Hill v. Wackenhut Services International

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
ADAM HILL, et al.,
Plaintiffs,
v. Civil Action No. 11-2158 (JEB)
WACKENHUT SERVICES
INTERNATIONAL, et al.,
Defendants.
MEMORANDUM OPINION
Plaintiffs were employed by Defendant Wackenhut Services LLC as firefighters in Iraq
and Afghanistan. They brought this action against Wackenhut and its affiliates, as well as
against other companies, alleging that they were unlawfully denied various forms of employment
benefits and compensation, such as in-country and overtime pay. The Wackenhut Defendants
have now filed a Motion to Compel Arbitration and Stay Litigation, arguing that the claims set
forth in Plaintiffs’ Complaint are subject to a mandatory-arbitration provision in their
employment agreements. Seeking to avoid arbitration, Plaintiffs challenge the validity of the
provision and argue that the Court – not an arbitrator – must determine whether a valid,
enforceable arbitration agreement exists before ordering Plaintiffs to submit their claims to an
arbitrator. The Court agrees that it is the appropriate authority to resolve Plaintiffs’ challenges to
the disputed arbitration clause; upon review of these challenges, however, the Court finds that
the arbitration agreement is valid and covers the allegations in the Complaint. Defendants’
Motion will thus be granted.
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I. Background
On December 6, 2011, Plaintiffs filed suit against a single entity they call “Wackenhut
Services International, aka Wackenhut Services Inc., aka Wackenhut Services LLC.” See
Compl. at 3-4. Wackenhut explains that its named businesses are separate entities, see Motion to
Compel at 1 & n.1, and the Court will thus refer to them as “the Wackenhut Defendants.”
Plaintiffs also sued two other government-contracting companies that Plaintiffs claim “oversaw
and controlled” Wackenhut – Halliburton Corp. and Kellogg-Brown & Root, LLC (in several
corporate forms) – alleging all Defendants deprived them of “in-country pay, danger pay, on-
call pay, up-lift pay, overtime, and other benefits and compensation” in relation to their work as
firefighters in Iraq and Afghanistan. Compl., ¶¶ 2, 4. Plaintiffs claim that they received
promises of such compensation to “induce them to leave their families in the United States and
work under harsh conditions in Iraq and Afghanistan” from 2005 to the present. Id., ¶¶ 4, 62.
They assert twelve separate causes of action related to these allegations. Id., ¶¶ 72-137.
The terms of Plaintiffs’ employment were set forth in employment contracts that were
signed annually by each Plaintiff. Id., ¶ 53. Although Plaintiffs reference these employment
contracts throughout their Complaint, see id., ¶¶ 5, 53, 60, 61, 73, 74, 76, 88-91, 104, they never
cite to specific language from these agreements, nor do they attach a copy of any of the
contracts. In moving to compel arbitration, the Wackenhut Defendants attach a standard-form
employment agreement embodying the terms and conditions of employment that they claim
would be found in each of Plaintiffs’ individual employment contracts, including a clause
requiring employees to arbitrate disputes with their employer. See Mot., Declaration of Luke
Shelton, ¶ 3 & Exh. 1 (Form Employment Agreement), ¶ 27.
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Plaintiffs in their Opposition disavow any knowledge of this agreement. See Opp. at 2;
see also id. at 9, 11-12 (“we have no proof that the particular exemplar agreement . . . was ever
given to these plaintiffs or was signed by them”; “there is nothing showing one of these plaintiffs
signed or initialed it or one materially like it, or that it contained an arbitration clause”).
Plaintiffs provide no support for this general denial, nor do they provide any evidence that the
contracts they signed or the applicable arbitration clause was different from the standard-form
agreement provided by Defendants.
Defendants’ Reply endeavors to “lay[] to rest any question over the existence of written
arbitration agreements between Plaintiffs and Wackenhut Services, LLC” by attaching signed
employment agreements for “three of the Plaintiffs, which span the time of Plaintiffs’ proposed
class period.” Reply at 3 n.2. In the signed agreements, Plaintiffs separately initialed the
“Specific Terms and Conditions” – including the arbitration provision – and signed the
agreement, acknowledging that they had “read this Employment Agreement and fully
understand, agree, and consent to the terms and conditions of this Agreement.” Reply,
Declaration of Clyde S. Brinkley, Exhs. 1-3 (employment agreements of Plaintiffs Hill, Harville,
and Garber).
In paragraph 27 of the signed agreements, under the heading “Claims/Disputes,” the
contracts state:
In consideration of your employment, you agree that your
assignment, job or compensation can be terminated with or without
cause, with or without notice at any time at your option or at
Employer’s option. You also agree that you will be bound by and
accept as a condition of your employment the terms of the
Wackenhut Dispute Resolution Program which are herein
incorporated by reference. You understand that the Dispute
Resolution Program requires, as its last step, that any and all
claims that you might have against Employer related to your
employment, including your termination, and any and all personal
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injury claim arising in the workplace, you have against other
parent or affiliate of Employer, must be submitted to binding
arbitration instead of to the court system.
See, e.g., Garber Agreement, ¶ 27 (emphasis added). Additionally, the contracts state that they
“shall be governed by and construed in accordance with the laws of the State of Florida” and “in
accordance with the Federal Arbitration Act.” Id., ¶ 26.
Pursuant to the arbitration provision in Plaintiffs’ employment contracts, the Wackenhut
Defendants now move to compel arbitration and stay this litigation.
II. Legal Standard
When considering a motion to compel arbitration, “the appropriate standard of review for
the district court is the same standard used in resolving summary judgment motions” pursuant to
Federal Rule of Civil Procedure 56(c). See Aliron Intern., Inc. v. Cherokee Nation Indus., Inc.,
531 F.3d 863, 865 (D.C. Cir. 2008); Hughes v. CACI, Inc., 384 F. Supp. 2d 89, 92–93 (D.D.C.
2005); Brown v. Dorsey & Whitney, LLP, 267 F. Supp. 2d 61, 67 (D.D.C. 2003).
As the party seeking to compel arbitration, Defendants must first come forward with
“evidence sufficient to demonstrate an enforceable agreement to arbitrate.” See Smart Text
Corp. v. Interland, Inc., 296 F. Supp. 2d 1257, 1263 (D. Kan. 2003). The burden then shifts to
Plaintiffs “to raise a genuine issue of material fact as to the making of the agreement, using
evidence comparable to that identified in Fed. R. Civ. P. 56.” See Grosvenor v. Qwest
Communications International, Inc., 2010 WL 3906253, at *5 (D. Colo. 2010). Arbitration shall
be compelled if there is “‘no genuine issue of fact concerning the formation of the agreement’ to
arbitrate.” Kirleis v. Dicki, McCamey & Chilcote, P.C., 560 F.3d 156, 159 (3d Cir. 2009)
(quoting Par–Knit Mills, Inc. v. Stockbridge Fabrics Co., 636 F.2d 51, 54 (3d Cir. 1980)).
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A fact is “material” if it is capable of affecting the substantive outcome of the litigation.
Holcomb v. Powell, 433 F.3d 889, 895 (D.C. Cir. 2006); Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 248 (1986). A dispute is “genuine” if the evidence is such that a reasonable jury could
return a verdict for the nonmoving party. See Scott v. Harris, 550 U.S. 372, 380 (2007); Liberty
Lobby, 477 U.S. at 248; Holcomb, 433 F.3d at 895. “A party asserting that a fact cannot be or is
genuinely disputed must support the assertion by citing to particular parts of materials in the
record.” Fed. R. Civ. P. 56(c)(1)(A).
The party seeking summary judgment “bears the heavy burden of establishing that the
merits of his case are so clear that expedited action is justified.” Taxpayers Watchdog, Inc., v.
Stanley, 819 F.2d 294, 297 (D.C. Cir. 1987). When a motion for summary judgment is under
consideration, “the evidence of the non-movant[s] is to be believed, and all justifiable inferences
are to be drawn in [her] favor.” Liberty Lobby, 477 U.S. at 255; see also Mastro v. PEPCO, 447
F.3d 843, 850 (D.C. Cir. 2006); Aka v. Washington Hosp. Ctr., 156 F.3d 1284, 1288 (D.C. Cir.
1998) (en banc). On a motion for summary judgment, the Court must “eschew making
credibility determinations or weighing the evidence.” Czekalski v. Peters, 475 F.3d 360, 363
(D.C. Cir. 2007).
The nonmoving party’s opposition, however, must consist of more than mere
unsupported allegations or denials and must be supported by affidavits, declarations, or other
competent evidence, setting forth specific facts showing that there is a genuine issue for trial.
Fed. R. Civ. P. 56(e); Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). The nonmovant is
required to provide evidence that would permit a reasonable jury to find in its favor. Laningham
v. United States Navy, 813 F.2d 1236, 1242 (D.C. Cir. 1987). If the nonmovant’s evidence is
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“merely colorable” or “not significantly probative,” summary judgment may be granted. Liberty
Lobby, Inc., 477 U.S. at 249-50.
III. Analysis
By enacting the Federal Arbitration Act, 9 U.S.C. § 1 et seq., Congress “manifest[ed] a
‘liberal federal policy favoring arbitration agreements.’” Gilmer v. Interstate/Johnson Lane
Corp., 500 U.S. 20, 25 (1991) (quoting Moses H. Cone Mem. Hosp. v. Mercury Construction
Corp., 460 U.S. 1, 24 (1983)). The FAA provides that “[a] written provision in any . . . contract
evidencing a transaction involving commerce to settle by arbitration a controversy thereafter
arising out of such contract . . . shall be valid, irrevocable, and enforceable, save upon such
grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2.
The FAA thus creates a strong presumption in favor of enforcing arbitration agreements,
and “any doubts concerning the scope of arbitrable issues should be resolved in favor of
arbitration.” Moses H. Cone, 460 U.S. at 24-25; see also Shearson/Am. Express, Inc. v.
McMahon, 482 U.S. 220, 226–27 (1987) (stating that arbitration agreements must be rigorously
enforced). Nevertheless, parties cannot be forced into arbitration unless they have agreed to do
so. AT&T Techs. Inc. v. Commc’ns Workers, 475 U.S. 643, 648–49 (1986).
Questions of arbitrability are typically brought before courts pursuant to Section 4 of the
FAA, which permits a party to petition any United States district court that would otherwise have
subject-matter jurisdiction “for an order directing that such arbitration proceed in the manner
provided for in such agreement.” 9 U.S.C. § 4. When presented with a motion to compel
arbitration, a district court must “determine the enforceability of the agreement [to arbitrate] and
decide whether arbitration should be compelled.” Nelson v. Insignia/Esg, Inc., 215 F. Supp. 2d
143, 146 (D.D.C. 2002).
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In this case, in response to Defendants’ Motion to Compel Arbitration, Plaintiffs have
challenged both the existence and the legitimacy of the arbitration provision in their employment
contracts. The Court must, consequently, first determine if an arbitration provision actually
exists. Finding that it does, the Court next assesses whether a court or an arbitrator should
evaluate the enforceability of the provision. Deciding that such a determination belongs to the
Court, it will then analyze each of Plaintiffs’ arguments as to why their claims should not be
arbitrated. First, the Court will look at the three contract defenses raised by Plaintiffs:
unconscionability, defective formation due to no meeting of the minds, and duress. Next, the
Court will address whether the claims in Plaintiffs’ Complaint fall within the scope of the
arbitration agreement. Ultimately holding that none of Plaintiffs’ arguments defeats arbitrability,
the Court will grant the Wackenhut Defendants’ Motion and stay the case pending arbitration.
A. Agreement to Arbitrate
As the party seeking to compel arbitration, Defendants must come forward with
“evidence sufficient to demonstrate an enforceable arbitration agreement. Sapiro v. VeriSign,
310 F. Supp. 2d 208, 212 (D.D.C. 2004) (“‘the party asserting the existence of a contract to
submit disputes to arbitration has the burden of proving its existence’”) (citing Bailey v. Federal
Nat. Mortg. Ass’n, 209 F.3d 740, 746 (D.C. Cir. 2010)). Here, Plaintiffs challenge the very
existence of a contract containing an arbitration provision. See Opp. at 9-11. They argue that
Defendants must show that Plaintiffs “signed a particular agreement to arbitrate a dispute,” id. at
12, and that “[a]ll that Defendant shows is a blank contract, which Mr. Shelton, the affiant says is
the ‘standard form’ used for all firefighters for WSI, and that the arbitration provisions for
everyone’s contracts were ‘materially the same’ as that contained in the exemplar presented.” Id.
at 11. They thus maintain that “there is nothing showing one of these plaintiffs signed or
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initialed it or one materially like it, or that it contained an arbitration clause.” Id. at 11-12.
While Defendants’ first submission may well have sufficed to defeat this argument, their second
easily does. In their Reply they provide the Court with three exhibits of “signed employment
agreements from three of the Plaintiffs, which span the time of Plaintiffs’ proposed class period:
one from Adam Hill (1/05), one from Todd Harville (12/07), and one from John Garber (02/09),”
all of which include the same provision requiring arbitration, initialed by each employee. Id. at 3
n.2.
Having stated at various points in their Complaint that they signed employment contracts,
see Compl., ¶¶ 5, 53, 61, 62, Plaintiffs have provided no evidence that the contracts they refer to
are not the ones attached to Defendants’ Motion. More specifically, they have offered nothing to
show that the arbitration provision in those contracts was not the one they agreed to. Plaintiffs’
mere assertion that they have not agreed to arbitrate disputes with their employer – with no
evidence supporting the disavowal – is insufficient to create an issue of fact in light of
declarations submitted by Defendants, the form employment contract, and the three contracts
signed and initialed by Plaintiffs spanning the proposed class period. The Court thus finds that
Defendants have provided sufficient unrebutted evidence showing that Plaintiffs signed
employment agreements with their employer that included mandatory arbitration provisions.
B. Contract-Law Defenses
Plaintiffs next argue that even if they signed an agreement containing that arbitration
provision, the provision is invalid, and they cannot be compelled to arbitrate their claims. See
Opp. at 14-23. Defendants do not address the specific contract-law defenses raised by Plaintiffs,
instead arguing that the arbitrator – and not the Court – is the appropriate authority to evaluate
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them. See Reply at 3-5. The Court will address this threshold issue and then discuss each
challenge in turn.
1. Court or Arbitrator?
In Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (2006), the Supreme Court
established a framework for analyzing who – courts or arbitrators – should decide issues of
arbitrability. The framework looks to the nature of the party’s challenge to the validity of the
arbitration agreement and divides these challenges into: 1) challenges to the validity of the
agreement to arbitrate and 2) challenges to the contract as a whole. Id. at 444. Buckeye held that
the former should be adjudicated by the court, while the latter must be resolved by the arbitrator.
Id. Thus, where a plaintiff’s argument is that the contract as a whole is unenforceable, the
arbitrator decides the validity of the contract (including the arbitration provision); in contrast,
when a plaintiff argues that an arbitration clause, standing alone, is unenforceable, that is a
question to be decided by the court. See Bridge Fund Capital Corp. v. Fastbucks Franchise
Corp., 622 F.3d 996, 1000 (9th Cir. 2010); Cox v. Ocean View Hotel Corp., 533 F.3d 1114, 1120
(9th Cir. 2008); Roberts v. Synergistic Int’l, LLC, 676 F. Supp. 2d 934, 947 (E.D. Cal. 2009)
(where plaintiff’s challenge was to arbitration clause rather than contract as a whole, court to
determine issue of arbitrability); ATP Flight School, LLC v. Sax, 44 So. 3d 248, 252 (Fla. Dist.
Ct. App. 2010) (applying Buckeye and finding that as challenge was not to arbitration provision,
but to underlying agreement, claim must proceed to arbitration); see also Prima Paint Corp. v.
Flood & Conklin Mfg. Co., 388 U.S. 395, 403 (1967) (guided by Section Four of the FAA,
Supreme Court held that “a federal court may consider only issues relating to the making and
performance of the agreement to arbitrate”).
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This bifurcated approach rests on substantive federal arbitration law, which treats
arbitration provisions as severable from the remainder of the contract. Buckeye, 546 U.S. at
445-46; see also Rent-A-Center, West, Inc. v. Jackson, 130 S. Ct. 2772, 2778 (2010) (explaining
that “because § 2 states that a ‘written provision’ ‘to settle by arbitration a controversy’ is ‘valid,
irrevocable, and enforceable’ without mention of the validity of the contract in which it is
contained,” a court is not prevented from enforcing specific agreement to arbitrate, even if party
challenges enforceability of contract as a whole).
There is no binding precedent to assist the Court where the challenge in question may not
fit squarely into either category for purposes of the Buckeye framework. The Ninth Circuit,
however, has recently provided helpful guidance on the matter in Bridge Fund Capital Corp., 622
F.3d 996. That Circuit there stated that “[w]hat matters is the substantive basis of the challenge”
– “as long as the plaintiff’s challenge to the validity of an arbitration clause is a distinct question
from the validity of the contract as a whole, the question of arbitrability is for the court to decide
regardless of whether the specific challenge to the arbitration clause is raised as a distinct claim
in the complaint.” Id. at 998. Looking not only at the complaint, but also at the plaintiffs’
opposition to the motion to compel, the court pointed to plaintiffs’ arguments that the arbitration
agreement: “(1) was not mutually entered into; (2) improperly limits Plaintiffs’ damages; (3)
impermissibly shortens the statute of limitations; (4) contains invalid place and manner
restrictions; (5) seeks to negate Plaintiffs’ unwaivable rights under the CFIL; and (6) wrongly
bans class and consolidated actions.” Id. at 1002. In light of these challenges, the Ninth Circuit
determined that the plaintiffs’ arguments were “marshaled against the validity of the arbitration
clause alone” and were separate from the plaintiffs’ challenges to the contract as a whole, such
that the question of arbitrability was properly decided by the court. Id.; see also Nagrampa v.
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MailCoups, Inc., 469 F.3d 1257, 1270 (9th Cir. 2006) (examining “crux of the complaint” to
determine if plaintiff was challenging the arbitration clause); Felts v. CLK Mgmt., Inc., 254 P.3d
124, 135-36 (N.M. Ct. App. 2011) (where plaintiff’s arguments challenging arbitration clause
were distinct from his claims against underlying agreement, court was proper body to evaluate
plaintiff’s unconscionability argument); Winter v. Window Fashions Prof’ls., Inc., 83 Cal. Rptr.
3d 89, 93-94 (Cal. Ct. App. 2008) (holding trial court properly determined issue of arbitrability
where party opposing arbitration challenged arbitration provision itself as unconscionable).
Plaintiffs here raise a number of similar challenges to the arbitration agreement in their
Opposition to Defendants’ Motion. Specifically, Plaintiffs argue that (1) “the arbitration
provision is unconscionable, procedurally and substantively,” Opp. at 14; (2) there was no
meeting of the minds as to the agreement to arbitrate, id. at 31; and (3) no arbitration agreement
was formed due to duress. Id. at 32. Additionally, Plaintiffs challenge the arbitration agreement
in Count I of the Complaint: “Plaintiffs and those similarly situated were required to waive
valuable and substantive rights under false pretenses by submitting to class arbitration, which
was unconscionable because the contracts did not require class arbitration.” Compl., ¶ 73.
Furthermore, Plaintiffs argue the contracts were
ambiguous and unconscionable if applied to require arbitration of
class action as they mention nothing about class actions,
ambiguous and unconscionable for lack of any rules of arbitration
or allocation of costs, and also contain confusing and misleading
provisions pertaining to any duty to arbitrate individual claims.
Id., ¶ 74. While Plaintiffs undoubtedly attack many aspects of the employment agreement as a
whole, they also make a distinct challenge to the arbitration agreement in their Complaint and in
their Opposition. The Court – and not an arbitrator – should, therefore, determine the threshold
issue of arbitrability.
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2. Plaintiffs’ Challenges to Arbitration Clause
Under the FAA, an agreement to arbitrate “shall be valid, irrevocable, and enforceable,
save upon such grounds as exist at law or in equity for the revocation of any contracts.”
9 U.S.C. § 2. In analyzing whether an arbitration agreement is valid and enforceable, “generally
applicable contract defenses, such as fraud, duress, or unconscionability, may be applied to
invalidate arbitration agreements.” Doctor’s Assoc., Inc. v. Casarotto, 517 U.S. 681, 687 (1996).
These contract-based challenges are governed by applicable state law. Puleo v. Chase Bank
USA, N.A., 605 F.3d 172, 180-81 (3d Cir. 2010); Davis v. O’Melveny & Myers, 485 F.3d 1066,
1072 (9th Cir. 2007). Plaintiffs assert here that Florida law should govern the Court’s analysis of
the contract defenses, pointing to language in the exemplar employment agreements. See Opp.
at 6-9. Defendants do not contest this assertion or suggest that any other state law should
govern. Reply at 5. Because the parties appear to agree that Florida law is the governing law –
and the contracts clearly so indicate – the Court will proceed accordingly.
In their Opposition, Plaintiffs raise three contract-law challenges to the arbitration
provision: unconscionability, defective formation due to no meeting of the minds, and duress.
Although Plaintiffs bear the ultimate burden of invalidating the provision, here they need only
raise a genuine issue of material fact. See Kirleis, 560 F.3d at 159; Bridge Fund, 622 F.3d at
1004; SA-PG Sun City Center, LLC v. Kennedy, 79 So. 3d 916, 919 (Fla. Dist. Ct. App. 2012).
In evaluating the three contract defenses raised by Plaintiffs, the Court must determine
whether any is applicable to invalidate the arbitration provision at issue. In other words, each of
these challenges must be “directed specifically to the agreement to arbitrate,” rather than to the
contract as a whole. Rent-A-Center, 130 S. Ct. at 2778. The Court, therefore, will not address
Plaintiffs’ arguments to the extent that they challenge the contract in its entirety, rather than the
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severable arbitration clause. Such broader challenges lie in the arbitrator’s bailiwick. Bearing
this caveat in mind, the Court now turns to each of the three challenges.
a. Unconscionability
Plaintiffs first contend that the arbitration provision is unconscionable. Under Florida
law, a court may decline to enforce a contract on that ground. See Powertel, Inc. v. Bexley, 743
So. 2d 570, 574 (Fla. Dist. Ct. App. 1999) (citing Steinhardt v. Rudolph, 422 So. 2d 884, 889
(Fla. Dist. Ct. App. 1982)). In order to find a contract unconscionable, “[t]he party seeking to
avoid the arbitration provision has the burden to establish unconscionability.” Murphy v.
Courtesy Ford, LLC, 944 So. 2d 1131, 1134 (Fla. Dist. Ct. App. 2006) (citation omitted);
Gainesville Health Care Ctr., Inc. v. Weston, 857 So. 2d 278, 288 (Fla. Dist. Ct. App. 2003).
A court applying Florida law must determine that the contract is both procedurally and
substantively unconscionable, see Pendergast v. Sprint Nextel Corp., 592 F.3d 1119, 1134 (11th
Cir. 2010); Belcher v. Kier, 558 So. 2d 1039, 1040 (Fla. Dist. Ct. App. 1990); Complete
Interiors, Inc. v. Behan, 558 So. 2d 48, 52 (Fla. Dist. Ct. App. 1990), and Plaintiffs here argue
that they satisfy both prongs. See Opp. at 14. Defendants do not address the substance of
Plaintiffs’ unconscionability argument, instead re-stating that the arbitrator – and not this Court –
should address those issues. See Reply at 4-5. As Plaintiffs bear the burden of showing the
invalidity of the arbitration clause, Sims v. Clarendon Nat. Ins. Co., 336 F. Supp. 2d 1311,
1321 (S.D. Fla. 2004) – and here that at least a material dispute of fact exists – the Court will
weigh their arguments even without briefing from Defendants.
“The procedural component of unconscionability relates to the manner in which the
contract was entered and it involves consideration of such issues as the relative bargaining power
of the parties and their ability to know and understand the disputed contract terms.” Powertel,
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743 So. 2d at 574. Courts must consider the following four factors to determine whether a
contract is procedurally unconscionable under Florida law:
(1) the manner in which the contract was entered into; (2) the
relative bargaining power of the parties and whether the
complaining party had a meaningful choice at the time the contract
was entered into; (3) whether the terms were merely presented on a
“take-it-or-leave-it” basis; and (4) the complaining party's ability
and opportunity to understand the disputed terms of the contract.
Pendergast, 592 F.3d at 1135 (citations omitted). While unequal bargaining power between
employers and employees may be common, “[m]ere inequality in bargaining power . . . is not a
sufficient reason to hold that arbitration agreements are never enforceable in the employment
context.” Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 33 (1991).
Plaintiffs argue that the arbitration agreement is procedurally unconscionable because:
(1) Plaintiffs were given the agreement on a take it or leave it basis
after they had already been hired by Defendant WSI, and so it was
an adhesion contract; (2) WSI provided the lengthy agreement
without highlighting the arbitration provision alleged to be
binding, and did not provide copies of the WSI arbitration policy
or JAMS arbitration rules; (3) the arbitration clause, paragraph 27
in a 14 page agreement, was not bold, underlined, or otherwise in
CONSPICUOUS LETTERS OR FORMAT DISTINGUISHING it
from the jungle of clauses and writing in the lengthy agreement;
(4) plaintiffs lacked meaningful choice when signing the contract
because similar employment opportunities were not readily
available, and they had already made arrangements to leave the
country and left their stateside jobs; and (5) the plaintiffs were
unsophisticated employees bargaining with a highly sophisticated
corporation.
Opp. at 17-18 (emphasis in original). Plaintiffs provide no affidavits to support these claims;
instead, they rely solely on the unverified general allegations of the Complaint.
Given that Plaintiffs provide no evidence for their arguments and Defendants do not even
address this issue, the Court believes the prudent approach is to avoid a resolution. In any event,
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since Plaintiffs have failed to demonstrate any substantive unconscionability, as discussed below,
resolution of the procedural issue is not necessary to the outcome.
Substantive unconscionability requires an assessment of whether the contract terms are so
outrageously unfair as to shock the judicial conscience. A substantively unconscionable contract
is one that “no man in his senses and not under delusion would make on the one hand, and as no
honest and fair man would accept on the other.” Hume v. United States, 132 U.S. 406, 411
(1889). To determine substantive unconscionability, courts further consider “whether the
disputed terms limit available remedies, exclude punitive damages, prevent equitable relief,
impose substantial costs, or lack mutuality of obligation with respect to the arbitration of
disputes.” EEOC v. Taco Bell of Am., Inc., No. 06-1792, 2007 WL 809660, at *1 (M.D. Fla.
Mar. 15, 2007) (citing Palm Beach Motor Cars Ltd., Inc. v. Jeffries, 885 So. 2d 990, 992 (Fla.
Dist. Ct. App. 2004)).
Plaintiffs argue that the arbitration provision here is substantively unconscionable
because “(1) the agreement and non-attached ADR policy calls for fee-splitting and expense
splitting under JAMS rules, which would deter plaintiffs from effectively vindicating their rights;
and, (2) the arbitration agreement is excessively one-sided because it does not indicate that
[Wackenhut] must arbitrate any disputes it has against employee.” Opp. at 20.
As to the first argument, while Plaintiffs conclusorily allege that the cost of arbitration
under JAMS is prohibitively expensive, see id. at 21, they provide no record support as to
whether or how the costs of arbitration would discourage them from being able to pursue their
claims. Plaintiffs quote the “JAMS Case Management Fee” information from the JAMS website
– “‘the only fee that an employee may be required to pay is the initial JAMS Case Management
Fee. This can be as much as $1,000 per person, or $25,000 . . . .’” Id. at 21, n.7 (quoting JAMS
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Employment Arbitration Rule 31(c), available at http://www.jamsadr.com/rules-employment-
arbitration/). This information, however, does not inform the Court whether Plaintiffs could
afford this fee or whether it would inhibit their ability to vindicate their rights. As in Stewart
Agency, Inc. v. Robinson, 855 So. 2d 726 (Fla. Dist. Ct. App. 2003), “[t]here is nothing to show
that the expense of arbitration is greater than the expense of litigating the issues or would prevent
the appellee from vindicating her statutory rights. Therefore, the record is insufficient to support
this as a basis for substantive unconscionability.” Id. at 728-29; see also Palm Beach Motor
Cars, 885 So. 2d at 992.
Plaintiffs also argue that the provision is unconscionable because it is “one-sided” in
requiring only the employee – and not the employer – to arbitrate disputes. See Opp. at 20.
While the one-sided nature of an arbitration agreement may be relevant to a finding of
unconscionability, a court must find additional facts to determine that the agreement is so one-
sided as to be unconscionable. See, e.g., Taco Bell, 2007 WL 809660, at *1 (“In determining
whether an agreement or provision is substantively unconscionable, courts consider whether the
disputed terms limit available remedies, exclude punitive damages, prevent equitable relief,
impose substantial costs, or lack mutuality of obligation with respect to the arbitration of
disputes.”); Hialeah Automotive, LLC v. Basulto, 22 So. 3d 586, 590-91 (Fla. Dist. Ct. App.
2009) (court’s unconscionability analysis focused on whether arbitration clause requires
plaintiffs to waive rights to which they would otherwise be entitled under common law or
statutory law – or to give up legal remedies). While one case, Palm Beach Motor Cars, 885 So.
2d 990, reached a finding of unconscionability based solely on the one-sided nature of the
agreement, the authority it relied on as support for this holding, Bellsouth Mobility LLC v.
Christopher, 819 So. 2d 171 (Fla. Dist. Ct. App. 2002), employed a more holistic approach,
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basing its unconscionability analysis on a number of factors, rather than looking only at the
mutuality of the obligation to arbitrate. As the bulk of authority in Florida employs an analysis
that assesses multiple considerations in determining whether an agreement is unconscionable, the
Court will follow a similar approach here.
Plaintiffs in this case have failed to produce evidence to demonstrate the existence of the
unconscionability factors discussed in the aforementioned cases. For example, the arbitration
provision here does not limit remedies or exclude punitive damages or equitable relief. Such a
waiver of rights is an important consideration in determining whether the agreement is
unconscionable. See Powertel, 743 So. 2d at 576. In Powertel, a Florida court found an
arbitration clause substantively unconscionable where the agreement required customers to give
up legal remedies – e.g., the plaintiffs were foreclosed from seeking punitive damages. Id. at
576. The court also noted that an agreement that precluded the possibility of customers pursuing
a class action was one-sided and provided an advantage that inured only to one party. Id. In
contrast, the arbitration provision here does not require Plaintiffs to surrender any of their claims
or damages that they could seek in court; it merely substitutes the forum. As Plaintiffs note, the
provision requires them to submit personal injury claims to arbitration, see Opp. at 22; however,
while stating the location where such claims must be brought, the provision does not in any way
limit the employee’s ability to bring or recover for such claims. Factors that would support
unconscionability are thus not present here. See Avid Engineering, Inc. v. Orlando Marketplace
Ltd., 809 So. 2d 1, 5 (Fla. Dist. Ct. App. 2001); cf. Hooters of America, Inc. v. Phillips, 39 F.
Supp. 2d 582, 614-15 (D.S.C. 1998) (finding that multiple one-sided provisions in the arbitration
rules – including provisions stripping the employee of numerous substantive remedies – were
unconscionable).
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Plaintiffs, in sum, have not demonstrated the existence of a material factual dispute that
could render the arbitration agreement so outrageously unfair as to shock the judicial conscience.
The Court, accordingly, finds that the agreement is not substantively unconscionable.
b. No Meeting of Minds
Plaintiffs further argue that no valid arbitration provision exists because there was no
meeting of the minds. See Opp. at 31. “[A] meeting of the minds of the parties on all essential
elements is a prerequisite to the existence of an enforceable contract . . . .” Business Specialists,
Inc. v. Land & Sea Petroleum, Inc., 25 So. 3d 693, 695 (Fla. Dist. Ct. App. 2010) (citations
omitted). Under Florida law, “a party to a contract is ‘conclusively presumed to know and
understand the contents, terms, and conditions of the contract.’” Rocky Creek Ret. Props., Inc.
v. Estate of Fox, 19 So. 3d 1105, 1109 (Fla. Dist. Ct. App. 2009) (quoting Stonebraker v.
Reliance Life Ins. Co. of Pittsburgh, 166 So. 583, 584 (Fla. Dist. Ct. App. 1936)). Further, “[a]
party has a duty to learn and know the contents of an agreement before signing it, and [a]ny
inquiries . . . concerning the ramifications of [the contract] should have been made before
signing.” Id. (internal quotations and citation omitted).
Here, Plaintiffs agreed upon an express arbitration provision with Defendants and are
thus conclusively presumed to have understood the contents, terms, and conditions of that
agreement. The challenged arbitration clause was written in plain English, and the Court does
not find that the “wording” of the agreement or the “lack of any specificity” that Plaintiffs point
to, Opp. at 31, creates any factual issues as to whether there was a meeting of the minds. The
language in the arbitration clause is unequivocal: “[A]ll claims that you might have against
Employer related to your employment … must be submitted to binding arbitration instead of to
the court system.” Employment Agreement, ¶ 27. While the specifics of the rules that would
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govern the arbitration proceedings do not appear to have been appended to the employment
agreement, this cannot tip the balance. Plaintiffs initialed the specific arbitration provision and
cannot now claim that they did not understand that claims against their employer were subject to
mandatory arbitration. See Citibank, N.A. v. Dalessio, 756 F. Supp. 2d 1361, 1367-68 (M.D. Fla.
2010) (“As a general matter, ‘[a] party who signs an instrument is presumed to know its contents
. . . . He cannot avoid his obligations thereunder by alleging that he did not read the contract, or
that the terms were not explained to him, or that he did not understand the provisions.’”) (internal
citations omitted).
The Court thus finds that there is no material dispute regarding a meeting of the minds
with regard to the arbitration clause.
c. Duress
As noted above, Section 2 of the FAA permits “generally applicable contract defenses,”
including duress, to “be applied to invalidate arbitration agreements.” Doctor’s Assocs., 517
U.S. at 687. Plaintiffs thus argue that “no valid arbitration agreement was formed” due to the
“personal and economic” duress they faced. See Opp. at 32. Specifically, Plaintiffs claim that
“[t]hey simply had to sign” as they were not “free to leave or to engage in any give and take with
the party who drafted the agreement. They were in a pressure situation in groups.” Id. While
Plaintiffs attempt to frame their duress challenge as one directed at the arbitration provision, see
id., it appears – based on their own arguments, see id. (describing the circumstances surrounding
the signing of the “14-page confusing form agreement they were required to sign”) – that the
alleged duress in this case instead relates to the employment agreement as a whole. If so, the
question of duress should be resolved in arbitration. See Prima Paint, 388 U.S. at 403-04;
Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Haydu, 637 F.2d 391, 398 & n.11 (5th Cir. 1981).
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Even if Plaintiffs’ challenge is in fact directed at the arbitration clause, rather than the
employment agreement as a whole, they still cannot prevail on such a defense. To establish
duress, a party must show “(1) that one side involuntarily accepted the terms of another, (2) that
circumstances permitted no other alternative, and (3) that said circumstances were the result of
coercive acts of the opposite party.” Woodruff v. TRG-Harbour House, Ltd., 967 So. 2d 248,
250 (Fla. Dist. Ct. App. 1988) (citing McLaughlin v. Fla., Dep’t of Natural Res., 526 So. 2d 934,
936 (Fla. Dist. Ct. App. 1988)). The threshold for duress is thus quite high, and Plaintiffs here
have not put forth sufficient evidence to create a factual dispute that the signing of the arbitration
provision itself crossed that line.
In Hodgson v. Royal Caribbean Cruises, Ltd., 706 F. Supp. 2d. 1248 (S.D. Fla. 2009), an
employee claimed duress where his employment agreement was signed while “he was already
aboard the Sovereign of the Seas and, if he had not signed them, he would have been stranded in
Port Canaveral without money to return to Nicaragua or authorization to work in the United
States.” Id. at 1260. The court rejected this argument, finding that the employee was not under
duress, as he had a choice: “a choice either to accept the Agreement and work or reject the
Agreement and disembark.” Id. at 1261; see also Henriquez v. NCL (Bahamas), Ltd., 440 Fed.
Appx. 714, 716 (11th Cir. 2011) (rejecting employee’s duress argument where he claimed that if
he did not sign the agreement, he would not have been allowed to stay on the ship to work). The
facts Plaintiffs offer are no worse than these, and they do not provide any contrary authority to
demonstrate their weaker showing suffices. As a result, this defense does not defeat arbitration
either.
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C. Scope of Arbitration Agreement
Plaintiffs last argue that even if a valid arbitration agreement existed, the present dispute
is “outside the scope of the arbitration clause.” Opp. at 23. Defendants respond that “all twelve
counts of the Complaint are directly related to the Plaintiffs’ employment as firefighters with
Wackenhut Services, LLC” and are thus arbitrable. Mot. at 1-2. The Court agrees with
Defendants that the claims alleged in the Complaint are comfortably within the scope of the
arbitration clause and are thus subject to mandatory arbitration.
As Plaintiffs correctly note, arbitration is required only of those controversies or disputes
that the parties have agreed to submit to arbitration. See Brandon, Jones, Sandall, Zeide, Kohn,
Chalal & Musso, P.A. v. Med Partners, Inc., 312 F.3d 1349, 1357 (11th Cir. 2002). Yet, in
“applying general state-law principles of contract interpretation to the interpretation of an
arbitration agreement . . . [,] due regard must be given to the federal policy favoring arbitration,
and ambiguities as to the scope of the arbitration clause itself resolved in favor of arbitration.”
Volt Info. Sciences, Inc. v. Bd. of Trs. Leland Stanford Junior Univ., 489 U.S. 468, 475–476
(1989).
“Whether a claim falls within the scope of an arbitration agreement turns on the factual
allegations in the complaint.” Gregory v. Electro-Mech. Corp., 83 F.3d 382, 384 (11th Cir.
1996). The scope of the arbitration clause here is very broad, stating that “all claims that you
might have against Employer related to your employment … must be submitted to binding
arbitration instead of to the court system.” Employment Agreement, ¶ 27 (emphasis added).
Each count set forth in the Complaint falls under this umbrella. See Compl. ¶¶ 72-137. These
allegations challenge: the arbitration clause governing employer/employee relations (Count I);
Defendants’ breach of the employment contract (Counts II and VI); Defendants’ failure to pay
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for overtime and on-call time (Count III); fraud in the inducement of the employment contract
(Count IV); intentional and negligent misrepresentation regarding Plaintiffs’ employment (Count
V); fraudulent and deceptive trade practices regarding Plaintiffs’ employment (Count VII); civil
conspiracy and prima facie tort centered around Plaintiffs’ employment (Count VIII); and
liability under quasi-contract theories related to the employment relationship (Counts IX, X, and
XI). It is hard to see how these are not claims “related to [Plaintiffs’] employment.” As a
result, all are subject to arbitration by the express terms of ¶ 27 in the Employment Agreements.
IV. Conclusion
The Court, therefore, will grant the Wackenhut Defendants’ Motion to Compel
Arbitration and Stay Litigation. To the extent Plaintiffs wish to challenge the contract as a
whole, they may still assert such defenses in the arbitration itself. A separate Order consistent
with this Opinion will be issued this day.
SO ORDERED.
/s/ James E. Boasberg
JAMES E. BOASBERG
United States District Judge
Date: June 7, 2012
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