Rent-A-Center Inc. v. Anita Ellis

IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA
January 2019 Term FILED
_______________
April 30, 2019
released at 3:00 p.m.
No. 17-0644 EDYTHE NASH GAISER, CLERK
SUPREME COURT OF APPEALS
_______________ OF WEST VIRGINIA
RENT-A-CENTER, INC. and RENT-A-CENTER, EAST, INC.,
Defendants Below, Petitioners
v.
ANITA ELLIS,
Plaintiff Below, Respondent
____________________________________________________________
Appeal from the Circuit Court of Mercer County
The Honorable Mark Wills, Judge
Civil Action No. 16-C-375
REVERSED AND REMANDED
____________________________________________________________
Submitted: January 29, 2019
Filed: April 30, 2019
Richard Wallace, Esq. Jerome J. McFadden, Esq.
LITTLER MENDELSON, PC Law Offices of Jerome McFadden, PLLC
Charleston, West Virginia Princeton, West Virginia
Edward F. Berbarie, Esq., Pro Hac Vice James D. McQueen, Esq.
Robert F. Friedman, Esq., Pro Hac Vice McQueen Davis, PLLC
LITTLER MENDELSON, PC Huntington, West Virginia
Dallas, Texas
Counsel for the Respondent
Counsel for the Petitioners
CHIEF JUSTICE WALKER delivered the Opinion of the Court.
JUSTICE WORKMAN concurs and reserves the right to file a concurring opinion.
SYLLABUS BY THE COURT
1. “An order denying a motion to compel arbitration is an interlocutory
ruling which is subject to immediate appeal under the collateral order doctrine.” Syllabus
Point 1, Credit Acceptance Corp. v. Front, 231 W.Va. 518, 745 S.E.2d 556 (2013).
2. “When an appeal from an order denying a motion to dismiss and to
compel arbitration is properly before this Court, our review is de novo.” Syllabus Point 1,
West Virginia CVS Pharmacy, LLC v. McDowell Pharmacy, Inc., 238 W.Va. 465, 796
S.E.2d 574 (2017).
3. “A ‘delegation provision’ is a clause, within an agreement to arbitrate,
which clearly and unmistakably provides that the parties to the agreement give to the
arbitrator the power to decide the validity, revocability or enforceability of the arbitration
agreement under general state contract law.” Syllabus Point 4, Schumacher Homes of
Circleville, Inc. v. Spencer, 237 W. Va. 379, 787 S.E.2d 650 (2016).
4. “Under the Federal Arbitration Act, 9 U.S.C. § 2, there are two
prerequisites for a delegation provision to be effective. First, the language of the delegation
provision must reflect a clear and unmistakable intent by the parties to delegate state
contract law questions about the validity, revocability, or enforceability of the arbitration
agreement to an arbitrator. Second, the delegation provision must itself be valid,
i
irrevocable and enforceable under general principles of state contract law.” Syllabus Point
7, Schumacher Homes of Circleville, Inc. v. Spencer, 237 W. Va. 379, 787 S.E.2d 650(2016).
5. “Under the Federal Arbitration Act, 9 U.S.C. § 2, and the doctrine of
severability, where a delegation provision in a written arbitration agreement gives to an
arbitrator the authority to determine whether the arbitration agreement is valid, irrevocable
or enforceable under general principles of state contract law, a trial court is precluded from
deciding a party’s challenge to the arbitration agreement. When an arbitration agreement
contains a delegation provision, the trial court must first consider a challenge, under general
principles of state law applicable to all contracts, that is directed at the validity, revocability
or enforceability of the delegation provision itself.” Syllabus Point 5, Schumacher Homes
of Circleville, Inc. v. Spencer, 237 W. Va. 379, 787 S.E.2d 650 (2016).
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
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).
ii
7. “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).
8. “The omission of an ‘opt out’ provision in an agreement that permits
the signatories to reject arbitration is just one of multiple factors to consider in evaluating
a claim of procedural unconscionability. As a result, the omission of an ‘opt out’ provision
is not in itself sufficient evidence that an arbitration agreement is grossly unfair and thus
unenforceable on grounds of procedural unconscionability.” Syllabus Point 2, Nationstar
Mortg., LLC v. West, 237 W. Va. 84, 785 S.E.2d 634 (2016).
iii
WALKER, CHIEF JUSTICE:
After Respondent Anita Ellis was terminated from employment, she filed
workers’ compensation discrimination claims against Petitioners Rent-A-Center, Inc. and
Rent-A-Center East, Inc. Relying on the arbitration agreement that Respondent signed at
the time she was hired, Petitioners moved to compel arbitration. Respondent challenged
the arbitration agreement’s delegation clause, which required that any challenge to the
interpretation, applicability, enforceability or formation of the agreement be resolved by
the arbitrator and not any court, on the grounds that it was ambiguous, unconscionable and
in violation of West Virginia Code § 23-2-7 (2017). The circuit court found the delegation
clause unconscionable and refused to enforce the arbitration agreement. On appeal,
Petitioners contend that the delegation clause should have been enforced and the matter
sent to arbitration. Because the delegation clause was neither unconscionable nor
unenforceable, we reverse the circuit court and remand this case for an order compelling
arbitration.
I. FACTUAL AND PROCEDURAL BACKGROUND
When Respondent was hired by Petitioners in March of 2011 as an assistant
manager, she signed a “Mutual Agreement to Arbitrate Claims” (arbitration agreement).
The agreement states that it is governed by the Federal Arbitration Act (FAA), that it
applies mutually to both parties, and that the mutual obligation to arbitrate differences
“[p]rovide[s] consideration for each other.” The arbitration agreement includes a “Claims
Covered by the Agreement” section that states:
1
The Company and I mutually consent to the resolution
by arbitration of all claims or controversies (“claims”), past,
present or future, including without limitation, claims arising
out of my application for employment,
assignment/employment, and/or the termination of my
assignment/employment
....
. . . The claims covered by this Agreement include, but are not
limited to: . . . tort or statutory claims for discrimination
(including, but not limited to, . . . workers’ compensation); . . .
and claims for violation of any federal, state or other
governmental law, statute, regulation, or ordinance . . . .
Under the “Arbitration Procedures” section, the agreement includes the
following delegation clause:
The Arbitrator, and not any federal, state, or local court
or agency, shall have exclusive authority to resolve any dispute
relating to the interpretation, applicability, enforceability, or
formation of this Agreement, including, but not limited to, any
claim that all or part of this Agreement is void or voidable.
Just above the Respondent’s signature line on the agreement, the following
appears in bold, capitalized letters:
I ACKNOWLEDGE THAT I HAVE CAREFULLY
READ THIS AGREEMENT; THAT I UNDERSTAND ITS
TERMS; THAT ALL UNDERSTANDINGS AND
AGREEMENTS BETWEEN THE COMPANY AND ME
RELATING TO THE SUBJECTS COVERED IN THE
AGREEMENT ARE CONTAINED IN IT; AND THAT I
HAVE ENTERED INTO THE AGREEMENT NOT IN
RELIANCE ON ANY PROMISES OR
REPRESENTATIONS BY THE COMPANY OTHER THAN
THOSE CONTAINED IN THIS AGREEMENT ITSELF. I
UNDERSTAND THAT BY SIGNING THIS AGREEMENT
THE COMPANY AND I ARE GIVING UP OUR RIGHTS
2
TO A JURY TRIAL AND THAT PURSUANT TO THE
TERMS OF THIS AGREEMENT, I AM AGREEING TO
ARBITRATE CLAIMS COVERED BY THIS
AGREEMENT.
I FURTHER ACKNOWLEDGE THAT I HAVE
BEEN GIVEN THE OPPORTUNITY TO DISCUSS THIS
AGREEMENT WITH MY PRIVATE COUNSEL AND
HAVE AVAILED MYSELF OF THAT OPPORTUNITY TO
THE EXTENT THAT I WISH TO DO SO.
On April 8, 2014, Respondent injured her right shoulder while moving a
refrigerator at work. She filed a workers’ compensation claim and received temporary total
disability (TTD) benefits for the period April 23, 2014, through May 15, 2014. By letter
dated November 28, 2014, Petitioners terminated Respondent from employment effective
November 11, 2014. The stated reason for termination was Respondent’s absences from
work.
On October 8, 2015, Respondent sought to re-open her workers’
compensation claim. She was awarded TTD benefits for the period of May 19, 2014,
through December 17, 2014. Respondent then filed a complaint in the Circuit Court of
Mercer County in which she alleged that Petitioners unlawfully terminated her while she
was off work due to a compensable injury and for which she received or was eligible to
receive TTD benefits in violation of West Virginia Code §§ 23-5A-1 and -3(a) (2017).
3
Petitioners filed a motion to dismiss or stay the case and compel arbitration
arguing that Respondent’s claim is covered under the arbitration agreement. Petitioners
further argued that, to the extent Respondent challenges the enforceability or applicability
of the arbitration agreement, the agreement’s delegation clause requires that those
challenges be decided by the arbitrator and not the circuit court.
Respondent opposed Petitioners’ motion to compel on three grounds. First,
Respondent argued that the delegation clause was ambiguous and failed to reflect an
unmistakable intent by the parties to delegate to the arbitrator the determination of gateway
issues of arbitrability. Second, Respondent asserted that the delegation clause was
unconscionable under West Virginia common law contract principles. Third, Respondent
alleged that the delegation clause is invalid because it violates West Virginia Code § 23-2-
7, which provides that “[n]o employer or employee shall exempt himself from the burden
or waive the benefits of [the workers compensation statute] by any contract, agreement,
rule or regulation, and any such contract, agreement, rule or regulation shall be pro tanto
void.”
In an order entered June 22, 2017, the circuit court denied Petitioners’
motion to compel. The court determined that the arbitration agreement was both
procedurally and substantively unconscionable and that there was no mutual agreement to
arbitrate. In finding that the arbitration agreement was procedurally unconscionable, the
4
circuit court placed significance on the fact that the arbitration provision was a non-
negotiable term in an adhesion contract, and the Respondent was not permitted to opt out
of or alter the provision. The circuit court also noted that the Respondent did not have the
same level of sophistication or understanding about the arbitration clause as the Petitioners’
attorneys who drafted the language, and found that she likely had no meaningful
opportunity to seek counsel.
In finding substantive unconscionability, the circuit court determined that the
agreement substantially impaired a plaintiff’s right to pursue remedies for their losses such
as a class action suit, which was expressly waived in the agreement, and that it would
deprive the Respondent of a statutory remedy that exists to benefit and protect workers that
have the claims set forth in West Virginia Code § 23-5A-3. The circuit court also
concluded that there was a lack of a real and voluntary meeting of the minds, there was an
overall imbalance and one-sidedness to the agreement, and there was no real choice or
bargaining on the part of the Respondent, as her only alternative to signing the agreement
was not taking the job. Further, it found that the consideration for the agreement “that both
parties agree to arbitrate,” was an “illusory promise” and was therefore inadequate. This
appeal followed.
II. STANDARD OF REVIEW
5
Petitioners appeal the circuit court’s denial of its motion to compel arbitration
and to dismiss. This Court has held previously that “[a]n order denying a motion to compel
arbitration is an interlocutory ruling which is subject to immediate appeal under the
collateral order doctrine.”1 We have also held that “[w]hen an appeal from an order
denying a motion to dismiss and to compel arbitration is properly before this Court, our
review is de novo.”2 Further, “we apply a de novo standard of review to [a] circuit court’s
interpretation of [a] contract.”3 Applying this standard, we proceed to determine whether
the circuit court committed error in refusing to refer the underlying matter to arbitration.
III. ANALYSIS
The parties assert various assignments and cross-assignments of error, all of
which pertain to one central issue—whether the delegation clause in the arbitration
agreement between the parties should have been enforced. Petitioners assert that the circuit
court erred in denying their motion to compel arbitration because the delegation clause
clearly assigns the arbitrator “the exclusive authority to resolve any dispute relating to the
. . . applicability, enforceability, or formation of . . . the arbitration agreement.” Petitioners
1
Syl. Pt. 1, Credit Acceptance Corp. v. Front, 231 W.Va. 518, 745 S.E.2d 556(2013).
2
Syl. Pt. 1, West Virginia CVS Pharmacy, LLC v. McDowell Pharmacy, Inc., 238
W.Va. 465, 796 S.E.2d 574 (2017).
3
Zimmerer v. Romano, 223 W.Va. 769, 777, 679 S.E.2d 601, 609 (2009).
6
contend that in Rent-A-Center, West, Inc. v. Jackson,4 the United States Supreme Court
enforced the identical delegation clause and found that it clearly delegated the gateway
issues of arbitrability to the arbitrator. Thus, Petitioners contend the FAA mandates that
an arbitrator and not the circuit court should have determined whether the arbitration
agreement is unenforceable.5
Reiterating the arguments she made below, Respondent asserts that the
delegation clause is (1) ambiguous and fails to reflect an unmistakable intent to delegate to
the arbitrator the determination of gateway issues of arbitrability; (2) unconscionable under
West Virginia common law contract principles; and (3) invalid because it violates West
Virginia Code § 23-2-7. Before we consider the parties’ arguments, we set forth the legal
framework that controls the arbitration agreement and delegation clause at issue.
A. Delegation of Arbitrability
As the United States Supreme Court has explained, “[p]arties can agree to
arbitrate ‘gateway’ questions of ‘arbitrability,’ such as whether the parties have agreed to
arbitrate or whether their agreement covers a particular controversy.”6 This can be
4
561 U.S. 63 (2010).
5
See id. at 70 (“An agreement to arbitrate a gateway issue is simply an additional
antecedent agreement the party seeking arbitration asks the federal court to enforce, and
the FAA operates on this additional arbitration agreement just as it does on any other.”).
6
Id. at 68-69.
7
accomplished by a specific term in the arbitration agreement, known as a delegation
provision. As we have held, “[a] ‘delegation provision’ is a clause, within an agreement
to arbitrate, which clearly and unmistakably provides that the parties to the agreement give
to the arbitrator the power to decide the validity, revocability or enforceability of the
arbitration agreement under general state contract law.”7
In discussing delegation provisions, we have described their purely
contractual nature:
The way that courts treat a delegation provision within
an arbitration agreement should reflect the principle that
arbitration is purely a matter of contract. In their contract, the
parties may agree that questions about the validity, revocability
or enforceability of an arbitration agreement under state
contract law will be delegated from a court to an arbitrator.
“Because the parties are the masters of their collective fate,
they can agree to arbitrate almost any dispute—even a dispute
over whether the underlying dispute is subject to arbitration.”[8]
In considering a challenge to the same arbitration agreement we examine in
this case, the United States Supreme Court discussed how the severability doctrine applies
to delegation provisions in Rent-A-Center, West. In that case, Jackson filed an
employment-discrimination suit against Rent-A-Center in a Nevada federal court. Rent-
A-Center filed a motion to dismiss or stay the proceedings and to compel arbitration based
7
Syl. Pt. 4, Schumacher Homes of Circleville, Inc. v. Spencer, 237 W. Va. 379, 787
S.E.2d 650 (2016).
8
Id. at 389, 787 S.E.2d at 660 (citing Bruni v. Didion, 73 Cal.Rptr.3d 395, 407
(Cal.Ct.App. 2008)) (footnotes omitted).
8
on the arbitration agreement Jackson signed as a condition of his employment.9 Rent-A-
Center asserted that the arbitration agreement had a provision delegating to the arbitrator,
“exclusive authority to resolve any dispute relating to . . . the enforceability” of the
arbitration agreement.10 In response, Jackson contended that the arbitration agreement was
unenforceable because it was unconscionable under state law.11 Importantly, Jackson did
not challenge the delegation provision separate from the arbitration agreement. The district
court agreed with Rent-A-Center and compelled arbitration.12 On appeal, the Ninth Circuit
reversed, holding that where “a party challenges an arbitration agreement as
unconscionable, and thus asserts that he could not meaningfully assent to the agreement,
the threshold question of unconscionability is for the court.”13
In reversing the Ninth Circuit, the Supreme Court severed the delegation
provision from the remainder of the arbitration agreement and explained that, unless
Jackson challenged the delegation provision specifically, it must be treated as valid and
must be enforced, leaving any challenge to the to the validity of the arbitration agreement
9
Rent-A-Center, West, 561 U.S. at 65.
10
Id. at 66.
11
Id.12
See Jackson v. Rent-A-Center, West, Inc., 2007 WL 7030394, *2 (D.Nev. June 7,
2007).
13
See Jackson v. Rent-A-Center, West, Inc., 581 F.3d 912, 917 (9th Cir. 2009).
9
as a whole for the arbitrator.14 It concluded that Jackson had only challenged the validity
of the contract as a whole because he raised a challenge to the delegation provision for the
first time in his appeal to the Supreme Court, which the Court determined was too late and
would not be considered.15 However, the high court went on to illustrate how Jackson
could have argued that the delegation provision, as opposed to the arbitration agreement as
a whole, was “unconscionable”—and therefore unenforceable—because of the limitations
on arbitral discovery and the fee-splitting procedures. It reasoned:
Jackson’s other two substantive unconscionability
arguments assailed arbitration procedures called for by the
contract—the fee-splitting arrangement and the limitations on
discovery—procedures that were to be used during arbitration
under both the agreement to arbitrate employment-related
disputes and the delegation provision. It may be that had
Jackson challenged the delegation provision by arguing that
these common procedures as applied to the delegation
provision rendered that provision unconscionable, the
challenge should have been considered by the court. To make
such a claim based on the discovery procedures, Jackson would
have had to argue that the limitation upon the number of
depositions causes the arbitration of his claim that the
[arbitration] Agreement is unenforceable to be unconscionable.
That would be, of course, a much more difficult argument to
sustain than the argument that the same limitation renders
arbitration of his factbound employment-discrimination claim
unconscionable. Likewise, the unfairness of the fee-splitting
arrangement may be more difficult to establish for the
arbitration of enforceability than for arbitration of more
complex and fact-related aspects of the alleged employment
discrimination. Jackson, however, did not make any
arguments specific to the delegation provision; he argued that
14
Rent-A-Center, West, 561 U.S. at 72.
15
Id. at 75–76 (citing Penn Plaza LLC v. Pyett, 556 U.S. 247, 273-74 (2009)).
10
the fee-sharing and discovery procedures rendered the entire
Agreement invalid.[16]
We examined the Rent-A-Center, West holding in Schumacher Homes of
Circleville, Inc. v. Spencer (Schumacher Homes II),17 and held that delegation clauses will
be enforced if there is a “clear and unmistakable intent” to delegate these gateway issues
to the arbitrator, and if the delegation provision is valid and enforceable under general
principles of state contract law.18 In Schumacher Homes II, the petitioner argued that the
arbitration agreement delegated questions regarding unconscionability to the arbitrator for
resolution. The arbitration clause in the contract in that case stated, “that any claim, dispute
or cause of action, of any nature . . . shall be subject to final and binding arbitration by an
arbitrator[.]”19 The arbitration clause also included language that Schumacher contended
was a delegation provision, stating, “[t]he arbitrator(s) shall determine all issues regarding
16
Id. at 74 (emphasis in original).
17
237 W.Va. 379, 787 S.E.2d 650 (2016).
18
See id. at Syl. Pt. 7 (“Under the Federal Arbitration Act, 9 U.S.C. § 2, there are
two prerequisites for a delegation provision to be effective. First, the language of the
delegation provision must reflect a clear and unmistakable intent by the parties to delegate
state contract law questions about the validity, revocability, or enforceability of the
arbitration agreement to an arbitrator. Second, the delegation provision must itself be valid,
irrevocable and enforceable under general principles of state contract law.”).
19
Id. at 384, 787 S.E.2d at 655.
11
the arbitrability of the dispute.” Nowhere in the contract was the term “arbitrability”
defined for the parties.20
Applying Rent-A-Center, West, we determined in Schumacher Homes II that
because a delegation provision is a mini-arbitration agreement divisible from both the
broader arbitration clause and the even broader contract in which the delegation provision
and arbitration clause are found, a party must specifically object to the delegation provision
in order for a court to consider the challenge.21 A party resisting delegation to an arbitrator
of any question about the enforceability of an arbitration agreement must specifically
challenge the delegation provision first.22 To that end, we held that:
Under the Federal Arbitration Act, 9 U.S.C. § 2, and the
doctrine of severability, where a delegation provision in a
written arbitration agreement gives to an arbitrator the
authority to determine whether the arbitration agreement is
valid, irrevocable or enforceable under general principles of
state contract law, a trial court is precluded from deciding a
party’s challenge to the arbitration agreement. When an
arbitration agreement contains a delegation provision, the trial
court must first consider a challenge, under general principles
of state law applicable to all contracts, that is directed at the
validity, revocability or enforceability of the delegation
provision itself.[23]
We also explained the practical effect of this holding:
20
Id.21
Id. at 389-90, 787 S.E.2d. at 660-61.
22
Id.
23
Id. at Syl. Pt. 5.
12
[u]nder this rule, if the trial court finds the delegation
provision to be effective, then the case must be referred to the
parties’ arbitrator who can then decide if the arbitration
agreement is invalid, revocable or unenforceable. Conversely,
if the delegation provision is ineffective on a ground that exists
at law or in equity for the revocation of any contract, then the
trial court may examine a challenge to the arbitration
agreement.[24]
Similar to the facts presented in Rent-A-Center, West, the home buyer in
Schumacher II never specifically challenged the delegation language before the circuit
court or this Court. So, we held that the home buyer waived any right to challenge the
delegation language and we remanded the case to the circuit court and directed that the
parties’ dispute regarding the validity, revocability, or enforceability of the arbitration
agreement be referred to arbitration.25
B. Challenging the Delegation Clause
Although we acknowledged that the rule created by the Supreme Court in
Rent-A-Center, West seemed to be “intricate and complex,” we made it clear in
Schumacher Homes II that it is possible to oppose enforcement of a delegation provision.
As we cautioned, “the FAA does not require all claims to be sent to arbitration merely
24
Id. at 390, 787 S.E.2d at 661.
25
Id. at 392, 787 S.E.2d at 663.
13
because there is a delegation provision.”26 Because delegation clauses and “agreements to
arbitrate are severable does not mean that they are unassailable.”27
(1) Clear and Unmistakable Intent
In determining whether the delegation clause in this case is enforceable, we
must first discern whether the language of the delegation provision reflects “a clear and
unmistakable intent by the parties to delegate state contract law questions about the
validity, revocability and enforceability of the arbitration agreement to an arbitrator.”28 As
we explained in Schumacher Homes II, “[c]ourts should not assume that the parties agreed
to arbitrate arbitrability unless there is ‘clear and unmistakable’ evidence that they did
so.”29 “Parties are only bound to arbitrate those issues that by clear and unmistakable
writing they have agreed to arbitrate,” and an “agreement to arbitrate will not be extended
by construction or implication.”30 The “clear and unmistakable” test reflects a “heightened
26
Id. at 391, 787 S.E.2d at 662.
27
Id. (citing Rent-A-Center, West, 561 U.S. at 71).
28
Id. at Syl. Pt. 7.
29
Id. at 391, 787 S.E.2d at 662 (citing First Options of Chicago, Inc. v. Kaplan, 514
U.S. at 944.)
30
Id. (citing Syl. Pt. 10, Brown v. Genesis Healthcare Corp., 228 W. Va. 646, 724
S.E.2d 250 (2011) (“Brown I”), overruled on other grounds by Marmet Health Care
Center, Inc. v. Brown, 565 U.S. 530 (2012)).
14
standard” of proof of the parties’ “manifestation of intent.”31 This heightened standard was
adopted
because the question of who would decide the
unconscionability of an arbitration provision is not one that the
parties would likely focus upon in contracting, and the default
expectancy is that the court would decide the matter. Thus, the
Supreme Court has decreed, a contract’s silence or ambiguity
about the arbitrator’s power in this regard cannot satisfy the
clear and unmistakable evidence standard.[32]
Respondent contends the delegation clause is ambiguous—meaning that it
does not clearly and unmistakably reflect the parties’ intent to arbitrate the question of
arbitrability—because it does not state that the arbitrator shall determine what is
“arbitrable” nor is it explicitly labeled as a “delegation clause.” The delegation clause in
this case states:
The Arbitrator, and not any federal, state, or local court or
agency, shall have exclusive authority to resolve any dispute
relating to the interpretation, applicability, enforceability or
formation of this Agreement including, but not limited to, a
claim that all or any part of this Agreement is void or voidable.
Respondent asserts that the scope of the arbitrator’s authority is unclear, as it is uncertain
whether the authority given to the arbitrator is given in the context of the “run-of-the-mill”
disputes and claims that are being arbitrated, or whether this authority grants the arbitrator
the power to address gateway issues of arbitrability. Respondent further contends that
31
Id. (citing Rent-A-Center, 561 U.S. at 70 n.1).
32
Id. (citing Ajamian v. CantorCO2e, L.P., 137 Cal.Rptr.3d 773, 782 (Cal.Ct.App.
2012)).
15
because the agreement is ambiguous, Petitioners fail to meet their burden of proof to reflect
an unmistakable intent to delegate to the arbitrator the determination of gateway issues of
arbitrability. Thus, the delegation clause must be construed against Petitioners and in favor
of Respondent.
Petitioners counter that the delegation clause is not ambiguous because it
states that it provides “exclusive authority” to the arbitrator “to resolve any dispute relating
to the interpretation, applicability, enforceability, or formation of this Agreement,
including, but not limited to, any claim that all or part of this Agreement is void or
voidable.” Petitioners argue that the delegation provision could not be clearer and was
upheld in Rent-A-Center, West.
In Rent-A-Center, West, Jackson did not dispute the district court’s finding
that the agreement to arbitrate clearly and unmistakably provided the arbitrator with the
exclusive authority to decide whether the agreement was enforceable, and the delegation
clause was not specifically challenged. So, the high court enforced the delegation clause
and this issue was not addressed on the merits.33 But, when we examine the delegation
33
See Jackson v. Rent-A-Center, West, 561 U.S. at 69 n.1 (noting that “Jackson did
not dispute [before the Ninth Circuit or the Supreme Court] that the text of the Agreement
was clear and unmistakable.”); see also Kabba v. Rent-A-Center, Inc., 730 Fed.Appx. 141,
143 (2018) (“[T]he mere fact that the Supreme Court upheld the exact agreement as valid
in Rent-A-Center does not answer the question of whether the parties in this case
manifested an intention to be bound by the same agreement.”)
16
clause at issue, here, we find that it clearly and unmistakably designates authority to the
arbitrator to decide whether the arbitration agreement is enforceable. In footnote twenty-
seven of Schumacher Homes II, we noted that the very delegation clause at issue in this
case, which was examined by the United States Supreme Court in Rent-A-Center, West,
provided “an example of a clear delegation provision.”34 Also, in House v. Rent-A-Center
Franchising International, Inc.,35 the United States District Court for the Southern District
of West Virginia determined that this same delegation provision was “clear and concise.”
In examining this delegation clause, the district court stated:
Language designating authority to an arbitrator cannot be made
any clearer. If agreements incorporating by reference the rules
of the American Arbitration Association (AAA), which in turn
references a delegation provision, have been upheld by courts,
surely a concise statement within the agreement itself satisfies
the clear and unmistakable test.[36]
The district court determined that “the parties’ intent is clearly and unmistakably
incorporated by the arbitration agreement, and both parties signed the documents agreeing
to be bound.”37 In light of our own previous assessment of the delegation clause at issue,
and that of the Southern District of West Virginia, we reject Respondent’s assertion that
34
Schumacher Homes II, 237 W. Va. at 389 n.27, 787 S.E.2d at 660 n.27.
35
2016 WL 7394552 (S.D.W. Va. Dec. 21, 2016).
36
House, 2016 WL 7394552 at *6 (citing U.S. ex rel. Beauchamp v. Academi
Training Ctr., Inc., No. 1:11cv371, 2013 WL 1332028, at *5 (E.D. Va. March 29, 2013)
(collecting cases from seven circuits upholding references to the AAA rules)).
37
House, 2016 WL 7394552 at *6.
17
the clause is ambiguous and find that it clearly and unmistakably demonstrates the parties’
intent to delegate the issues of arbitrability to the arbitrator.
(2) Validity
We must next decide, under Schumacher Homes II, whether the delegation
clause itself is valid, irrevocable and enforceable under general principles of state contract
law. On this issue, we stated in Schumacher Homes II that:
Questions about the validity, revocability, and
enforceability of a provision delegating a problem with the
enforceability or scope of an arbitration clause are resolved by
looking to state contract law. “When deciding whether the
parties agreed to arbitrate a certain matter (including
arbitrability), courts generally . . . should apply ordinary state-
law principles that govern the formation of contracts.”[38]
We also explained that “[n]othing 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.”39 We made it clear that “[a]ny generic state-law contract
principle may be employed to invalidate a severed delegation provision within an
38
Schumacher Homes II, 237 W. Va. at 391, 787 S.E.2d at 662 (citing First Options,
514 U.S. at 944).
39
Id. (citing Syl. Pt. 9, Brown I, 228 W.Va. at 657, 724 S.E.2d at 261).
18
arbitration agreement; the only caveat is that the principle cannot be aimed at arbitration
agreements alone.40
Before the circuit court and in her cross-assignments of error here,
Respondent argues that the delegation clause was invalid because it was unconscionable
under state law and in violation of West Virginia Code § 23-2-7. Petitioners contend that
the only challenge Respondent made to the delegation clause itself, in addition to her
argument that the delegation clause was ambiguous and arcane, was that the delegation
clause lacks mutuality. Thus, they argue that these were the only arguments the circuit
court should have considered. Petitioners assert that Respondent’s remaining challenges,
and all of the unconscionability grounds relied upon by the circuit court to deny Petitioners’
motion to compel, are directed at the arbitration agreement as a whole.
The circuit court’s order is not a model of clarity. Throughout its order, the
circuit court’s findings focus on the arbitration agreement generally, not the delegation
clause specifically.41 These findings lack any analysis of the law applicable to delegation
40
Id.
41
The circuit court’s order recognized that this was a challenge to the delegation
clause when it observed, “The plaintiff argues that the delegation clause in the employment
contract is unconscionable” and it specifically addressed the delegation clause holding that
“the Court FINDS and CONCLUDES that the delegation clause in the contract is
unconscionable.” However, in so finding, the circuit court improperly reasoned, “the
agreement is both procedurally and substantively unconscionable;” “enforcing the
arbitration agreement would deprive the Plaintiff from a statutory remedy that exists in
19
clauses. And, in making findings directed at the arbitration agreement as a whole, the
circuit court’s analysis fails to comport with Rent-A-Center,West.42 Despite the flaws in
the circuit court’s reasoning, after careful review of Respondent’s arguments here and
before the circuit court, we find that Respondent challenged the delegation provision itself,
rather than impermissibly focusing on the arbitration agreement as a whole. Thus, we
proceed to review the validity of the delegation clause.
(a) Unconscionability
In examining unconscionability, this Court has used a two-step approach.
“Under West Virginia law, we analyze unconscionability in terms of two components parts:
procedural unconscionability and substantive unconscionability. . . . To conclude that a
contractual term is unenforceable on grounds of unconscionability requires a finding that
West Virginia . . .;” “[t]here was a lack of a real and voluntary meeting of the minds, an
overall imbalance and one-sidedness to the agreement;” and “the consideration for the
agreement is that both sides agree to arbitrate.” (Emphasis added).
42
See Rent-A-Center, West, 561 U.S. at 74 (“It may be that had Jackson challenged
the delegation provision by arguing that these common procedures as applied to the
delegation provision rendered that provision unconscionable, the challenge should have
been considered by the court.”) (emphasis in original); see also Schumacher Homes II, at
Syl. Pt. 5; Thornton v. First Nat’l Bank Credit Card, No. 3:12-0492, 2012 WL 4356280,
at *3 (S.D. W. Va. 2012) (finding that unconscionability arguments focused on the entire
arbitration agreement were for the arbitrator to determine in light of a delegation clause
assigning to arbitration “any issue concerning the validity, enforceability or scope of this
agreement.”)
20
the provision in issue ‘is both procedurally and substantively unconscionable.’”43 We have
explained that “[a]lthough both forms of unconscionability need to be present, the court
‘should apply a sliding scale’ to determine whether a contract is unconscionable, finding
that “the more substantively oppressive the contract term, the less evidence of procedural
unconscionability [will be] required.”44 We are mindful that
“[t]he 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
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.”[45]
As we observed in Brown I, “[t]he burden of proving that a contract term is unconscionable
rests with the party attacking the contract.”46
(i) Procedural Unconscionability
In Brown I, we explained what courts should consider in assessing procedural
unconscionability:
Procedural unconscionability is concerned with
inequities, improprieties, or unfairness in the bargaining
process and formation of the contract. Procedural
43
Nationstar Mortgage, LLC v. West, 237 W. Va. 84, 88, 785 S.E.2d 634, 638
(2016) (quoting Brown I, 228 W. Va. at 658, 724 S.E.2d at 262, Syl. Pt. 20, in part).
44
Brown I at Syl. Pt. 20, in part.
45
Brown I at Syl. Pt. 12.
46
Id. at 680, 724 S.E.2d at 284.
21
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.[47]
Respondent contends that the arbitration agreement and the delegation clause
at issue are part of a contract of adhesion, as they are part of a preprinted, form contract
drafted by the defendant with no opportunity for her to alter any terms of the agreement—
a take-it-or-leave-it deal. Respondent maintains that both the arbitration agreement and the
delegation clause are procedurally unconscionable because there is grossly unequal
bargaining power and sophistication between her (a high school graduate with little
understanding of the law) and Petitioners (large corporate entities that are highly
experienced in drafting and litigating arbitration agreements and delegation clauses).
Respondent asserts that while Petitioners have extensive experience regarding the litigation
of this delegation clause, she had never before seen it and certainly not before entering into
her agreement with the Petitioners.
47
Id. at Syl. Pt. 17.
22
Respondent also argues that the circumstances under which she reviewed and
signed the document containing the delegation clause were controlled by her employer,
making it difficult for her to review and understand the clause. Respondent contends that
on her first day of employment, she was directed by her manager to sign numerous
documents in quick succession and she did not see the arbitration agreement again until the
motion to compel was filed. She argues that she was never advised that the forms she was
signing “involved legal matters;” and the delegation clause consists of “one sentence of
text” in four to five pages of “densely fine print.” She maintains that there was simply no
time for her to read the documents that were placed in front of her or to reasonably
understand the terms of the delegation clause.
Petitioners contend that their motion to compel arbitration should have been
enforced—despite the fact that the circuit court found that (1) the agreement to arbitrate
was nonnegotiable; (2) Respondent could not opt out or alter it; (3) the parties’ levels of
sophistication were unequal; (4) Respondent had no chance to seek counsel; and (5) there
was no true bargained-for exchange—because similar findings were recently rejected by
this Court in Nationstar Mortgage, LLC v. West.48
48
237 W.Va. 84, 785 S.E.2d 634 (2016).
23
In Nationstar Mortgage, LLC v. West, a case involving a mortgagee’s motion
to compel arbitration, we found that, although the arbitration agreement very likely was a
contract of adhesion, the fact that it was prepared by a party with more power, lacked an
opt-out provision allowing for some choice in the matter, and was perceived to lack
separate consideration did not make the agreement procedurally unconscionable.49
In so finding, we acknowledged the realities of consummating standardized
business transactions and the attendant unworkability of individualized bargaining, and
stated:
[c]ourts around the country have recognized that the
need for pre-printed form contracts is a stark reality of today’s
mass-production/consumer culture. Despite even severe
disparities in bargaining power, these agreements are most
often enforced, at least as long as they comport with the
reasonable expectations of the parties. A contrary rule would
slow commerce to a crawl.[50]
As we explained, contracts of adhesion are routinely executed without the signatory’s full
reading or comprehension of the specified terms:
[c]ustomers do not in fact ordinarily understand or even
read the standard terms. They trust to the good faith of the
party using the form and to the tacit representation that like
terms are being accepted regularly by others similarly situated.
But they understand that they are assenting to the terms not
49
Id. at 90–91, 785 S.E.2d at 640–41.
50
Id. at 89, 785 S.E.2d at 639 (quoting In re Managed Care Litig., No. 00-1334-
MD, 2009 WL 855963, at *5 (S.D.Fla. 2009)).
24
read or not understood, subject to such limitations as the law
may impose.[51]
We noted that in reviewing an adhesion contract, we must examine whether “it imposes
terms beyond the reasonable expectations of an ordinary person, or oppressive or
unconscionable terms.”52 Because contracts of adhesion are by definition typically
prepared by a party with more power, we did not view that factor as persuasive by itself.53
Further, in assessing the circuit court’s determination that Nationstar’s failure to include
an opt-out provision in its arbitration rider was significant in ruling on the issue of
procedural unconscionability, we held in Syllabus Point 2 that:
The omission of an “opt out” provision in an agreement that
permits the signatories to reject arbitration is just one of
multiple factors to consider in evaluating a claim of procedural
unconscionability. As a result, the omission of an “opt out”
provision is not in itself sufficient evidence that an arbitration
51
Id. at 89, 785 S.E.2d at 639 (emphasis in original) (quoting State ex rel. Dunlap
v. Berger, 211 W.Va. 549, 558, 567 S.E.2d 265, 274 (2002) (internal citations omitted)).
52
Id. (quoting Brown I, 228 W.Va. at 683, 724 S.E.2d at 287 (citation omitted);
State ex rel. Richmond American Homes v. Sanders, 228 W.Va. 125, 135, 717 S.E.2d 909,
918–19 (2011) (explaining that unconscionability analysis requires inquiry into fairness of
contract as whole based on facts and circumstances of particular case, observing that
“contractual provisions may be unconscionable in some situations but not in others”)).
53
Nationstar, 237 W. Va. at 90, 785 S.E.2d at 640 (citing Williams v. Jo-Carroll
Energy, Inc., 890 N.E.2d 566, 571 (Ill. 2008) (“[J]ust because a contract is prepared by a
party in a superior bargaining position, without allowing the other party to negotiate any
terms, does not mean that an included arbitration clause is unconscionable.”); State ex rel.
Ocwen Loan Servicing, LLC v. Webster, 232 W.Va. 341, 358, 752 S.E.2d 372, 389 (2013)
(rejecting procedural unconscionability challenge to an arbitration agreement based, in
part, on failure of record to support trial court's finding that mortgage loan borrowers
“lacked sophistication and financial knowledge to a degree that rendered the contract
unenforceable”)).
25
agreement is grossly unfair and thus unenforceable on grounds
of procedural unconscionability.[54]
Like Respondent here, the petitioners in Nationstar contended that their loan
closing was conducted in a hurried manner, not allowing the opportunity to appreciate their
relinquishment of the right to utilize the court system. In rejecting the petitioners’
argument, we noted that the petitioners were not complaining (1) that they had been denied
the right to read the arbitration agreement; (2) that they lacked the capacity to understand
the arbitration clause; (3) that they were coerced into signing the document; or (4) that they
were denied the opportunity to take more time to read and review the loan documents, or
to have a third party review them. We also reiterated that “a party to a contract has a duty
to read the instrument,”55 and the fact that the petitioners “may have signed a document
without reading it first [did] not excuse them from the binding effect of the agreements
contained in the executed document.”56 For these reasons, we find Respondent’s argument
unavailing.
54
Nationstar at Syl. Pt. 2.
55
Id. at 91, 785 S.E.2d at 641 (quoting Syl. Pt. 5, Soliva v. Shand, Morahan & Co.,
Inc., 176 W. Va. 430, 345 S.E.2d 33 (1986); Syl. Pt. 4, American States Ins. Co. v.
Surbaugh, 231 W. Va. 288, 745 S.E.2d 179 (2013); and citing Grayiel v. Appalachian
Energy Partners, 230 W.Va. 91, 101, 736 S.E.2d 91, 101 (2012) (rejecting claim of grossly
inadequate bargaining power where signatory “had ample time to seek counsel’s advice
before signing, there is no allegation that he was pressured into signing, and he signed on
his own free will.”)).
56
Id. (citing G & R Tire Distribs., Inc. v. Allstate Ins. Co., 411 A.2d 31, 34 (Conn.
1979) (recognizing that when “a person of mature years who can read and write signs or
accepts a formal written contract affecting his pecuniary interests, it is his duty to read it,
and notice of its contents will be imputed to him if he negligently fails to do so”); see also
26
Respondent also asserts that the very arcane nature of the delegation clause,
“agreeing to arbitrate issues of arbitrability,” supports the fact that there was no real and
voluntary meeting of the minds. Respondent notes that in First Options Chicago v.
Kaplan,57 Justice Breyer noted:
On the other hand, the former question—the “who (primarily)
should decide arbitrability” question—is rather arcane. A party
often might not focus upon that question or upon the
significance of having arbitrators decide the scope of their own
powers. Cf. Cox, Reflections Upon Labor Arbitration, 72
Harv.L.Rev. 1482, 1508-1509 (1959), cited in Warrior & Gulf,
363 U.S., at 583, n. 7, 80 S.Ct., at 1353, n. 7. And, given the
principle that a party can be forced to arbitrate only those issues
it specifically has agreed to submit to arbitration, one can
understand why courts might hesitate to interpret silence or
ambiguity on the “who should decide arbitrability” point as
giving the arbitrators that power, for doing so might too often
force unwilling parties to arbitrate a matter they reasonably
would have thought a judge, not an arbitrator, would decide.[58]
Conversely, Petitioners contend, and we agree, that while the issue of who
decides arbitrability is arcane when an agreement is silent or ambiguous in this regard, it
is for that very reason that FAA jurisprudence requires that parties must “clearly and
New v. GameStop, Inc., 232 W.Va. 564, 578, 753 S.E.2d 62, 76 (2013) (“‘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.’”) (internal citations omitted).
57
514 U.S. 938 (1995).
58
First Options, 514 U.S. at 945 (internal citations omitted).
27
unmistakably” agree to arbitrate questions of arbitrability in order for that agreement to be
enforceable.59 Because we have determined that the delegation clause at issue is clear and
unmistakable, this issue has no merit. For these reasons, we conclude that the grounds
relied upon by the circuit court to find the delegation clause procedurally unconscionable
were erroneous.
(ii) Substantive Unconscionability
To prevail on her unconscionability argument involving the delegation clause
at issue here, Respondent must show both procedural and substantive unconscionability, at
least in some measure.60 Because we conclude that no procedural unconscionability exists
with respect to the delegation clause, we need not evaluate whether substantive
unconscionability exists.61 But, even if Respondent had succeeded in her procedural
unconscionability argument, she has failed to demonstrate substantive unconscionability.
59
Id. at 944 (“Courts should not assume that the parties agreed to arbitrate
arbitrability unless there is ‘clear and unmistakabl[e]’ evidence that they did so.”)
60
See Dan Ryan Builders, Inc. v. Nelson, 230 W. Va. 281, 289, 737 S.E.2d 550, 558
(2012).
61
Hampden Coal Co., LLC v. Varney, 240 W. Va. 284, 295, 810 S.E.2d 286, 297
(2018) (“Mr. Varney must establish both substantive and procedural unconscionability
before the Agreement can be deemed unenforceable. . . . Inasmuch as we have determined
that the Agreement is not substantively unconscionable, we need not address the issue of
procedural unconscionability.”)
28
This Court recently reiterated in Nationstar that “the focus of substantive
unconscionability is on the nature of the contractual provisions rather than on the
circumstances surrounding the contract’s formation.”62 We stated:
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.[63]
Respondent challenges the delegation clause as substantively
unconscionable under West Virginia Code § 23-2-7 because it results in an improper
exemption from burdens and a waiver of benefits under our workers’ compensation statute.
West Virginia Code § 23-5A-3 provides, in part, that
(a) It shall be a discriminatory practice within the meaning of
section one of this article to terminate an injured employee
while the injured employee is off work due to a
compensable injury within the meaning of article four of
this chapter and is receiving or is eligible to receive
temporary total disability benefits, unless the injured
employee has committed a separate dischargeable offense.
West Virginia Code § 23-2-7 also provides that, “No employer or employee shall exempt
himself from the burden or waive the benefits of this chapter by any contract, agreement,
62
Nationstar, 237 W. Va. at 91–92, 785 S.E.2d at 641–42.
63
Id. (quoting Syl. Pt. 19, Brown I, 228 W.Va. at 658, 724 S.E.2d at 262).
29
rule or regulation, and any such contract, agreement, rule or regulation shall be pro tanto
void.” Respondent argues that § 23-5A-3 and § 23-5A-1 allow access to the circuit court
and to a jury to enforce and address claims of unlawful discrimination when the worker is
fired while in a protected status or because he or she filed a workers compensation claim.
Conversely, Petitioners maintain that because the delegation clause itself
does not affect any burdens or benefits arising under the worker’s compensation statute,
Respondent’s challenge under West Virginia Code § 23-2-7 is actually directed at the
provision of the agreement requiring arbitration of her underlying worker’s compensation
discrimination claim. We agree. Numerous courts have similarly rejected substantive
unconscionability arguments directed at the arbitration agreement, itself, rather than the
terms of the delegation provision.64 Thus, under the FAA and U.S. Supreme Court
precedent, the question of whether the parties’ arbitration agreement violates West Virginia
Code § 23-2-7 is for an arbitrator to decide, not this Court.
64
See Rent-A-Center, West, 561 U.S. at 74 (finding that plaintiff’s substantive
unconscionability arguments were not tailored to the delegation provision itself); House v.
Rent-A-Center Franchising Int’l, Inc., 2016 WL 7394552 at *5 (rejecting plaintiff’s
unconscionability arguments that were targeted at the arbitration agreement as a whole
rather than the delegation provision itself); see also May v. Nationstar Mortg., LLC, 2012
WL 3028467 at *10 (N.D.W. Va. July 25, 2012) (finding that although plaintiff challenged
delegation provision as substantively unconscionable, she failed to expand and attack the
delegation provision specifically).
30
Respondent also alleges that the delegation clause is substantively
unconscionable because it lacks mutuality. Specifically, she claims that the threshold
question of arbitrability is decided by an arbitrator who has a financial interest in ruling in
favor of the defendant and for arbitration, rather than for the plaintiff and against
arbitration. In several opinions discussing the unconscionability doctrine, we have noted
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.”65 For instance, in Brown v. Genesis Healthcare
Corp. (Brown II), we stated that:
Substantive unconscionability may manifest itself in the form
of “an agreement requiring arbitration only for the claims of
the weaker party but a choice of forums for the claims of the
stronger party.” “Some courts suggest that mutuality of
obligation is the locus around which substantive
unconscionability analysis revolves.” “Agreements to arbitrate
must contain at least ‘a modicum of bilaterality’ to avoid
unconscionability.”[66]
Petitioners contend that Respondent’s argument is antiquated and based on a
mistrust of arbitration, which has been repeatedly rejected by the United States Supreme
65
Dan Ryan Builders, Inc. v. Nelson, 230 W. Va. 281, 289, 737 S.E.2d 550, 558
(2012).
66
229 W.Va. 382, 393, 729 S.E.2d 217, 228 (2012) (internal citations omitted). See
also, State ex rel. Richmond Am. Homes of W. Va., Inc. v. Sanders, 228 W.Va. 125, 137,
717 S.E.2d 909, 921 (2011) (“In assessing substantive unconscionability, the paramount
consideration is mutuality.”).
31
Court.67 Further, they claim that the delegation clause here does not lack mutuality because
both parties are bound by it equally. It requires arbitration for “any dispute relating to the
interpretation, applicability, enforceability, or formation of this Agreement, including, but
not limited to, any claim that all or part of this Agreement is void or voidable” whether by
or against the employee or employer. Petitioners contend, and we agree, that the arbitration
agreement also contains mutual promises by both parties to arbitrate disputes covered by
the agreement, which constitutes sufficient consideration to support the agreement.68 This
mutuality is far more than the “modicum of bilaterality” required by our Court in
employment arbitration agreements.69 Thus, we find nothing in the delegation clause upon
which to conclude that it lacks mutuality.
67
See, e.g., 14 Penn Plaza, LLC v. Pyett, 556 U.S. at 269 (“At bottom, objections
centered on the nature of arbitration do not offer a credible basis for discrediting the choice
of that forum to resolve statutory antidiscrimination claims.”); Green Tree Fin. Corp. –
Ala. v. Randolph, 531 U.S. 79, 89–90 (2000) (“generalized attacks” resting on “suspicion
of arbitration” must be rejected).
68
Citizens Telecomms. Co. of W. Va. v. Sheridan, 239 W. Va. 67, 75, 799 S.E.2d
144, 152 (2017) (“mutual commitments to arbitrate alone constitute sufficient
consideration to support the contract.”) (quoting Toney v. EQT Corp., No. 13-1011, 2014
WL 2681091 at *3 (W. Va. June 13, 2014)); see also Reed v. Darden Rests., Inc., 213
F.Supp.3d 813, 818 (S.D.W. Va. 2016) (“The only consideration required to enforce an
arbitration agreement is that both parties are bound by the resolution format.”) (citing
Adkins v. Labor Ready, Inc., 303 F.3d 496, 501 (4th Cir. 2002) (“no consideration [is
required] above and beyond the agreement to be bound by the arbitration process” (internal
quotation marks and citation omitted)).
69
See Nationstar, 237 W. Va. at 92, 785 S.E.2d at 642 (“. . . rather than full
bilaterality, only a modicum of bilaterality is required to avoid a determination of
unconscionability.”); Brown II, 229 W.Va. at 393, 729 S.E.2d at 228 (“Agreements to
arbitrate must contain at least ‘a modicum of bilaterality’ to avoid unconscionability.”
(citations omitted)).
32
IV. CONCLUSION
Because we have determined that the delegation clause clearly and
unmistakably evinces the parties’ intent to send gateway questions of arbitration to an
arbitrator and that is also valid, the circuit court should have referred the parties’ arguments
about the enforceability of the arbitration agreement to the arbitrator.70 For these reasons,
we reverse the circuit court’s June 23, 2017 order, and remand the case to the circuit court
with directions to refer the Respondent’s challenge to the enforceability of the arbitration
agreement to an arbitrator, in accordance with the parties’ contract.
Reversed and remanded.
70
Schumacher Homes II, 237 W. Va. at 392, 787 S.E.2d at 663.
33