Opinion
3:23-cv-1012-JR
02-05-2024
CHRISTOPHER ACKERMAN, an Individual, Plaintiff, v. BRIDGETOWN NATURAL FOODS LLC, a foreign corporation, Defendant.
FINDINGS AND RECOMMENDATION
Jolie A. Russo United States Magistrate Judge.
Plaintiff, Christopher Ackerman, brings this action alleging defendant, Bridgetown Natural Foods, engaged in employment discrimination and retaliation. Defendant moves to compel arbitration and dismiss this case. For the reasons stated below, the motion to compel arbitration is granted and this action is dismissed.
ALLEGATIONS
Plaintiff alleges he suffers from a hearing loss disability and urticaria. Complaint (ECF 1) at ¶¶ 5, 7. Plaintiff alleges defendant Bridgetown Natural Foods employed him as a mixer operator on January 9, 2020, and knew of his disability upon hire. Id. at ¶¶ 6, 8.
Plaintiff alleges mask requirements during the COVID-19 pandemic exacerbated his hearing disability at work because he no could longer read lips. Id. at ¶ 9. Plaintiff filed a complaint against his supervisor for wrongly insisting plaintiff “could hear him.” Id.
Plaintiff further alleges the hives caused by urticaria were exacerbated by the excessive heat present during his employment in 2021. Id. at ¶ 11. As a result of the hives and hearing issues, plaintiff requested intermittent leave under the FMLA and OFLA which defendant approved in March 2021. Id. at ¶ 13.
In June 2021, plaintiff alleges he filed OSHA and BOLI complaints regarding unsafe work conditions and discrimination in June of 2021. Id. at ¶ 14. Plaintiff alleges that despite approval for intermittent absences because of his conditions, he received a disciplinary warning for “no-call no-show” violations in October 2021 and defendant used those violations against plaintiff in its response to the BOLI complaint. Id. at ¶¶ 15, 16.
On October 19, 2021, defendant informed plaintiff he had exhausted OFLA leave and requested additional information as to his required accommodations. Id. at ¶ 17. Plaintiff alleges he responded with a doctor's note stating he required continued intermittent leave. Id. at ¶ 19.
Plaintiff asserts he suffered an on-the-job- injury on or about October 19, 2021, and filed a worker's compensation claim. Plaintiff alleges he was off work due to the injury beginning November 2-29, 2021, and released to return to work with modified work restrictions on November 30, 2021. Id. at ¶ 20.
Plaintiff alleges he notified defendant on November 5, 2021, that he had surgery scheduled on November 30, 2021, to repair bones in his ear which required two weeks of medical leave. Plaintiff alleges defendant told him “no additional paperwork was necessary.” Id. at ¶¶ 21-22. However, plaintiff asserts defendant informed him on November 29, 2021, that he was out of OFLA leave. Plaintiff informed defendant he could not reschedule the surgery. Id. at ¶ 23. Plaintiff alleges that even though he had been waiting months for the surgery due to the pandemic, and paid a non-refundable $1200 deposit, defendant informed him that if he followed through with the procedure and missed work, he would be fired. Id. at ¶¶ 24, 25. Plaintiff alleges that on December 3, 2021, defendant terminated his employment for violation of attendance policy and for failing to report or call in to work from November 20 through December 2, 2021. Id. at ¶ 26.
Plaintiff alleges:
Bridgetown violated the law by failing to accommodate Plaintiff's disabilities and by retaliating against him for taking medical leave and for having disabilities. Substantial evidence shows that Bridgetown unlawfully subjected Plaintiff to discriminatory terms and conditions of employment because he invoked the protections of OFLA and the ADA, by subjecting him to disciplinary action, denying him reasonable accommodations and unlawfully terminating his employment because he invoked the protections of the Workers' Compensation Act, and the ADA.Id. at ¶ 27.
Plaintiff asserts claims for unlawful disability discrimination under the Americans with Disabilities Act and Or. Rev. Stat. § 659A.112, unlawful retaliation for filing an OSHA complaint and asserting his rights under the Worker's Compensation Act, as well as for violation of the Family Medical Leave Act and Oregon Family Leave Act. Defendant moves to compel arbitration and to dismiss plaintiff's complaint based on a written arbitration provision in the Offer of Employment.
DISCUSSION
Under the Federal Arbitration Act (FAA), 9 U.S.C. §§ 1-4, any arbitration agreement within its scope is enforceable and district courts must direct parties to proceed to arbitration on issues covered by a signed arbitration agreement. Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000). The Court's role under the FAA is therefore limited to determining: (1) whether a valid agreement to arbitrate exists, and if it exists; (2) whether the agreement encompasses the dispute at issue. Id.
The Offer Letter provides:
Binding Arbitration:
You and the Company agree that any claim or dispute arising out of or relating to this offer letter, or the breach thereof, or based upon you r employment relationship or the termination thereof (including, but not limited to, any tort claim, wage claim, meal and rest period claim, sick leave claim, leave period claim (such as FM LA), wrongful termination claim, discrimination claim, harassment claim, or any claim based upon any ordinance, statute, regulation, administrative rule, judicial decision, or common law related to, involving or interpreting the employment relationship) with the Company (but excluding workers' compensation and unemployment insurance claims) shall be resolved exclusively through binding arbitration. The arbitration shall he conducted in Portland, Oregon by and under the rules of the Arbitration Service of Portland that are then in effect. To see the rules currently in effect, you may visit http://www.arbserve.com/pages/proceduralrules14.htm. The dispute shall be submitted to a single arbitrator to be mutually agreed upon by the patties. If the parties cannot agree on a single arbitrator, each party shall appoint one arbitrator, who shall then jointly appoint a single arbitrator. The arbitrator shall give effect to applicable statues of limitations and any other applicable laws and regulations, including those allowing for the award of attorneys' fees, costs, and disbursement to the prevailing party. Any controversy concerning whether an issue can be arbitrated shall he determined by the arbitrator. Judgment upon the arbitration award may be entered in any court having competent jurisdiction. The administrative costs of arbitration (arbitrator's fee, filing fees, hearing venue rental fee, etc.) shall be borne equally by you and the Company, except that, in total, you shall not be required to pay any such fees that exceed what you would have paid if the matter had been brought in a court of law. Either party may seek injunctive relief from a court of law to prevent or stop damages that may arise while awaiting arbitration of any claim, such as damages that may arise from the disclosure of confidential information or solicitation of customers or employees.Offer of Employment dated January 6, 2020 (ECF 9-1) at p. 2.
Plaintiff does not dispute that the agreement to arbitrate covers the claims raised in his complaint. Rather, plaintiff asserts arbitration violates his constitutional right to a jury trial that he did not waive, and the clause is unconscionable and therefore unenforceable. Plaintiff also asserts the clause is voidable under state law and void as against public policy.
A. Right to a Jury Trial
A recurring theme in plaintiff's opposition to the agreement to arbitrate is that the Seventh Amendment Right to a jury trial provides multiple grounds for preventing enforcement of the agreement.
The FAA applies to arbitration agreements arising out of transactions in interstate commerce. See, e.g., Sanders v. Concorde Career Colleges, Inc., 2017 WL 1025670, at *2 (D. Or. Mar. 16, 2017). Plaintiff asserts the intra-state nature of his employment agreement exceeds Congressional authority under the Commerce Clause to apply the FAA and that the FAA violates his right to a jury trial. However, Bridgetown Natural Foods is a Delaware limited liability company and manufactures snack brands distributed throughout the United States. Supplemental Declaration of Vice President of Human Resources Gina Delahunt (ECF 13) at pp. 1-2. The manufacture of these products occurs at Bridgetown's facilities in southeast Portland where plaintiff works as a mixer. Id. at p. 2. Congress' Commerce Clause power may be exercised in individual cases without showing any specific effect upon interstate commerce if, in the aggregate, the economic activity in question would represent a general practice subject to federal control. Citizens Bank v. Alafabco, Inc., 539 U.S. 52, 56-57 (2003). Because the FAA encompasses a wider range of transactions than those actually in commerce, i.e., within the flow of interstate commerce, plaintiff's employment as a mixer for a company that distributes its product throughout the United States, is subject to federal control generally and the FAA specifically. See Id. at 56. In addition, the FAA does not violate the right to a jury trial.
Plaintiff asserts the right to a jury trial under the Seventh Amendment to the United States Constitution supersedes any presumption in favor of arbitration in the FAA. Plaintiff agrees that the right to a jury trial can be waived but only if such waiver is voluntary, knowing, and intelligent.
As such, plaintiff notes that Oregon State law requires a clear statement above the signature line that the employment agreement contains an arbitration clause and provides employees three days to consider the consequences of any waiver. See Or. Rev. Stat. § 36.620(5) and (6). Plaintiff argues the arbitration clause at issue is voidable under the Oregon Statute because he was not given three days to review it and it did not have the statutorily mandated language calling attention to the arbitration clause.
Plaintiff also asserts the arbitration clause is unconstitutional because it does not specifically inform the employee that he has a right to a jury trial arguing that such a waiver cannot be made without providing Miranda like warnings. However, plaintiff provides no authority for such a proposition in the civil context.
In this federal question case, federal law governs pretrial jury trial waivers and thus federal courts apply federal and not state law in determining whether to enforce an arbitration provision. See In re Cnty. of Orange, 784 F.3d 520, 526-27, 529, n. 4 (9th Cir. 2015) (A party's right to a jury trial in federal court is a federal issue controlled by federal law, and even in diversity cases, the FAA permits pre-dispute jury trial waivers). In addition, while the right to civil jury trial is a fundamental constitutional right, it may be waived by a contract knowingly and voluntarily executed. Applied Elastomerics, Inc. v. Z-Man Fishing Prod., Inc., 521 F.Supp.2d 1031, 1044 (N.D. Cal. 2007). Here the three-page offer of employment has seven discreet underlined clauses including: Compensation and Benefits, Terms of Employment, Binding Arbitration, Class Action Ban, Opt-out of Class Action Ban, Severability, and Confidentiality and Non-Solicitation Agreement. Offer of Employment dated January 6, 2020 (ECF 9-1). The Arbitration provision at the top of page two is plainly visible, it unmistakably requires arbitration and clearly binds the parties to arbitration. The inclusion of the arbitration provision in the employment agreement does not violate plaintiff's Seventh Amendment Rights.
Moreover, as noted above, federal law and not state law applies to the Court's analysis of this provision. Indeed, through enactment of the FAA, Congress intended to foreclose state legislative attempts to undercut the enforceability of arbitration agreements. Tapley v. Cracker Barrel Old Country Store, Inc., 448 F.Supp.3d 1143, 1148 (D. Or. 2020). Thus, Or. Rev. Stat. § 36.620 is preempted by the FAA. Id. B. Public Policy
Plaintiff asserts the arbitration provision is void because the waiver of his right to a jury trial was not voluntary. However, as noted above, the waiver was knowing and voluntary and the FAA permits pre-dispute waivers. To the extent plaintiff also asserts the provision is void as contrary to the Seventh Amendment and/or Oregon law, as noted above, the FAA permits knowing pre-dispute waivers and preempts state law.
C. Enforceability
Plaintiff also relies on ordinary principles of contract interpretation to argue the clause is not enforceable. To determine enforceability of the clause, the Court applies ordinary state-law principles that govern the formation of contracts. See First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995). Plaintiff asserts the provision is unconscionable.
Whether the facts support a determination of unconscionability is a question of law to be decided based on the facts in existence at the time the contract was made. Best v. U.S. National Bank, 303 Or. 557, 560, 739 P.2d 554, 556 (1987). The party asserting unconscionability bears the burden of demonstrating that the provision in question is unconscionable. W.L. May Co. v. Philco-Ford Corp., 273 Or. 701, 707, 543 P.2d 283, 286 (1975).
The test for unconscionability has both procedural and substantive components. Procedural unconscionability refers to the conditions of contract formation and two factors: oppression and surprise. Oppression exists when there is inequality in bargaining power between the parties, resulting in no real opportunity to negotiate the terms of the contract and the absence of meaningful choice. Vasquez-Lopez v. Beneficial Oregon, Inc., 210 Or.App. 553, 567, 152 P.3d 940, 948 (2007). Substantive unconscionability focuses on whether the substantive terms unfairly favor the party with greater bargaining power. Id.
The primary focus ... appears to be relatively clear: Substantial disparity in bargaining power, combined with terms that are unreasonably favorable to the party with the greater power may result in a contract or contractual provision being unconscionable. Unconscionability may involve deception, compulsion, or lack of genuine consent, although usually not to the extent that would justify rescission under the principles applicable to that remedy. The substantive fairness of the challenged terms is always an essential issue.Carey v. Lincoln Loan Co., 203 Or.App. 399, 422-23, 125 P.3d 814, 828 (2005).
Plaintiff contends he has grossly unequal bargaining power with defendant, was given a take-it-or-leave-it contract with no opportunity to negotiate, experienced surprise with a buried clause, and defendant gave him the contract to sign on the same day he started work. However, the complaint establishes plaintiff's first day of employment was January 9, 2020, but defendant provided the contract with plaintiff's signature dated January 6, 2020. Offer of Employment dated January 6, 2020 (ECF 9-1) at p. 3. Moreover, the offer gave plaintiff three days to return the signed agreement. In addition, as noted above, the provision was conspicuously visible in the short offer of employment agreement and applies equally to both parties except that it actually limits plaintiff's share of the arbitration costs to no more than what he would pay to bring the case in a court of law.
Moreover, “more than a contract of adhesion and unequal bargaining power is required to void an arbitration clause.” Fuqua v. Kenan Advantage Grp., Inc., 2012 WL 2861613, at *10 (D. Or. Apr. 13, 2012), adopted, 2012 WL 2861660 (D. Or. July 11, 2012); Willis v. Nationwide Debt Settlement Group, 878 F.Supp.2d 1208, 1222 (D. Or. 2012) (contract of adhesion alone insufficient to establish unconscionability); Wilson v. Bristol-Myers Squibb Co., 2018 WL 2187443, at *5 (D. Or. May 11, 2018) (under Oregon law, “‘take-it-or-leave it' arbitration contracts in the context of beginning new employment are not procedurally unconscionable”); Motsinger v. Lithia Rose-FT, Inc., 211 Or.App. 610, 615-17, 156 P.3d 156 (2007) (unequal bargaining power is insufficient alone to invalidate an arbitration clause without some evidence of deception, compulsion, or unfair surprise). As noted above, the provision is conspicuous and unambiguous in stating that all disputes will be resolved exclusively by arbitration. The arbitration provision is not procedurally or substantively unconscionable.
D. Applicability of 9 U.S.C. § 402(b)
Plaintiff asserts the FAA, pursuant to 2022 amendments, reserves to the federal courts the right to interpret the arbitrability of a contract. This section merely reserves to the federal courts the applicability of Chapter 4 of the FAA to an agreement to arbitrate and the validity and enforceability of an agreement to which the chapter applies rather than an arbitrator. Chapter 4 applies to allegations of conduct constituting a sexual harassment dispute or sexual assault dispute. 9 U.S.C.A. § 402(a). Plaintiff alleges no such conduct.
To the extent plaintiff asserts he has a right to a jury trial under 9 U.S.C. § 4 to contest whether the complaint is subject arbitration, there is no material dispute as to the making of the agreement and plaintiff has waived such right at any rate. See Burch v. P.J. Cheese, Inc., 861 F.3d 1338, 1349 (11th Cir. 2017) (Section 4 requires plaintiff to demand a jury trial on an issue related to the making of an arbitration agreement.). Plaintiff submitted a general jury demand as part of his complaint and did not set forth the specific issue related to the making of the arbitration agreement as required by section 4. Moreover, arbitrability issues can be delegated to the arbitrator as well. Momot v. Mastro, 652 F.3d 982, 988 (9th Cir. 2011) (the question of arbitrability is left to the court unless the parties clearly and unmistakably provide otherwise). The parties clearly and unmistakably expressed such intent.
Because all of the claims are subject to arbitration, the Court dismisses this action. See Johnmohammadi v. Bloomingdale's, Inc., 755 F.3d 1072, 1074 (9th Cir. 2014) (notwithstanding the language of 9 U.S.C. § 3, a district court may either stay the action or dismiss it outright when it determines that all of the claims raised in the action are subject to arbitration).
CONCLUSION
Defendant's motion to compel arbitration (ECF 8) should be granted. In addition, because all claims are subject to arbitration, the Court should dismiss this action. A judgment should enter.
This recommendation is not an order that is immediately appealable to the Ninth Circuit Court of Appeals. Any notice of appeal pursuant to Rule 4(a)(1), Federal Rules of Appellate Procedure, should not be filed until entry of the district court's judgment or appealable order. The parties shall have fourteen (14) days from the date of service of a copy of this recommendation within which to file specific written objections with the court. Thereafter, the parties shall have fourteen (14) days within which to file a response to the objections. Failure to timely file objections to any factual determination of the Magistrate Judge will be considered as a waiver of a party's right to de novo consideration of the factual issues and will constitute a waiver of a party's right to appellate review of the findings of fact in an order or judgment entered pursuant to this recommendation.