Cara New v. Gamestop, Inc. , 232 W. Va. 564 ( 2013 )

IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA
September 2013 Term
FILED
No. 12-1371 November 6, 2013
released at 3:00 p.m.
RORY L. PERRY II, CLERK
SUPREME COURT OF APPEALS
CARA NEW, OF WEST VIRGINIA
Plaintiff Below, Petitioner
v.
GAMESTOP, INC. d/b/a GAMESTOP;
AARON DINGESS, Individually; and
DAVID TREVATHAN, Individually;
Defendants Below, Respondents
Appeal from the Circuit Court of Logan County
Honorable Roger L. Perry
Civil Action No. 11-C-190
AFFIRMED
Submitted: September 24, 2013
Filed: November 6, 2013
Richard W. Walters, Esq. Allyson N. Ho, PHV
Brian L. Ooten, Esq. Craig A. Stanfield, PHV
Shaffer & Shaffer, PLLC Morgan, Lewis & Bockius, LLP
Madison, West Virginia Houston, Texas
Attorneys for Petitioner Sam S. Shaulson, PHV
Morgan, Lewis & Bockius, LLP
New York, New York
Joseph M. Price, Esq.
Benjamin W. Price, Esq.
Robinson & McElwee PLLC
Attorneys for Respondents
The Opinion of the Court was delivered PER CURIAM.
SYLLABUS BY THE COURT
1. “Appellate review of a circuit court’s order granting a motion to dismiss
a complaint is de novo.” Syl. Pt. 2, State ex rel. McGraw v. Scott Runyon Pontiac-Buick,
Inc., 194 W.Va. 770, 461 S.E.2d 516 (1995).
2. “‘When a trial court is required to rule upon a motion to compel
arbitration pursuant to the Federal Arbitration Act, 9 U.S.C. §§ 1-307 (2006), the authority
of the trial court is limited to determining the threshold issues of (1) whether a valid
arbitration agreement exists between the parties; and (2) whether the claims averred by the
plaintiff fall within the substantive scope of that arbitration agreement.’ Syllabus Point 2,
State ex rel. TD Ameritrade, Inc. v. Kaufman, 225 W.Va. 250, 692 S.E.2d 293 (2010).” Syl.
Pt. 5, Brown v. Genesis Healthcare Corp., 228 W.Va. 646, 724 S.E.2d 250 (2011), overruled
in part on other grounds by Marmet Health Care Center, Inc. v. Brown, U.S. , 132 S. Ct.
1201, 182 L. Ed. 2d 42 (2012)].
3. “‘Under the Federal Arbitration Act, 9 U.S.C. § 2, a written provision
to settle by arbitration a controversy arising out of a contract that evidences a transaction
affecting interstate commerce is valid, irrevocable, and enforceable, unless the provision is
found to be invalid, revocable or unenforceable upon a ground that exists at law or in equity
for the revocation of any contract.’ Syllabus Point 6, Brown v. Genesis Healthcare Corp.,
i
228 W.Va. 646, 724 S.E.2d 250 (2011)[, overruled in part on other grounds by Marmet
Health Care Center, Inc. v. Brown, U.S. , 132 S. Ct. 1201, 182 L. Ed. 2d 42 (2012)].” Syl.
Pt. 1, State ex rel. Johnson Controls, Inc. v. Tucker, 229 W.Va. 486, 729 S.E.2d 808 (2012).
4. “‘Nothing in the Federal Arbitration Act, 9 U.S.C. § 2, overrides normal
rules of contract interpretation. Generally applicable contract defenses–such as laches,
estoppel, waiver, fraud, duress, or unconscionability–may be applied to invalidate an
arbitration agreement.’ Syllabus Point 9, Brown v. Genesis Healthcare Corp., 228 W.Va.
646, 724 S.E.2d 250 (2011)[ , overruled in part on other grounds by Marmet Health Care
Center, Inc. v. Brown, U.S. , 132 S. Ct. 1201, 182 L. Ed. 2d 42 (2012)].” Syl. Pt. 2, State
ex rel. Johnson Controls, Inc. v. Tucker, 229 W.Va. 486, 729 S.E.2d 808 (2012).
5. “‘A valid written instrument which expresses the intent of the parties
in plain and unambiguous language is not subject to judicial construction or interpretation
but will be applied and enforced according to such intent.’ Cotiga Development Co. v. United
Fuel Gas Co., 147 W.Va. 484, 128 S.E.2d 626 (1962), Syllabus Point 1.” Syl. pt. 1, Bennett
v. Dove, 166 W.Va. 772, 277 S.E.2d 617 (1981).
6. “‘The doctrine of unconscionability means that, because of an overall
and gross imbalance, one-sidedness or lop-sidedness in a contract, a court may be justified
ii
in refusing to enforce the contract as written. The concept of unconscionability must be
applied in a flexible manner, taking into consideration all of the facts and circumstances of
a particular case.’ Syllabus Point 12, Brown v. Genesis Healthcare Corp., 228 W.Va. 646,
724 S.E.2d 250 (2011)[ , overruled in part on other grounds by Marmet Health Care Center,
Inc. v. Brown, U.S. , 132 S. Ct. 1201, 182 L. Ed. 2d 42 (2012)].” Syl. Pt. 4, Brown v.
Genesis Healthcare Corp., 229 W.Va. 382, 729 S.E.2d 217 (2012).
7. “‘A determination of unconscionablity must focus on the relative
positions of the parties, the adequacy of the bargaining position, the meaningful alternatives
available to the plaintiff, and the “existence of unfair terms in the contract.”’ Syllabus Point
4, Art’s Flower Shop, Inc. v. Chesapeake and Potomac Telephone Co. of West Virginia, Inc.,
186 W.Va. 613, 413 S.E.2d 670 (1991).” Syl. Pt. 6, Brown v. Genesis Healthcare Corp., 229
W.Va. 382, 729 S.E.2d 217 (2012).
8. “‘A contract term is unenforceable if it is both procedurally and
substantively unconscionable. However, both need not be present to the same degree.
Courts should apply a ‘sliding scale’ in making this determination: the more substantively
oppressive the contract term, the less evidence of procedural unconscionability is required
to come to the conclusion that the clause is unenforceable, and vice versa.’ Syllabus Point
20, Brown v. Genesis Healthcare Corp., 228 W.Va. 646, 724 S.E.2d 250 (2011)[, overruled
iii
in part on other grounds by Marmet Health Care Center, Inc. v. Brown, U.S. , 132 S. Ct.
1201, 182 L. Ed. 2d 42 (2012)].” Syl. Pt. 9, Brown v. Genesis Healthcare Corp., 229 W.Va.
382, 729 S.E.2d 217 (2012).
9. “‘Procedural unconscionability is concerned with inequities,
improprieties, or unfairness in the bargaining process and formation of the contract.
Procedural unconscionability involves a variety of inadequacies that results in the lack of a
real and voluntary meeting of the minds of the parties, considering all the circumstances
surrounding the transaction. These inadequacies include, but are not limited to, the age,
literacy, or lack of sophistication of a party; hidden or unduly complex contract terms; the
adhesive nature of the contract; and the manner and setting in which the contract was formed,
including whether each party had a reasonable opportunity to understand the terms of the
contract.’ Syllabus Point 17, Brown v. Genesis Healthcare Corp., 228 W.Va. 646, 724 S.E.2d
250 (2011), [overruled in part on other grounds by Marmet Health Care Center, Inc. v.
Brown, U.S. , 132 S. Ct. 1201, 182 L. Ed. 2d 42 (2012)].” Syl. Pt. 10, Brown v. Genesis
Healthcare Corp., 229 W.Va. 382, 729 S.E.2d 217 (2012).
10. “‘A contract of adhesion is one drafted and imposed by a party of
superior strength that leaves the subscribing party little or no opportunity to alter the
substantive terms, and only the opportunity to adhere to the contract or reject it. A contract
iv
of adhesion should receive greater scrutiny than a contract with bargained-for terms to
determine if it imposes terms that are oppressive, unconscionable or beyond the reasonable
expectations of an ordinary person.’ Syl. Pt. 18, Brown v. Genesis Healthcare Corp., 228
W.Va. 646, 724 S.E.2d 250 (2011), [overruled in part on other grounds by Marmet Health
Care Center, Inc. v. Brown, U.S. , 132 S. Ct. 1201, 182 L. Ed. 2d 42 (2012)].” Syl. Pt. 11,
Brown v. Genesis Healthcare Corp., 229 W.Va. 382, 729 S.E.2d 217 (2012).
11. “‘Substantive unconscionability involves unfairness in the contract itself
and whether a contract term is one-sided and will have an overly harsh effect on the
disadvantaged party. The factors to be weighed in assessing substantive unconscionability
vary with the content of the agreement. Generally, courts should consider the commercial
reasonableness of the contract terms, the purpose and effect of the terms, the allocation of
the risks between the parties, and public policy concerns.’ Syllabus Point 19, Brown v.
Genesis Healthcare Corp., 228 W.Va. 646, 724 S.E.2d 250 (2011), [overruled in part on
other grounds by Marmet Health Care Center, Inc. v. Brown, U.S. , 132 S. Ct. 1201, 182
L. Ed. 2d 42 (2012)].” Syl. Pt. 12, Brown v. Genesis Healthcare Corp., 229 W.Va. 382, 729
S.E.2d 217 (2012).
12. “In assessing whether a contract provision is substantively
unconscionable, a court may consider whether the provision lacks mutuality of obligation.
v
If a provision creates a disparity in the rights of the contracting parties such that it is one-
sided and unreasonably favorable to one party, then a court may find the provision is
substantively unconscionable.” Syl. Pt. 10, Dan Ryan Builders, Inc. v. Nelson, 230 W.Va.
281, 737 S.E.2d 550 (2012).
vi
Per curiam:
The petitioner, Cara New, appeals the October 10, 2012, order of the Circuit
Court of Logan County, which granted the motions to dismiss of the respondents, GameStop,
Inc., Aaron Dingess, and David Traevathan (collectively referred to as “GameStop”),
pending the petitioner’s submission of her claims to final and binding arbitration. On appeal,
the petitioner argues that she did not enter into a valid arbitration agreement with GameStop.
Nonetheless, she argues that even if this Court determines that a valid arbitration agreement
exists, the agreement is still unconscionable and unenforceable. We find no error and,
accordingly, affirm the circuit court’s order.
I. Factual and Procedural Background
GameStop operates retail stores that sell new and used video games and video
gaming hardware. On March 29, 2009, GameStop hired the petitioner as an assistant
manager at its store in Logan County, West Virginia. When the petitioner began her
employment with GameStop, she received a “Store Associate Handbook” (“the Handbook”),
which summarized the company’s policies, procedures, and practices. The Handbook further
provided that the petitioner did
not have, nor does this Handbook constitute, an employment
contract, express or implied. Your employment is not confined
to a fixed term and may be ended by either you or GameStop,
Inc. at any time and for any reason. All terms and conditions of
1
employment are subject to change without notice, other than
GameStop C.A.R.E.S. Rules for Dispute Resolution.1
(Footnote added).
Set forth in a separate, fourteen-page document included with, but set off from,
the forty-page Handbook, is the arbitration agreement at issue in this case. This agreement,
entitled the “GameStop C.A.R.E.S.2 Rules of Dispute Resolution Including Arbitration” (“the
GameStop C.A.R.E.S. Rules,” “the GameStop C.A.R.E.S. program,” or “the arbitration
agreement”), is a multi-step internal dispute resolution program that includes binding
arbitration. Among other things, the document states that the GameStop C.A.R.E.S. Rules
are a mutual agreement to arbitrate Covered Claims (as defined
below). The Company and you agree that the procedures
provided in these Rules will be the sole method used to resolve
any Covered Claim as of the Effective Date of the Rules,
regardless of when the dispute or claim arose. The Company
and you agree to accept an arbitrator’s award as the final,
binding and exclusive determination of all Covered Claims.
These Rules do not preclude any employee from filing a charge
with a state, local or federal administrative agency such as the
Equal Employment Opportunity Commission.
1
The Handbook also advises employees that it “is intended to answer most of your
questions, explain our important policies and provide guidelines on our Company’s standards
and expectations.” It includes information about, inter alia, GameStop’s drug, alcohol and
smoke-free policy; “work guidelines” (e.g., the use of name badges; personal and general
appearance; schedules, attendance and absence policies; store hours; and parking); proper use
of company resources; payroll; safety; loss prevention; performance and promotion; benefits;
and standards of conduct.
2
C.A.R.E.S stands for “Concerned Associates Reaching Equitable Solutions.”
2
GameStop C.A.R.E.S. is an agreement to arbitrate pursuant to
the Federal Arbitration Act, 9 U.S.C. Sections 1-14, or if that
Act is held to be inapplicable for any reason, the arbitration law
in the state of Texas will apply. The parties acknowledge that
the Company is engaged in transactions involving interstate
commerce.
. . . .
If any court of competent jurisdiction declares that any part of
GameStop C.A.R.E.S., including these Rules, is invalid, illegal
or unenforceable (other than as noted for the class action,
collective action and representative action waiver above), such
declaration will not effect [sic] the legality, validity or
enforceability of the remaining parts, and each provision of
GameStop C.A.R.E.S. will be valid, legal and enforceable to the
fullest extent permitted by law.
Nothing in these Rules changes or in any way modifies the
parties’ employment relationship of employment-at-will; that is,
the parties can each end the relationship at any time for any
reason with or without cause. The Arbitrator has no authority to
alter the at-will nature of your employment.
. . . .
GameStop may from time to time modify or discontinue
GameStop C.A.R.E.S. by giving covered employees thirty (30)
calendar days notice; however, any such modification or
rescission shall be applied prospectively only. An employee
shall complete the processing of any dispute pending in
GameStop C.A.R.E.S. at the time of an announced change,
under the terms of the procedure as it existed when the dispute
was initially submitted to GameStop C.A.R.E.S.
Upon being hired by GameStop, the petitioner signed and dated an
“Acknowledgment and Receipt of the Store Associate Handbook and GameStop C.A.R.E.S.
Rules Including Arbitration” (“the Acknowledgment”). The signed Acknowledgment was
3
on a separate page. In this Acknowledgement, the petitioner specifically agreed that all
workplace disputes or claims could not be taken to court, but must, instead, be resolved
through the dispute resolution and arbitration system set out in the GameStop C.A.R.E.S.
Rules. It stated as follows:
I acknowledge that I have received a copy of the GameStop
Store Associate Handbook, including the GameStop C.A.R.E.S.
Rules for Dispute Resolution. The Rules set forth GameStop’s
procedure for resolving workplace disputes ending in final and
binding arbitration. The Handbook summarizes certain
information about my job and company policies, procedures and
practices. I understand that it is my responsibility to read and
familiarize myself with the information contained in the
Handbook. I understand that by continuing my employment
with GameStop following the effective date of GameStop
C.A.R.E.S., I am agreeing that all workplace disputes or claims,
regardless of when those disputes or claims arose, will be
resolved under the GameStop C.A.R.E.S. program rather than
in court. This includes legal and statutory claims, and class or
collective action claims in which I might be included. I
understand that at any time and for any reason, GameStop may
make changes to the Handbook, except for the Rules, without
prior notice. I understand that my employment with GameStop
is “at will,” and that either I or GameStop may end my
employment at any time and for any reason.
On September 9, 2011, the petitioner filed a Complaint against GameStop in
the Circuit Court of Logan County, alleging wrongful discharge, sexual harassment, hostile
work environment, intentional infliction of emotional distress, negligent infliction of
emotional distress, and violations of the West Virginia Wage Payment and Collection Act.
The petitioner alleged that she had been sexually harassed by Respondent Aaron Dingess, the
4
store manager and her direct supervisor, and Respondent David Trevathan, a GameStop
district manager who had supervisory authority over both Respondent Dingess and the
petitioner. The petitioner further alleged that she was wrongfully demoted and discharged
based upon her gender and/or in retaliation for reporting the misconduct of Respondent
Dingess to Respondent Trevathan.
In response to the petitioner’s lawsuit, each of the respondents filed a separate
“Motion to Dismiss Pending Mandatory Arbitration,” or, in the alternative, to stay the
proceedings pending referral “to arbitration as is required by the GameStop C.A.R.E.S.
program which [the petitioner] agreed through her continued employment GameStop would
provide the exclusive means by which her claims in this matter would be resolved.”
By order entered October 10, 2012, the circuit court granted the respondents’
motions to dismiss. This appeal by the petitioner followed.
II. Standard of Review
The petitioner appeals the circuit court’s order granting GameStop’s motion
to dismiss and compelling her to submit her claims to arbitration. “Appellate review of a
circuit court’s order granting a motion to dismiss a complaint is de novo.” Syl. Pt. 2, State
ex rel. McGraw v. Scott Runyon Pontiac-Buick, Inc., 194 W.Va. 770, 773, 461 S.E.2d 516,
5
519 (1995). With regard to the circuit court’s dismissal order, which directs the petitioner
to arbitrate her claims, this Court will preclude enforcement of such an order
only after a de novo review of the circuit court’s legal
determinations leads to the inescapable conclusion that the
circuit court clearly erred, as a matter of law, in directing that a
matter be arbitrated or that the circuit court’s order constitutes
a clear-cut, legal error plainly in contravention of a clear
statutory, constitutional, or common law mandate.
Syl. Pt. 4, McGraw v. American Tobacco Co., 224 W.Va. 211, 214, 681 S.E.2d 96, 99
(2009). With these standards in mind, we proceed to consider the parties’ arguments.
III. Discussion
When reviewing a motion to compel arbitration under an arbitration agreement,
a court’s consideration of the motion is limited to two issues: is the arbitration agreement
valid, and does the agreement cover the plaintiff’s claims? As we have explained,
When a trial court is required to rule upon a motion to compel
arbitration pursuant to the Federal Arbitration Act, 9 U.S.C. §§
1-307 (2006), the authority of the trial court is limited to
determining the threshold issues of (1) whether a valid
arbitration agreement exists between the parties; and (2) whether
the claims averred by the plaintiff fall within the substantive
scope of that arbitration agreement. Syllabus Point 2, State ex
rel. TD Ameritrade, Inc. v. Kaufman, 225 W.Va. 250, 692
S.E.2d 293 (2010).
Syl. Pt. 5, Brown v. Genesis Healthcare Corp., 228 W.Va. 646, 656, 724 S.E.2d 250, 260
(2011), overruled in part on other grounds, U.S. , 132 S. Ct. 1201, 182 L. Ed. 2d 42 (2012)
6
(“Brown I”). See also Syl. Pt. 4, Ruckdeschel v. Falcon Drilling Co., L.L.C., 225 W.Va. 450,
452, 693 S.E.2d 815, 817 (2010).
A. Validity of arbitration agreement
The petitioner concedes that, if a valid arbitration agreement exists, her
substantive claims would come within the scope of that agreement. She asserts, however,
that the parties did not form a contract to arbitrate their disputes. Furthermore, she asserts
that if a contract was formed, then the contract is unenforceable because it is unconscionable.
By its express terms, the GameStop C.A.R.E.S. program clearly advises its
employees that it is an arbitration agreement. It provides that
GameStops C.A.R.E.S. is an agreement to arbitrate pursuant to
the Federal Arbitration Act, 9 U.S.C. Sections 1-14, or if that
Act is held to be inapplicable for any reason, the arbitration law
in the state of Texas will apply. The parties acknowledge that
the Company is engaged in transactions involving interstate
commerce.
In syllabus point one of State ex rel. Johnson Controls, Inc. v. Tucker, 229 W.Va. 486, 729
S.E.2d 808 (2012), this Court explained:
“Under the Federal Arbitration Act, 9 U.S.C. § 2, a
written provision to settle by arbitration a controversy arising
out of a contract that evidences a transaction affecting interstate
commerce is valid, irrevocable, and enforceable, unless the
provision is found to be invalid, revocable or unenforceable
upon a ground that exists at law or in equity for the revocation
of any contract.” Syllabus Point 6, Brown v. Genesis Healthcare
7
Corp., 228 W.Va. 646, 724 S.E.2d 250 (2011)[, overruled in
part on other grounds, U.S. , 132 S. Ct. 1201, 182 L. Ed. 2d 42
(2012)].
229 W.Va. at 489, 729 S.E.2d at 811.
In considering whether an arbitration agreement has been validly formed,
normal rules of contract interpretation apply. In syllabus point two of Johnson Controls, we
recognized:
“Nothing in the Federal Arbitration Act, 9 U.S.C. § 2, overrides
normal rules of contract interpretation. Generally applicable
contract defenses–such as laches, estoppel, waiver, fraud,
duress, or unconscionability–may be applied to invalidate an
arbitration agreement.” Syllabus Point 9, Brown v. Genesis
Healthcare Corp., 228 W.Va. 646, 724 S.E.2d 250 (2011)
[subseq. History].
229 W.Va. at 489, 729 S.E.2d at 811. See State ex rel. Clites v. Clawges, 224 W.Va. 299,
685 S.E.2d 693 (2009) (“While it is clear that the FAA preempts state law that would
invalidate ‘or undercut the enforcement of arbitration agreements,’ the issue of whether an
arbitration agreement is a valid contract is a matter of state contract law and capable of state
judicial review.” 224 W.Va. at 305, 685 S.E.2d at 699 (quoting Southland Corporation v.
Keating, 465 U.S. 1, 16 (1984)). Indeed, this Court has established that the FAA “‘does not
elevate arbitration clauses to a level of importance above all other contract terms.’” Johnson
Controls, 229 W.Va. at 493-94, 729 S.E.2d at 815-16 (quoting Brown I, 228 W.Va. at 671,
724 S.E.2d at 275). Rather, the FAA “‘places arbitration agreements on an equal footing
8
with other contracts, and requires courts to enforce them according to their terms.’” Johnson
Controls, 228 W.Va. at 494, 729 S.E.2d at 816 (quoting Rent-A-Center, West, Inc. v.
Jackson, 561 U.S. 1142, __ (2010)). See Dan Ryan Builders, Inc. v. Nelson, 230 W.Va. 281,
737 S.E.2d 550 (2012) (“‘[A]rbitration is simply a matter of contract between the parties; it
is a way to resolve those disputes–but only those disputes–that the parties have agreed to
submit to arbitration.’” 230 W.Va. at __, 737 S.E.2d at 555 (quoting First Options of
Chicago, Inc. v. Kaplan, 514 U.S. 938, 943 (1995)). With these principles in mind, we
proceed to determine whether the petitioner and GameStop entered into a valid arbitration
agreement.
The petitioner does not dispute that she received a copy of the GameStop
C.A.R.E.S. Rules which plainly state that it is an agreement to arbitrate under the F.A.A.
More importantly, the petitioner does not dispute that the GameStop C.A.R.E.S. Rules
evidence a transaction affecting interstate commerce such that it would be governed by the
F.A.A. Likewise, she does not dispute that she signed the Acknowledgment of the mutual
agreement to arbitrate, which indicated, inter alia, that she understood that “by continuing
my employment with GameStop . . . I am agreeing that all workplace disputes or claims . .
. will be resolved under the GameStop C.A.R.E.S. program rather than in court.” However,
the petitioner challenges the arbitration agreement, arguing that the disclaimer in the
Handbook that “[y]ou do not have, nor does this Handbook constitute, an employment
9
contract, express or implied” renders the arbitration agreement unenforceable. GameStop
counters that a valid agreement to arbitrate was formed, as evidenced by the clear and
unambiguous language set forth in the GameStop C.A.R.E.S. Rules and the
Acknowledgment signed by the petitioner at the time of her employment.
The crux of the petitioner’s argument is that, given the disclaimer language in
the Handbook, no arbitration agreement was formed because there was no mutual assent or
meeting of the minds with respect to arbitration. West Virginia contract law requires mutual
assent to form a valid contract. See Ways v. Imation Enterprises Corp., 214 W.Va. 305, 313,
589 S.E.2d 36, 44 (2003) (“‘It is elementary that mutuality of assent is an essential element
of all contracts.’” (internal citations omitted)).3 “‘In order for this mutuality to exist, it is
necessary that there be a proposal or offer on the part of one party and an acceptance on the
part of the other. Both the offer and acceptance may be by word, act or conduct that evince
the intention of the parties to contract. That their minds have met may be shown by direct
evidence of an actual agreement . . . .’” Id. (quoting Bailey v. Sewell Coal Co., 190 W.Va.
138, 140-41, 437 S.E.2d 448, 450-51 (1993) (citations omitted). Indeed, “[t]he contractual
3
See also Syl. Pt. 4, State ex rel. AMFM, LLC v. King, __ W.Va. __, __, 740 S.E.2d
66, 69 (2013) (“‘The fundamentals of a legal contract are competent parties, legal subject
matter, valuable consideration and mutual assent. There can be no contract if there is one of
these essential elements upon which the minds of the parties are not in agreement.’ Syllabus
Point 5, Virginian Export Coal Co. v. Rowland Land Co., 100 W.Va. 559, 131 S.E. 253
(1926).” Syllabus point 3, Dan Ryan Builders, 230 W.Va. 281, 737 S.E.2d 550 (2012).”).
10
concept of ‘meeting of the minds’ or ‘mutual assent’ relates to the parties having the same
understanding of the terms of the agreement reached.” Messer v. Huntington Anesthesia
Group, Inc., 222 W.Va. 410, 418, 664 S.E.2d 751, 759 (2008). However, the unambiguous
language of the GameStop C.A.R.E.S. Rules that were separate from the Handbook, and the
Acknowledgment signed by the petitioner, coupled with the petitioner’s continued
employment with GameStop, clearly demonstrate that the parties mutually assented to
arbitrate all covered workplace disputes or claims. Other jurisdictions are in accord with this
view.
In Patterson v. Tenet Health Care, Inc., 113 F.3d 832 (8th Cir. 1997), the
Eighth Circuit Court of Appeals considered whether an arbitration provision set forth on the
last page of the company’s handbook constituted a valid arbitration agreement. The
handbook at issue included a disclaimer that it was “‘not intended to constitute a legal
contract with any employee’” and that “‘no written statement or agreement in this handbook
concerning employment is binding,’” while also providing that all disputes are to be resolved
through binding arbitration. Id. at 834. Not unlike the case sub judice, the plaintiff employee
in Patterson also signed an acknowledgment form which stated that there was no contract
of employment and that “as a condition of employment and continued employment, I agree
to submit any complaints to the published process and agree to abide by and accept the final
decision of the arbitration panel as ultimate resolution of my complaint(s) for any and all
11
events that arise out of employment or termination of employment.” Id. at 834-35. The court
in Patterson found the arbitration clause to be separate from the handbook provisions stating
that the handbook is not a binding contract. More specifically, the court noted that the
arbitration clause was set forth on a separate page of the handbook with a conspicuous
heading: “IMPORTANT! Acknowledgment Form.” Id. at 835. The court was further
persuaded by the arbitration clause’s use of “contractual terms such as ‘I understand,’ ‘I
agree,’ I ‘agree to abide by and accept,’ ‘condition of employment,’ ‘final decision,’ and
‘ultimate resolution.’” Id. The court concluded that “the difference in language used in the
handbook and that employed in the arbitration clause would sufficiently impart to an
employee that the arbitration clause stands alone, separate and distinct from the rest of the
handbook.” Id.
Similarly, in Curry v. MidAmerica Care Foundation., 2002 WL 1821808
(S.D.Ind. 2002), the United States District Court for the Southern District of Indiana found
that, notwithstanding the disclaimer that the employee “handbook is neither a contract of
employment nor a legal document[,]” the language in the arbitration agreement included
therein provided that the employee and employer “‘voluntarily promise, irrevocably agree,
12
understand, agree to abide by and to accept’ the conditions contained [therein] . . . .”4 Id. at
*2, 4. The court in Curry concluded that this language
conveys to an employee such as [the plaintiff employee] that the
arbitration agreement is a separate and distinct part of the
handbook and constitutes an agreement by the parties.
Moreover, the arbitration agreement further conveys this . . . by
expressly stating that ‘[t]his is the complete agreement of the
parties on the subject of employment and arbitration of disputes
and claims.’
Id. at *4. Indeed,
[a]ny doubt as to whether the arbitration agreement is separate
from the rest of the employee handbook is resolved by [the
additional] language . . . that “[the parties] understand that if any
other provision of this manual is deemed to violate any local,
state, or federal law or regulation, that this provision stands by
itself and is fully enforceable to the fullest extent provided by
law.”
Id. The court in Curry concluded that mutual assent was present by virtue of the employer
offering the arbitration agreement to the plaintiff as a condition of her employment and the
plaintiff accepting the arbitration agreement by accepting employment. Id. at *5.
Likewise, in Brown v. KFC National Management Co., 921 P.2d 146
(Haw.1996), the Supreme Court of Hawaii concluded that an arbitration agreement was valid
and enforceable even though the “Agreement” section on the plaintiff employee’s
4
The plaintiff in Curry brought an action alleging pregnancy and disability
discrimination against her former employer. 2002 WL 1821808 at *1. The court found that
the arbitration agreement purportedly covered those claims. Id. at *4.
13
employment application clearly stated that his employment would be “at will” and “that the
application was not an implied or express contract of employment.” Id. at 150. The court
in Brown concluded that
[t]he arbitration agreement . . . is manifestly unambiguous in its
expressed intent that employment-related disputes be arbitrated
rather then resolved via resort to the federal or state court
systems. Indeed, no other construction could be accorded the
recitation that “[Employer] and [employee] agree to submit to
binding arbitration any controversies concerning [the
employee’s] compensation, employment[,] or termination of
employment[.]”
Id. at 159. The court in Brown accordingly determined that “on its face, [the arbitration
agreement] reflects both mutual assent to the arbitration of employment-related disputes and
consideration for that mutual assent.” Id., at 160; see also Lumuenemo v. Citigroup, Inc.,
2009 WL 371901 at *3 (D.Colo. 2009) (finding that “a reasonable reading of the relevant
disclaimer is that it precludes the Handbook provisions from altering the Plaintiff’s
employment-at-will status, while excepting the Arbitration Agreement from its purview. . .
. the language of the disclaimer [is] clear and not ambiguous. Therefore, despite the
existence of the disclaimer, . . . the agreement is generally enforceable.”).
This Court adheres to the basic principle that “‘[a] valid written instrument
which expresses the intent of the parties in plain and unambiguous language is not subject
to judicial construction or interpretation but will be applied and enforced according to such
intent.’ Cotiga Development Co. v. United Fuel Gas Co., 147 W.Va. 484, 128 S.E.2d 626
14
(1962), Syllabus Point 1.” Syl. Pt. 1, Bennett v. Dove, 166 W.Va. 772, 277 S.E.2d 617
(1981); see also id. at 772, 277 S.E.2d at 618, syl. pt. 2 (“‘It is not the right or province of
a court to alter, pervert or destroy the clear meaning and intent of the parties as expressed in
unambiguous language in their written contract or to make a new or different contract for
them.’ Cotiga Development Co. v. United Fuel Gas Co., 147 W.Va. 484, 128 S.E.2d 626
(1962), Syllabus Point 3.”).
In the case sub judice, we find that there was a clear and unequivocal intent by
both parties to arbitrate. The GameStop C.A.R.E.S. Rules clearly state that it “is an
agreement to arbitrate pursuant to the [FAA][;];” that it is “a mutual agreement to arbitrate
Covered Claims[;]” and that both GameStop and the petitioner “agree that the procedures
provided in these Rules will be the sole method used to resolve any Covered Claim . . . .”
The Rules further provide that both GameStop and the petitioner “agree to accept an
arbitrator’s award as the final, binding and exclusive determination of all Covered Claims.”
The GameStop C.A.R.E.S. Rules were set apart from the forty-page Handbook and consisted
of an additional, separately numbered, fourteen-page document.
Additionally, even a cursory review of the Handbook (such as by an employee
receiving it upon employment) reveals that it is merely informative of GameStop’s various
15
practices, policies and procedures.5 By comparison, the language in the GameStop
C.A.R.E.S. Rules is clearly more contractual in nature. This is demonstrated not only by the
language stating that “[t]hese Rules . . . govern” and “are a mutual agreement to arbitrate,”
“I acknowledge,” “I understand,” and “I am agreeing,” but also by the agreement’s provision
that “[i]f any court . . . declares that any part of GameStop C.A.R.E.S. . . . is invalid, illegal
or unenforceable . . . such declaration will not effect [sic] the legality, validity or
enforceability of the remaining parts, and each provision of GameStop C.A.R.E.S. will be
valid, legal and enforceable to the fullest extent permitted by law.” See Patterson, 113 F.3d
at 835; Curry, 2002 WL 1821808, at *4.
Furthermore, the petitioner signed the separate Acknowledgment which
unequivocally states that the GameStop C.A.R.E.S. Rules “set forth GameStop’s procedure
for resolving workplace disputes ending in final and binding arbitration. . . . [and] I
understand that by continuing my employment with GameStop . . . I am agreeing that all
workplace disputes or claims . . . will be resolved under the GameStop C.A.R.E.S. program
rather than in court.” (emphasis added). GameStop offered the arbitration agreement to the
petitioner as a condition of her employment and the petitioner accepted the agreement by
accepting employment. Clearly, notwithstanding the disclaimer that the Handbook did not
constitute a contract of employment, the parties entered into a separate agreement to arbitrate.
5
See supra, n.1.
16
“Viewed in context, the arbitration agreement highlights–rather than camouflages–its general
purpose and the limited scope of the disclaimer [i.e., to emphasize the employee’s at-will
employment status] is clear and unambiguous . . . .” Brown, 921 P.2d at 165. The GameStop
C.A.R.E.S. Rules and the Acknowledgment signed by the petitioner expressly provided that
the parties agreed to submit all covered claims to arbitration. The fact that the Handbook did
not constitute an employment contract “in no way undermines this simple reality.” Id.6
6
The GameStop C.A.R.E.S. Rules were previously considered in Ellerbee v.
GameStop, Inc., 604 F. Supp. 2d 349 (D.Mass 2009). In Ellerbee, the District Court of
Massachusetts addressed “[t]he essential question [of] whether Plaintiff accepted the
arbitration agreement contained in the Rules document.” Id. at 354. The plaintiff argued,
inter alia, that he did not agree to the GameStop C.A.R.E.S. Rules and “that he did not initial
for their receipt.” Id. In concluding that the plaintiff had entered into a valid agreement to
arbitrate with GameStop, the Ellerbee court reasoned, inter alia, that the GameStop
C.A.R.E.S. Rules were given to the plaintiff; were “crystal clear;” and that the evidence
showed that the store manager advised the plaintiff “of both the binding nature of the
arbitration agreement and its scope.” Id. at 355. The court stated that, under Massachusetts
law, “[f]or the arbitration agreement to be binding, [GameStop] was not required to explain
C.A.R.E.S. to Plaintiff’s satisfaction, to obtain his initials on a receipt, or to ensure that
Plaintiff read the document he was handed . . . .” Id. Rather, GameStop “was required only
to give Plaintiff the information sufficient to put a reasonably prudent employee on adequate
notice of the agreement to arbitrate.” Id. The court in Ellerbee found that “[t]here can be
no doubt that the Rules specified that the C.A.R.E.S. Program covered arbitration and was
binding upon Plaintiff . . . . [t]he Rules contained a mandatory arbitration procedure.” Id.
See also Pomposi v. GameStop, Inc., 2010 WL 147196 *4, 5 (D.Conn. 2010) (holding that
former GameStop store manager executed valid agreement to arbitrate claims upon receiving
C.A.R.E.S. Program documents and executing written acknowledgment. “[T]he Plaintiff’s
continued employment in this case was not the only evidence of his assent to the C.A.R.E.S.
program, as he also signed an acknowledgment in which he expressly agreed to resolve
claims under C.A.R.E.S.” The court concluded that the plaintiff “expressly agreed to resolve
any employment-related dispute . . . through binding arbitration.”); McBride v. GameStop,
Inc., 2011 WL 578821 *2 (N.D.Ga. 2011) (determining that, under Georgia contract law,
offer and acceptance of GameStop arbitration agreement existed: evidence of offer included
that copy of C.A.R.E.S. policy was given and explained to plaintiff, flow chart depicting
17
Upon consideration of the foregoing, we conclude that, given the clear and
unambiguous language of the Acknowledgment and the GameStop C.A.R.E.S. Rules, the
petitioner and GameStop entered into an agreement to arbitrate the petitioner’s claims. See
Bennett, 166 W.Va. at 772, 277 S.E.2d at 618, syl. pts. 1 and 2.7
B. Unconscionability
The petitioner next argues that if it is determined that the parties entered into
an agreement to arbitrate, as we have concluded, then it was an unconscionable contract of
adhesion and, therefore, unenforceable. See Johnson Controls, 229 W.Va. at 489, 729 S.E.2d
at 811, syl. pt. 2 (holding that defense of, inter alia, unconscionability “may be applied to
invalidate an arbitration agreement”). GameStop counters that even if it is determined that
the arbitration agreement was a contract of adhesion, it was not unconscionable. This court
has explained the doctrine of unconscionability as follows:
The doctrine of unconscionability means that, because of
an overall and gross imbalance, one-sidedness or lop-sidedness
in a contract, a court may be justified in refusing to enforce the
arbitration policy was displayed in store, and policy was made available in store manual and
on GameStop intranet; acceptance occurred when plaintiff signed Acknowledgment
form–which plaintiff had duty to read–and GameStop’s actions of distributing and displaying
information about C.A.R.E.S. process “would have put a reasonably prudent employee on
notice of the agreement to arbitrate.”).
7
Given our conclusion that the terms of the GameStop C.A.R.E.S. Rules and the
Acknowledgment are clear and unambiguous as to the parties’ mutual intent to arbitrate, we
need not address the petitioner’s argument that they were ambiguous by virtue of the
disclaimer.
18
contract as written. The concept of unconscionability must be
applied in a flexible manner, taking into consideration all of the
facts and circumstances of a particular case. Syllabus Point 12,
Brown v. Genesis Healthcare Corp., 228 W.Va. 646, 724 S.E.2d
250 (2011)[, overruled in part on other grounds, U.S. , 132
S. Ct. 1201, 182 L. Ed. 2d 42 (2012)].
Syl. Pt. 4, Brown v. Genesis Healthcare Corp., 229 W.Va. 382, 385, 729 S.E.2d 217, 220
(2012) (“Brown II”).
Our analysis of whether the arbitration agreement at issue is “‘unconscionable
necessarily involves an inquiry into the circumstances surrounding [its] execution and the
fairness of [it] as a whole.’” Id. at 385, 729 S.E.2d at 220, syl. pt. 5, in part (quoting Syl. Pt.
3, Troy Mining Corp. v. Itmann Coal Co., 176 W.Va. 599, 346 S.E.2d 749 (1986).).8
Furthermore,
[a] determination of unconscionablity must focus on the
relative positions of the parties, the adequacy of the bargaining
position, the meaningful alternatives available to the plaintiff,
and the “existence of unfair terms in the contract.” Syllabus
Point 4, Art’s Flower Shop, Inc. v. Chesapeake and Potomac
Telephone Co. of West Virginia, Inc., 186 W.Va. 613, 413
S.E.2d 670 (1991).
8
“‘Unconscionability is an equitable principle, and the determination of whether a
contract or a provision therein is unconscionable should be made by the court.’” Brown II,
229 W.Va. at 386, 729 S.E.2d at 221, syl. pt. 7 (quoting Troy Mining Corp., 176 W.Va. 559,
346 S.E.2d at 749, syl. pt. 1); see also Dan Ryan Builders, 230 W.Va. at __, 737 S.E.2d at
552, syl. pt. 9 (“A court in its equity powers is charged with the discretion to determine, on
a case-by-case basis, whether a contract provision is so harsh and overly unfair that it should
not be enforced under the doctrine of unconscionability.”).
19
Brown II, 229 W.Va. at 386, 729 S.E.2d at 221, syl. pt. 6.9
There is a growing body of case law in West Virginia which has indicated that
this Court chooses to “analyze unconscionability in terms of two component parts: procedural
unconscionability and substantive unconscionability.” Id. at 392, 729 S.E.2d at 227; see also
State ex rel. Richmond American Homes of W.Va., Inc. v. Sanders, 228 W.Va. 125, 136, 717
S.E.2d 909, 920 (2011). As we held in syllabus point nine of Brown II,
“[a] contract term is unenforceable if it is both
procedurally and substantively unconscionable. However, both
need not be present to the same degree. Courts should apply a
‘sliding scale’ in making this determination: the more
substantively oppressive the contract term, the less evidence of
procedural unconscionability is required to come to the
conclusion that the clause is unenforceable, and vice versa.”
Syllabus Point 20, Brown v. Genesis Healthcare Corp., 228
W.Va. 646, 724 S.E.2d 250 (2011)[, overruled in part on other
grounds, U.S. , 132 S. Ct. 1201, 182 L. Ed. 2d 42 (2012)].
229 W.Va. at 386, 729 S.E.2d at 221, syl. pt. 9; see also Johnson Controls, 229 W.Va. at 490,
729 S.E.2d at 812, syl. pt. 6. Applying this sliding scale analysis, as discussed in more detail
9
However, we have recognized that “‘[i]n most commercial transactions[,] it may be
assumed that there is some inequality of bargaining power, and this Court cannot undertake
to write a special rule of such general application as to remove bargaining advantages or
disadvantages in the commercial area, nor do we think it is necessary that we undertake to
do so.’” Johnson Controls, 229 W.Va. at 495, 729 S.E.2d at 817 (quoting Ashland Oil, Inc.
v. Donahue, 159 W.Va. 463, 474, 223 S.E.2d 433, 440 (1976)).
20
below, we find that the arbitration agreement at issue is neither procedurally nor
substantively unconscionable.10
1. Procedural Unconscionability
With regard to procedural unconscionability, this Court has stated as follows:
Procedural unconscionability is concerned with
inequities, improprieties, or unfairness in the bargaining process
and formation of the contract. Procedural unconscionability
involves a variety of inadequacies that results in the lack of a
real and voluntary meeting of the minds of the parties,
considering all the circumstances surrounding the transaction.
These inadequacies include, but are not limited to, the age,
literacy, or lack of sophistication of a party; hidden or unduly
complex contract terms; the adhesive nature of the contract; and
the manner and setting in which the contract was formed,
including whether each party had a reasonable opportunity to
understand the terms of the contract.” Syllabus Point 17, Brown
v. Genesis Healthcare Corp., 228 W.Va. 646, 724 S.E.2d 250
(2011)[, overruled in part on other grounds, U.S. , 132 S. Ct.
1201, 182 L. Ed. 2d 42 (2012)].
Brown II, 229 W.Va. at 386, 729 S.E.2d at 221, syl. pt. 10; see also Johnson Controls, 229
W.Va. at 490, 729 S.E.2d at 812, syl. pt. 7.
This Court has recognized that it is not uncommon for procedural
unconscionability to begin with a contract of adhesion. Brown II, 229 W.Va. at 393, 729
10
For a recent discussion on the use of a sliding scale in assessing unconscionablity,
see Melissa T. Lonegrass, “Finding Room for Fairness in Formalism – The Sliding Scale
Approach to Unconscionability,” 44 Loyola U. Chi.L.J. 1 (2012).
21
S.E.2d at 228; Sanders, 228 W.Va. at 137, 717 S.E.2d at 921. In syllabus point eleven of
Brown II, we held that
A contract of adhesion is one drafted and imposed by a
party of superior strength that leaves the subscribing party little
or no opportunity to alter the substantive terms, and only the
opportunity to adhere to the contract or reject it. A contract of
adhesion should receive greater scrutiny than a contract with
bargained-for terms to determine if it imposes terms that are
oppressive, unconscionable or beyond the reasonable
expectations of an ordinary person. Syl. Pt. 18, Brown v.
Genesis Healthcare Corp., 228 W.Va. 646, 724 S.E.2d 250
(2011)[, overruled in part on other grounds, U.S. , 132 S. Ct.
1201, 182 L. Ed. 2d 42 (2012)].
229 W.Va. at 386, 729 S.E.2d at 221. See Sanders, 228 W.Va. at 137, 717 S.E.2d at 921.
We have also recognized that “‘[a]dhesion contracts’ include all ‘form contracts’ submitted
by one party on the basis of this or nothing[.]” Clites, 224 W.Va. at 306, 685 S.E.2d at 700.
However, as a practical matter, given that
“the bulk of contracts signed in this country . . . are adhesion
contracts, a rule automatically invalidating [such] contracts
would be completely unworkable. Instead[,] courts engage in a
process of judicial review[.] Finding that there is an adhesion
contract is the beginning point for analysis, not the end of it;
what courts aim at doing is distinguishing good adhesion
contracts which should be enforced from bad adhesion contracts
which should not.”
Id. (quoting State ex rel. Dunlap v. Berger, 211 W.Va. 549, 557, 567 S.E.2d 265, 273 (2002)
(internal citation omitted)); see also Brown II, 229 W.Va. at 393, 729 S.E.2d at 228; Sanders,
228 W.Va. at 137, 717 S.E.2d at 921.
22
In the case sub judice, the petitioner argues that although she was aware that
her employment at GameStop was at will, she claims that she was never advised that she was
agreeing to arbitrate future claims against the company simply by signing the
Acknowledgment. The petitioner argues that she is a high school graduate who was
unemployed when she sought employment with GameStop11 and that she possessed no
bargaining power against GameStop, an international corporation. She contends that she was
required to sign the Acknowledgment if she wished to be employed by GameStop; that “there
were no meaningful alternatives available” to her; and that “[t]here was no negotiation.”
GameStop counters that there is simply no evidence that the petitioner, who was twenty-
seven years old and qualified for employment as a GameStop Assistant Manager, was not
capable of understanding the clear import of the Acknowledgment that stated: “I understand
that . . . I am agreeing that all workplace disputes or claims . . . will be resolved under the
GameStop C.A.R.E.S. program rather than in court.” GameStop further argues that the
petitioner had the ability to reject its offer of employment.
Notwithstanding her assertions to the contrary, the petitioner has failed to offer
any evidence that she was incapable due to age, literacy or lack of sophistication to
understand the clear terms of the arbitration agreement or the Acknowledgment she signed
11
The petitioner represents that she had previously been employed at a gas station and
held only a few part time jobs prior to working at GameStop.
23
upon her employment.12 See Brown II, 229 W.Va. at 386, 729 S.E.2d at 221, syl. pt. 10. She
has also failed to offer any evidence that the arbitration agreement’s terms were hidden from
her or were couched in unduly complex terms. The petitioner’s bald assertions that the
arbitration agreement is procedurally unconscionable because the agreement was not subject
to negotiation and because she was unemployed and had no other “meaningful alternatives
available to her” other than to sign the Acknowledgment are simply not sufficient. See
Montgomery v. Applied Bank, 848 F. Supp. 2d 609, 616 (S.D.W.Va. 2012) (concluding that
where plaintiff failed to offer evidence “that she had no other alternative but to enter into a
credit card agreement with . . . defendant[,] . . . [she] wholly fail[ed] to put forth any evidence
that the Agreement was procedurally unconscionable other than her assertion that [it] was a
contract of adhesion, which . . . does not in itself make a contract procedurally
unconscionable.”); Clites, 224 W.Va. at 306, 685 S.E.2d at 700 (finding that although
arbitration agreement entered into upon plaintiff’s employment was a contract of adhesion
because the “entire Agreement is boiler-plate language that was not subject to negotiation
and there is no contention . . . that the Petitioner had any role or part in negotiating [its]
terms[,]” the agreement was not unconscionable). There is simply no evidence in the record
to show that the manner or setting in which the petitioner signed the Acknowledgment
12
The petitioner concedes that she did not seek to introduce evidence or otherwise
develop a factual record regarding whether her age, literacy, or lack of sophistication
precluded her from understanding the GameStop C.A.R.E.S. Rules or the Acknowledgment
form she signed.
24
prevented her from having a reasonable opportunity to understand the terms of the
agreement.
Furthermore, the petitioner’s claim that she was not advised that she was
agreeing to arbitrate furture claims against GameStop by signing the Acknowledgment is
without merit. As previously established, the language of the Acknowledgment was
abundantly clear: “I understand that . . . I am agreeing that all workplace disputes or claims
. . . will be resolved under the GameStop C.A.R.E.S. program rather than in court.” “A court
can assume that a party to a contract has read and assented to its terms, and absent fraud,
misrepresentation, duress, or the like, the court can assume that the parties intended to
enforce the contract as drafted.” Adkins v. Labor Ready, Inc., 185 F. Supp. 2d 628, 638
(S.D.W.Va. 2001). See Sedlock v. Moyle, 222 W.Va. 547, 551, 668 S.E.2d 176, 180 (2008)
(stating that “‘in the absence of extraordinary circumstances, the failure to read a contract
before signing it does not excuse a person from being bound by its terms. . . . [and] [t]he
person who fails to read a document to which he places his signature does so at his peril.’”
quoting Reddy v. Cmty. Health Found. of Man, 171 W.Va. 368, 373, 298 S.E.2d 906, 910
(1982)). The petitioner does not point to any evidence “to rebut the presumption that a party
to a contract is charged with knowledge of its terms.” Adkins, 185 F. Supp. 2d at 638.
Further, the petitioner does not allege that she was fraudulently induced to enter into the
25
arbitration agreement or that she did so under duress or as the result of misrepresentations
by GameStop. Id.
As previously discussed, upon her employment with GameStop, the petitioner
was presented with the GameStop C.A.R.E.S. Rules, at which time she was also presented
with and signed the Acknowledgment. It is beyond cavil that the stated purpose of the
Acknowledgment was to make clear to the petitioner that by continuing her employment with
GameStop, she agreed to submit all covered disputes to arbitration. The petitioner fails to
offer any evidence demonstrating that the arbitration agreement was procedurally
unconscionable because it “involve[d] . . . inadequacies that result[ed] in the lack of a real
and voluntary meeting of the minds . . . .” Brown II, 229 W.Va. at 386, 729 S.E.2d at 221,
syl. pt. 10. Accordingly, we conclude that the petitioner has failed to demonstrate that the
arbitration agreement is procedurally unconscionable.
2. Substantive Unconscionability
With regard to substantive unconscionability, this Court has held as follows:
Substantive unconscionability involves unfairness in the
contract itself and whether a contract term is one-sided and will
have an overly harsh effect on the disadvantaged party. The
factors to be weighed in assessing substantive unconscionability
vary with the content of the agreement. Generally, courts should
consider the commercial reasonableness of the contract terms,
the purpose and effect of the terms, the allocation of the risks
between the parties, and public policy concerns. Syllabus Point
26
19, Brown v. Genesis Healthcare Corp., 228 W.Va. 646, 724
S.E.2d 250 (2011)[, overruled in part on other grounds, U.S.
, 132 S. Ct. 1201, 182 L. Ed. 2d 42 (2012)].
Brown II, 229 W.Va. at 386, 729 S.E.2d at 221, syl. pt. 12; see also Dan Ryan Builders, 230
W.Va. at __, 737 S.E.2d at 552, syl. pt. 8.
The petitioner argues that, under the terms of the arbitration agreement, there
is no mutual obligation to arbitrate because the agreement gives GameStop the unfettered and
unilateral right to modify or discontinue the GameStop C.A.R.E.S. program. The petitioner
contends that this provision renders the agreement substantively unconscionable and,
therefore, unenforceable. GameStop counters that the agreement does not give it the
unfettered right to change or discontinue the C.A.R.E.S. program; to the contrary, GameStop
argues that, under the terms of the agreement, it is required to give employees thirty days
notice of any modification to, or rescission of, the GameStop C.A.R.E.S. program, and any
such modification or rescission is to be applied prospectively only. Therefore, GameStop
argues that the arbitration agreement is not substantively unconscionable and, as a result, is
enforceable.
This Court has recognized that “‘[s]ome courts suggest that mutuality of
obligation is the locus around which substantive unconscionability analysis revolves[]’” and
that, “‘[i]n assessing substantive unconscionability, the paramount consideration is
27
mutuality.’” Sanders, 228 W.Va. at 137, 717 S.E.2d at 921 (internal citations omitted). See
Dan Ryan Builders, 230 W.Va. at __, 737 S.E.2d at 558 (stating that “the lack of mutuality
in a contractual obligation–particularly in the context of arbitration–is an element a court may
consider in assessing the substantive unconscionability of a contract term”). Moreover,
“‘[a]greements to arbitrate must contain at least “a modicum of bilaterality” to avoid
unconscionability.’” Sanders, 228 W.Va. at 137, 717 S.E.2d at 921 (internal citation
omitted); see also Brown II, 229 W.Va. at 393, 729 S.E.2d at 228.
As we held in syllabus point ten of Dan Ryan Builders,
In assessing whether a contract provision is substantively
unconscionable, a court may consider whether the provision
lacks mutuality of obligation. If a provision creates a disparity
in the rights of the contracting parties such that it is one-sided
and unreasonably favorable to one party, then a court may find
the provision is substantively unconscionable.
230 W.Va. at __, 737 S.E.2d at 552. With regard to GameStop’s right to modify or
discontinue the GameStop C.A.R.E.S. program, the arbitration agreement states as follows:
GameStop may from time to time modify or discontinue
GameStop C.A.R.E.S. by giving covered employees thirty (30)
calendar days notice; however, any such modification or
rescission shall be applied prospectively only. An employee
shall complete the processing of any dispute pending in
GameStop C.A.R.E.S. at the time of an announced change,
under the terms of the procedure as it existed when the dispute
was initially submitted to GameStop C.A.R.E.S.
28
Thus, contrary to the petitioner’s argument that the foregoing provision gives
GameStop the unfettered right to alter or rescind the GameStop C.A.R.E.S. Rules, the clear
language of this provision limits GameStop’s ability in this regard by requiring it to give
covered employees thirty days notice of any modification or rescission, which “shall be
applied prospectively only.” Furthermore, any dispute pending at the time GameStop
modifies the agreement is to proceed “under the terms of the procedure as it existed when the
dispute was initially submitted . . . .” This provision does not render the arbitration
agreement substantively unconscionable.
A similar provision was considered in Martin v. Citibank, Inc., 567 F. Supp. 2d
36 (D.C.C. 2008), in which the United States District Court for the District of Columbia
concluded that “in order to modify terms of the [arbitration] policy, defendant must provide
thirty (30) days advance notice to employees, barring any ‘unfair retroactive application of
amendments.’” Id. at 45. The court in Martin determined that, based upon this language, it
was “satisfied that requiring defendant to provide thirty days notice of prospective
modifications affords employees sufficient protection against inequitable assertions of
power.” Id. See Hardin v. First Cash Financial Services, 465 F.3d 470, 478 (10th Cir.
2006) (concluding that clause in arbitration agreement providing that defendant employer
“‘retains the right to terminate the [Agreement] and/or modify or discontinue the [Dispute
Resolution Program]’” was valid because employer was required to provide ten days notice
29
to current employees, not amend the agreement if it had actual notice of a potential dispute
or claim, and not terminate the agreement as to any claims which arose prior to the date of
termination); Seawright v. Amer. Gen’l. Financial Services, 507 F.3d 967, 975 (6th Cir.
2007) (determining that although the “defendant companies reserved the right to terminate
the [Employee Dispute Resolution program] at any time, they also agreed to be bound by the
terms of the agreement for 90 days after giving reasonable notice of the termination and as
to all known disputes arising before the date [of] termination. Thus, the companies were
bound by the terms for at least 90 days after the agreement came into effect. This reciprocal
obligation to arbitrate at least those claims arising in the 90-day period after the effective date
of the agreement satisfies the mutuality requirement.” (footnote omitted)); Miguel v.
JPMorgan Chase Bank, N.A., 2013 WL 452418 *6 (C.D.Cal. 2013) (holding that arbitration
agreement that “shall be effective thirty (30) calendar days after such amendments are
provided. . . and will apply on a going forward basis” is not substantively unconscionable);
Lumuenemo, 2009 WL 371901 at *5 (holding arbitration provision valid where defendant’s
right to modify or change agreement was not unrestricted reasoning that “if Defendant
decides to modify or terminate the agreement, the change will not become effective until
Defendant has provided its employees 30-days notice[,] . . . [and] any alterations would apply
prospectively only . . . .”); Brackett v. Gen’l. Dynamics Armament, 2010 WL 2628525 *3
(D.Me.2010) (concluding that employee’s challenge of, inter alia, employer’s right to change
or terminate arbitration agreement upon thirty days notice only as to claims not yet filed is
30
not unconscionable because it is an “ordinary, some would say desirable, incident[] of
arbitration and dispute resolution procedures”).
As previously established, the GameStop C.A.R.E.S. Rules are “a mutual
agreement to arbitrate” under which both GameStop and the petitioner “agree that the
procedures provided in these Rules will be the sole method used to resolve any Covered
Claim” and that an arbitrator’s decision is final and binding. GameStop’s limited ability
under the arbitration agreement to modify or discontinue the GameStop C.A.R.E.S. Rules in
no way negates the parties’ mutual agreement to arbitrate. GameStop is required to give
employees thirty days notice of any modification or rescission and any such modification or
rescission may only be applied prospectively. Furthermore, if a dispute is pending at the time
a modification to the program is made, such disputes are to proceed under the terms of the
program as they existed when the dispute was initiated. This provision and its effects are not
overly harsh and in no way “create[] a disparity in the rights of the contracting parties such
that it is one-sided and unreasonably favorable to” GameStop. Dan Ryan Builders, 230
W.Va. at__, 737 S.E.2d at 552, syl. pt. 10. We, therefore, conclude that the provision that
permits modification does not render the arbitration agreement substantively
unconscionable.13
13
The petitioner also argues that the GameStop C.A.R.E.S. program is substantively
unconscionable because it shortens the statute of limitations within which the petitioner may
bring her claims. However, GameStop’s position before both the circuit court and this Court
31
IV. Conclusion
Based upon all of the above, the October 10, 2012, circuit court order
dismissing the petitioner’s claims pending their submission to final and binding arbitration
is hereby affirmed.
Affirmed.
is that the petitioner’s claims are not barred under the arbitration provision and that the state
law claims alleged by the petitioner are subject to the two-year statute of limitations
applicable to the petitioner’s claims. This is also consistent with the GameStop C.A.R.E.S.
Rules which provide that “[t]he Notice of Intent to Arbitrate must be received within the time
period allowed by law applicable to the Covered Claim at issue, just as if you were
proceeding in court.” As the Rules further make clear, “[t]his is commonly referred to as a
statute of limitations and is the period of time that is provided by law for bringing a claim.”
See Pomposi, 2010 WL 147196 at *12 (holding that “under the plain language of the
agreement, the only mandatory deadline imposed by C.A.R.E.S. is the one imposed by law,
namely, the deadline provided by the statute of limitations applicable to the claim in
dispute.”). Therefore, given GameStop’s position that the arbitration provision above does
not shorten the statute of limitations within which the petitioner may bring a claim under
state law, we need not address the petitioner’s argument that the provision is substantively
unconscionable.
32