Shatteen v. Omni Hotels Management Corporation

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
TAMIKO SHATTEEN
Plaintiff,
Civil Case No.
1:14-cv-01962 (RJL)
V.
OMN I HOTELS MANAGEMENT
CORPORATION,
FILED
Defendant.
KL JUL «6 2015
MEMORA DUM OPINION
mm, U 8 District & Bankruptcy
(July 6*, 2015) [Dkt. #7] Courts forthe District of Columbia
Plaintiff Tamiko Shatteen (“plaintiff”) commenced this action on November 20,
2014 against defendant Omni Hotels Management Corporation (“defendant”), for alleged
violations ofthe Family Medical Leave Act of 1993 (“FMLA”) 29 U.S.C. § 2601 el seq.
See generally Compl. [Dkt. #1]. In response, defendant moved to dismiss the case and
compel arbitration in accordance with the parties’ arbitration agreement. See Def.’s Mot.
Dismiss Compl. & Compel Arb. (“Def’s Mot") [Dkt. #7]. Upon consideration of the
parties’ pleadings, the relevant law, and the entire record herein, the Court GRANTS
defendant’s Motion and DISMISSES the case.
BACKGROUND
Plaintiff began working as a Banquet Coordinator at the Omni Shoreham Hotel in
Washington, DC. on April 11, 2011. Compl. 11 7. As a precondition ofher
employment, plaintiff signed the “Summary of the Amended Omni Arbitration Program”
(“Agreement”), which states in relevant part:
The Company [defendant] and the Associate [plaintiff] hereby consent
to the resolution by arbitration of all claims or controversies arising out
of [plaintiffs] application with, employment with, or termination from,
the Company. This Agreement is mutual encompassing all claims
[plaintiff] may have against [defendant] . . . . The claims covered by
this Agreement include . . . claims for violation of any federal, state or
other statute, ordinance, regulation, or common law.”
Def.’s Mot. Ex. 1 1] 1 [Dkt. #7-3] (emphasis in original). The details of the arbitration
program are contained in the “Omni Hotels Amended and Restated Dispute Resolution
Program” (“Program”), which the Agreement incorporates by reference. See Def.’s Mot.
Ex. 1; see generally Def.‘s Mot. Ex. 2 [Dkt. #7-4]. The Program has several pertinent
features. First, it requires the party requesting arbitration to pay a filing fee of up to
$125.00. Def.’s Mot. Ex. 2 1] 9. Upon commencement, the parties “shall split the cost
of the first hearing day.” Def.’s Mot. Ex. 2 1] 9. All “other arbitration costs shall be
born by [defendant].” Def’s Mot. Ex. 2 1] 9. If, however, the employee “cannot share
the fees described above for financial reasons,” he or she “can request the [defendant] to
pay the remainder of the arbitration costs.” Def.’s Mot. Ex. ‘] 9. Second, the Agreement
precludes the arbitrator from awarding any “punitive or exemplary damages” to plaintiff.
Def.’s Mot. EX. 2 at 1] 4.4. Finally, it allows defendant to modify or revoke the Program
with 14 days’ advance notice of its changes, but prohibits any ensuing amendments from
having a retroactive effect. Def.’s Mot. Ex. 2 at 1] 16.3.
done nothing of the sort. Rather than show how splitting the first day’s fee would
prejudice her rights under the F MLA, plaintiff relies on vague pronouncements of
Congressional intent to support her argument that arbitral fees should never be borne by
an employee. See Pl.’s Opp’n at 10. But invalidation cannot rest on rote objections
alone. In the absence of clear evidence that the fee-shifting clause somehow restricts
plaintiffs access to the arbitral forum, the Court declines to invalidate the Agreement.
CONCLUSION
Thus, for the foregoing reasons, the Court GRANTS defendant’s Motion to
Dismiss and Compel Arbitration and DISMISSES this action. An Order consistent with
this decision accompanies this Memorandum Opinion.
event, on shaky ground in light of the Supreme Court’s subsequent decision in Green Tree
Financial, which eschews any per se ban on fee shifting in the arbitral context. See Green Tree
Fin. Corp, 531 US. at 92.
ll
In March 2014, plaintiff suffered a stroke and requested medical leave pursuant
to the FMLA. Compl. W 9-10. Defendant granted her request. Compl. 1] 10. When
plaintiff returned to work on July 21, 2014, she discovered that defendant had terminated
her position. Compl. W 15-16. Shortly thereafter, plaintiff commenced the instant
case, alleging violations of the FMLA. See Compl. Defendant, in response, filed a
motion to dismiss the case and compel arbitration pursuant to the parties’ signed
Agreement. See Def.’s Mot.
LEGAL STANDARD
Courts reviewing motions to compel arbitration apply the standard for resolving
summary judgment motions under Federal Rule of Civil Procedure 56(c). See Aliron
Int’l, Inc. v. Cherokee Nation Indus, Inc, 531 F.3d 863, 865 (DC. Cir. 2008). Review
in this context is limited to “whether or not there [was] a meeting of the minds on the
agreement to arbitrate.” Id. (citation and internal quotation marks omitted). Summary
judgment is “appropriate only if ‘there is no genuine issue’” as to the enforceability of the
arbitration agreement. Id. (quoting Anderson v. Liberty Lobby, Inc., 477 US. 242, 247
(1986)).
DISCUSSION
The Federal Arbitration Act (“FAA”), which governs the Agreement here, creates
a strong presumption in favor of arbitration and dictates that arbitration agreements “shall
be valid, irrevocable, and enforceable, save upon such grounds as exist in law or in equity
for the revocation of any contract." 9 U.S.C. § 2. The FAA’s presumption of validity
is, however, just that: a presumption. See Moses H. Cone Mem ’[ Hosp. v. Mercury
Constr. Corp, 460 U.S. 1, 24 (1983) (the FAA reflects a “liberal federal policy favoring
arbitration agreements”). Arbitration agreements remain creatures of contract, and, as
such, parties cannot be required to arbitrate unless they have expressly consented to do so.
See AT&TMobi[ity LL. C. v. Concepcion, 131 S. Ct. 1740, 1745 (2011) (“[C]ourts must
place arbitration agreements on an equal footing with other contracts”). Arbitration
agreements are therefore subject to the litmus of mutual assent, and may be “invalidated
by generally applicable contract defenses, such as fraud, duress, or unconscionability.”
Id. at 1746 (citation and internal quotation marks omitted).
Plaintiff, eager to litigate her grievances in this Court, claims that the Agreement is
unconscionable.1 See Mem. P. & A. Opp’n Def.’s Mot. Dismiss Compl. & Compel Arb.
(“Pl.’s Opp’n) [Dkt #9]. Under District of Columbia law, a court can void a contract
that is both procedurally and substantively unconscionable. See Urban Invs., Inc. v.
Branham, 464 A.2d 93, 99 (DC. 1983). Unconscionability inheres were the contract
evidences a lack of meaningful choice on the part of one of the signatories and, in
addition, contains manifestly unfair terms. Id. For the reasons discussed below, I find
1 Plaintiff does not, however, dispute that the Agreement, if valid, covers her claims under the
FMLA. See P.’s Opp’n. Nor, as a practical matter, could she. The Agreement clearly
encompasses all claims that, like plaintiff‘s claims in the instant action, allege violations ofa
federal statute. Def.’s Mot. Ex. 1 fl 1. Thus sole issue before the Court is whether the
Agreement itself is enforceable.
that the Agreement does not unreasonably disadvantage plaintiff and, as such, must
enforce its directive.
1. Procedural Unconscionability
Plaintiff argues that the Agreement is procedurally unconscionable because she
was “forced to sign [it] in front of her employer.” See Pl.’s Opp’n at 1 l. A contract is
procedurally unconscionable if a party “lacked meaningful choice as to whether to enter
the agreement.” Fox v. Computer World Servs. Corp, 920 F. Supp. 2d 90, 97 (D.D.C.
2013). “Meaningful choice” is a product of the transaction itself and turns on whether
the plaintiff “ha[d] a reasonable opportunity to understand the terms of the contract, or
[whether] the important terms [were] hidden in a maze of fine print and minimized by
deceptive . . . practices.” See Williams v. Walker-Thomas Furniture Co, 350 F.2d 445,
449 (DC. Cir. 1965).
Plaintiff would have this Court invalidate the Agreement because she “was forced
to sign in front of her employer rather than at a later date.” See Pl.’s Opp’n at 11.
However, the mere “fact that the Agreement was presented to [plaintiff] as a condition of
[her] employment [and] without further negotiation” does not render it void. See Fox,
920 F. Supp. 2d at 98. Bargaining disparity exists in nearly every employment contract.
But it is neither the province, nor the prerogative, of the judiciary to eliminate the
inequities of a typical business relationship. Courts may only intervene when the
contract evidences a gross inadequacy of bargaining power and contains terms that so
unreasonably favor the stronger party that enforcement would shock the judicial
conscious. See Gilmer v. Interstate/Johnson Lane Corp, 500 US. 20, 33 (1991)
(“[I]nequality in bargaining power . . . is not a sufficient reason to hold that arbitration
agreements are never enforceable in the employment context”). My judicial conscious is
not so aggrieved here.
The signed Agreement, which is entitled “SUMMARY OF THE AMENDED
OMNI ARBITRATION PROGRAM,” clearly states that it is a “Mutual Agreement to
Arbitrate." See Def.’s Mot. Ex. 1. It stipulates, in no fewer than three places, that by
signing the Agreement, plaintiff consented “to the resolution by arbitration of all claims”
within its ambit. Def.’s Mot. Ex. 1 fl 1. It is difficult to imagine a more conspicuous
proviso. Further still, the agreement states, in all capital letters: “ASSOCIATE ALSO
UNDERSTANDS THAT IT IS HIS/HER RESPONSIBILITY TO REVIEW THE OMNI
HOTELS DISPUTE RESOLUTION PROGRAM” for the operative terms. Def.’s Mot.
Ex. 1. Although plaintiff may regret giving her consent, it is abundantly clear from the
Agreement that she was advised not only of the terms of the contract, but also of her
responsibility to review the Program details. Id. Whether she comprehended the
ramifications of her decision is, unfortunately for her, irrelevant to its validity. See
Paterson v. Reeves, 304 F.2d 950, 951 (DC. Cir. 1962) (“One who signs a contract which
he had an opportunity to read and understand is bound by its provisions”). The sole
question is whether plaintiff had an opportunigz to review the Agreement. She most
assuredly did.
11. Substantive Unconscionability
Plaintiff next argues that the Agreement is substantively unconscionable because it
allows defendant to “unilaterally” revoke its terms, it “waives” potential remedies, and it
forces her to bear certain costs. See Pl.’s Opp’n at l 1. A contract is substantively
unconscionable only if it unreasonably favors one party. Urban Invs. Inc, 464 A.2d at
99—100. Thus, to prevail, plaintiff must show that the Agreement is so outrageously
unfair that “no man in his senses and not under delusion would make on the one hand,
and . . . no honest and fair man would accept on the other.” See Hill v. Wackenhut Servs.
Int ’1, 865 F. Supp. 2d 84, 94 (D.D.C. 2012) (citation and internal quotation marks
omitted). Unfortunately for plaintiff, the Agreement does not meet that threshold.
A. Adequacy of Consideration
Plaintiff first argues that the Agreement is illusory because it gives defendant an
unfettered right to amend or revoke its terms. See Pl.’s Opp’n at 6-9, 1 1. I disagree.
An illusory contract is one that “gives consideration that is so insignificant that an actual
obligation cannot be imposed.” Amfac Resorts, LL. C. v. US. Dep ’t of Interior, 142 F.
Supp. 2d 54, 79 (D.D.C. 2001) (citation and internal quotation marks omitted).
However, because “[m]utua1 agreements to arbitrate are independently sufficient forms of
consideration,” Sapiro v. VeriSz‘gn, 310 F. Supp. 2d 208, 214 (D.D.C. 2014), the critical
question is whether the Agreement permits “optional performance by defendant,” see
Davis v. Joseph J Magnolia, Inc, 640 F. Supp. 2d 38, 45 (BBC. 2009).
Two Circuits have provided guidance on this issue in the arbitral context. Both
held that performance was not optional, and consideration therefore not illusory, when,
notwithstanding the defendant’s unilateral right to modify the contract terms, defendant
was prohibited from retroactively applying its changes to pre-existing claims. See, e. g.,
Carey v. 24 Hour Fitness, USA, Inc, 669 F.3d 202, 205, 207 (5th Cir. 2012); Hardin v.
First Cash Fin. Servs. Inc, 465 F.3d 470, 478-79 (10th Cir. 2006). The situation here is
analogous.
Plaintiff is correct that defendant may unilaterally modify the Program. See
Def.’s Mot. Ex. 2 fl 16.3. But defendant’s discretion is by no means unbounded. First,
defendant must provide 14 days advance notice of its changes. Id; Def.’s Mot. Ex. 1 ii 5.
Second, any ensuing modifications will not “apply to any claim that has already been
submitted” for arbitration. Def.’s Mot. Ex. 2 1] 16.3; Def,’s Mot. Ex. 1 1i 5. Not only
does the Agreement prevent defendant from retroactively revoking plaintiff 5 right to
arbitrate, but it also gives plaintiff the option to litigate the case as she wishes. Simply
stated, once plaintiff receives notice of defendant’s decision to amend the Program, she
has two choices. She can either file her claim under the old Program, or, if she prefers
the terms of the amended Program, she may delay and file under the new program. The
parties, then, enjoy a parity of choice, but not one that creates “optional” performance.2
Accordingly, I find that the Agreement is not illusory.
B. Availability of Punitive Damages
Plaintiff next argues that the Agreement is invalid because it unlawfully restricts
punitive damages. See Pl.’s Opp’n at 9-10, 11. 1 disagree. To be enforceable,
arbitration agreements must allow litigants to vindicate their statutory rights in an arbitral
forum. See Gilmer, 500 US. at 28. As such, arbitration agreements must “provide[] for
all ofthe types of relief that would otherwise be available in court.” Cole v. Burns 1m"!
Sec. Servs., 105 F.3d 1465, 1482 (DC. Cir. 1997). The Program’s exclusion ofpunitive
damages is hardly fatal to the Agreement. Because the FMLA only affords relief for
compensatory damages, punitive damages are unavailable irrespective of the forum. See,
e.g., Roseboro v. Billinglon, 606 F. Supp. 2d 104, 108 (D.D.C. 2009); Coleman v.
Potomac Elec. Power Co, 281 F. Supp. 2d 250, 254 (D.D.C. 2003). Accordingly, I find
nothing substantively unconscionable about an Agreement that restricts plaintiffs
remedies to those she is statutorily due.
2 Indeed, the two cases plaintiff invokes demonstrate that notice of impending changes and limits
on a party’s ability to retroactively modify the agreement are, in fact, adequate consideration.
See citing In re Halliburton C0,, 80 S.W.3d 566, 570 (Tex. 2002) (holding that an arbitration
agreement was not illusory because it required, among other things, 10-day advance notice of any
amendments); In re Odyssey Healthcare, Inc, 310 S.W.3d 419, 424 (Tex. 2010) (holding that the
arbitration agreement was not illusory because defendant could not retroactively modify the
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C. Arbitral Fees
Plaintiff’s final contention is that the Agreement is unconscionable because it
requires her to pay a $125.00 filing fee and, in addition, to split the cost ofthe first
hearing day. See Pl.’s Opp’n at 10. While it is certainly possible that “large arbitration
costs could preclude a litigant . . . from effectively vindicating her federal statutory
rights,“ that is not the case here. See Green Tree Fin. Corp—Ala. v. Randolph, 531 U.S.
79, 90 (2000). First, with regard to the $125.00 filing fee, plaintiff is not entitled to a
free ride. Our Circuit has explicitly rejected the notion that arbitration exists as “a
virtually cost-free alternative to traditional court proceedings.” See LaPrade v. Kidder,
Peabody & Co, Inc, 246 F.3d 702, 707 (DC. Cir. 2001). As such, litigants, regardless
of forum, may be required to bear “the cost of filing fees and other administrative
expenses.” Cole, 105 F.3d at 1484.
The fee—splitting provision is similarly unobjectionable. Where, as here, a
plaintiff “seeks to invalidate an arbitration agreement on the ground that arbitration would
be prohibitively expensive, [she] bears the burden of showing the likelihood of incurring
[prohibitively high] costs.” See Green Tree Fin. Corp, 531 US. at 92.3 Plaintiff has
terms).
3 Plaintiff relies on our Circuit’s holding in Cole v. Burns International Security Services for the
proposition that cost-splitting is per se unenforceable. See Pl.’s Opp’n at 10. Cole, however,
can be read for the narrower proposition that contracts should not make arbitration prohibitively
expensive for the plaintiff. Cole concerned an arbitration agreement that was silent as to which
party bore the costs of arbitration. See Cole, 105 F.3d at 1480-81. Concerned about
disproportionate fee shifting, our Circuit interpreted the agreement against the drafter and
required the company to pay all arbitration fees. 1d. at 1484-85. Cole’s holding is, in any
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