Opinion
2:22-cv-04408-BHH-MGB
02-23-2023
Jeremy J. Nichols, PLAINTIFF, v. Enlivant AID ES, LLC, DEFENDANT.
REPORT AND RECOMMENDATION
Plaintiff, through counsel, filed the instant employment action on December 6, 2022. (Dkt. No. 1.) Now before the Court is Defendant's Motion to Dismiss or, in the alternative, to Compel Arbitration. (Dkt. No. 8.) Pursuant to the provisions of Title 28, United States Code, Section 636(b)(1)(A), and Local Rule 73.02(B)(2)(g), D.S.C., all pretrial matters in employment discrimination cases are referred to a United States Magistrate Judge. For the reasons stated herein, the undersigned recommends that the Court grant Defendant's motion and compel arbitration.
BACKGROUND
Plaintiff alleges that he began working for Defendant on or about February 27, 2008 as a Maintenance Technician. (Dkt. No. 1 at 2.) Plaintiff claims that he is a “practicing Independent Baptist, and follows the rules for the religious exemptions, such as not receiving vaccines.” (Id.) Plaintiff further claims that he “suffers from seizures whenever he receives any vaccination.” (Id.)
According to the Complaint, Plaintiff provided Defendant with “a doctor's note and ADA paperwork” relating to his seizure condition and religious beliefs on or about April 1, 2021. (Id.) The Complaint states that Plaintiff “emailed a Certificate of Religious Exemption for Immunizations to Defendant's HR Director, Nate McBride.” (Id.) Nonetheless, Plaintiff claims that he “was informed that he would need to have the COVID-19 vaccine by June 1, 2021, or he would be terminated.” (Id.)
Plaintiff alleges that he was terminated on or about June 1, 2021 for refusing to be vaccinated. (Id.) Plaintiff claims his termination was therefore a “direct and proximate result of Defendant's discrimination against the Plaintiff on the basis of his religion and disability and was also in retaliation for requesting accommodations under both Title VII and the ADA.” (Id.)
Plaintiff alleges that his termination “forc[ed] him to lose pay and all of his benefits in violation of the ADA.” (Id. at 3.) He claims that he is therefore entitled to “injunctive relief and/or civil damages, to include back pay, front pay and interest thereon; payment for and reinstatement of lost benefits; and attorney's fees and costs.” (Id.) Plaintiff further claims that “Defendant agreed to pay the Plaintiff an additional Forty and 00/100 Dollars ($40.00) per day, for every day that he was ‘on call'” but that he “never received the additional funds as agreed upon.” (Id.) Accordingly, Plaintiff filed the instant litigation bringing causes of action for religious discrimination and retaliation in violation of Title VII of the Civil Rights Act, failure to accommodate and retaliation in violation of the Americans with Disabilities Act, breach of contract, violation of the South Carolina Payment of Wages Act, and violation of the Fair Labor Standards Act. (Id. at 3-7.)
On January 20, 2023, Defendant filed a Motion to Dismiss or, in the alternative, to Compel Arbitration. (Dkt. No. 8.) Plaintiff responded in opposition to the motion on February 3, 2023. (Dkt. No. 10.) Defendant replied to Plaintiff's response on February 10, 2023. (Dkt. No. 11.) Thus, the motion before the court has been fully briefed and is ripe for disposition.
DISCUSSION
With its motion, Defendant submits its Arbitration Policy (the “Arbitration Agreement”) and evidence of Plaintiff's electronic signature thereto. (Dkt. No. 8-2.) Defendant therefore claims that “Plaintiff's lawsuit should be dismissed in favor of arbitration” because “Plaintiff accepted and signed a binding Arbitration Agreement containing promises to arbitrate the claims he asserts in this lawsuit.” (Dkt. No. 8-1 at 3.) Defendant further claims that it is entitled to an award of attorneys' fees and costs incurred in filing the instant motion. (See generally Dkt. Nos. 8-1, 11.) In response, Plaintiff argues that he should not be bound by the Arbitration Agreement because it is: (1) not supported by mutual consideration; (2) unconscionable; and (3) a contract of adhesion. (Dkt. No. 10 at 3-6.) The undersigned considers these arguments, below.
I. Relevant Law
A. Motions to Compel Arbitration
In ruling on a motion to compel arbitration, the court employs the same standard as when ruling on a motion for summary judgment. Rowland v. Sandy Morris Fin. & Est. Plan. Servs., LLC, 993 F.3d 253, 258 (4th Cir. 2021); Cummings v. NC Fin. Sols. of S.C., No. 3:22-cv-2430-SAL-SVH, 2022 WL 18717553, at *1 (D.S.C. Nov. 30, 2022), adopted, No. 3:22-cv-2430-SAL, 2023 WL 2025167 (D.S.C. Feb. 15, 2023). Thus, the court should grant a motion to compel arbitration only if the moving party “shows that there is no genuine dispute as to any material fact and the [moving party] is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a).
B. Federal Arbitration Act
The Federal Arbitration Act (“FAA”) governs the arbitrability of this dispute. (See Dkt. No. 8-2 at 6.) Section 4 of the FAA, provides, in part, that a “party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition any United States district court . . . for an order directing that such arbitration proceed in the manner provided for in such agreement.” 9 U.S.C. § 4. “[Q]uestions of arbitrability must be addressed with a healthy regard for the federal policy favoring arbitration . . . [and] any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration.” Moses H. Cone Mem'l Hosp. v. Mercury Const. Corp., 460 U.S. 1, 25-26 (1983). “In the Fourth Circuit, a litigant can compel arbitration under the FAA if he can demonstrate ‘(1) the existence of a dispute between the parties, (2) a written agreement that includes an arbitration provision which purports to cover the dispute, (3) the relationship of the transaction, which is evidenced by the agreement, to interstate or foreign commerce, and (4) the failure, neglect or refusal of the defendant to arbitrate the dispute.'” Adkins v. Lab. Ready, Inc., 303 F.3d 496, 500-01 (4th Cir. 2002) (citing Whiteside v. Teltech Corp., 940 F.2d 99, 102 (4th Cir. 1991)). Plaintiff makes no arguments relating to elements one, three, and four. (See generally Dkt. No. 10.) Rather, Plaintiff contends only that the Arbitration Agreement is invalid and unenforceable. (Id.)
The undersigned therefore considers these elements undisputed.
The FAA states that a written arbitration agreement “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. Although federal law governs the arbitrability of disputes, state law principles apply when considering whether parties have an enforceable agreement to arbitrate. First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995); Am. Gen. Life & Accident Ins. Co. v. Wood, 429 F.3d 83, 87 (4th Cir. 2005). “Thus, generally applicable contract defenses, such as fraud, duress, or unconscionability, may be applied to invalidate arbitration agreements without contravening [the FAA].” Dr.'s Assocs., Inc. v. Casarotto, 517 U.S. 681, 687 (1996).
II. Analysis
As noted, Plaintiff contends that the court should decline to compel arbitration because the agreement at issue lacks mutual consideration and is an unconscionable contract of adhesion. (Dkt. No. 10at 3-6.) For the reasons set forth below, the undersigned finds these arguments unconvincing.
As an initial matter, the undersigned notes that Plaintiff cites to Maryland case law throughout his response brief. (See generally Dkt. No. 10.) However, the Arbitration Agreement is governed by South Carolina law, not Maryland law. (Dkt. No. 8-1 at 13; Dkt. No. 8-2 at 7.) Plaintiff's argument based on S.C. Code § 15-48-10(b)(2) is similarly misplaced, as the Arbitration Agreement is governed by the Federal Arbitration Act. (Dkt. No. 8-1 at 7-8; Dkt. No. 8-2 at 6.)
With respect to Plaintiff's first argument, this court has held that “[a] mutual promise to arbitrate constitutes sufficient consideration to underpin an arbitration agreement.” Bautista v. Ruiz Food Prod., Inc., No. 4:20-cv-3868-SAL-TER, 2022 WL 4181078, at *3 (D.S.C. July 7, 2022) (citing O'Neil v. Hilton Head Hosp., 115 F.3d 272, 275 (4th Cir. 1997); Rickborn v. Liberty Life Ins. Co., 321 S.C. 291, 304 (1996)), adopted as modified, 2022 WL 3699633 (D.S.C. Aug. 26, 2022); Lincoln v. G2 Secure Staff, LLC, No. 2:20-cv-1954-DCN-MHC, 2020 WL 12772535, at *4 (D.S.C. Nov. 18, 2020), adopted, 2021 WL 5936391 (D.S.C. Jan. 7, 2021). The arbitration agreement at issue here clearly contains such a mutual promise. (Dkt. No. 8-2 at 6, stating “Any controversy, dispute or claim between any employee and the Company . . . shall be settled by binding arbitration, at the request of either party.... each party may bring claims against the other ....”) (emphasis added). Thus, Plaintiff's contention that the agreement is unsupported by consideration is plainly incorrect. (Dkt. No. 10 at 3-4.)
Further, this court has repeatedly determined that employment and continued employment constitute adequate consideration for arbitration agreements. See, e.g., Pitt v. Wells Fargo Bank, Nat'l Assoc., No. 3:21-cv-3428-JFA-TER, 2022 WL 2068851, at *4 (D.S.C. Apr. 1, 2022), adopted, 2022 WL 1421120 (D.S.C. May 4, 2022); Lincoln, 2020 WL 12772535, at *4;Morton v. Darden Restaurants, Inc., No. 8:17-cv-1865-HMH-KFM, 2018 WL 1531634, at *4 (D.S.C. Mar. 2, 2018), adopted, 2018 WL 1524093 (D.S.C. Mar. 28, 2018). Accordingly, the Arbitration Agreement is supported by sufficient consideration on this basis, as well. (Dkt. No. 8-2 at 7, stating “The employee acknowledges and agrees, as a condition of employment and/or continued employment, to be bound by the terms of [the Arbitration Agreement].”)
The undersigned finds Plaintiff's arguments regarding unconscionability similarly faulty. Plaintiff first contends that the arbitration agreement is unconscionable because it was “buried among on-boarding and work training documents” and he was “not able to negotiate the Agreement, which was mandatory.” (Dkt. No. 10 at 5.) Plaintiff further argues that the arbitration agreement is “subject to greater scrutiny” because it is a contract of adhesion. (Id. at 6.)
Defendant counters that “[i]n the employment context, an arbitration agreement is not procedurally unconscionable simply because there is a disparity of bargaining power between an employer and employee, so long as the terms are clear and presented in a way that emphasizes the importance of the agreement.” (Dkt. No. 11 at 5, citing O'Bryant v. Flowers Foods, Inc., No. 2:21-cv-3501-BHH, 2022 WL 4368237, at *6 (D.S.C. Sept. 21, 2022)). Defendant notes that “[i]t is outright inaccurate for Plaintiff to claim that the Arbitration Agreement was buried among other on-boarding and work training documents” because “Defendant presented it to him at the time it rolled out its mandatory arbitration policy in 2015 ....[and] [n]o other document, other than the Employee Handbook, was presented to him at that time.” (Dkt. No. 11 at 5-6.) Further, Defendant asserts that the Arbitration Agreement's terms are not so oppressive that no reasonable person would agree to them, that adhesion contracts (including arbitration agreements) are not invalid per se, and that Plaintiff has failed to demonstrate that the Arbitration Agreement is so unfair, unduly oppressive, or unconscionable as to render it invalid or unenforceable. (Id. at 6-8.)
To prove that an arbitration provision is unconscionable, a plaintiff must show that (1) he lacked a meaningful choice as to whether to arbitrate because the arbitration agreement's provisions were one sided, and (2) the terms were so oppressive no reasonable person would make them, and no fair and honest person would accept them. Simpson v. MSA of Myrtle Beach, Inc., 373 S.C. 14, 24-25 (2007). When determining whether a contract is unconscionable, courts tend to view adhesive contracts-those presented in “take-it-or-leave-it” form-with considerable skepticism. See Smith v. D.R. Horton, Inc., 417 S.C. 42, 49 (2016). By their nature, contracts of adhesion are non-negotiable; parties thus often claim that they lack a meaningful choice when a contract of adhesion is involved. Id.
Nonetheless, Defendant is correct that a take-it-or-leave-it contract of adhesion is not necessarily unconscionable. See id.; see also Damico v. Lennar Carolinas, LLC, No. 2020-001048, 2022 WL 4231032, at *6 (S.C. Sept. 14, 2022). Indeed, “adhesive contracts are not unconscionable in and of themselves so long as the terms are even-handed.” Damico, 2022 WL 4231032, at *6 (emphasis in original). The South Carolina Supreme Court recently clarified: “unconscionability requires a finding of a lack of meaningful choice coupled with unreasonably oppressive terms. Thus, an adhesion contract with fair terms is certainly not unconscionable, and the mere fact a contract is one of adhesion does not doom the contract-drafter's case.” Id. (emphasis in original).
The terms of the Arbitration Agreement at issue here cannot be defined as unreasonably oppressive. (Dkt. No. 8-2 at 6-8.) As noted, the Arbitration Agreement contains a mutual obligation to arbitrate. (Id. at 6.) It also provides for the mutual selection of a neutral arbitrator, requires Defendant to cover the “cost of the arbitrator and other incidental costs of arbitration that would not be incurred in a court proceeding,” and mandates that the arbitration take place “in the county and state where the employee works or worked.” (Id. at 6-7.) Plaintiff does not point the court to unfair terms or provisions within the Arbitration Agreement, and the undersigned's independent review of the agreement finds none.
Moreover, courts in this district have consistently rejected arguments similar to Plaintiff's. See, e.g., Simmons-Agnew v. HB Emp. Servs., LLC, No. 2:20-cv-4402-MBS, 2021 WL 1783135, at *2 (D.S.C. May 5, 2021) (rejecting plaintiff's arguments that: arbitration agreement was drafted by defendants and offered on a “take it or leave it basis as a condition of [] employment”; plaintiff had no power to negotiate; agreement was “broadly drafted to include any legal disputes arising out of or related to [] employment”; and agreement was far more restrictive of plaintiff because it limited her ability to pursue claims against her employer); Lincoln, 2021 WL 5936391, at *1 (enforcing arbitration agreement where the plaintiff argued that no one explained the agreement to her and the agreement was mandatory); Hamlin v. Dollar Tree Stores, Inc., No. 2:17-cv-2648-PMD, 2017 WL 6034325, at *1 (D.S.C. Dec. 6, 2017) (enforcing arbitration agreement where the plaintiff claimed that the agreement was “buried among other work training documents,” no one explained the agreement to her, and the agreement was mandatory).
Based on the foregoing, the undersigned simply cannot conclude that the arbitration agreement is an unconscionable contract of adhesion, as Plaintiff contends. “The Fourth Circuit instructs courts to focus on whether the arbitration clause is geared towards achieving an unbiased decision by a neutral decision maker.” Low Country Rural Health Educ. v. Greenway Medical Technologies, Inc., No. 9:14-cv-874-DCN, 2014 WL 5771850 (D.S.C. Nov. 5, 2014) (citing Hooters of Am., Inc. v. Phillips, 173 F.3d 933, 938 (4th Cir. 1999)). This appears to be the goal of the agreement at issue. (Dkt. No. 8-2 at 6-8.) The undersigned therefore recommends that the parties be compelled to arbitrate, and that this case be dismissed.
The undersigned further recommends that Defendant's request for an award of attorneys' fees and costs be granted. As noted above, the Arbitration Agreement is a valid and enforceable contract. The Arbitration Agreement plainly states:
If either party files a lawsuit against the other in a court . . . instead of requesting arbitration of the dispute, the party seeking to enforce this Policy may serve the suit-filing party with written notice of this Policy. Upon such notice, the suit-filing party will have five (5) days from the date of service (not extended for any time period, regardless of the manner of service) to personally serve a writing on the party seeking to enforce the Policy, agreeing to arbitrate the dispute. If the suitfiling party does not timely serve his/her/their agreement to arbitrate and the party seeking to enforce this Policy successfully compels the suit-filing party to arbitration, the party seeking to enforce this Policy shall be entitled to reasonable attorney's fees and court fees and costs it incurred in enforcing same.(Dkt. No. 8-2 at 6) (emphasis added). Based on this language, the parties have entered into a contractual agreement regarding attorneys' fees and costs relating to this motion. Defendant has provided the court with evidence indicating that the notice provision of this paragraph was satisfied. (Dkt. No. 8-3.) Specifically, Defendant notified Plaintiff of the Arbitration Agreement via letter and email. (Id.) Plaintiff did not timely serve an agreement to arbitrate, and Defendant therefore filed the instant motion to compel. The undersigned recommends that this motion be granted, meaning that Defendant will successfully compel arbitration so long as the District Judge agrees with the undersigned's recommendation. As such, the terms of the parties' agreement regarding attorneys' fees and costs relating to this motion appear satisfied. The undersigned sees no basis on which to interfere with parties' agreement and therefore recommends that the court order Defendant to submit an affidavit delineating and supporting the fees and costs requested.
CONCLUSION
Based on the foregoing, Plaintiff has not identified any genuine issue of material fact as to whether a valid arbitration agreement exists. It is therefore RECOMMENDED that Defendant's Motion to Dismiss or, in the alternative, to Compel Arbitration (Dkt. No. 8) be GRANTED. The undersigned RECOMMENDS that the parties be compelled to arbitrate and that this case be dismissed in full. The undersigned further RECOMMENDS that Defendant is entitled to an award of attorneys' fees and costs, and that Defendant be required to submit an affidavit supporting the requested fees and costs within ten (10) days of the District Judge's ruling on this Report and Recommendation.
IT IS SO RECOMMENDED.
Notice of Right to File Objections to Report and Recommendation
The parties are advised that they may file specific written objections to this Report and Recommendation with the District Judge. Objections must specifically identify the portions of the Report and Recommendation to which objections are made and the basis for such objections. “[I]n the absence of a timely filed objection, a district court need not conduct a de novo review, but instead must ‘only satisfy itself that there is no clear error on the face of the record in order to accept the recommendation.'” Diamond v. Colonial Life & Acc. Ins. Co., 416 F.3d 310 (4th Cir. 2005) (quoting Fed.R.Civ.P. 72 advisory committee's note).
Specific written objections must be filed within fourteen (14) days of the date of service of this Report and Recommendation. 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b); see Fed.R.Civ.P. 6(a), (d). Filing by mail pursuant to Federal Rule of Civil Procedure 5 may be accomplished by mailing objections to:
Robin L. Blume, Clerk United States District Court Post Office Box 835 Charleston, South Carolina 29402
Failure to timely file specific written objections to this Report and Recommendation will result in waiver of the right to appeal from a judgment of the District Court based upon such Recommendation. 28 U.S.C. § 636