Carson v. Higbee Co. , 149 F. App'x 289 ( 2005 )

United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT September 30, 2005
)))))))))))))))))))))))))) Charles R. Fulbruge III
Clerk
No. 04-60572
))))))))))))))))))))))))))
VERA P. CARSON,
Plaintiff–Appellee,
v.
HIGBEE COMPANY; WILLIAM CARR,
Defendants–Appellants.
Appeal from the United States District Court
for the Southern District of Mississippi
Before SMITH, DENNIS, and PRADO, Circuit Judges.
PER CURIAM:*
Higbee Company d/b/a Dillard’s (“the Company” or
“Dillard’s”) and William Carr (collectively, “Defendants”) appeal
the district court’s denial of their motion to compel
arbitration. We reverse and remand.
I.
Vera Carson began working at Dillard’s as a sales associate
in 1993 and was eventually promoted to the position of assistant
*
Pursuant to 5TH CIRCUIT RULE 47.5, the court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5TH CIRCUIT
RULE 47.5.4.
1
sales manager. She was still working in that position when in
2001, the Company adopted an arbitration policy for employment-
related disputes. That year, the Company held a management
meeting to discuss the policy. Carson attended.
During the 2001 meeting, the store manager, William Carr,
showed the attendees two documents related to the Company’s new
arbitration policy: the Rules of Arbitration and an
acknowledgment form. The acknowledgment form was labeled
“Acknowledgment of Receipt of Rules of Arbitration.” It
described the purposes of the arbitration policy and contained
the following notice provision:
Effective immediately, all employees (as hereinafter
defined) of Dillard’s, Inc., its affiliates, subsidiaries
and Limited Liability Partnerships (the “Company”) shall
be subject to the RULES OF ARBITRATION (the “Rules”)
described below. Employees are deemed to have agreed to
the provisions of the Rules by virtue of accepting
employment with the company and/or continuing employment
therewith.
(Emphasis added). Below the notice provision was a space for
both the Company employee’s signature as well as that of a
Company representative. The notice provision was printed in the
same font size, but different font style, as the rest of the
acknowledgment form.1
Carson continued her employment with Dillard’s after the
Rules of Arbitration were implemented. During this time, she
1
The notice provision was in roman type; the rest of the
acknowledgment form was italicized.
2
dealt with the acknowledgment form on a daily basis. A copy of
the form was on display in the Company’s personnel office. In
addition, Carson assisted Dillard’s in obtaining signatures on
the acknowledgment form from other employees and signed several
forms herself as a witness to other signatures.
Nevertheless, Carson testified that she could not remember
whether she signed the acknowledgment form. However, she did not
refuse to sign the form either verbally or in writing.2 Carson
also claims she was told that the arbitration policy would be
optional for employees in management positions.
In March 2002, Carson applied for and was denied the
position of assistant store manager. The following month, she
brought suit against the Company and Carr, alleging claims of sex
and race discrimination.
The Defendants filed a motion to compel arbitration, which
the district court denied. The Defendants timely appealed.
II.
We review the denial of a motion to compel arbitration de
novo. Freudensprung v. Offshore Technical Servs., Inc., 379 F.3d
327, 337 (5th Cir. 2004). Where, as here, the issue is whether
the parties have a valid and enforceable agreement to arbitrate,
courts apply the contract law of the state governing the
2
Some employees did refuse to sign the acknowledgment form.
Those employees were not terminated, nor is there any evidence
that they suffered adverse employment-related consequences for
their failure to sign.
3
agreement. Wash. Mut. Fin. Group, LLC v. Bailey, 364 F.3d 260,
264 (5th Cir. 2004).3 Mississippi contract law applies here.4
Carson raises three issues on appeal: First, she claims that
she did not assent to arbitration. Second, she claims that if an
agreement to arbitrate does exist, that agreement is
unconscionable. Finally, Carson claims that any agreement to
arbitrate was procured by fraudulent inducement. We will address
each argument in turn.
A.
Arbitration must proceed by agreement: “[A]rbitration is a
matter of contract and a party cannot be required to submit to
arbitration any dispute which he has not agreed so to submit.”
May v. Higbee Co., 372 F.3d 757, 763 (5th Cir. 2004) (quoting
AT&T Techs., Inc. v. Communications Workers of Am., 475 U.S. 643,
648 (1986)). Carson’s first argument is that no agreement to
arbitrate exists in this case. Specifically, she makes two
claims: First, Carson argues that “there are no actions which
3
See also 9 U.S.C. § 2 (stating that arbitration agreements
are enforceable “save upon such grounds as exist at law or in
equity for the revocation of any contract”); Doctor’s Assocs.,
Inc. v. Casarotto, 517 U.S. 681, 687 (1996) (“[G]enerally
applicable [state-law] contract defenses, such as fraud, duress,
or unconscionability, may be applied to invalidate arbitration
agreements without contravening § 2.”).
4
Both Carson and Carr are citizens of Mississippi, and
Mississippi is the site of the controversy. See Boardman v.
United Servs. Auto. Ass’n, 470 So. 2d 1024, 1031 (Miss. 1985)
(explaining that Mississippi follows the “center of gravity”
approach to choice-of-law issues).
4
indicate that [she] intended to be bound by the arbitration
agreement”; that is, there was no written acceptance of the
arbitration policy, nor was her continued employment with
Dillard’s enough to manifest assent. Second, Carson argues that
even if she had signed the acknowledgment form, it is an
ambiguous document, and thus parol evidence may be introduced to
clarify its meaning. According to Carson, she was told that the
arbitration policy would be optional for management employees.
Thus, she argues, her continued employment did not constitute
acceptance of the contract.
We must reject both of these claims in light of May v.
Higbee Company, 372 F.3d 757 (5th Cir. 2004), issued shortly
before the district court ruled in this case.5 That case is
indistinguishable: it involved the same defendants, the same
arbitration policy and acknowledgment form, and a plaintiff
similarly situated to Carson.
In May, a panel of this court rejected the same argument
that Carson makes here. May, 372 F.3d at 764. First, the court
held that the acknowledgment form was not ambiguous, explaining,
Properly construed, . . . the Acknowledgment Form and
May’s signature thereon did not by themselves constitute
May’s assent to arbitration. By signing the
Acknowledgment Form, May indicated that she had received
5
See also Marino v. Dillard’s, Inc., 413 F.3d 530, 533 (5th
Cir. 2005) (“As in May, the Acknowledgment Form here is clear in
advising Marino . . . of the means of consent, i.e., Marino’s
continued employment with Dillard’s.”).
5
the Rules, but the signature did not all by itself bind
May to the arbitration program. Rather, May became bound
through her subsequent conduct, for the Acknowledgment
Form unambiguously notified May that “[e]mployees are
deemed to have agreed to the provisions of the Rules by
virtue of . . . continuing employment [with Dillard’s].”
Id. (second ellipsis in original). Thus, the court explained,
the acknowledgment form “notified May of how she would manifest
her assent to be bound”——by her continued employment. Id.
Furthermore, May undisputedly continued her employment with
Dillard’s, manifesting her assent to be bound by the Rules of
Arbitration. Id. Therefore, the court held, the district court
had erred in looking to parol evidence “to vary the terms of the
unambiguous writings that were before it.” Id.
The May court also noted that “Mississippi courts have long
held that a party’s conduct may manifest assent to an agreement.”6
And even though there was no Mississippi case specifically
addressing continued employment in the context of arbitration
agreements,7 the May court “[saw] no reason to think that the
Mississippi courts would reject the general rule when it comes to
this particular species of assent-manifesting conduct.” Id. at
765. To buttress that conclusion, the May court pointed out that
6
May, 372 F.3d at 764 (citing Edwards v. Wurster Oil Co.,
688 So. 2d 772, 775 (Miss. 1997); Misso v. Nat’l Bank of
Commerce, 95 So. 2d 124 (Miss. 1957)).
7
Our more recent research continues to reveal no
Mississippi case addressing continued employment in the context
of arbitration agreements.
6
many other courts had “held under the law of various states that
a party may manifest assent through continued employment.”8
Because the acknowledgment form was not ambiguous and May
assented to the Rules of Arbitration through her continued
employment, this court reversed the district court’s denial of
the Company’s motion to compel arbitration. Id. at 765.
Carson attempts to distinguish May by pointing out that the
plaintiff in that case admitted to having signed the
acknowledgment form. That fact, however was irrelevant to the
court’s decision in May: it was May’s continued employment——not
her signature——that manifested her assent to be bound by the
arbitration policy. Id. at 764. Thus, the factual difference
between this case and May changes nothing. Carson, like May,
manifested her assent to arbitration by continuing her employment
with Dillard’s. Her first argument is rejected.
B.
Carson next argues that the arbitration agreement is
unconscionable and therefore invalid. Mississippi courts
recognize two types of unconscionability: procedural and
substantive. East Ford, Inc. v. Taylor, 826 So. 2d 709, 714
8
May, 372 F.3d at 765 (citing Gutman v. Baldwin Corp., No.
Civ. A 02-CV-7971, 2002 WL 32107938, at *4 (E.D. Pa. Nov. 22,
2002); Lang v. Burlington N. R.R. Co., 835 F. Supp. 1104, 1105–06
(D. Minn. 1993); Baptist Health Sys., Inc. v. Mack, 860 So. 2d
1265, 1273–74 (Ala. 2003); In re Haliburton Co., 80 S.W.3d 566,
568–69 (Tex. 2002); Asmus v. Pac. Bell, 999 P.2d 71, 79 (Cal.
2002)).
7
(Miss. 2002). Carson argues both types of unconscionability
here.
1.
Carson may prove that the agreement to arbitrate is
procedurally unconscionable by showing “a lack of knowledge, lack
of voluntariness, inconspicuous print, the use of complex
legalistic language, disparity in sophistication or bargaining
power of the parties and/or a lack of opportunity to study the
contract and inquire about the contract terms.” East Ford, 826
So. 2d at 714 (internal quotation marks omitted). She has not
done so.
Carson’s procedural unconscionability arguments can be
summarized as follows: Carson did not voluntarily enter into the
arbitration agreement because it was a contract of adhesion,
unilaterally imposed on her by the Company; the provision of the
acknowledgment form notifying the employee that continued
employment would constitute acceptance of the arbitration
contract was “an inconspicuous statement within the document[] in
legalistic language”; there was a “lack of knowledge” by Carson
of the contract terms because she did not have “the least
opportunity to discuss or negotiate the . . . policy’s
provisions”; and there was a disparity in bargaining power
between Carson and the Company.
Carson principally relies on East Ford, Inc. v. Taylor, 826
8
So. 2d 709 (Miss. 2002), to support these arguments. In that
case, Taylor filed suit against East Ford, alleging that East
Ford had sold him a used truck that was represented to him as
new. Id. at 711. When he bought the vehicle, Taylor signed a
purchase agreement that contained an arbitration clause. Id.
After Taylor filed suit, East Ford moved to compel arbitration
based on the contract clause. Id. The trial court found the
arbitration agreement to be unconscionable, and the Mississippi
Supreme Court affirmed. Id.
The East Ford court held that the arbitration clause at
issue in that case was procedurally unconscionable because Taylor
was not told of the arbitration provision before signing the
contract; the font size of the provision was one-third the size
of other terms of the contract; and the arbitration provision was
not underlined or emphasized and did not otherwise alert the
reader to its importance. Id. at 714–17. The facts of this case
are not comparable.
Here, Carson undoubtedly knew of the arbitration policy: she
attended the 2001 meeting where Carr introduced the policy to
Company employees; a copy of the acknowledgment form was on
display in the Company personnel office; and Carson assisted
Dillard’s in obtaining signed acknowledgment forms from other
employees, even signing several forms herself as a witness.
Moreover, the arbitration agreement in the acknowledgment form is
9
the entire contract. In East Ford, by contrast, the arbitration
agreement was just one provision of a contract for the sale of an
automobile. Here, the notice provision was in the same font size
as the rest of the acknowledgment form and in a different font
type; there, the arbitration provision was obscured. Finally, as
the East Ford court recognized, this court has previously held
that contracts of adhesion are not automatically void. Id. at
716 (citing Hughes Training, Inc. v. Cook, 254 F.3d 588, 593 (5th
Cir. 2001)). East Ford is distinguishable. The arbitration
agreement is not procedurally unconscionable.
2.
Carson also argues that the arbitration agreement is
substantively unconscionable. Substantive unconscionability may
be proven by showing that the terms of the arbitration agreement
are oppressive. East Ford, 826 So. 2d at 714. “Substantively
unconscionable clauses have been held to include waiver of choice
of forum and waiver of certain remedies.” Id.
Carson again relies on East Ford to make her substantive
unconscionability argument. The court did not reach the issue of
substantive unconscionability in that case, id. at 717, but
suggested in a later case that the terms of the East Ford
provision might have indeed been substantively unconscionable,
see Russell v. Performance Toyota, Inc., 826 So. 2d 719, 726 n.1
(Miss. 2002) (distinguishing East Ford from the case before the
10
court).
The contract provision at issue in East Ford allowed East
Ford to unilaterally rescind the arbitration agreement, while
Taylor could only rescind the agreement if his Lemon Law rights
were implicated. East Ford, 826 So. 2d at 715; Russell, 826 So.
2d at 726 n.1. Carson argues that the Company’s arbitration
agreement is substantively unconscionable because it suffers from
the same defect as the provision in East Ford. Specifically, she
claims that under the Rules of Arbitration, “nearly all
conceivable employee rights to a judicial forum are waived,”
while the Company is permitted to seek judicial relief in cases
involving unfair competition, the use or disclosure of trade
secrets or confidential information, and potential criminal
claims.
This argument ignores the record evidence showing that many
employee claims are, in fact, not covered by the agreement. For
example, claims under ERISA, wage claims not brought under a
statute or ordinance, and claims precluded from arbitration under
the National Labor Relations Act may be brought in a judicial
forum. Under the agreement at issue here, both the Company and
the employee retain the right to a judicial forum in certain
instances; thus, this agreement is wholly unlike that in East
Ford, where East Ford could unilaterally rescind the agreement in
any circumstance. The agreement here is not substantively
11
unconscionable.
C.
Finally, Carson argues that she was fraudulently induced to
enter into the arbitration agreement. Carson failed to raise
this argument before the district court; therefore, we will not
consider it here. See, e.g., Alford v. Dean Witter Reynolds,
Inc., 975 F.2d 1161, 1163 (5th Cir. 1992) (refusing the consider
a fraudulent inducement claim raised for the first time on
appeal).
III.
For the foregoing reasons, the district court erred in
denying the Company’s motion to compel arbitration. The judgment
is reversed.
REVERSED and REMANDED.
12