Wardlow v. U-Haul International, Inc. et al
Filing
21
OPINION AND ORDER: Plaintiff's Motion to Remand 10 is DENIED and defendant's Motion to Stay and Compel Arbitration 11 is GRANTED. This case is therefore STAYED while the parties engage in arbitration pursuant to the terms of th e Arbitration Agreement. The parties shall inform the court when arbitration is completed, or within 90 days of this order, the parties shall submit a joint status report to the Court on the status of arbitration. Signed on 3/30/2018 by Judge Ann L. Aiken. (ck)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
EUGENE DIVISION
WILLIAM WARDLOW, an individual,
6:17-cv-01100-AA
OPINION AND ORDER
Plaintiff,
v.
U-HAUL INTERNATIONAL, INC.; and
DOES 1 through 50, inclusive,
Defendants.
AIKEN, District Judge:
Plaintiff William Wardlow is an Oregon citizen and an attorney.
Defendant U-Haul
International, Inc. is a business incorporated in Nevada with its primary business location in
Arizona. Plaintiff filed suit in Deschutes County Circuit Comt alleging intentional and negligent
misrepresentations and unlawful trade practice by defendant. Defendant removed the case to
federal court based on diversity jurisdiction under 28 U.S.C. § l332(a). Plaintiff moves for an
order remanding this case to state court. (doc. 10) Defendant subsequently moved to dismiss the
complaint or, in the alternative, stay proceedings and compel arbitration. (doc. 11.)
For the reasons set forth below, plaintiffs Motion to Remand is DENIED, and
defendant's Motion to Stay and Compel Arbitration is GRANTED.
Page 1 - OPINION AND ORDER
BACKGROUND
This case arises from a dispute over a trailer rental. On May 26, 2016, plaintiff called
defendant's office in Port Angeles, Washington to inquire about the availability of a 6' x 12'
trailer. After confoming the availability of the trailer, plaintiff made a reservation to rent the
trailer for May 29, 2016, through defendant's online portal. Plaintiff drove with his family to
Port Angeles, Washington on May 27, 2016. On May 28, 2016, plaintiff alleges that he received
a call informing him that the trailer he reserved was not available. Due to this unavailability,
plaintiff asserts that he had to rent and use a smaller trailer on May 29, 2016. He alleges that this
forced him to make a second trip from Sunriver, Oregon to Port Angeles, Washington to move
items that would not fit on the first trip. Plaintiff also alleges that items were left behind and not
moved due to the lack space in the trailer.
Plaintiff avers that he was initially unable to serve defendant in Oregon because
defendant's status with the Oregon Secretary of State was "inactive," and its registered agent in
Oregon declined to accept service. Wardlow Deel.
at~
4. After failed attempts to communicate
with defendant's legal depatiment, plaintiff filed his First Amended Complaint listing
defendant's two entities in Arizona and Oregon alleging intentional and negligent
misrepresentations and unlawful trade practice in Deschutes County Circuit Court.
After
plaintiff filed a Second Amended Complaint ("SAC"), defendant removed the case to federal
court based on diversity jurisdiction.
Plaintiff filed the present motion to remand, alleging that there is no diversity jurisdiction
between the parties.
Defendant subsequently moved to dismiss or, in the alternative, stay
proceedings and compel arbitration.
Ill
Page 2 ~OPINION AND ORDER
STANDARDS
A defendant may remove an action filed in state court to federal court if there is diversity
or federal question jurisdiction. 28 U.S.C. § 144l(a), (b). If the federal court's jurisdiction is
based on diversity rather than a federal question, the action "may be removed only if none of the
parties properly joined and served as defendants is a citizen of the State in which such action is
brought." 28 U.S.C. § 1441(b)(2).
DISCUSSION
I.
Plaintiff's Jvfotion to Remand
A motion to remand is proper for challenging removal. 28 U.S.C. §§ 1447(c), 1448.
Here, plaintiff challenges defendant's removal arguing that this Court lacks subject matter
jurisdiction and that diversity jurisdiction has not been established. For district courts to have
original subject matter jurisdiction over civil actions through diversity, the matter in controversy
should exceed $75,000 exclusive of interest or costs and the patties must be citizens of different
states. 28 U.S.C. § l332(a).
A.
Amount in Controversy
In his motion to remand, plaintiff alleges that the amount in controversy is under the
required $75,000 threshold.
The amount in controversy depends on the value of the
unaggregated individual claims, both for monetary damages and equitable relief. In re Ford
Jvfotor Co./Citibank (S.D.), NA., 264 F.3d 952, 958-59 (9th Cir. 2001).
Potential punitive
damages are also part of the amount in controversy. Gibson v. Ch1ysler Corp., 261 F.3d 927,
946 (9th Cir. 2001). Where a statute authorizes an award of attorney fees, the fees are part of the
amount in controversy. Galt G/S v. JSS Scaninavia, 142 F.3d 1150, 1155-56 (9th Cir. 1998).
The Ninth Circuit has not definitively ruled whether prospective, unaccrued attorney fees are part
Page 3 - OPINION AND ORDER
of the amount in controversy when a case is removed. Gonzales v. CarMax Auto Superstores,
LLC, 840 F.3d 644, 649 n.2 (9th Cir. 2016). Thus, I examine whether the value of plaintiffs
unaggregated claim exceeds the jurisdictional threshold.
The amounts proffered for compensatory and statutmy damages are not in controversy.
Plaintiff requests compensatory damages in the amount of $1,400. 1 Plaintiff also prays for
statutory damages of $200 for each of defendant's alleged violations of 0.R.S § 646.608.
Plaintiff alleges 44 distinct violations of the statute, meaning that the total request for statutory
damages is $8,800 (44 violations times $200 per violation).
Next, I look to plaintiffs potential punitive damages. Oregon law does not allow the
pleading of punitive damages in an initial complaint.
0.R.S. § 31.725. However, despite
Oregon's punitive damages pleading requirements, federal courts may consider the potential for
punitive damages when determining the amount in controversy. Gibson, 261 F. 3d at 946; See
also Culpepper v. Wells Fargo Bank, NA., 2012 WL 3779038 (D. Or. 2012).
In reviewing awards for punitive damages for unlawful trade practices, Oregon courts
have approved ratios of 3.9:1 between the punitive damage award and the economic damage
award. See Allen v. 1Worgan Drive Away, Inc., 273 Or. 614, 615-16 (1975). I find that applying
a ratio of3.9:1 is appropriate here though Oregon Courts have approved awards involving much
higher ratios. See Parrott v. Carr Chevrolet, Inc., 331 Or. 537, 564-65 (2001) (upholding a
punitive damage award that exceeded economic damages by a ratio of 87: 1); Lithia 1Wedford LM,
Inc. v. Yovan, 254 Or. App. 307, 328-29 (2012). (upholding a punitive damages award that
exceeded the economic damages by a 200: 1 ratio)
1
Plaintiff alleges his family incurred at least $900 due to extra trips that had to be made
and at least $500 worth of items were lost during the move.
Page 4 - OPINION AND ORDER
Therefore, plaintiffs compensatory and statutory damages applied to the ratio of 3.9: 1
yields $40,800 in potential punitive damages (total of compensatory and statutory damages
multiplied by 3 .9).
Next, I consider the amount of plaintiffs attorney fees. When an underlying statute
authorizes an award of attorneys' fees, either with mandatory or discretionary language, such
fees may be included in the amount in controversy. lvfissouri State Life Insurance Company et
al. v. Jones, 290 U.S. 199, 202 (1933); Galt G/S v. JSS Scandinavia, 142 F.3d 1150, 1156 (9th
Cir. 1998).
Here, plaintiff seeks an award of pre-removal attorney fees based on Rule 11 of the
Federal Rules of Civil Procedure.
While preserving arguments as to the reasonableness of
plaintiffs fee expenditures or the merit of any of plaintiffs claims, defendants do not dispute the
inclusion of pre-removal attorneys' fees in assessing the amount in controversy requirement.
Therefore, pre-removal attorneys' fees, $28,470 as estimated by plaintiff, may be included in the
amount in controversy. Galt G/S, 142 F.3d at 1156.
The parties dispute whether potential future attorneys' fees should be considered in
calculating the amount in controversy.
Initially, I note that "[i]t remains an open question
whether attorney's fees that are anticipated but unaccrued at the time of removal or filing in
federal comt ... may be included in the amount-in-controversy. Other circuits and the district
comts in this circuit are divided on the issue." Gonzales, at 649 n.2.
The Third, Fourth, Fifth, and Tenth Circuits all allow potential attorneys' fees to be
calculated as part of the amount in controversy, so long as recovery of fees is authorized by
Page 5 - OPINION AND ORDER
statute or contract. 2 The Tenth Circuit offers the most thorough reasoning regarding the issue.
See 1vliera v. Dairyland Ins. Co., 143 F.3d 1337, 1340 (10th Cir. 1998) (emphasis added) (citing
lvlissouri State, 290 U.S. at 202). ("The Supreme Court has long held that when a statute permits
recovery of attorney's fees a reasonable estimate may be used in calculating the necessary
jurisdictional amount in a removal proceeding based upon diversity of citizenship.")
In contrast, the Seventh Circuit allows only those attorneys' fees (as long as fee recovery
is authorized by statute or contract) incurred up to the time of removal to be included in the
amount in controversy. Gardynski-Leschuck v. Ford 1Vlotor Co., 142 F.3d 955, 959 (7th Cir.
1998). (Reasoning that "legal expenses that lie in the future and can be avoided by the
defendant's prompt satisfaction of the plaintiffs demand are not an amount 'in controversy'
when the suit is filed."). 3
This analysis is consistent with recent District of Oregon cases. See, Reames v. AB Car
Rental Services, Inc., 899 F. Supp. 2d 1012, 1016 (D. Or. 2012) (Concluding that "including
anticipated, but unaccrued attorney fees in calculating the amount in controversy is necessarily
speculative."); Sturdevant v. 24 Hour Fitness USA, Inc., 2017 WL 359175, *3 (D. Or. Jan. 23,
2017) ("The court concludes unaccrued attorney fees are not part of the amount in controversy.
The amount in controversy depends on the circumstances at the time of removal or filing.")
2
See, e.g., Suber v. Ch1ysler Corp., 104 F.3d 578, 585 (3d Cir. 1997); Francis v. Allstate
Ins. Co., 709 F.3d 362, 369 (4th Cir. 2013); Grant v. Chevron Phillips Chem. Co., 309 F.3d 864,
873 (5th Cir. 2002); Miera v. Dairyland Ins. Co., 143 F.3d 1337, 1340 (10th Cir. 1998).
3
The comt further explained that "the Supreme Court held that legal expenses yet to be
incmTed on the date a suit begins do not create a 'case or controversy' within the meaning of
Article III." Id. (citing Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 107 (1998) ("An
interest in attorney's fees is ... insufficient to create an Atticle III case or controversy where
none exists on the merits of the underlying claim.") (quotation marks omitted) (ellipsis in
original) (emphasis added)).
Page 6 ~OPINION AND ORDER
(emphasis added) (citing Singer v. State Fann Mut. Auto. Ins. Co., 116 F.3d 373, 377 (9th Cir.
1997)).4
Because attorneys' fees incurred up to the time of removal are concrete and tangible, and
any post-removal settlement would be reached taking them into account, their inclusion in the
amount in controversy is entirely acceptable. Allowing potential attorneys' fees to be calculated
in the amount in controversy risks increasing litigation in federal courts under diversity
jurisdiction, contrary to Congress's intent. See Lynch v. Household Fin. Corp., 405 U.S. 538,
550 (1972) (citing legislative history for the proposition that the amount in controversy
requirement is designed to "reduce the federal judiciary's workload with regard to cases rising
under federal diversity jurisdiction"). Additionally, considering future attorneys' fees tips the
presumption towards, instead of against, removal---contrary to the standard set by U.S. Supreme
Cou1i. Provincial Gov't oflvfarinduque v. Placer Dome, Inc., 582 F.3d at 1087 ("The removal
statute is strictly construed against removal jurisdiction.") (citing Syngenta Crop Prot., Inc., 537
U.S. at 32). Therefore, in this case I consider only plaintiffs attorneys' fees incull"ed by the time
of removal in calculating the amount in controversy.
In sum, the amount in controversy in this case exceeds the requirement of $75,000 even
without including the contested costs of injunctive relief and disgorgement
4
5
Adding
Defendant cites Beaver v. NFC Int'/, Inc., 451 F. Supp. 2d 1196, 1199 (D. Or. 2006), in
which the comi included potential attorneys' fees in the amount in controversy. But Beaver did
not consider the statutory and policy arguments against counting unaccrued attorney's fees in the
amount in controversy. Thus, I find the more recent reasoning in Reames and Sturdevant
convincing.
5
Defendant also urges this Court to include costs of compliance with the injunctive relief
sought by plaintiff. Defendant further argues that this comi should include plaintiffs claims for
disgorgement in calculating the amount in controversy. Plaintiff argues that because he is
bringing suit on behalf of other similarly situated plaintiffs, the costs of compliance and
disgorgement may not be aggregated under Ford, supra. There, the comi held that such costs
cannot be aggregated in a class action suit. In re Ford Motor Co./Citibank (S.D.), NA., at 958Page 7 - OPINION AND ORDER
compensatory damages ($1,400), statutory damages ($8,800), potential punitive damages
($40,800), and pre-removal attorneys' fees ($28,470); the overall amount in controversy for
plaintiffs unaggregated claims is $79,470.
B.
Diversity of Citizenship
Plaintiff is an Oregon citizen and U-Haul International is a Nevada corporation with its
principal place of business in Arizona. Plaintiff alleges that defendant is a citizen of Oregon
because it accepted jurisdiction of Oregon when it merged with an Arizona corporation. Plaintiff
also argues that defendant was once registered as an Oregon Domestic Business Corporation,
which makes it fall under the scope of28 U.S.C. § 1332(c)(l) that deems "a corporation[ ... ] a
citizen of every State[ ... ] by which it has been incorporated."
Defendant avers that its acceptance of continuing jurisdiction of Oregon is irrelevant
because it concerns personal jurisdiction.
Moreover, defendant cites O.R.S. § 60.497(1)(a)
which provides that a merged corporation no longer retains the citizenship of the original state
when the surviving corporation is a citizen of another state. As to the interpretation of the phrase
"has been" in 28 U.S.C. § 1332(c)(1 ), defendant counters that the Ninth Circuit does not interpret
the phrase to include pre-merger situations when surviving corporations are incorporated in
foreign states.
See Meadows v. Bicrodyne Corp., 785 F.2d 670, 671-72 (9th Cir. 1986).
Defendant points to cases from other Circuit courts interpreting the phrase "in which it has been
incorporated" to mean "in which it is incorporated." Hogan v. Consol. Rail Corp., 961 F.2d
1021, 1027 (2d Cir. 1992).
959. Regardless, it is unnecessary to consider these arguments here, as the unaggregated
damages and costs outlined above already place the amount in controversy above the
jurisdictional threshold.
Page 8 - OPINION AND ORDER
It is established that "a corporation is typically a citizen of two states for determining the
existence of diversity jurisdiction: the state of incorporation and the state in which it has its
principal place of business." lvfontrose Chem. Corp. of Cal. v. Am. lvfotorists Ins. Co., 117 F.3d
1128, 1234 (9th Cir.1997) (quoting Breitman v. May Co., 37 F.3d 562, 564 (9th Cir.1994)).
Here, the record shows that defendant is a Nevada corporation with its principal place of
business in Arizona. Thus, I conclude that defendant is not an Oregon citizen. This is supported
by the fact that U-Haul International in Arizona is the surviving entity of the past merger, which
renders defendant a citizen of Arizona. See, Mira/es v. Wells Fargo Bank, NA., 845 F.Supp.2d
1034, 1046 n. 75 (C.D.Cal.2012) ("[a] company that merges into another company adopts the
citizenship of the merged company for diversity purposes."); citing to }vfeadows, 785 F.2d at 672.
Because plaintiff is a citizen of Oregon and defendant is a citizen of Nevada and Arizona,
diversity of citizenship is met.
Taking the amount in controversy and diversity of citizenship into consideration, this
case satisfies the requirements for diversity jurisdiction under 28 U.S.C. § 1332(a). Defendant's
removal was proper, and plaintiffs motion to remand is DENIED.
II.
Defendants' 1'1otion to Dismiss or Stay and Compel Arbitration
Defendant maintains that a valid and binding arbitration agreement was signed by
plaintiff as part of the rental agreement on May 29.
In response, plaintiff argues that the
arbitration agreements were either revoked or inapplicable to the instant action or equitable
claims.
Plaintiff further alleges that the agreements are procedurally and substantively
unconscionable.
Under the Federal Arbitration Act, arbitration agreements are "valid, irrevocable, and
enforceable, save upon such grounds as exist at law or equity for the revocation of any contract."
Page 9 ~OPINION AND ORDER
9 U.S.C. § 2. In determining the validity of an arbitration agreement, federal courts "apply
ordinary state-law principles that govern the fo1mation of contracts." Circuit City Stores, Inc. v.
Adams, 279 F.3d 889, 892 (9th Cir. 2002) (internal quotation marks and citation omitted); see
also 1Vfotsinger v. Lithia Rose-FT, Inc., 211 Or. App. 610, 613-14, 156 P.3d 156 (2007).
Accordingly, "generally applicable contract defenses, such as fraud, duress or unconscionability,
may be applied to invalidate arbitration agreements without contravening federal law." Al-Safin
v. Circuit City Stores, Inc., 394 F.3d 1254, 1257 (9th Cir. 2005) (internal quotations and citation
omitted).
A.
Scope of the Agreement
•
First, plaintiff alleges that the May 26 agreement was revoked, rendering the arbitration
provision therein void. Defendant responds that this dispute is still subject to subsequent May 29
agreement. Plaintiff further contends that the May 29 agreement is inapplicable not only to the
instant action, but also to his equitable claims. Defendant avers that the term "claims" as defined
by the arbitration agreement is to include all claims arising out of plaintiffs dealings with
defendant.
When he rented the 5' x 8' trailer, plaintiff signed a rental contract on May 29, 2016,
which included the te1m: "I agree to submit all legal claims in accordance with the U-Haul
Arbitration Agreement, incorporated by reference, and available at uhaul.com/arbitration or from
my local U-Haul representative." Settles Deel. Ex. 3.
The contract also includes the te1m just
above the signature block: "I acknowledge that I have received and agree to the te1ms and
conditions of this Rental Contract and the Rental Contract Addendum." Id.
Page 10- OPINION AND ORDER
The Rental Addendum contains additional references to the terms of the Arbitration
Agreement listing many of the provisions contained in the agreement.
The Arbitration
Agreement itself provides that:
"By commencing or making a reservation to, or agreeing to, purchase retail products or
purchase or rent "Equipment" ... U-Haul and You agree that any and all Claims ...
between U-Haul and You relating in any way to your rental purchase from U-Haul shall
be submitted to binding Arbitration before the American Arbitration Association ... "
Settles Dec. Ex. 4. Especially pe1iinent to the case, where plaintiff alleges class action claims, is
the following provision:
U-HAUL AND YOU AGREE THAT CLAIMS MAY ONLY BE BROUGHT IN AN
INDIVIDUAL CAPACITY AND IN THE NAME OF AN INDIVIDUAL PERSON OR
ENTITY AND THAT CLAIMS MUST PROCEED ON AN INDIVIDUAL AND NONCLASS AND NON REPRESENTATIVE BASIS. U-HAUL AND YOU AGREE THAT
CLAIMS OF TWO OR MORE PERSONS MAY NOT BE JOINED OR
CONSOLIDATED IN THE SAME ARBITRATION UNLESS ARISING FROM THE
SAME TRANSACTION.
Settles Dec. Ex. 4. (capitalization in original). "Claims" for the purposes of the arbitration
agreement are defined therein:
Claims is to be broadly interpreted to include any dispute, claim or cause of action arising
out of or relating to, Your dealing with U-Haul, including but not limited to, the
reservation and/or reservation process, use of any affiliated U-Haul website, advertising,
rental or sales contract, or Equipment. Claims include any and all legal theories,
including but not limited to, all statutory and t01i claims, that may be asserted by You.
Id. Ex. 6.
Any doubts concerning the scope of arbitrable issues should be resolved in favor of
arbitration. Moses H Cone Jvfemorial Hosp. v. Jvfercwy Const. Corp., 460 U.S. 1, 24-25. An
order to arbitrate should not be denied unless it may be said with positive assurance that the
arbitration clause is not susceptible of an interpretation that covers the asserted dispute. United
Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582-583 (1960).
Here, any ambiguity as to whether defendant actions in failing to provide the 6' x 12' trailer
Page 11 - OPINION AND ORDER
pursuant to the May 26 rental were in fact "related" to plaintiffs later rental must be resolved in
favor of compelling arbitration of the dispute, as it appears that the clause, interpreted broadly,
encompasses the claims at issue here. Notably, all the material facts of the SAC occurred within
one week of each other. The May 29 and May 26 agreement were both regarding the same
contemplated activity of renting a trailer for plaintiffs move. Thus, I conclude that May 29
agreement is applicable to the instant action.
B.
Unconscionability
Next, plaintiff contends that defendant's arbitration agreements were unconscionable.
Under Oregon law, a contractual provision may be rendered unconscionable when there is a
"substantial disparity in bargaining power combined with terms that are unreasonably favorable
to the party with the greater power .... " Vasquez-Lopez v. Beneficial Oregon, Inc., 210 Or. App.
553, 567 (2007) (internal quotations omitted). Unconscionability is determined by looking at the
procedural and substantive components of an agreement. J'vfotsinger, 211 Or.App. at 614, 156
P.3d 156. In deciding whether unconscionability exists as a matter oflaw, the comt looks to the
facts that were in existence at the time the contract was made. Best v. US Nat'! Bank, 303 Or.
557, 560 (1987). The part asse1ting unconscionability bears the burden of proof. iV!eunier v.
Northwestern iV!ut. Life. Ins. Co., 51 F. Supp. 3d 1023, 1031 (D. Or. 2014).
A.
Procedural Unconscionability
Here, plaintiff alleges procedural unconscionability by relying on both oppression and
surprise. Procedural unconscionability looks to two factors at the time of contract formation:
oppression and surprise. Vasquez-Lopez, 210 Or.App. at 567, 152 P.3d 940. Oppression refers
to an inequality of bargaining power where there is an absence of meaningful negotiation. Id.
Surprise refers to "the extent to which the supposedly agreed-upon terms of the bargain are
Page 12- OPINION AND ORDER
hidden" by the party seeking to enforce the agreement. Id. However, unequal bargaining power
alone is insufficient to render an arbitration agreement unenforceable in Oregon. See Motsinger
v. Lithia Rose-Ft, Inc., 211 Or. App. 610, 614 (2007).
First, plaintiff alleges that defendant possesses monopoly power as is a basis for arguing
oppression. This argument is unavailing. As defendant co11'ectly notes, it does not hold a
monopoly position in the trailer rental services market. Even assuming an unequal bargaining
power between an individual customer and a company because of inherent asymmetry of
information, such inequality in bargaining power alone does not render an arbitration agreement
unconscionable in Oregon. Motsinger, 211 Or. App. at 614.
Plaintiff argues that consumers
have no choice but to accede to the Arbitration agreement. However, the Ninth Circuit has
concluded "the take-it-or-leave-it nature of [a contract] is insufficient to render it unenforceable"
on account of procedural unconscionability when the arbitration clause "was not hidden or
disguised and where the plaintiff was given time to read the documents before assenting to their
te1ms." Runyan v. Farmers Ins. Exch., 2009 WL 10694419, at 4 (D. Or. 2009) (citing Chalk v.
T-Mobile USA, Inc., 560 F.3d 1087, 1094 (9th Cir. 2009)). Here, the claims were not hidden or
disguised for the reasons discussed below. Moreover, plaintiff had multiple oppmiunities to read
the Arbitration agreement before assenting to the terms. For all these reasons, the agreement is
not void on grounds of oppression.
Next, plaintiff alleges that defendant concealed the arbitration provisions m the
agreements which constituted procedural unconscionability due to smprise.
While plaintiff
focuses on the visibility and accessibility of the specific provisions, defendant focuses on
multiple occasions that plaintiff could have actually read and signed the rental agreements
containing arbitration provisions.
Page 13 ~OPINION AND ORDER
It is ttue that inconspicuous contract te1ms, in general, may be used as evidence to
demonstrate surprise and potential procedural unconscionability. However, the fact that plaintiff
is an attorney who was given notice throughout the reservation process by means of two separate
documents and an addendum weighs against finding surprise. Indeed, in Oregon, a party is
"presumed to be familiar with the contents of any document that bears the person's signature."
lvfotsinger, 211 Or. App. at 616-17 (citing First Interstate Bank v. Wilkerson, 128 Or.App. 328,
337 n. 11, 876 P.2d 326 (1994)). As partially outlined above, the Arbitration Agreement is not
overly long, and the second numbered paragraph contains the broad language regarding the
scope of the Arbitration Agreement and refers the reader to a further definition of "Claims" at the
bottom of the first page, where that term is bolded. The language about the scope of claims
subject to arbitration was not buried somewhere inaccessible to plaintiff. In fact, the notice that
plaintiff was assenting to the Arbitration Agreement was located mere inches above the signature
block in the rental agreement. For all these reasons, I find that the arbitration provisions of the
contract were not a surprise such that it was procedurally unconscionable.
B.
Substantive Unconscionability
Substantive unconscionability exists where a contract's terms render the agreement
unreasonably unfair and one-sided. Afotsinger, 211 Or. App. at 617 ("Whether the arbitration
clause is substantively unconscionable is an inquiry that focuses on the one-sided nature of the
substantive terms.") Further, "[t]he substantive fairness of the challenged terms is always an
essential issue." Vasquez-Lopez, 210 Or. App. at 567 (internal quotations omitted) (noting that
only substantive unconscionability is absolutely necessary).
Here, plaintiff briefly alleges substantive unconscionability based on defendant's alleged
monopoly power and vaguely on the terms of the Arbitration Agreement itself.
Page 14- OPINION AND ORDER
Plaintiffs
monopoly power argument is misplaced.
Because I have already analyzed defendants'
monopoly power in relation to the procedural unconscionability, I will breifly examine the tenns
of the arbitration agreements.
Addressing several provisions of the arbitration agreements,
plaintiff alleges that the te1ms are unfair and one-sided. Defendant counters by elaborating on
each provision's language explaining that none of the provisions are substantively unfair.
Answering the questions of substantive unconscionability, I first note that the Supreme Court has
concluded that waivers of class-wide relief are per se enforceable. See At&T i\;fobility LLC v.
Concepcion, 563 U.S. 333 (2011). Moreover, I find that defendant's Confidentiality provision,
and Notice and Demand Procedure are not unreasonably favorable to defendant. Based on the
reading of the parties' briefs and the provisions at issue, I do not find defendant's arbitration
agreements substantively unconscionable.
Based on the validity of the arbitration agreements signed by plaintiff and absence of
procedural or substantive unconscionability, the Arbitration Agreements are enforceable.
Thus, considering all of the arguments from the parties, defendants' motion to stay and
compel arbitration is GRANTED. Rather than dismissing this case, the proper remedy is to stay
the case and compel arbitration. Once arbitration is completed, I can resolve any outstanding
issues which may still exist before entering a final Judgment dismissing the case.
I II
II I
Ill
Ill
Ill
Ill
Page 15- OPINION AND ORDER
CONCLUSION
For these reasons set fmih herein, plaintiffs Motion to Remand (doc. 10) is DENIED and
defendant's Motion to Stay and Compel Arbitration (doc. 11) is GRANTED. This case is
therefore STAYED while the parties engage in arbitration pursuant to the tenns of the
Arbitration Agreement. The parties shall inform the court when arbitration is completed, or
within 90 days of this order, the pmiies shall submit a joint status report to the Court on the status
of arbitration.
IT IS SO ORDERED.
Dated
thi~ihf March 2018.
Ann Aiken
United States District Judge
Page 16 - OPINION AND ORDER
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