Jensen v. Fisher Communications, Inc. et al
Filing
28
AMENDED OPINION and ORDER - The court GRANTS Fisher's Motion 15 to Compel Arbitration and refers this matter to arbitration in King County Washington pursuant to the Employment Agreement. DATED this 3rd day of December, 2014, by United States Magistrate Judge John V. Acosta. (peg)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
THOM JENSEN
Civ. No. 3:14-cv-00137-AC
Plaintiff,
AMENDED OPINION AND ORDER
v.
FISHER COMMUNICATIONS, INC., aka
Sinclair Broadcast Group, Inc., FISHER
BROADCASTING COMPANY, aka
Sinclair Television Media, Inc., and FISHER
BROADCASTING - PORTLAND TV,
LLC, aka Sinclair Television ofPortland,
LLC.
Defendants.
ACOSTA, Magistrate Judge:
Introduction
This case arises out of an employment agreement ("Employment Agreement") between Thom
Jensen ("Jensen") and his former employers, Fisher Communications, Inc., Fisher Broadcasting
AMENDED OPINION AND ORDER - 1
[RMD]
Company, and Fisher Broadcasting- Portland TV, LLC (collectively "Fisher").' Jensen filed this
suit in January 2014 stating ten employment-related claims for relief. Fisher now moves to dismiss
or stay this case, and compel arbitration pursuant to an arbih"ation clause governing disputes arising
out of the Employment Agreement. Jensen opposes arbitration. He argues the arbitration clause is
unconscionable and unenforceable under Oregon and federal law, and that Fisher has waived its right
to compel arbitration.
Factual Background
In October 2006, Fisher hired Jensen to serve as an investigative reporter on a news program
broadcast on KATU-TV, a television station in Pmtland, Oregon. (Declaration of John Tamerlano
in Support of Motion to Compel Arbitration ("Tamerlano Deel.") Ex.Bat 1, 8.) Jensen served for
seven years at KATU-TV. (Tamerlano Deel. Exs. C, D.) After he completed his three-year conh"act
signed in 2006, he subsequently signed two-year extensions in 2009 and 2011.
The three
employment agreements are largely identical, the primary difference being Jensen's yearly salary,
which increased from $75,000 to $88,000 during his seven years with KATU-TV. (Id.)
Included in each of Jensen's three contracts is a section entitled "Resolution ofDisputes, Fees
and Costs." (Tamerlano Deel Exs. B, C, D.) That section provides that, for any controversy or claim
"arising out of, or relating to, [Jensen's] employment or tetmination of employment" with Fisher,
the parties will first attempt to negotiate the matter. (Tamerlano Deel, Ex B, C, D at 6-7.) If the
'Fisher Communications, Inc., Fisher Broadcasting Company, and Fisher Broadcasting Pmtland TV, LLC have changed their names and are now known as Sinclair Broadcasting Group,
Inc., Sinclair Television Media, Inc., and Sinclair Television of Pmtland, LLC respectively. The
court will nonetheless refer to Defendants as "Fisher," as that is the name used by both parties in
their court filings.
AMENDED OPINION & ORDER - 2
[RMD]
parties cannot successfully negotiate a mutually agreeable resolution, the contract calls for a nonbinding mediation. (Tamerlano Deel, Ex. D at 7.) If the dispute persists after mediation, then:
[t]he dispute shall be settled by final and binding arbitration in Seattle, Washington,
in accordance with the national rules for the resolution of employment disputes of the
American Arbitration Association. The arbitrator shall have the power to award
monetaty damages, costs, and reasonable attorneys' fees to the prevailing party. The
only disputes not covered by this Agreement shall be worker's compensation claims,
claims for unemployment compensation, and claims for injunctive relief and/or
equitable relief by the Company for violation of Section 6 above. The parties agree
to abide by and perform in accordance with any award rendered by the arbitrator, and
agree that judgment upon the award may be entered by the prevailing party in any
court having jurisdiction thereof. The arbitrator's fees and costs of arbitration shall
be borne equally by the parties, subject to the authority above of the arbitrator to
award costs and reasonable attorneys' fees to the prevailing patty; provided, however,
that arbitration costs which at·e prohibitively expensive for the Employee may be
borne by the company, including such costs as the arbitration filing fee and the
at·bitrator' s expenses.
Should either party file a judicial or administrative action asserting claims which are
subject to this arbitration provision, and the other party successfully stays such action
and/or succeeds in compelling arbitration of such claims, the party which filed the
action shall pay the other patty's costs and expenses incurred in seeking a stay or
compelling at·bitration, including its reasonable attorneys' fees.
(Tamerlano Deel. Exs. B, C, D at 7.)
Procedural Background
In Mat·ch 2013, Jensen filed a claim for Declarat01y Judgment in Multnomah County Circuit
Court. (Declaration of Aat·on W. Baker ("Baker Deel.") Ex. A.) In his complaint, Jensen asked the
court to declare the non-compete provisions of the Employment Agreement void and award him
attorney fees and costs pursuant to OR. REV. STAT.§ 28.100. (Baker Deel. Ex. A at 3.) Fisher filed
an answer followed by a motion for summary judgment. Neither of Fisher's documents mentioned
the at·bitration clause or asserted that the matter was improperly before the Multnomah County Court.
The record does not reflect if, when, or how Jensen's Multnomah County Court case resolved.
AMENDED OPINION & ORDER - 3
[RMD]
In January 2014, Jensen filed the present class-action suit in the U.S. District Court for the
District of Oregon. (Dkt. No. 1.) Fisher answered Jensen's complaint, this time asse1ting the
arbitration agreement as an affirmative defense. (Dkt. No. 10 at 11.) On June 5, 2014, Fisher filed
a Motion to Compel Arbitration. (Dkt. No. 15.) In it, Fisher asks the court to dismiss, or
alternatively, stay the present suit and order Jensen to participate in a binding arbitration in Seattle,
Washington pursuant to the Employment Agreement. (Id.)
Legal Standard
The Federal Arbitration Act ("the FAA") establishes the validity and enforceability of
agreements to arbitrate disputes arising out of contract, "save upon such grounds as exist at law or
in equity for the revocation of any contract." 9 U.S.C. § 2. As a general principle, the Supreme
Court has held that arbitration agreements in employment contracts are valid and enforceable. See
Circuit City Stores v. Saint Clair Adams, 532 U.S. 105, 119 (2001) (the exemption in the FAA for
employment contracts extends only to those oftranspo1tation workers). The FAA expresses the
strong federal policy in favor of arbitration. Moses H Cone Mem 'l Hosp. V. Mercwy Constr. Corp.,
460 U.S. 1, 24 (1983).
"Evaluating a motion to compel arbitration requires a court to determine: '(1) whether a valid
agreement exists, and if it does, (2) whether the agreement encompasses the dispute at issue."'
Simpson v. Lifestyles, LLC, Civil No. 07-1251-HA, 2008 WL 1882838, at *2 (D. Or. Apr. 24, 2008),
quoting Chiron Corp. v. Ortho Diagnostic Sys., 207 F.3d 1126, 1130 (9th Cir.2000). If the
agreement is valid and encompasses the dispute, the comt must "enforce the arbitration agreement
in accordance with its terms." Id Fmthermore, there is "a presumption in favor of arbitrability."
Livingston v. Metropolitan Pediatrics, LLC, 234 Or. App. 137, 147 (2010).
AMENDED OPINION & ORDER - 4
[RMD]
An otherwise valid arbitration clause may be found unconscionable and, thus, unenforceable.
This is a question of law to be determined by the court and is "based on the facts in existence at the
time the contract was made." Id. at 151, citing Bestv. U.S. National Bank, 303 Or. 557, 560 (1987).
Contract te1ms are evaluated for both procedural and substantive unconscionability, and the party
asse1ting it bears the burden of demonstrating unconscionability. Simpson, 2008 WL 1882838, at
*9.
Discussion
I. Armlicability of the Federal Arbitration Act
Before reaching the merits of Fisher's motion, the court must make first determine the
applicable law. Federal courts siting in diversity must apply state substantive law and federal
procedural law. Gasperini v. Ctr. for Humanities, Inc., 518 U.S. 415, 427 (1996). However, the
distinction between the procedural and substantive is not always clear. Id. In parsing the procedural
from the substantive, comts analyze whether the law in question has "so important an effect upon
the fmtunes of one or both of the litigants that failure to apply it" would lead to inconsistent results
or judicial fornm shopping. Hanna v. Plummer, 380 U.S. 460, 468 n.9 (1965). More recently, the
Supreme Comt held that a state statute is substantive if it "significantly affects the result of a
litigation" on the merits. Shady Grove Orthopedic Assocs., P.A. v. Allstate Ins. Co., 559 U.S. 393,
406 (2010).
The Federal Arbitration Act ("FAA") "was enacted in 1925 in response to widespread
judicial hostility to arbitration agreements." AT&T Mobility LLC v. Conception, -U.S.-, 131 S.
Ct. 1740, 1745 (2011). It expresses a "liberal federal policy favoring arbitration" and shows an
"unmistakably clear congressional purpose that the arbitration procedure, when selected by the
AMENDED OPINION & ORDER - 5
[RMD]
parties to a contract, be speedy and not subject to delay and obstrnction in the courts." Id.; Prima
Paint Corp. v. Flood & Cone/in Mfg. Co., 388 U.S. 395, 404 (1967). The Supreme Comthas held
that the FAA is "substantive law" for Erie analysis purposes, but nonetheless applies it in diversity
cases. Id. The court explained:
[t]he question in this case . . . is not whether Congress may fashion federal
substantive mies to govern questions arising in simple diversity cases. Rather the
question is whether Congress may prescribe how federal comts are to conduct
themselves with respect to subject matter over which Congress plainly has power to
legislate. The answer to that can only be in the affirmative. And it is clear beyond
dispute that the federal arbitration statute is based upon and confined to the
incontestable federal foundations of 'control over interstate commerce and over
admiralty.'
Id. at 405. Although the Comt's holding in Prima Paint Corp. appears to entirely obviate the Erie
analysis entirely so long as Congress intended a substantive statute to apply in diversity cases, the
Court has repeatedly upheld Paint Corp., and Erie analyses remain commonplace in diversity cases.
Allied-Bruce Terminix Companies, Inc. v. Dobson, 513 U.S. 265, 271 (1995). The Court has even
extended the FAA to apply in state courts where no federal jurisdiction exists and held thatthe FAA
preempts state laws which would invalidate arbitration provisions which otherwise are enforceable
under the FAA. Id., AT&T Mobility LLC, 131 S. Ct. at 1753.
The FAA applies to all transactions and agreements between individuals in commerce. 9
U.S.C. § 1. Because of the broad language used therein, Congress intended the FAA to have an
"expansive" reach and "provide for the enforcement of arbitration agreements within the full reach
of the Commerce Clause." Perry v. Thomas, 482 U.S. 483, 490 (1987). In EEOC v. Waffle House,
Inc, the Supreme Comt specifically held that "[e]mployment contracts, except for those covering
workers engaged in transportation, are covered by the FAA." 534 U.S. 279, 289 (2002).
AMENDED OPINION & ORDER - 6
[RMD]
The parties do not dispute that the Employment Agreement is in interstate commerce.
Therefore, the FAA applies to the Employment Agreement between Jensen and Fisher.
II. Merits of Fisher's Motion
Fisher argues that, under the FAA' s broad language, the arbitration clause of the Employment
Agreement is valid and enforceable, and the court should require Jensen to submit to arbitration.
Jensen disagrees and contends that the contract is unenforceable under generally applicable Oregon
contract law.
The FAA provides that agreements 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. Thus, under the FAA, an arbitration clause can be invalidated only according to principles of
contract law which may invalidate contracts generally, like unconscionability, lack of consideration,
or formation problems. State law provides the substantive law of decision to determine whether the
arbitration clause is enforceable. AT&T Mobility LLC, 131 S. Ct. at 1746. However, to be consistent
with the FAA, the state law must be generally applicable to all contracts and must not place
heightened standards of enforceability on arbitration agreements. Id. As the court held in Doctor's
Associates, Inc. v. Casarotto, "[c]ourts may not ... invalidate arbitration agreements under state
laws applicable only to arbitration provisions" because arbitration agreements must be put on "the
same footing as other contracts." 517 U.S. 681, 687.
OR REV. STAT. § 36.620 governs the validity of arbitration agreements in Oregon, and
provides:
(1) An agreement contained in a record to submit to arbitration any existing or
subsequent controversy arising between the patties to the agreement is valid,
enforceable and irrevocable except upon a ground that exists at law or in equity for
the revocation of a contract.
AMENDED OPINION & ORDER - 7
[RMD]
(2) . . . the court shall decide whether an agreement to arbitrate exists or a
controversy is subject to an agreement to arbitrate.
(5) A written arbitration agreement entered into between an employer and employee
and otherwise valid under subsection (1) of this section is voidable and may not be
enforced by a comt unless:
(a) At least 72 hours before the first day of the employee's employment, the
employee has received notice in a written employment offer from the
employer that an arbih·ation agreement is required as a condition of
employment, and the employee has been provided with the required
arbih·ation agreement that meets the requirements of, and includes the
acknowledgment set forth in, subsection (6) of this section; or
(b) The arbitration agreement is entered into upon a subsequent bona fide
advancement of the employee by the employer.
Because OR. REV.
STAT.
§ 36.620(5) applies specifically to, and creates a higher bar of
validity to enforce, arbih·ation agreements, it is likely precluded by the FAA. Bettencourt v.
Brookdale Senior Living Communities, Inc., No. 09-cv-1200-BR, 2010 WL 274331, at *7 (D. Or.
Jan. 14, 2010) (finding§ 36.620(5) preempted). However, the comt need not decide that issue, as
Jensen does not rely on § 36.620(5) to argue that the arbitration agreement is invalid. Instead, he
uses the statute to underscore that state-law defenses to contract are available even if the FAA
applies. He then contends the court should refuse to apply the arbitration agreement because: (1) the
Employment Agreement is a contract of adhesion void for public policy reasons; (2) the arbih·ation
clause is unconscionable; and (3) Fisher waived its oppmtunity to compel arbitration.
A. Contract ofAdhesion
Jensen first argues that the entire Employment Agreement is void or voidable because it is
a contract of adhesion. A contract of adhesion is "an agreement between paities of unequal
AMENDED OPINION & ORDER - 8
[RMD]
bargaining power, offered to the weaker party on a 'take-it-or-leave-it' basis." Sprague v. Quality
Restaurants Nw., Inc., 213 Or. App. 521, 526 (2007), citing Reeves v. Chem Industrial Co. 262 Or.
95, 101 (1972). Contracts of adhesion are often viewed as procedurally unfair, and may be void
when coupled with unfair or umeasonable substantive terms. See Sprague, 213 Or. App. at 526
(finding a contract of adhesion evidence of procedural unfairness). "However, under Oregon law,
the fact that a contract is adhesive does not alone render it unenforceable." Id. In fact, contracts of
adhesion "are a common feature of contemporary commercial life" and are regularly enforced by
Oregon courts. Id. Instead, the adhesive nature of a contract is but one factor courts use to
determine whether a contract or contract provision is unconscionable. Id. Although the Employment
Agreement contains some characteristics of a contract of adhesion, this fact alone is not sufficient
to invalidate the Employment Agreement.
A challenge to the validity of a contract containing an arbitration clause can be of two types,
and the type fo challenge determines the venue in which that challenge is determined. In Buckeye
Check Cashing, Inc. v. Cardegna the Supreme Court wrote:
Challenges to the validity of arbitration agreements ... can be divided into two types.
One type challenges specifically the validity of the agreement to arbitrate. The other
challenges the contract as a whole, either on a ground that directly affects the entire
agreement (e.g., the agreement was fraudulently induced), or on the ground that the
illegality of one of the contract's provisions renders the whole contract invalid.
546 U.S. 440, 444 (2006) (citations omitted). The latter category of contractual challenges, those
which challenge the validity of an entire contract, must be decided by an arbitrator. Id. at 446.
Conversely, the former category of challenges may be decided by the court. Id.
AMENDED OPINION & ORDER - 9
[RMD]
In arguing that the Employment Agreement is a contract of adhesion, Jensen's challenge falls
. This
into the latter Buckeye category because he urges the coutt to invalidate the entire contract
challenge must be decided by the arbitrator, not the comt.
B. Unconscionability
Second, Jensen argues that the arbitration clause is unenforceable because it is procedurally
only
and substantively unconscionable. Unlike Jensen's adhesion argument, this argument attacks
court.
the arbitration clause. Thus, under Buckeye the unconscionability issue is decided by the
In Oregon, as in most jurisdictions, contracts or paits thereof may be invalidated because they
The
ai·e unconscionable. Vasquez-Lopez v. Beneficial Oregon, Inc., 210 Or. App. 553, 566 (2007).
App. at
patty assetting unconscionability bears the burden of proof on the issue. Sprague, 213 Or.
525. Further, unconscionability is a question oflaw "to be assessed on the basis of facts in existenc
e
at the time the contract was made." Vasquez-Lopez, 210 Or. App. at 566.
Unconscionability is defined relative to a procedural component and a substantive
ively
component. Id. Some jurisdictions require a contract to be both procedurally and substant
ionable
unconscionable to void the one-sided provision. Id. Others will find a contract unconsc
has not
given the presence of either substantive or procedural unconscionability. Id. "Oregon
relevant,
adopted a formal template." Id. "[B]oth procedural and substantive unconscionability are
case
although only substantive unconscionability is absolutely necessary. With that proviso, each
is decided on its own unique facts." Id.
1. Procedural Unconscionability
Procedural Unconscionability refers to the conditions under which a contract is formed. Id.
[It] focuses on two factors: oppression and surprise. Oppression ai·ises from an
inequality of bargaining power which results in no real negotiation and an absence
AMENDED OPINION & ORDER - 10
[RMD]
of meaningful choice. Surprise involves the extent to which the supposedly agreedupon terms of the bargain are hidden in a prolix printed form drafted by the party
seeking to enforce the te1ms.
Id., quoting Acorn v. Household Intern., Inc., 211 F. Supp. 2d 1160, 1168 (N.D. Cal. 2002)(applying
California law defining unconscionability).
In nearly any contractual relationship, some imbalance of bargaining power exists. Some
evidence on the record indicates contract negotiations between Jensen and Fisher were no exception,
as Fisher refused to negotiate certain portions of the Employment Agreement. But despite Fisher's
refusal to negotiate certain terms of the contract, Jensen clearly had some bargaining power as shown
by the parties' negotiation of three express terms of the contract: Jensen's salary, the term of the
contract, and Jensen's work schedule as it related to ce1tain holidays. An unwillingness to negotiate
some p01tions of a contract does not render the bargaining process oppressive and does not render
an otherwise-enforceable contract unconscionable. Moreover, although the court noted above that
the Employment Agreement has some characteristics of a contract of adhesion, that conclusion does
not mandate a finding of oppression in the bargaining process. Therefore, the contract-negotiation
process was not "oppressive."
The terms and language of the Employment Agreement do not evidence the existence of
"surprise," however section twelve of the Employment Agreement bears the bold and underlined
heading "Resolution of Disputes, Fees and Costs" and clearly states the appropriate procedure to
resolve disputes arising out of the Employment Agreement:
Attempt shall first be made to resolve the dispute tlu·ough negotiation. If negotiation
without mediation is unsuccessful, the patties shall submit the dispute to mediation .
. . . Ifnegotiation and mediation are unsuccessful, the dispute shall be settled by final
and binding arbitration in Seattle, Washington, in accordance with the national mies
for the resolution of employment disputes of the American Arbitration Association.
AMENDED OPINION & ORDER - 11
[RMD]
(Tamerlano Deel. Ex. D at 7.) The language explaining the dispute-resolution process is not hidden
in fine print or prolix, or stated in terms incomprehensible to a layperson. Further, at only nine
pages, the Employment Agreement is not so long as to conceal the arbitration agreement by the sheer
volume of material. In addition, Jensen signed three nearly identical Employment Agreements
between 2006 and 2011, all of which contained the agreement to arbitrate. Paities to a contract
generally are presumed to have read the contract's terms. Tokyo Ohka Kogyo America, Inc. v.
Huntsman Propylene Oxide LLC, -F. Supp. 2d-, No. 3:13-cv-01580-SI, 2014 WL 3893031, at
*15 (D. Or. Aug. 8, 2014). Therefore, the court must presume that Jensen read the Employment
Agreement and its predecessor versions, before signing them and was, thus, not surprised by the
contents of the Employment Agreement he now challenges. The record does not show he objected
to either of his previous contracts or to the arbitration clauses they contained.
At oral argument, Jensen argued that the Employment Agreement and its predecessors
contain elements of "surprise" because the arbitration clause does not contain language explicitly
waiving Jensen's right to a jury trial. However, Jensen did not present any authority to supp011 his
argument, and did not carry his burden on the issue.
Therefore, although the Employment
Agreement has some elements of procedural unconscionability, is not so unfair as to mandate the
contract's invalidation.
2. Substantive Unconscionability
Jensen claims the arbitration clause is substantively unconscionable for two reasons. First,
he mgues it is umeasonable that the arbitration agreement requires arbitration to occur in Seattle,
Washington. Second, Jensen contends that arbitration would be prohibitively expensive and would
deny him access to an arbitral forum.
AMENDED OPINION & ORDER - 12
[RMD]
A substantively unconscionable contract is a contract whose te1ms are unfairly favorable to
the party of superior bargaining power, and the court's analysis focuses on the actual terms of the
contract. Vasquez-Lopez, 210 Or. App. at 567. Like other aspects ofunconscionability, comts apply
a totality-of-the-circumstances approach to substantive unconscionability. Id. However, courts have
found arbitration agreements substantively unconscionable where they bar all class-action litigation
and contain unreasonable fee-sharing provisions. Id. at 571-75.
The enforceability of fomm-selection clauses is controlled by federal law. Argueta v. Banco
Mexicano, S.A., 87 F.3d 320, 324 (9th Cir. 1996). Fo!Ulll-selection clauses are entitled to a
presumption of validity, "and should not be set aside unless the party challenging enforcement ...
can show it is unreasonable under the circumstances." Id. at 325 (internal quotation marks omitted).
Under prevailing precedent:
A f01um selection clause is unreasonable if (1) its incorporation into the contract was
the result of fraud, undue influence, or overweening bargaining power; (2) the
selected fomm is so "gravely difficult and inconvenient" that the complaining party
will "for all practical purposes be deprived of its day in court;" or (3) enforcement
of the clause would contravene a strong public policy of the forum in which the suit
is brought.
Id. (citations omitted).
Jensen does not carry his burden to prove the forum-selection clause is unreasonable. He
does not argue the clause resulted from "fraud, undue influence, or overweening bargaining power,"
nor does he point to a "strong public policy" of this jurisdiction which would counsel against
enforcement. Instead Jensen argues the selected fomm of Seattle, Washington is unreasonable
because at the time he signed the agreement, he lived and worked in Portland, Oregon. The comt
disagrees. This relatively minor geographic distance is not "so gravely difficult or inconvenient" so
as to deprive him of his ability to arbitrate this dispute. Driving from Portland, Oregon to Seattle,
AMENDED OPINION & ORDER - 13
[RMD]
Washington takes only three hours, and Jensen has not produced evidence showing that, similar to
the Vasquez-Lopez plaintiffs, his resources and income are disproportionately small compared to the
anticipated cost of arbitration. Thus, the court concludes that requiring arbitration in Seattle would
not deprive Jensen of his day in court. Id.
Jensen also does not sufficiently demonstrate the fee-shifting provisions of the arbitration
agreement make arbitration prohibitively expensive. An arbitration agreement is unenforceable
when the cost of arbitrating a matter functionally denies a claimant access to an arbitral forum.
Vasquez-Lopez, 210 Or. App. at 573-74.
Denial of access to an arbitral forum occurs when the cost of arbitration is large in
absolute terms, but also, comparatively, when that cost is significantly larger than the
cost of a trial; otherwise, it is the existence of the claim itself and not the forum
choice that deters the plaintiff.
Id. at 574.
The fee-shifting aspect of the arbitration clause does not render the clause unconscionable.
In Green Tree Financial Corp.-Ala. v. Randolph, 531 U.S. 79, 91 (2000), the plaintiff asked the
cou1t to invalidate an arbitration agreement because arbitrating the dispute at issue would have been
prohibitively expensive in comparison to litigation. Id. at 84. However, the agreement did not
specify the prop01tion of costs to be borne by each party or the expected cost of the arbitration. Id.
The agreement's silence on these issues would have required the court to estimate the costs involved
and speculate as to the manner in which those costs would likely be divided. Id. at 90-91. Because
there was insufficient evidence that arbitration would be prohibitively expensive for the plaintiff, the
court rejected the plaintiffs argument and held that "[t]he 'risk' that [plaintiff! will be saddled with
prohibitive costs is too speculative to justify invalidation of an arbitration agreement." Id. at 91.
AMENDED OPINION & ORDER - 14
[RMD]
An example of a substantively unconscionable fee-sharing provision can be found in
Vasquez-Lopez. 210 Or. App. at 574-75. There, the arbitration agreement in Plaintiffs mortgage
provided: (I) the lender-defendant would pay the first $100.00 of arbitration filing costs; (2) the
remaining filing costs would be divided equally among the parties; (3) arbitration costs exceeding
the claimant's loan amount were to be paid by the claimant; and (4) the arbitrator's fees forthe first
day of hearings would be divided equally among the parties, but the cost for subsequent days of
hearings would be borne only by the party requesting arbitration. Id. at 572. The court determined
that the precise language of the fee-sharing agreement removed any speculation about the costs
associated with the plaintiffs' anticipated arbitration. Id. at 574. Fmther, the court reasoned that,
"by the second hour ofthe second day ofarbitration, [plaintiffs] would owe $1,000 in arbitration fees
and that, with their current earnings and expenses, they would need six months to save that amount
of money." Id. at 572. Thus, according to the Oregon Comt of Appeals, the arbitration clause at
issue was substantively unconscionable and unenforceable. Id. at 574-75.
The fee-shifting provision in the Employment Agreement is not substantively
unconscionable. The Employment Agreement provides that "[t]he arbitrator's fees and costs of
arbitration shall be borne equally by the parties," but "[t]he arbitrator shall have the power to award
monetaty damages, costs, and reasonable attorneys' fees to the prevailing patty." (Tamerlano Deel.
Ex. D at 7 .) However, it goes on to state that "arbitration costs which are prohibitively expensive
for the Employee may be borne by the Company, including such costs as the arbitration filing fee
and the arbitrator's expenses." (Tatnerlano Deel. Ex. D at 7.) Like the Green Tree fee-shifting
provision, the wording of the present agreement leaves the court to speculate as to (I) the amount
of fees likely necessary to fully arbitrate the matter; (2) whether the arbitrator will award fees and
AMENDED OPINION & ORDER - 15
[RMD]
costs to the prevailing party; and (3) whether the cost truly will be prohibitively expensive for
Jensen. Further, the agreement specifically provides that, ifthe costs of arbitration are prohibitively
expensive, the costs will be borne by Fisher.
In sum, the arbitration clause is neither procedurally nor substantively unconscionable.
Therefore, the court will not invalidate the arbitration agreement as unconscionable and grants
Fisher's motion to compel arbitration so long as they did not waive their right to arbitration.
3. Waiver
Third, Jensen argues even if the arbitration clause is enforceable, Fisher waived its right to
compel arbitration by failing to raise the arbitration clause dming Jensen's previous Multnomah
County Circuit Court case or in Fisher's answer to Jensen's complaint in this case. Fisher denies that
they waived their right to arbitrate but that, regardless, the issue should be decided by the arbitrator
instead of this court. The court agrees with Fisher and concludes that the arbitrator is the appropriate
decisionmaker on issues ofwaiver. 2
Under the FAA, state laws governing contract interpretation are determinative when
analyzing choice of forum issues. Citigroup Smith Barney v. Henderson, 241 Or. App. 65, 72
(2011). Parties may agree to a particular forum of decision or to apply "a particular state's
substantive contract law to their dispute or a state's procedural rules to their arbitration hearing."
Id. at 72, quoting Industria/MatrixJoint Venture v. Pope & Talbot, Inc., 341Or.321, 330 (2006).
However, "where the arbitration agreement is silent as to whether the court or the arbitrator should
2
The court notes that the arbitration clause expressly exempts from its application "claims
for iJ1iunctive relief and/or equitable relief by t.he Company for violation of Section 6 above."
(Tamaerlano Deel., Ex. D at 7.) The parties Multnomah County lawsuit involved Jensen's noncompete obligations in Section 6.
AMENDED OPINION & ORDER- 16
[RMD]
decide issues of waiver, the FAA supplies a default rnle: It is presumed that waiver issues are to be
decided by the arbitrator." Citigroup Smith Barney, 241 Or. App. at 72, citing Howsam v. Dean
Witter Reynolds, Inc., 537 U.S. 79, 84-85 (2002). In fact, nearly all issues ofprocedural arbitrability,
like waiver, should be decided by the arbitrator absent a binding agreement othetwise. Id. at 85. The
Employment Agreement is silent on the issue of waiver, so the court declines to decide the issue and
instead refer it to the arbitrator.
Conclusion
For the aforementioned reasons, the court GRANTS Fisher's Motion to Compel Arbitration
and refers this matter to arbitration in King County Washington pursuant to the Employment
Agreement.
DATED this 3rd st day of December, 2014.
/JOHN V. ACOSTA
United States Magistrate Judge
AMENDED OPINION & ORDER - 17
[RMD]
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?