NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with
Fed. R. App. P. 32.1
United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Argued February 24, 2011
Decided April 28, 2011
Before
WILLIAM J. BAUER, Circuit Judge
RICHARD A. POSNER, Circuit Judge
DANIEL A. MANION, Circuit Judge
Nos. 09‐3389 & 10‐3418
Tonya M. Baumann, Appeal from the United States District
Plaintiff‐Appellant, Court for the Southern District of
Indiana, Indianapolis Division
v.
No. 08 CV 1385
The Finish Line, Inc.
Defendant‐Appellee. Larry J. McKinney, Judge.
O R D E R
Before The Finish Line, Inc. hired Tonya Baumann as a consumer‐service representative,
she signed a contract agreeing to resolve any claims concerning her employment through
arbitration. When she was fired six weeks later, she sued in federal court claiming she was
discriminated against. The Finish Line moved to compel arbitration and the district court
agreed, dismissing Baumann’s complaint. Baumann appeals. Because Baumann agreed to
arbitrate her claims against The Finish Line and she has not established that the costs associated
with arbitration would be prohibitively high, we affirm.
Nos. 09‐3389 & 10‐3418 Page 2
I.
Baumann began working for The Finish Line as a temporary worker in late November
2007. A few weeks later, in early January, she was hired as a full‐time consumer‐service repre‐
sentative. When she applied for the full‐time position, Baumann filled out a standard job
application. It had several forms, including an “Applicant Statement” that provided that the
employee would settle any and all claims arising out her “employment with The Finish Line,
exclusively by final and binding arbitration.” It also provided that “[c]omplete details of my
agreement to submit these claims to arbitration are contained in The Finish Line, Inc. Employee
Dispute Resolution Plan, which has been made available for my review prior to the execution
of this application.” Baumann signed and dated the Applicant Statement and began working
for The Finish Line immediately thereafter. Within six weeks, she was fired after making
several complaints about harassment, shift changes, and inconsiderate treatment after suffering
a miscarriage.
She later sued The Finish Line under Title VII, claiming several forms of discrimination.
Citing the arbitration agreement signed by Baumann, The Finish Line moved to dismiss the
complaint and compel arbitration. In response, Baumann argued that the arbitration agreement
was not binding on her and that the potential costs associated with the arbitration were prohibi‐
tive, and thus the arbitration provision should not be enforced against her. In a very thorough
order, the district court held that under ordinary contract principles she was bound by her
agreement to arbitrate. The district court also found that she had failed to establish that the
potential cost of arbitration would be prohibitive. Baumann appealed, and while her appeal
was pending, she moved for relief from judgment under Federal Rule of Civil Procedure 60(b),
citing newly discovered evidence. In support, she submitted the depositions of two supervisors
at The Finish Line who did not recall ever receiving the Plan when they were hired. The district
court denied Baumann’s motion.
II.
Baumann appeals both the district court’s decision to compel arbitration and its denial
of her motion for relief from judgment. We review de novo the district court’s decision to compel
arbitration. Tinder v. Pinkerton Security,
305 F.3d 728, 733 (7th Cir. 2002). And we review its
decision denying Baumann relief under Rule 60(b) for an abuse of discretion. Eskridge v. Cook
County,
577 F.3d 806, 808–09 (7th Cir. 2009).
Nos. 09‐3389 & 10‐3418 Page 3
A.
Baumann’s primary argument is that she was not bound to arbitrate her claims because
she never received the detailed Plan that set out all the terms and conditions that came with her
agreement to arbitrate. She does not dispute that she signed the one paragraph application
agreement, or that on it there appears this language:
Complete details of my agreement to submit these claims to arbitration are
contained in The Finish Line, Inc. Employee Dispute Resolution Plan, which has
been made available for my review prior to the execution of this application.
And she concedes that her employment was conditioned on her signing the Applicant Statement
and agreeing to arbitrate. The only real issue is whether the fact that the Plan was not actually
given to her somehow nullifies the arbitration clause.
An agreement to arbitrate is treated like any other contract, and we look to the state law
that governs the formation of contracts to determine if there was a valid agreement. Tinder,
305
F.3d at 733. In this case, Indiana law applies. Indiana follows the general principle that to
incorporate another document by reference, all that is required is a clear reference to the
document and a description of its terms so its identity may be ascertained. MPACT Const. Group,
LLC v. Superior Concrete Constructors, Inc.,
785 N.E.2d 632, 639 (Ind. Ct. App. 2003); see also
Standard Bent Glass Corp. v. Glassrobots Oy,
333 F.3d 440, 447 n.10 (3d Cir. 2003) (discussing the
common‐law rule). Here, the Applicant Statement formed a contract between Baumann and
The Finish Line: in return for being hired, Baumann agreed to bring any claims related to her
employment to arbitration. The contract identified and incorporated by reference the Plan as
providing the details of the arbitration agreement. It is immaterial whether Baumann exercised
her ability to hold and study the Plan; The Finish Line was not required to force her to read it
or have her sign a copy of it to incorporate its terms into the contract. Thus, we reject Baumann’s
argument that the fact that she did not physically receive a copy of the Plan kept her from being
bound by her agreement to arbitrate.
B.
Baumann also argues that the abitration agreement should not be enforced because the
Plan’s cost‐splitting terms prohibit her from exercising her rights through arbitration. The Plan
provides that Baumann could be forced to share the costs of arbitration, up to the greater of
$10,000 or 10% of the amount in controversy. The Plan also provides that the arbitrator can
“reduce the Employee’s share of the costs and fees upon a showing of substantial need.” In
support of her argument that the cost of arbitration would be prohibitive, Baumann filed an
Nos. 09‐3389 & 10‐3418 Page 4
affidavit to the effect that she is an unemployed, single mother with two kids, that she lives at
her parents’ house, and that her only income is $900 a month in child support. The district court
held that this failed to establish that the cost of arbitration would be prohibitive.
The party seeking to invalidate an arbitration agreement on the ground that arbitration
would be prohibitively expensive “bears the burden of showing the likelihood of incurring such
costs.” Green Tree Financial Corp. v. Randolph,
531 U.S. 79, 92 (2000). While there is no bright line
for when the costs associated with arbitration will be prohibitive, we have outlined the showing
a party must make when it seeks to invalidate an arbitration agreement on those grounds. James
v. McDonald’s Corp.,
417 F.3d 672, 678–80 (7th Cir. 2005). In James we looked for evidence on two
pertinent questions: first, how the party’s financial situation will “be factored into an assessment
of the arbitration costs under this hardship provision”; and second, how the costs will compare
between litigating in the courts versus proceeding in arbitration.
Id. at 679–80.
Baumann did not provide the district court with any of that information. She merely
stated that she has little money and assumed that would be enough to support her claim. But
to invalidate an arbitration agreement based on the costs, there must be specific evidence
establishing why arbitration would be prohibitively expensive.
Id. In this case, that means
Baumann would have to produce some evidence to show how her income would be factored
into the arbitration agreement’s hardship provision, and why arbitration would be too costly
but litigation in the courts would not be. Without this information, the risk that arbitration
would be prohibitively expensive is “too speculative to justify the invalidation of an arbitration
agreement.” Green Tree,
531 U.S. at 91. Thus, the district court did not err in finding Baumann
had failed to meet her burden on this issue.1
C.
As a final point, Baumann claims the district court erred by not granting her relief from
judgment after she submitted newly discovered evidence. This newly discovered evidence
consisted of two depositions that Baumann took at the suggestion of the Seventh Circuit
mediator—it was thought that these depositions might put some value on Baumann’s claim and
facilitate a settlement. During the depositions, Baumann sought information from the supervi‐
sors about The Finish Line’s arbitration policy and whether the Plan was made available to them
1
At oral argument, we determined that at this juncture she is competently represented
under a contingency‐fee arrangement, and it is likely that litigating the case to this point has
already surpassed the minium $10,000 that Baumann may have incurred in arbitration. And
as noted above, the arbitrator could reduce the fee if shown substantial need.
Nos. 09‐3389 & 10‐3418 Page 5
when they were hired. Both supervisors could not recall whether it was. This fact, Baumann
argues, establishes that The Finish Line’s human resources manager lied when she stated in her
affidavit that the Plan was made available to Baumann. It does not.
The deposition testimony amounted to the supervisors saying that they did not recall
whether the Plan was given to them when they were hired. In this context, the reality of being
hired for a job and all the forms that come with it is not lost on us. It is difficult to imagine any
person remembering precisely what forms they were given when they started working—there
are usually plenty. And those supervisors, like most people when they’re seeking a job, only
cared about getting hired and they were more than happy to sign whatever forms were handed
to them to make sure they got the job. The fact that they could not recall what they signed or
what was made available to them does not mean, let alone suggest, that the human resources
manager was lying when she said the Plan was made available to Baumann before she was
hired. Because we agree with the district court that the newly discovered evidence did not
suggest any fraud on The Finish Line’s part, the district court did not err in denying Baumann’s
motion for relief from judgment.
III.
In sum, the district court did not err in holding that the Baumann agreed to resolve all
claims related to her employment in arbitration, finding that Baumann failed to establish that
the costs of arbitration would be prohibitive, and deciding that Baumann’s newly discovered
evidence was not grounds for granting her relief from judgment. Accordingly, the judgment
of the district court is AFFIRMED.
