The ability of the court to consider
supplementary documentation has limits, however, in that it must be “clear that there
exist no material disputed issues of fact concerning the relevance of the document.”
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Mediacom Se. LLC v. BellSouth Telecomms., Inc., 672 F.3d 396, 400 (6th Cir. 2012)
(internal quotation and citation omitted).
Here, the Agreement was not attached to Biro’s complaint. However, there is no
dispute that the Agreement (attached to Dillard’s motion) is relevant to the issue
presented to the Court for review. And, although Biro argues that the Agreement does
not apply in this case, she does not dispute that she signed the Agreement as part of her
employment with Dillard’s. Thus, it is appropriate for the Court to consider the
Agreement attached to the motion to compel arbitration and dismiss, or alternatively stay,
The Action Must be Sent to Arbitration
Biro does not dispute that she signed the Agreement. (Doc. 12). Nor does she
seem to dispute that the claims are within the scope of the Agreement. (Id.). Upon a
review of the Agreement, at least some of claims here—discrimination, retaliation,
wrongful termination—are clearly covered. (Doc. 9 at PageID# 77). However, Biro
argues that she cannot be compelled to arbitrate under the Agreement for two reasons:
(1) the Agreement is unconscionable; and (2) the “making” of the Agreement is “in
issue.” (Doc. 12). The Court considers each contention in turn.
Biro argues that the Agreement was procedurally and substantively
unconscionable. (Doc. 12 at 5). Biro bears the burden to show both procedural and
substantive unconscionability—and the Court will only hold the contract unconscionable
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if both are met. Morrison v. Cir. City Stores, Inc., 317 F.3d 646 (6th Cir. 2003).
Additionally, while parties may contract to delegate gateway arbitrability questions, like
unconscionability, to an arbitrator, they have seemingly chosen not to do so in the present
agreement. See Blanton v. Domino's Pizza Franchising LLC, 962 F.3d 842, 845 (6th Cir.
2020). The Court thus has the power to determine unconscionability.
Regarding procedural unconscionability, the “crucial question” is “whether each
party to the contract, considering his obvious education or lack of it, [had] a reasonable
opportunity to understand the terms of the contract….” Morrison, 317 F.3d at 666.
Additionally, “[i]n determining procedural unconscionability, Ohio courts look to ‘factors
bearing on the relative bargaining position of the contracting parties, including their age,
education, intelligence, business acumen and experience, relative bargaining power, who
drafted the contract, whether the terms were explained to the weaker party, and whether
alterations in the printed terms were possible.’” Id. (quoting Cross v. Carnes, 132 Ohio
App.3d 157, 724 N.E.2d 828, 837 (1998)).
To start, Biro’s proffered evidence does not suggest she lacked an opportunity to
understand the contract. Biro asserts she does not read English well, that she was told
where to sign on the Agreement, no one explained it to her, and that she did not know
what arbitration was until this lawsuit. (See Affidavit of Maria Biro, Doc. 12-1). None of
these statements about Biro’s position negate “an opportunity” to understand.
Conspicuously, Biro does not allege that she asked for, and was denied, time to review
the contract. See Taylor Bldg. Corp. of Am. v. Benfield, 2008-Ohio-938, ¶ 46, 117 Ohio
St. 3d 352, 362, 884 N.E.2d 12, 23 (“there is no evidence that the [Plaintiffs] were
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hurried through [the] signature process.”). She also provides no evidence that she raised
the issue of her limited ability to read in English with Dillard’s before she signed the
agreement. 2 In these ways, Biro’s evidence falls short of demonstrating a lack of
opportunity to understand what she signed.
At most, Biro’s affidavit provides evidence of unequal bargaining power. (Doc.
12-1). Alas, “[m]ere inequality of bargaining power is insufficient to invalidate an
otherwise enforceable arbitration agreement.” Vanyo v. Clear Channel Worldwide, 2004Ohio-1793, ¶ 19. Furthermore, Biro fails to provide evidence about how her age,
education or business acumen rendered her unfit to understand the contract she signed.
For these reasons, the contract-signing process was not procedurally unconscionable.
Neither can Biro establish substantive unconscionability. “Substantive
unconscionability pertains to the contract itself, without any consideration of the
individual contracting parties, and requires a determination of whether the contract terms
are commercially reasonable in the context of the transaction involved.” Ohio Plumbing,
Ltd. v. Fiorilli Constr., Inc., 2018-Ohio-1748, ¶ 25 (cleaned up).
Biro does not even assert that the contract is commercially unreasonable. Instead,
her arguments on this point address the “convoluted process” of arbitration and the
arbitration fees. (Doc. 12 at 6-7). These are not winning arguments. The arbitrator
Applying gloss to her affidavit, Biro’s counsel argues that her lack of English
proficiency is apparent from speaking to her. (Doc. 12 at 5-6). But it would be obviously
troublesome for an employer to assume a deficiency in reading printed English from the
fact of an accent. The Court thus finds this argument unpersuasive.
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selection process starts with a list of seven arbitrators provided by the American
Arbitration Association (“AAA”) and asks the parties to agree to one. (Doc. 9 at PageID#
80). If they cannot do so, each party exercises strikes against the list of seven. (Id.).
There is also a procedure for each side if they were to find the list completely
unacceptable. (Id.). This strikes the Court as more comprehensive than convoluted.
Moreover, on paper at least, the process is neither one-sided nor unfair.
The costs, furthermore, are not unreasonable. According to the Agreement, Biro
would have to pay $200.00 to the AAA as her share of the arbitration fees. (Id. at
PageID# 78). Were she to win at arbitration, Dillard’s would reimburse her. (Id. at
PageID #83). Biro’s affidavit says nothing about the burden of this expense. (See Doc.
12-1). As was the case with the plaintiff in Taylor v. Benfield, here there is “no evidence
that the arbitration costs and fees are prohibitive, unreasonable, and unfair” as applied to
Biro. 2008-Ohio-938, ¶ 12. For these reasons, there is no basis to conclude the
Agreement is substantively unconscionable.
In an argument with an unclear relationship to unconscionability, Biro claims
Dillard’s has “unclean hands.” (Doc. 12 at PageID# 97). Here Biro relies on the
Agreement’s provision stating that an internal review process may precede any
submission to arbitration. Biro apparently argues Dillard’s has not conducted an internal
review, and thus, cannot ship this dispute off to arbitration—or else that Dillard’s
prematurely terminated Biro so cannot seek the remedy of arbitration whatsoever.
Either way, it is a confusing and unpersuasive attempt to turn the tables. First, by
its own terms, the internal review process is not mandatory. (See Doc. 9 at PageID# 79)
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(“If you have a dispute over a Legal Claim with the Company you may, but do not have
to, begin the dispute resolution process by requesting Internal Review.”). Second, Biro
brought this case to court, thus skipping over both the internal review and arbitration by
her own act. Having done that, she is in no position to claim that Dillard’s must hold an
internal review. Third, Biro seems to assert that Dillard’s should have conducted an
internal review before terminating her, but there is no indication that a decision to
terminate an employee is necessarily subject to the Agreement. Rather, the Agreement
speaks to the arbitrability of “legal claims” between the employee and Dillard’s. (Doc. 9).
Dillard’s has no apparent legal claim against Biro, so it is not clear why Dillard’s would
need to submit anything to an internal review or to arbitration before terminating Biro.
For these reasons, Biro fails to demonstrate unclean hands.
2. The “Making” of the Agreement
Biro argues that “the making of the agreement is clearly at issue in this case,” so
the case should proceed to an evidentiary hearing. (Doc. 12 at 8). Biro continues:
“Plaintiff’s testimony at a hearing on this matter will show that there was no meeting of
the minds when she was manipulated into signing and ‘agreeing’ to Defendant’s terms.”
According to the Sixth Circuit, “[t]he question whether the party opposing
arbitration has put the making of the arbitration contract ‘in issue’ looks a lot like the
question whether a party has raised a ‘genuine issue as to any material fact.’” Boykin v.
Fam. Dollar Stores of Michigan, LLC, 3 F.4th 832, 838 (6th Cir. 2021) (quoting Fed. R.
Civ. P. 56(c)). Biro has simply failed to do this, so no hearing is warranted.
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Dillard’s has presented evidence of a valid arbitration, signed by Biro. (Doc. 9).
To rebut this evidence, Biro must present evidence demonstrating “specific facts, as
opposed to general allegations,” that would allow a rational trier of fact to find there was
no agreement to arbitrate. Boykin, 3 F.4th at 839 (6th Cir. 2021) (quoting Viet v. Le, 951
F.3d 818, 823 (6th Cir. 2020)). Biro does not deny she signed the contract. She alleges
nothing to suggest she was “manipulated” into signing it. Even viewing the evidence in
the light most favorable to Biro, the Court determines Biro has failed to show specific
facts that create a genuine dispute as to the making of the Agreement. This argument,
therefore, is not well-taken.
The Case is Stayed
Dillard’s requests that this Court dismiss this action, or alternatively stay this
action, pending arbitration. (Doc. 8). Biro only opposes Dillard’s request to compel
arbitration and does not discuss whether the action should be dismissed or stayed if she
were compelled to arbitrate. (Doc. 12).
To reiterate, the FAA establishes procedures for parties to enforce arbitration
agreements in federal court. 9 U.S.C. §§ 3–4. Section 3 provides that, “upon being
satisfied that the issue involved in such suit or proceeding is referable to arbitration,” the
court “shall on application of one of the parties stay the trial of the action until such
--arbitration has been had in accordance with the terms of the agreement[.]” Id. (emphasis
added); see, e.g., Anderson v. Charter Commc'ns, Inc., 860 F. App'x 374, 379 (6th Cir.
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When construing this section, some circuits adhere to this mandatory language that
a court cannot dismiss and must stay the action pending arbitration. Anderson, 860 F.
App’x at 380 (citing cases from the Second, Third, Tenth, and Eleventh Circuits).
However, despite the FAA’s mandatory language, several circuits have created an
exception that allow a district court to dismiss the action (instead of staying the action) if
it is clear the entire controversy will be resolved by arbitration. Id. (citing cases from the
First, Fifth, Eighth, and Ninth Circuits). Although the Sixth Circuit has “followed the
latter approach in unpublished decisions,” the Sixth Circuit has not yet issued binding
precedent on whether the district court may dismiss a case, or must only stay the case,
once compelling arbitration. Id.
The Court finds a stay is the most prudent approach. The FAA language dictating
a stay pending arbitration is mandatory. 9 U.S.C. § 3. The judicially-created exception, if
it applies in the Sixth Circuit, is a matter of discretion. See e,g., Green v. SuperShuttle
Int'l, Inc., 653 F.3d 766, 769 (8th Cir. 2011). Here, the Court finds good reason to adhere
to the language of the FAA and to decline to exercise any discretion it may have to
dismiss the case. Two considerations compel that conclusion. First, the Court is
persuaded by the decisions that have found an outright dismissal could upend the
structure of FAA vis-à-vis appeals. See e.g., Katz v. Cellco P'ship, 794 F.3d 341, 345 (2d
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Cir. 2015). 3 Second, dismissal is only appropriate, if it is all, where it is “clear that the
arbitrator would resolve all claims.” Anderson, 860 F. App'x 374, 380 (6th Cir. 2021).
The Court has very little argument in either direction on this point. On its own, the Court
notes the complaint asserts a range of claims from retaliation to malicious prosecution. If
malicious prosecution is within the scope of the arbitration agreement, the arbitrator may
duly resolve the issue. But it is premature for this Court to conclude that an arbitrator
would absolutely resolve all claims alleged. For these reasons, the Court will stay the
case rather than dismiss it.
Based upon the foregoing:
Defendants’ motion to compel arbitration (Doc. 8) is GRANTED;
The Court COMPELS the matter to arbitration; and
This action is STAYED pending arbitration. The parties SHALL notify
the Court within 14 days upon the conclusion of arbitration.
IT IS SO ORDERED.
s/Timothy S. Black
Timothy S. Black
United States District Judge
According to the circuit court in Katz:
[T]he FAA explicitly denies the right to an immediate appeal from an interlocutory order
that compels arbitration or stays proceedings…. The dismissal of an arbitrable matter that
properly should have been stayed effectively converts an otherwise-unappealable
interlocutory stay order into an appealable final dismissal order. Affording judges such
discretion would empower them to confer appellate rights expressly proscribed by
794 F.3d 341, 346 (2d Cir. 2015)
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