Gonzales v. J.C. Penney Corporation, Inc.

Filing 26

OPINION AND ORDER by Chief Judge Gregory K Frizzell ; staying case; granting 11 Motion to Compel Arbitration; denying 12 Motion to Dismiss; granting 12 Motion to Stay (hbo, Dpty Clk)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF OKLAHOMA

REBECCA L. GONZALES,
Plaintiff,
v.
J.C. PENNEY CORPORATION, INC.,
a Foreign for Profit Business Corporation,
Defendant.

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Case No. 13-CV-86-GKF-TLW

OPINION AND ORDER
Before the court is the Motion to Compel Arbitration and to Dismiss or, in the
Alternative, Stay All Proceedings [Dkt. ##11-12] filed by defendant J.C. Penney Corporation,
Inc. (“JCP”). Plaintiff Rebecca L. Gonzales (“Gonzales”) opposes the motion.
Gonzales, a former JCP customer service representative, sued JCP in Tulsa County
District Court, asserting claims of wrongful discharge in violation of 85 O.S. § 341, negligent
hiring, supervision and retention and intentional infliction of emotional distress. [Dkt. #2-1,
Petition]. JCP removed the case to federal court based on diversity of citizenship [Dkt. #2] and
filed the instant motion, asserting Gonzales, at the commencement of her employment, signed a
binding arbitration agreement (“Arbitration Agreement”) that requires arbitration of her claims in
this lawsuit.
The Arbitration Agreement states, in pertinent part:
[JCPenney] and I voluntarily agree to resolve disputes arising from, related to, or
asserted after the termination of my employment with JCPenney through
mandatory binding arbitration under the JCPenney Rules of Employment
Arbitration. JCPenney and I voluntarily waive the right to resolve these disputes
in courts.

I acknowledge that I was given the opportunity to review the Rules and consult
with an attorney prior to signing this Agreement. I understand that I will,
however, be bound by this Agreement and the Rules once I sign electronically,
regardless of whether I have reviewed the Rules, or consulted with an attorney,
prior to signing. I hereby agree to arbitrate disputes covered by and pursuant to
the JCPenney Rules of Employment Arbitration.
Check the box below and click on the Accept button below to electronically sign
this form. By signing this form, you agree to this Binding Mandatory Arbitration
Agreement.
[Dkt. #11, Ex. A.4]. The Arbitration Agreement bears the electronic signatures of Gonzales and
JCP, and is dated 07/14/2010. [Id.].1
Under Rule 3.B of the JCP Rules of Employment Arbitration, all claims related to
retaliation for exercising protected rights, wrongful termination and/or breach of common law
obligations are subject to arbitration. [Dkt. #11, Ex. A.3]. Rule 21.A. permits JCP to “amend
any Rule to clarify it or correct typographical errors.” [Id.].
Gonzales contends she never signed the Arbitration Agreement. Further, she argues
adequate consideration is lacking because JCP had an “unfettered right” to amend the Arbitration
Agreement.
II. General Law
Agreements containing arbitration provisions are valid, enforceable and irrevocable under
the Federal Arbitration Act (“FAA”). 9 U.S.C. § 2. The FAA requires a district court to stay
judicial proceedings where a written agreement provides for the arbitration of the dispute that is
the subject of the litigation. Coors Brewing Co. v. Molson Breweries, 51 F.3d 1511, 1514 (10th
Cir. 1995); 9 U.S.C. § 3.

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Under Oklahoma’s Uniform Electronic Transactions Act (“UETA”), 12A O.S. § 15-101, et seq., if the law requires
a signature, an electronic signature satisfies the law. 12A O.S. § 15-107(d). See also Buckhalter v. J.C. Penney
Corporation, Inc., No. 3:11-cv-752-CWR-FKB, 2012 WL 4468455 (S.D. Miss. Sept. 25, 2012) (recognizing
validity of employee’s electronic signature of arbitration agreement under UETA).

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Arbitration agreements in employment contracts are generally enforceable. See Circuit
City Stores, Inc. v. Adams, 532 U.S. 105, 123 (2001). Agreements that require arbitration of
statutory claims are also generally enforceable. See Shearson/American Express, Inc. v.
McMahon, 482 U.S. 220, 226 (1987).
The FAA establishes a federal policy favoring arbitration, and courts must vigorously
enforce arbitration clauses. Id. As a corollary to this policy, it is a well-established rule that “all
doubts must be resolved in favor of arbitrability.” McWilliams v. Logicon, Inc., 143 F.3d 573,
576 (10th Cor. 1998). And while state law principles of contract formation apply, the language
of the parties’ contract must be interpreted in light of the strong federal policy in favor of
arbitration. See Zink v. Merrill Lynch Pierce Fenner & Smith, Inc., 13 F.3d 330, 334 (10th Cir.
1993) (“[I]n applying general state-law principles of contract interpretation to the interpretation
of an arbitration agreement within the scope of the [FAA], due regard must be given to the
federal policy favoring arbitration”) (quoting Volt Info. Sciences, Inc. v. Board of Trustees of
Leland Stanford Junior Univ., 489 U.S. 468, 475-75 (1989).
In considering a motion to compel arbitration, the court must determine (1) whether a
valid agreement to arbitrate exists, and (2) whether the subject matter of the dispute is covered
by the arbitration agreement. Pierce v. Kellogg, Brown & Root, Inc., 245 F.Supp.2d 1212, 121516 (E.D. Okla. 2003) (citing Coors, 51 F.3d at 1515-16).
III. Analysis
Under Oklahoma law, “[a] contract is an agreement to do or not to do a certain thing.” 15
O.S. § 1. The essential elements of a contract are (1) parties capable of contracting; (2) consent;
(3) a lawful object; and (4) sufficient cause or consideration. 15 O.S. § 2. JCP has presented
evidence of an arbitration agreement bearing the signatures of Gonzales and JCP. Further, there

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is no dispute that the agreement covers the claims raised in this lawsuit. However, Gonzales
contends she did not sign the agreement, and there was no consideration for it.
A. Authenticity of Signature
JCP has submitted affidavits of Bret J. Romero, JCP’s Director of Human Resources, and
Kelley Perry, an Application Analyst for JCP. [Dkt. #11, Ex. A, Romero Affid.; Dkt. #17, Ex. 1,
Perry Affid.]. The affidavits establish:


Gonzales was employed as a customer service associate at the JCP in Woodland Hills
Mall in Tulsa from July 12, 2010 through April 12, 2012. [Romero Affid., ¶4].



Every newly-hired employee of JCP in Oklahoma is required to complete a New Hire
Package. To complete the package, each employee must enter their Social Security
Number into an Associate Kiosk, then is required to formally accept an offer of
employment with JCP and complete electronic forms containing his or her personal
data. [Id., ¶6].



After entering their personal data into the Associate Kiosk, each employee is assigned a
unique Employee Identification Number which is used to identify them throughout their
employment with JCP. Each newly-hired employee is also required to create a
password to enable them to access the Associate Kiosk, which employees use to clock
in and out each day and which JCP uses to convey information to employees. [Id., ¶7].



Once an employee obtains an Employee Identification Number, they are required to
complete the remainder of the New Hire Package, which they do electronically. This
includes completing an I-9 and W-4, providing emergency contact information and
enrolling in direct deposit, if they so choose. Employees are also provided with the JCP
policies and procedures applicable to their employment, and they must electronically
acknowledge receipt of them. All employees are presented with the Arbitration
Agreement, which they are required to review and accept electronically by clicking the
“I Accept” box on the Associate Kiosk screen. Upon completion of the New Hire
Package, the store’s Training Supervisors are required to print the forms and transmit
them with all support documentation to the Salt Lake Shared Service Center Imaging
Department in Salt Lake City, Utah, where they are maintained in the employee’s
personnel file. [Id., ¶8].



As part of JCP’s “on-boarding” new hire process, Gonzales was assigned a unique
Employee Identification Number on July 14, 2010. The process required that Gonzales
create her own unique password which, combined with her Employee Identification
Number, gave her access to the JCP Associate Kiosk, where the on-boarding process
takes place. Gonzales created her unique password on July 14, 2010. JCP does not
have and never had access to her password. As a result, JCP could not access Gonzales’
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new hire application and did not have access to her personal electronic account with
JCP. [Perry Affid., ¶2].


While in the on-boarding new hire process, Gonzales was required to sequentially
complete a task list, which included, among other things, completing a Federal W-4,
electronically signing and agreeing to the Binding Arbitration Agreement, providing
emergency contacts, and completing the universal acknowledgments, parking
acknowledgment, dress code acknowledgment, and attendance acknowledgment. Each
task on the task list must have been completed before the on-boarding new hire process
was complete and Gonzales was allowed to work. JCP’s records indicate that Gonzales
completed each of the tasks, including electronically signing the Binding Arbitration
Agreement, on July 14, 2010. [Id., ¶3].
In her response, Gonzales submitted an affidavit denying that she signed the Agreement

and stating that once she was hired, she remembered filling out paper work for a 401K, tax
information, contact information, relative contact information and “medical stuff,” but not the
Agreement. [Dkt. #15, Ex. A, Gonzales Affid., ¶¶4, 7]. She stated that she was never given a
copy of the Agreement until her attorney showed it to her in this case. [Id., ¶9]. She stated,
“When I worked at J.C. Penny other cashiers, supervisors and managers had access to my
employee number and social security number, if they needed it.” [Id., ¶8]. In a supplemental
affidavit subsequently filed with leave of court, Gonzales further stated:
Here’s how I got my J.C. Penny employee I.D. number. On my first day of work
a manager walked me to a device that looked like a Time Clock. It was down
stairs, mounted on a wall outside the break room. The Time Clock had a keypad,
also on the wall. It was not a computer at a desk or kiosk. I was standing up to
operate it and told to enter my name and Social Security number on it, which I
did, and a number came up that was to be my employee I.D. number. I had to
write it down to remember it. The manager was standing next to me and could
see the employee I.D. number.
When entering my name and Social Security number into the Time Clock, I was
standing up and there wasn’t any other information on it or for me to read or go
through. I just put in my basic information and it gave me, and the manager
standing next to me, my I.D. number that I needed to use while at J.C. Penny.
[Dkt. #24, Ex. A, Gonzales Affid., ¶¶3-4].

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The essence of Gonzales’ argument is that since she does not to remember signing the
agreement, and her manager was standing next to her when she wrote down her employee
identification number, then someone else must have electronically signed the arbitration
agreement on her behalf. The evidence before this court does not support such a conclusion.
Gonzales admits going through the new hire process, including electronically filling out other
forms at a terminal.2 The sworn statements of the JCP affiants establish that the new hire process
was an online electronic process that required all paperwork be signed sequentially; the
employee was required to input both the employee identification number and a password known
only to the employee in order to do so; and JCP has records of all paperwork completed during
the process, including the arbitration agreement with Gonzales’ electronic signature. Further,
Gonzales has not stated that she has proof that someone else signed the agreement, nor has she
identified who that person was.
The court concludes that Gonzales has not raised a genuine issue as to whether she signed
the arbitration agreement.
B. Sufficiency of Consideration
Rule 21 of the JCP Rules of Employment Arbitration states:
A. JCPenney may amend any Rule to clarify it or correct typographical errors.
B. If, in the course of a Case, a Rule or subpart thereof is deemed unenforceable
by a court or arbitrator, it will be considered stricken from these Rules insofar as
that particular Case is concerned. JCPenney may thereafter amend these Rules to
delete any such Rule or subpart, thus preventing its application to future Cases.
C. Amendments only apply to Cases commenced 90 days after publication of the
amendment.

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Although Gonzales denies the terminal was a “kiosk,” her affidavit establishes that she completed new hire forms
electronically on a device she described as a “Time Clock [with] a keypad.” [Dkt. #24, Ex. A, Gonzales Affid., ¶3].

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[Dkt. #11, Ex. A.4, p. 9]. Gonzales asserts, based on this language, that the Arbitration
Agreement lacks sufficient consideration because it gives JCP an “unfettered right” to amend the
agreement.
In Dumais v. American Golf Corp., 299 F.3d 1216, 1219 (10th Cir. 2002), the Tenth
Circuit held that “an arbitration agreement allowing one party the unfettered right to alter the
arbitration’s existence or its scope is illusory.” (emphasis added). There, the signature page of
employee handbook containing an arbitration agreement reserving to the employer the right to
amend, supplement, or revise everything in the handbook with the exception of employees’ atwill status. Id. at 1217.
However, in Hardin v. First Cash Financial Services, Inc., 465 F.3d 470 (10th Cir.
2006), the court—applying Oklahoma law regarding contract formation—held that where the
right to modify the arbitration agreement is restricted, the agreement is not illusory. In Hardin,
the dispute resolution agreement (“DRA”) stated the employer “retains the right to terminate the,
and/or to modify or discontinue the Dispute Resolution Program (“DRP”).” Id. at 478. It also
provided, though, that “no amendment shall apply to any claims, disputes, or controversies of
which the Company had actual notice on the date of the amendment” and termination of the
agreement and/or DRP would “not be effective until 10 days after reasonable notice of
termination is given to Employee or as to claims, disputes, or controversies which arose prior to
the date of termination.” Id.
In finding the modification provision did not render the arbitration agreement illusory,
the court stated, “Oklahoma law suggests that reasonable modification provisions are
permissible,” and it concluded “under Oklahoma law . . . an arbitration agreement allowing a
defendant company the unilateral right to modify or terminate the agreement is not illusory so

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long as reasonable restrictions are placed on the right.” Id. at 479 (citing Wilson v. Gifford-Hill &
Co., Inc., 570 P.2d 624, 626 (Okla. Civ. App.1977); Pierce v. Kellogg, Brown & Root, Inc., 245
F.Supp.2d 1212, 1215 (E.D. Okla. 2003)).
Here, as in Hardin, the arbitration rules permit JCP to amend the rules. However, the
right is not—as Gonzales asserts—“unfettered.” First, an amendment may be made only to
“clarify” the rule or “to correct typographical errors.” Second, amendments apply only to cases
commenced 90 days after publication of the amendment. Third, if, in the course of a case, a rule
or subpart of a rule is deemed unenforceable by a court or arbitrator, it will be considered
stricken from the rules insofar as that particular case is concerned; and JCP may thereafter
amend the rules to delete any such rule or subpart.
The court concludes that Rule 21 contains reasonable restrictions upon JCP’s right to
amend the Arbitration Agreement. Therefore, the agreement is not illusory. See Hardin, 465
F.3d at 479. Additionally, since both JCP and Gonzales agreed to submit any employmentrelated claims to binding arbitration, as provided by the Rules of Arbitration, their mutual
promises to arbitrate claims constitute adequate consideration to support the arbitration
agreement. See Thompson v. Bar-S Foods, Co., 174 P.3d 567 (Okla. 2007) (agreement to
arbitrate must apply equally to both parties to provide sufficient consideration). Further, courts
have held that an agreement to arbitrate as a condition of employment constitutes adequate
consideration to support an arbitration agreement. See, e.g., Pennington v. Northrop Grumman
Space & Mission Sys. Corp., 269 Fed.Appx. 812, 819 (10th Cir. 2008) (unpublished) (“In the
employment context, a reciprocal agreement to arbitrate can provide the requisite consideration
so long as the employer does not retain the unilateral authority to terminate or modify the
arbitration agreement once the employee’s claim has accrued.”)

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C. Dismissal/Stay
JCP seeks dismissal of this action. Alternatively, it asks the court to stay the case
pending arbitration.
The FAA requires a district court, upon motion by any party, to stay judicial proceedings
involving issues covered by written arbitration agreements. See 9 U.S.C. § 3. Some circuits
condone dismissal of a case where all issues presented in the lawsuit are arbitrable. See Choice
Hotels Int’l, Inc. v. BSR Tropicana Resort, Inc., 252 F.3d 707, 709-10 (4th Cir. 2001); Fedmet
Corp. v. M/V Buyalyk, 194 F.3d 674, 678 (5th Cir. 1999). However, the Tenth Circuit has
rejected this position, stating “Section 3 of the Federal Arbitration Act contemplates continuing
supervision by the district court to ensure that arbitration proceedings are conducted within a
reasonable period of time, thus preventing any impairment of the plaintiffs’ rights to seek relief.”
Meyer v. Dans un Jardin, S.A., 816 F.2d 533, 538-9 (10th Cir. 1987). See also Gratzer v.Yellow
Corp., 316 F.Supp.2d 1099, 1106-07 (D. Kan. 2004).
Therefore, JCP’s request for dismissal of this action is denied. Its alternative motion for
stay is granted.
III. Conclusion
For the foregoing reasons, JCP’s Motion to Compel Arbitration [Dkt. ##11] is granted.
JCP’s Motion to Dismiss and alternative Motion to Stay [Dkt. #12] is denied with respect to the
request for dismissal and granted with respect to the request for stay. This action is stayed
pending arbitration of the claims asserted by plaintiff in her complaint.3

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JCP filed an Application for Hearing on Motion to Compel. [Dkt. #25]. The court concludes a hearing is
unnecessary, as the evidence submitted by the parties raises no genuine dispute about whether plaintiff’s claims are
subject to arbitration. Therefore, the application for hearing is denied.

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ENTERED this 29th day of April, 2013.

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