Good Chevrolet Inc. & Michael Nouri v. David Bier ( 2017 )

FLED
COURT OF APED'
STATE OF
201705 21 f.;: 8:42
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DAVID BIER, No. 75733-4-1
Respondent, DIVISION ONE
V.
GOOD CHEVROLET, INC., a UNPUBLISHED
Washington corporation; and MICHAEL
NOURI and JANE DOE NOURI, and the FILED: August 21, 2017
marital community comprised thereof,
Appellants.
Cox, J. — Good Chevrolet, Inc. appeals the denial of its motion to compel
arbitration in this employment discrimination case. Because David Bier fails in
his burden to show that the arbitration agreement is either procedurally or
substantively unconscionable, we reverse and remand with directions.
Bier previously worked for Good Chevrolet as a finance manager. Ten
days after beginning there, he signed the Dealership Arbitration Agreement dated
December 15, 2014 that is at issue in this appeal.
Good Chevrolet terminated his employment seven months later. After
leaving, Bier commenced this action against Good Chevrolet and one of its
employees. He alleged employment discrimination, wrongful termination,
workplace discrimination, hostile-work environment, retaliation, and negligent
infliction of emotional distress. He refused to submit these disputes to arbitration
as required under the agreement.
No. 75733-4-1/2
Good Chevrolet moved to compel arbitration. The trial court denied the
motion.
Good Chevrolet appeals.
PROCEDURAL UNCONSCIONABILITY
Good Chevrolet argues that Bier has the duty under the arbitration
agreement to arbitrate his claims because he fails to show that the agreement is
procedurally unconscionable. We agree.
The Federal Arbitration Act(FAA)applies to all employment contracts
except in narrow circumstances not relevant here) Under section 2 of that act,
written arbitration agreements "'shall be valid, irrevocable, and enforceable, save
upon such grounds as exist at law or in equity for the revocation of any
contract.'"2 We "indulge every presumption 'in favor of arbitration, whether the
problem at hand is the construction of the contract language itself or an
allegation of waiver, delay, or a like defense to arbitrability.m3
We review de novo a trial court's order denying arbitration.4 The party
opposing arbitration bears the burden to show that the agreement is
unenforceable.5
1 Adler v. Fred Lind Manor, 153 Wash. 2d 331, 341, 103 P.3d 773(2004).
2 Id. (quoting 9 U.S.C. § 2).
3 Id. at 342(quoting Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460
U.S. 1, 25, 103 S. Ct. 927, 74 L. Ed. 2d 765 (1983)).
4 Id.
5 Id.
No. 75733-4-1/3
The ordinary contract defenses of procedural or substantive
unconscionability may invalidate an arbitration agreement.6 Either defense alone
is sufficient to do so.7
An agreement is procedurally unconscionable when it "lack[s] a
meaningful choice."8 To answer this inquiry, we examine the circumstances
surrounding the transaction.6 These include "'[t]he manner in which the contract
is entered,' whether each party had 'a reasonable opportunity to understand the
terms of the contract,' and whether 'the important terms[were] hidden in a maze
of fine print.'"16
In examining these circumstances, we consider the balance of the parties'
bargaining power." When that balance is unequal, the contract may be one of
adhesion.12 Whether a contract is adhesive depends on three factors: "(1)
whether the contract is a standard form printed contract,(2) whether it was
prepared by one party and submitted to the other on a take it or leave it basis,
6 McKee v. AT&T Corp., 164 Wash. 2d 372, 383, 191 P.3d 845(2008).
7 Adler, 153 Wash. 2d at 345.
8 Romney v. Franciscan Med. Grp., 186 Wash. App. 728, 736, 349 P.3d 32(2015).
9 Adler, 153 Wash. 2d at 345.
1° Id. (quoting Schroeder v. Far:mot Motors, Inc., 86 Wash. 2d 256, 260, 544 P.2d 20
(1975)).
11 Romney, 186 Wash. App. at 736.
12 Id.
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No. 75733-4-1/4
and (3) whether there was no true equality of bargaining power between the
parties."13
Inequality of bargaining power alone, even if it renders the contract one of
adhesion, is insufficient to render a contract procedurally unconscionable unless
it deprived a party of meaningful choice.14
The party opposing arbitration as procedurally unconscionable bears the
burden to show so.18 He must:
"[a]t minimum,... show some evidence that the employer refused
to respond to her questions or concerns, placed undue pressure on
her to sign the agreement without providing her with a reasonable
opportunity to consider its terms, and/or that the terms of the
agreement were set forth in such a way that an average person
could not understand them."[18]
We review de novo arbitrability.17 We also review de novo questions of
unconscionability.18
Here, Good Chevrolet correctly states in its briefing the three factors that
we use to determine procedural unconscionability. The third of these factors is
not seriously in dispute. Specifically, the agreement to arbitrate is plainly set
forth on the face page of this document. And the same page states that
13 Id. (quoting Adler, 153 Wn.2d at 347).
14 Id. at 737.
15 Id. at 735.
16 Id. at 737 (quoting Zuver v. Airtouch Commc'n, Inc., 153 Wash. 2d 293, 306-07,
103 P.3d 753(2004)).
17 Id. at 735.
18 McKee, 164 Wash. 2d at 383.
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arbitration shall be "binding."19 Finally, the same page states in oversize bold
that the signing employee, Bier, "ha[d] read [the agreement to binding arbitration
and other matters] and underst[ood]that by signing this agreement,[he] and the
dealership voluntarily and knowingly waive their right to bring suit in a court of
law and have their claims heard by a judge or jury.',20
Good Chevrolet further argues that the other two factors weigh in its favor.
We agree.
As for the manner of entering into the contract, the record shows Bier was
presented with the proposed agreement to sign shortly after starting employment.
However, there is no evidence in the record to show that he lacked a meaningful
choice whether to sign the agreement. That is the relevant test.21
For example, there is no evidence that he lacked ample opportunity either
to contact counsel of his choice or discuss concerns or questions with Good
Chevrolet. Moreover, as we have already observed, the arbitration terms are not
hidden in a maze. Thus, there is no showing that Bier lacked a meaningful
choice.
Bier's declaration in opposition to the motion to arbitrate states that he
was told by Julie Eberton "You need to make [] sure [you]sign this
[agreement]."22 This alleged statement fails to meet the minimum test to show
19 Clerk's Papers at 83.
29 Id. (capitalization omitted).
21 Zuver, 153 Wash. 2d at 305-06.
22 Clerk's Papers at 77.
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No. 75733-4-1/6
procedural unconscionability. It fails to show that Good Chevrolet refused to
respond to any questions or concerns Bier was free to ask about the agreement.
It also fails to show undue pressure on him to sign or that he lacked reasonable
opportunity to consider its terms.
Bier also testified in his declaration that no one at Good Chevrolet told him
to take time to consider the agreement. But this argument turns the relevant test
on its head. He must show that he was not given time to consider the
agreement, not that the company failed to tell him to do so.
Bier relies on McKee v. AT&T Corp.,23 which is instructive. But his
reliance on that case is misplaced.
_ In that case, Michael McKee had subscribed for long distance phone
service from AT&T.24 Around ten days to two weeks later, AT&T may have
mailed him the terms and conditions of his subscription, including an arbitration
provision.25 It retained the contractual right to unilaterally change these terms
and conditions.26 The consumer was further "deemed to have agreed to the
changes by continuing to use AT&T service whether the consumer had actual
23 164 Wash. 2d 372, 383, 191 P.3d 845(2008).
24 Id. at 378.
25 Id. at 401-02.
26 Id. at 402.
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No. 75733-4-1/7
notice of the change or not."27 The consumer was never required to read, or sign
acceptance of, the terms and conditions.28
Thus, the supreme court reasoned that it was unclear whether McKee had
had the "reasonable opportunity to understand the terms and a meaningful
choice."29 But the court held that the arbitration provision was substantively
unconscionable and thus, it did not reach a conclusion on procedural
unconscionability.39
Here, as in McKee, Good Chevrolet presented Bier with an arbitration
agreement ten days after the parties reached their central agreement. But the
two cases are otherwise distinct.
Good Chevrolet presented Bier with the agreement to sign. There is no
evidence that he lacked the opportunity to review it. And there is no evidence
that he would have suffered adverse consequences by taking the time to review
the document before signing it. Likewise, there is no evidence that he did not
have the opportunity to ask questions of the company about the agreement.
Thus, McKee simply does not support Bier's claim that the arbitration agreement
is procedurally unconscionable.
27 Id.
28 Id.
28 Id.
3° Id.
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No. 75733-4-1/8
SUBSTANTIVE UNCONSCIONABILITY
Good Chevrolet also argues that the agreement is not substantively
unconscionable. We agree.
A contract provision is substantively unconscionable when it is "overly or
monstrously harsh, is one-sided, shocks the conscience, or is exceedingly
calloused."31 We apply this principle to the following five provisions in the
agreement that are in dispute.
Mutuality
Good Chevrolet argues that the arbitration agreement applies mutually to
both parties and is not one-sided.32 We agree.
The plain words of the agreement state, in relevant part, that:
The parties further agree that any legal or equitable claims
or disputes arising out of or in connection with Employee's
employment, the terms and conditions of Employee's employment,
or the termination of Employee's employment, except for any
claims under workers' compensation laws, whether federal or state,
shall be settled by binding arbitration.[331
Here, the plain language of the arbitration agreement expressly states that
binding arbitration applies to both parties. The agreement is mutual in this
respect.
Bier argues that the agreement should be read otherwise because it also
states that Title Agreement applies to claims or disputes against the Dealership,
31 Hill v. Garda CL Nw., Inc., 179 Wn.id 47, 55, 308 P.3d 635(2013).
32 Id.
33 Clerk's Papers at 83(emphasis added).
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No. 75733-4-1/9
any officer or director of the Dealership individually and any co-worker or
supervisor."34
This argument is unpersuasive because it is strained and inconsistent with
a commonsense reading of the agreement as a whole. Moreover, it is contrary to
the principle that courts will presume that arbitration is what the parties intended
by this agreement.35
Cost-Sharing
Good Chevrolet next argues that the cost-sharing provision is not
substantively unconscionable. We again agree.
A cost-sharing provision may be unconscionable if it "effectively prohibits
employees from bringing claims in the arbitral forum."36 This court considers
affordability "case-by-case on the basis of specific, factual information."37 The
party contending that a cost-sharing provision makes arbitration unaffordable
bears the burden to "show[]the likelihood of incurring such costs."38 The party
does so by filing a personal finance affidavit and some evidence of expected
arbitration costs, like an average fee schedule from the American Arbitration
Association.39
34 Brief of Respondent at 7(quoting Clerk's Papers at 92).
35 Adler, 153 Wash. 2d at 342.
36 Hill, 179 Wash. 2d at 56.
37 Romney, 186 Wash. App. at 746 (quoting Walters v. AAA Waterproofing, Inc.,
151 Wash. App. 316, 327,211 P.3d 454 (2009)).
38 Adler, 153 Wn.2d at 353(quoting Green Tree Fin. Corp. v. Randolph, 531 U.S.
79, 92, 121 S. Ct. 513, 148 L. Ed. 2d 373(2000)).
39 id.
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No. 75733-4-1/10
Here, there is no evidence from Bier to substantiate his claim that costs
and expenses would preclude him from arbitrating his dispute. On this basis
alone, we may reject this argument.
In any event, he appears to claim that he cannot do so because he does
not know what such costs and expenses would be. This argument is simply
untenable and we reject it as unpersuasive.
We note that the agreement provides that if the employee prevails in
arbitration, "costs and expenses" shall be borne by the Dealership. But if the
Dealership prevails, the parties agree to split equally the costs and expenses. It
is difficult to see how this provision places Bier to some disadvantage that
precludes him from bringing his claim in arbitration. Accordingly, we conclude
this argument is unpersuasive.
Attorney Fees
Good Chevrolet argues that the agreement does not undermine Bier's
statutory right to attorney fees. We agree.
A provision is substantively unconscionable if it "effectively undermines a
plaintiffs right to attorney fees under [the Washington Law Against
Discrimination] and 'helps. . . the party with a substantially stronger bargaining
position and more resources, to the disadvantage of an employee needing to
obtain legal assistance'"4°
4° Id. at 355 (quoting Alexander v. Anthony Intl., L.P., 341 F.3d 256, 267(3d Cir.
2003)).
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No. 75733-4-1/11
Here, the agreement provides: IV the Employee is the prevailing party, he
or she shall have available all remedies provided by the statute or common
law."41
This provision does not diminish but rather reaffirms Bier's legal
entitlement to attorney fees. It unambiguously entitles the employee to
appropriate remedies if he is the "prevailing party." Nothing suggests that these
remedies would not include attorney fees. And the use of the term "prevailing
party," a term of art often determinative of fee awards, makes clear that it
includes such fees.42
Bier contends that the juxtaposition of this provision with other language in
the agreement creates ambiguity whether attorney fees will be available. Not so.
That other language on which he relies provides that the:
Employee and the Dealership shall be entitled to representation by
an attorney throughout the proceedings at his, her, or its own
expense. However, if the Employee agrees not to use an attorney
in the arbitration hearing, the Dealership shall forego its right to use
an attorney in the arbitration hearing.[431
This provision merely recognizes that Bier may elect to employ an
attorney. Nothing is misleading about requiring that he pay for counsel if he
chooses to do so. And the language obligating the dealership to forego counsel
if the employee elects to do so does not require the employee to waive any right.
41 Clerk's Papers at 83.
See e.o., Andersen v. Gold Seal Vineyards, Inc., 81 Wash. 2d 863, 867-68, 505
42
P.2d 790 (1973).
43 Clerk's Papers at 83.
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No. 75733-4-1/12
Further, nothing in this second quoted provision is relevant to either party's
entitlement to an award of attorney fees against the other party.
Reference to a Prior Statute
Good Chevrolet argues that reference to a prior and repealed statute,
RCW 7.04.010 et seq., does not render the agreement substantively
unconscionable. We agree.
The District Court for the Western District of Washington considered the
same issue in Brooks v. Robert Larson Automotive Group." There, the court
held that "reference to a prior statute does not invalidate the arbitration
agreement."45 Although the statute was no longer legally binding, parties could
still negotiate to apply it by contractual provision.46
Here, the parties did just that, structuring arbitration in accordance with
that former RCW 7.04.010 et seq. Brooks is dispositive in its reasoning and we
apply it here.
But Bier argues that RCW 7.04A.030(4) excludes employment disputes
from arbitration. The Brooks court addressed the same contention and its
reasoning is also dispositive here.
Under RCW 7.04A.030(4), RCW 7.04.010 et seq. does "not apply to any
arbitration agreement between employers and employees." The court reasoned
44 No. C09-5016 FDB, 2009 WL 2853452(W.D. Wash. Sept. 1, 2009).
45 1d. at *2.
46 Id.
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No. 75733-4-1/13
that this applied to mandatory statutory arbitration.47 It was "no prohibition of
contractual arbitration of employment disputes."45
Here, the parties agreed to the application of this statute, and nothing in
the statutory text bars them from doing so.
Arbitrator's Discretion
Good Chevrolet argues that the discretion afforded the arbitrator does not
render the agreement substantively unconscionable. We agree.
As stated above, an arbitration agreement is substantively unconscionable
when it is one-sided or overly harsh."
Here, the agreement allows "the arbitrator [to] provide for discovery
including, but not limited to, requests for information, depositions, and requests
for production. However, the arbitrator shall also have the authority to coordinate
and limit discovery as appropriate."50
This provision is not substantively unconscionable for two reasons. First,
without dispute, it is not one-sided. Both parties will share in its effect. Second,
Bier provides no argument why it is overly harsh. It affords discretion to a retired
state or federal judge chosen by consent of both parties. Such an arbitrator can
presumably exercise proper discretion.
47 Brooks, 2009 WL 2853452 at *2.
48 Id.
49 Hill, 179 Wn.2d at 55.
89 Clerk's Papers at 83.
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The methods of discovery allowed are the same as those listed under CR
26(a). And the authority to coordinate and limit discovery is similar to that
afforded under CR 26(f).
Bier contends that the arbitrator's "broad discretion undermines [his] ability
to effectively pursue and support his claims." This argument is purely
speculative. Because this court must presume in favor of arbitration, we reject
this argument.51
Bier also argues that the agreement deprives him of discovery remedies.
Discovery is generally limited in arbitration. But the arbitrator may allow limited
discovery and, presumably, has the power to provide remedies to ensure limited
discovery is provided. For these reasons, this argument is unpersuasive.
We reverse the Order Denying Defendants' Motion to Compel Arbitration
and remand with directions that the trial court stay this action and direct
arbitration.
69x,T
WE CONCUR:
-------
I ir;t-ic R si1 Ac--r Q6btArQ9e., y
51 Romney, 186 Wash. App. at 734.
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