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Taylor v. Ash Grove Cement Company

United States District Court, D. Oregon
Feb 25, 2004
CV-03-1509-ST (D. Or. Feb. 25, 2004)

Opinion

CV-03-1509-ST.

February 25, 2004


FINDINGS AND RECOMMENDATION


INTRODUCTION

Plaintiff, Cheri Taylor ("Taylor"), filed this action against her former employer, Ash Grove Cement Company ("Ash Grove"), on November 3, 2003, alleging claims for sex discrimination under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq. ("Title VII"), disability discrimination under the Americans with Disabilities Act ("ADA"), 42 U.S.C. § 12101, et seq., and the parallel state statutes, ORS Chapter 659A, and a claim for violation of Oregon's wage laws, ORS Chapter 652.

This court has original subject matter jurisdiction over Taylor's federal statutory claims under 28 U.S.C. § 1331 and supplemental jurisdiction over the state law claims under 28 U.S.C. § 1367.

Pursuant to the Federal Arbitration Act ("FAA"), 9 U.S.C. § 3, Ash Grove has now filed a Motion to Compel Arbitration and to Abate Further Proceedings (docket #3), asking that this court abate any further action in this proceeding until Taylor submits her claims to its alternative dispute resolution program. For the reasons that follow, the motion should be denied.

DISCUSSION

I. The Arbitration Program

Taylor worked for Ash Grove as an office assistant from September 4, 1995, until August 23, 2002. On March 23, 1998, David Ezell, a representative from Ash Grove's Human Resources Department in Kansas, held a half hour slide presentation concerning Ash Grove's new alternative dispute resolution program ("ADR Program"). Taylor Aff, ¶ 2. During the presentation, Michelle Hoecker, Taylor's direct supervisor, gave each employee, including Taylor, a 23-page document entitled "Alternative Dispute Resolution Program" ("ADR Document") (Ezell Dec, Exhibit 1), and a one page document entitled "Receipt of the Ash Grove Cement Company Alternative Dispute Resolution Program" ("Receipt"), and instructed them to sign the Receipt. Taylor Aff, ¶ 2.

Paragraph 2 is mislabeled as paragraph "B." For consistency, this court will use the numerical designation that appears to have been intended.

David Ezell submitted two declarations regarding the pending motion. The Declaration of David W. Ezell in Support of Defendant's Motion to Compel Arbitration and to Abate Further Proceedings (docket #7) will be referred to as the "Ezell Dec" and the Declaration of David W. Ezell in Support of Defendant's Reply to Plaintiff's Memorandum in Opposition to Defendant's Motion to Compel Arbitration (docket #11) will be referred to as the "Ezell Reply Dec." All other references to declarations and affidavits will be to the last name of the declarant or affiant and the paragraph number of the document.

The slide presentation did not address the ADR Document page-by-page. Id. Because Taylor was required to continue answering telephone calls during the presentation, she consequently was constantly interrupted. Id. When instructed to do so, she signed the Receipt which states as follows:

I have received a copy of the Ash Grove Cement Company Alternative Dispute Resolution Program. I understand that effective July 1, 1998 any employment issues that arise during and after my employment with Ash Grove Cement Company will be resolved through this program. I further understand that with my continued employment beyond July 1, 1998, I will have agreed to be bound by the terms and conditions of the Alternative Dispute Resolution Program.

Ezell Dec, Ex 2.

She was not given a copy of the Receipt after she signed it, but understood that she was acknowledging that she had been given a copy of the ADR Document, and that the provisions of the ADR Program would go into effect on July 1, 1998, whether or not she agreed to them. Taylor Aff, ¶ 2.

In September 1999, in response to Taylor's request to resolve a pay issue, her supervisors told her that she would need to complete a form in the ADR Document. She completed a form out of the copy of the ADR Document in the office, checking the box for "arbitration," a term that she did not fully understand Id, ¶ 4; Ezell Dec, Ex 3. The pay issue was then resolved in her favor following a telephone conference with Human Resources. Taylor Aff, ¶ 4. She was not given a choice on how to proceed or advised of any consequences. Id.

In July 2002, Taylor's attorney asked for a copy of Taylor's personnel file. Id, ¶ 5. Ash Grove initially refused to provide the file, asserting that Taylor had not made any claim with regard to her employment. Id, Ex B, p. 1. After Taylor's attorney responded that Taylor was asserting a discrimination claim, Ash Grove provided the file, advised Taylor's attorney of Ash Grove's ADR Program, and also advised that Taylor had not yet filed a complaint. Id at 2-4.

In September 2002, Taylor filed a Charge of Discrimination with the Equal Employment Opportunity Commission ("EEOC") and the Bureau of Labor and Industries ("BOLI"), alleging sex and disability discrimination and retaliation. On September 30, 2002, in response to information from the EEOC concerning its mediation process, Ash Grove requested that the EEOC remand Taylor's case "back to the Company for internal investigation and resolution, through our ADR process." Id, Ex C. However, the EEOC did not "remand" the case to Ash Grove.

Instead, in early October 2002, Taylor and her attorney completed an EEOC "Agreement to Mediate" form and acknowledged receiving a copy of a "Mediation Fact Sheet" which states that if mediation is unsuccessful, "the charge will be investigated like any other charge." Id, Ex D. A couple of months later, in response to a request by Ash Grove, Taylor signed a "Written Appeal Form," which is one of the forms in the ADR Document. Ezell Dec, Ex 4; Taylor Aff, ¶ 7. In that form, Taylor checked a box for "mediation" and wrote: "It was only agreed that mediation take place if we use the mediator who is also an EEOC mediator." Id.

A mediation concerning Taylor's claims took place on April 24, 2003, but was unsuccessful. Ezell Reply Dec, Ex 8. On August 4, 2003, the EEOC issued a Notice of Right to File a Civil Suit to Taylor. Complaint, ¶ 7. Taylor filed this action two months later. In early December 2003, Ash Grove's in-house counsel completed a "Written Appeal Form," checking the box for "Arbitration" and requesting that "Taylor follow the parties ADR process, which she originally initiated prior to filing her suit." Ezell Dec, ¶ 8 Ex 5. Ash Grove then submitted a written demand for arbitration and a filing fee with the American Arbitration Association ("AAA") on December 12, 2003. Ezell Dec, ¶ 8 Ex 6.

II. Enforceability of the ADR Program

Ash Grove argues that the Receipt signed by Taylor requires her claims to be submitted through its ADR Program, which covers "any . . . claim . . . which relates to, arises from, concerns or involves in any way . . . the relationship between the Employee and the Company" and provides "the exclusive, final and binding method" to resolve such disputes. ADR Document, Sections 3(B) 9. Taylor counters that she did not voluntarily agree to the terms of the ADR Document and that the ADR Document is unenforceable because it is unconscionable.

For the reasons that follow, this court concludes that Taylor is bound by the ADR Document, but that the terms of the ADR Document are sufficiently ambiguous and unconscionable as to relieve Taylor of further participation in Ash Grove's ADR Program. Accordingly, Ash Grove's Motion to Compel Arbitration and to Abate Further Proceedings should be denied.

A. Applicable Law

The Federal Arbitration Act ("FAA") provides that written agreements to arbitrate disputes arising out of transactions involving interstate commerce "shall be valid, binding, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2.

"The first task of a court asked to compel arbitration of a dispute is to determine whether the parties agreed to arbitrate that dispute." Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc, 473 U.S. 614, 626 (1985); see Progressive Cas. Ins. Co. v. C.A. Reaseguradora Nacional de Venezuela, 991 F.2d 42, 45 (2nd Cir 1993) (court must decide whether the parties agreed to arbitrate, and, if so, whether the scope of the arbitration agreement encompasses the asserted claims). In making its determination, this court "must `apply ordinary state-law principles that govern the formation of contracts.'" Wolsey Ltd. v. Foodmaker, Inc., 144 F.3d 1205, 1210 (9th Cir 1998), quoting First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995).

If an issue is referable to arbitration under a written agreement, then the court is required to direct that issue to arbitration and stay the trial of the remaining issues until arbitration is complete. 9 U.S.C. § 3. Where "the making of the agreement for arbitration . . . is not in issue, the court shall make an order directing the parties to proceed to arbitration in accordance with the terms of the agreement." 9 U.S.C. § 4. If made, an agreement to arbitrate shall be "rigorously enforce[d]." Dean Witter Reynolds, Inc., v. Byrd, 470 U.S. 213, 221 (1985).

Under Section 4 of the Act, the district court must order arbitration if it is satisfied that "the making of the agreement for arbitration . . . is not in issue. . . . "Therefore, the district court "can only determine whether a written arbitration agreement exists, and if it does, enforce it `in accordance with its terms.'"
Howard Elec. Mech. v. Briscoe Co., 754 F.2d 847, 849 (9th Cir 1985) (citations omitted).

The Supreme Court has repeatedly affirmed that all doubts as to the scope of arbitrability must be resolved in favor of arbitration. Volt Info. Sc. v. Bd. of Trs. of Leland Stanford Jr. Univ., 489 U.S. 468, 475-76 (1989); Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983). B. Waiver and Adequate Consideration

Initially, Taylor argues that she is not bound to the terms of the ADR Document because she did not knowingly waive her statutory rights with respect to her discrimination claims, and even if she did, that waiver was not supported by adequate consideration. Both of these arguments must be rejected.

Whether Taylor's claims are referable to arbitration depends upon whether she knowingly agreed to submit those disputes to arbitration: "Congress intended there to be at least a knowing agreement to arbitrate employment disputes before an employee may be deemed to have waived the comprehensive statutory rights, remedies and procedural protections prescribed in Title VII and related state statutes." Prudential Ins. Co. of Am. v. Lai, 42 F.3d 1299, 1304 (9th Cir 1994), cert denied, 516 U.S. 812 (1995).

Taylor argues that her agreement to be bound by the ADR Document, as evidenced in the Receipt, was not knowing because Ash Grove presented her with the ADR Document while she was trying to field telephone calls, never explained the document to her, never gave her time to review the ADR Document during work hours, and never initiated another substantive discussion regarding the ADR Program after March 23, 1998. She was simply handed the ADR Document and instructed to sign the Receipt, which she did. Ash Grove provided no other substantive discussions, training, or explanations of the ADR Program and the contents of the ADR Document were never discussed again in the workplace.

Despite Ash Grove's act of summarily presenting Taylor with the ADR Document, the three-sentence Receipt clearly and unambiguously states that by signing it effective July 1, 1998, Taylor agrees to resolve any employment issues through the ADR Program, and that her continued employment after July 1, 1998 binds her to the terms of the ADR Program. Taylor admits that she "understood . . . that [the ADR Program] was going into effect starting July 1, 1998 whether [she] agreed to it or not" and failed to ask any questions before signing the Receipt. Taylor Aff, ¶ 2. Moreover, Taylor signed the Receipt on March 23, 1998. While she states that she was "instructed to sign [the Receipt]" on March 23, 1998, by her direct supervisor ( id), nothing indicates that Taylor was threatened with any adverse consequences if she did not sign the Receipt at that time. Prior to its effective date, Taylor had over three months to read the ADR Document, ask any questions, ask for further explanation of the ADR Program or ask to view the slide presentation without work interruptions. Taylor is bound by what she signed:

[I]n the absence of any evidence of incapacity to read, or any trick, fraud or artifice resorted to . . . a party signing a written instrument that is plain and unequivocal in its terms is bound by its express terms and conditions therein contained, and [that party] cannot set up his own carelessness, negligence, ignorance or indolence as a defense, and, because he failed to make use of his faculties possessed by him for determining its conditions, [b]e heard to say that its terms or conditions should be other or different from what they are. . . . [T]hat proposition [is supported] by authorities too numerous to cite.
L.B. Menefee Lumber Co. v. Gamble, 119 Or. 224, 232, 242 P. 628, 631 (1926) (internal quotations and citations omitted); see also Knappenberger v. Cascade Ins. Co., 259 Or. 392, 398, 487 P.2d 80, 83 (1971) ("As with other contracts of adhesion, in the absence of special circumstances an insured is bound by the terms of an insurance policy purchased by him even though he is unaware of those terms because he has failed to read the policy, or having read the policy misunderstands it"); Shell Oil Co. v. Boyer, 234 Or. 270, 276, 381 P.2d 494, 497 (1963) ("Ordinarily, the failure to read an instrument, when there is ample opportunity to do so, affords the party no defense to its enforcement").

Taylor also infers that lack of consideration is a problem, noting that she "was never offered a promotion or additional compensation or any other additional benefit in connection with the ADR document." Taylor Aff, ¶ 2. However, adequate consideration is found in Taylor's continued employment: "Generally, a person's continued employment after a personnel handbook is distributed may be sufficient consideration to bind the employee to any terms of the handbook that are contractual in nature." Hreha v. Nemecek, 119 Or. App. 65, 67-68, 849 P.2d 1131, 1131, rev denied, 317 Or. 271, 858 P.2d 1313 (1993), citing Yartzoff v. Democrat-Herald Pub. Co., Inc., 281 Or. 651, 657, 576 P.2d 356, 359 (1978). Nothing in the record encourages rejection of this general rule in this case.

Thus, Taylor's arguments that she is not bound to the terms of the ADR Document due to or a lack of consideration must be rejected. However, as explained below, Taylor nonetheless is not required to submit her claims to binding arbitration.

C. Ambiguity

Although Taylor is bound by the terms of the ADR Document, those terms are ambiguous in a number of respects, including whether arbitration is a required feature of the ADR Program. Section 15A allows either party to initiate the ADR Program and provides four options for dispute resolution: open door policy, conference, mediation, and arbitration. "These options may be employed or bypassed for another option at the Employee's or Company's discretion." Id. Here Taylor chose mediation, although she insisted on a mediator who worked both for the EEOC and the AAA. Ezell Reply Dec, Ex 7, pp. 1-2. The mediation did not result in a resolution. The question presented is whether the ADR Program now compels Taylor to arbitrate her claims.

Ash Grove may have intended to institute a mandatory four-step ADR Program culminating in arbitration, with the option to skip any of the preceding three steps leading up to arbitration. However, the ADR Document does not clearly express that intent. Nothing in the ADR Document states that arbitration is required if the dispute is not resolved by one of the other options for dispute resolution.

The mediation option set forth in Section 15A(III) states that "both parties may agree to bypass [mediation] and move directly to Arbitration for a final decision" and requires the terms of a resolution to be put in writing and signed. However, it does not address whether arbitration is required if mediation is unsuccessful. Section 15B does allow either party to appeal their dispute to mediation or arbitration "by serving a written request to the Program Administrator, the AAA and simultaneously mailing a copy of the demand to the other party." This provision apparently allows, but does not require, either party to appeal an unsuccessful mediation to arbitration. Then under Section 15C, the other party must file an "answering statement" within 21 days. Section 16 states that AAA shall convene an "Administrative Conference" as soon as possible after receipt of the answering statement, if any. At that conference, AAA is to determine "whether the Parties are in agreement on a method to resolve the Dispute," and "[i]f the Parties cannot agree [on a procedure] or if the Parties have previously attempted and failed to resolve the Dispute by Mediation or another non-binding mechanism, the Dispute shall be arbitrated."

On the other hand, the arbitration option in Section 15A(IV) specifically provides that: "Where Disputes involve legally protected rights, such as protection against discrimination for age, race, or sex, or sexual harassment, and the matter has not been resolved in previous steps of this Program, the parties may request Arbitration." Taylor's dispute involves legally protected rights, such as protection against sex discrimination, and was not resolved through mediation. As a result, "the parties may request Arbitration." This language is in the plural, not the singular, and here only Ash Grove, not both parties, requested arbitration. Absent a request by both parties, Section 15A(IV) on its face does not authorize arbitration of Taylor's dispute, despite the ability of one party to file an appeal to arbitration under Section 15B and have AAA convene an Administrative Conference under Section 16.

This is not the only internal conflict in the ADR Program with respect to arbitration. Section 4 requires that all disputes "shall be finally and conclusively resolved under this Program and its Rules." Similarly, the first sentence of Section 9 states that: "Proceedings under the Program shall be the exclusive, final and binding method by which Disputes are resolved." Yet the second sentence of Section 9 states that: "Consequently, the institution of a proceeding under this Program shall be a condition precedent to the initiation of any legal action (including action before an administrative tribunal with adjudicatory powers) against the Company arising out of the employment of an Employee by the Company and any such legal action shall be limited to those under the [Federal Arbitration] Act." If the ADR Program is the "exclusive, final and binding" method for resolving disputes, as stated in the first sentence of Section 9, then the second sentence of Section 9 makes no sense. The second sentence contemplates the initiation of a legal action, including an EEOC or BOLI complaint, which would not be permissible if the ADR Program is "exclusive, final and binding" as stated in the first sentence. In any event, only the arbitration option is final and binding;" the other three options are merely different types of negotiations. One possible interpretation of Section 9 is a legal action may be filed if the parties conduct an unsuccessful mediation and no party appeals to an arbitration which would be final and finding. Another possible interpretation is that the only permissible court action is one to enforce an arbitration award. However, the correct interpretation is far from clear.

"While ambiguities in the language of the agreement should be resolved in favor of arbitration, we do not override the clear intent of the parties, or reach a result inconsistent with the plain text of the contract, simply because the policy favoring arbitration is implicated." EEOC v. Waffle House, Inc., 534 U.S. 279, 294 (2002) (citations omitted). Moreover, "the FAA does not confer a right to compel arbitration of any dispute at any time; it confers only the right to obtain an order directing that `arbitration proceed in the manner provided for in [the parties'] agreement.'" Volt Info. Servs., Inc., 489 US at 474-75, quoting 9 U.S.C. § 4.

In this case, the plain text of Sections 4 and 9 of the ADR Document require disputes to be resolved by proceedings under the ADR Program. However, the ADR Program allows parties to employ or bypass any option for another option and is ambiguous as to whether arbitration must follow an unsuccessful mediation of a dispute involving a legally protected right. Given that the ADR Document does not unambiguously require Taylor to submit her claims to arbitration, this court will not compel her to do so. D. Unconscionability

Even assuming that the ADR Document unambiguously requires arbitration of Taylor's claims, Taylor argues that it contains several substantively unconscionable provisions which nullify the entire ADR Document. This court agrees.

1. Fees and Costs

First is the issue of what costs must be paid by Taylor to arbitrate her claims. An arbitration clause is unenforceable if it denies a party a meaningful opportunity to vindicate his or her substantive rights due to prohibitive arbitration costs. Thus, as a condition of access to the arbitral forum, a claimant is not required "to pay either unreasonable costs or any arbitrators' fees or expenses." Circuit City Stores, Inc. v. Adams, 279 F.3d 889, 895 (9th Cir), cert denied, 535 U.S. 1112 (2002), citing Cole v. Burns Int'l Sec. Servs., 105 F.3d 1465, 1482 (DC Cir 1997). Although the cost of filing fees and other administrative expenses "are not problematic" because federal courts impose such costs as well, arbitrators' fees "are unlike anything that [a party] would have to pay to pursue his statutory claims in court." Cole, 105 F.3d at 1484. Thus, a party in an unequal bargaining position cannot be required to arbitrate if he is required to pay all or part of the arbitrator's fees and expenses. Id at 1485.

As recognized by the Supreme Court, "[i]t may well be that the existence of large arbitration costs could preclude a litigant . . . from effectively vindicating her federal statutory rights in the arbitral forum." Green Tree Fin. Corp.-Alabama v. Randolph, 531 U.S. 79, 90 (2000). Where "a party seeks to invalidate an arbitration agreement on the ground that arbitration would be prohibitively expensive, that party bears the burden of showing the likelihood of incurring such costs." Id at 92.

Section 46 which addresses payment of fees and expenses is not a model of clarity. The allocation of arbitration fees and expenses between the parties turns on which party initiated the proceedings. If the employee initiates proceedings, then the employee pays those fees delineated in Section 46F, whereas if Ash Grove initiates proceedings, then it must pay those costs specified in Section 46G. A party may initiate proceedings by first requesting an option under the ADR Program, but the other party may initiate any of the remaining three options for dispute resolution if that party is dissatisfied with outcome of the first option. Here Taylor initiated a claim with the EEOC and BOLI, and later agreed to mediation by signing at Ash Grove's request the "Written Appeal Form" and checking the box for "mediation," but Ash Grove initiated the arbitration which is now at issue. Given the vagueness of the wording in Section 26, it is entirely unclear whether Taylor or Ash Grove initiated proceedings.

If Taylor initiated the proceedings, as Ash Grove contends, then she must pay the $50.00 filing fee for mediation under Section 46F(i). If, in addition, she initiated the arbitration, then she must pay that filing fee under Section 46F(ii). The ADR Program contains no waiver of the filing fee for an indigent employee, in contrast to the usual waiver of the filing fee for indigent plaintiffs who file claims in court. Were Taylor indigent, which she is not, this fee alone could be unconscionable.

Furthermore, if Taylor initiated the proceedings, Section 46F(iii) requires Taylor to pay the first $1,000.00 of "legal costs;" Ash Grove must pay 100% of the next $500.00 of legal costs, but the maximum payable by Ash Grove is $1,000.00. Ash Grove asserts that the phrase "legal costs" does not refer to or include anything but attorney fees which Taylor would normally pay if she filed her claims in court. However, the ADR Document does not define "legal costs" and the phrase can be interpreted to include other costs which a party would not be required to pay to pursue her claims in court.

This interpretation arises by way of omission. Sections 46D requires Ash Grove to pay 100% of "the mediator and/or arbitrator daily fees and expenses" and "meeting room fees" in all cases. Furthermore, if Ash Grove initiates a proceeding, Section 46G requires it to pay the filing and administrative hearing fees. However, Section 46 does not exempt an employee who initiates a proceeding from paying the administrative hearing fees or require Ash Grove to pay AAA's case service fees. If Ash Grove is not required to pay these fees, then the employee presumably would be responsible for paying them. Therefore, if the employee initiates a proceeding, the administrative hearing and case service fees could be part of the "legal costs" which the employee must pay.

Although AAA administrative hearing fees are not easily accessible or discernible from its website, the cheapest possibility appears to be $300.00 per day in administrative hearing fees. Bennett Aff, ¶ 7 Ex F. Furthermore, for a claim of at least $500,000.00 in total economic and non-economic damages, which Taylor believes is supported by her allegations, AAA would charge $2,500.00 in case service fees. Id, ¶ 8 Ex G. Those fees are substantial and far exceed any fees a litigant would have to pay in court. As a result, the amount of fees and costs payable by the employee under the ADR Program is unconscionable.

2. Attorney Fees

Section 7D of the ADR Program allows Taylor to recover her statutory attorney fees if she prevails. However, that same provision states that "any award of fees shall be reduced by any amounts which have been or will be paid by the Program." The ADR Document does not define those "amounts." If the "amounts" include filing fees or the arbitrator's fee, presumably paid by Ash Grove, then such amounts would significantly curtail the remedy that a prevailing employee would normally receive in court. At the very least, it shifts unknown costs to a prevailing employee. That result is unconscionable.

3. Confidentiality Provision

Section 49 requires that all proceedings are "confidential and shall not be open to the public" with three exceptions. None of the three exceptions allow an employee to unilaterally open the proceedings to the public. Instead, the employee must obtain Ash Grove's consent, which apparently can be withheld for any reason, or somehow find a way to have a court intervene. In contrast, court proceedings are open to the public unless sealed by the court. This court is troubled by such secrecy, particularly for civil rights cases, for which Ash Grove has offered no rationale. Therefore, the confidentiality provision is deemed unconscionable.

E. Severability

Even though several of the provisions of the ADR Document are unconscionable, defendant argues that the entire ADR Document is not rendered invalid. The ADR Document contains a severability provision which provides that:

The terms of this Program and the Rules are severable. The invalidity of any provision therein shall not affect the application of any other provision. Where possible, consistent with the purpose of the Program, any otherwise invalid provisions of the Program may be reformed and, as reformed, enforced.

ADR Document, Section 12.

Assuming one or more provisions of an arbitration agreement are found unconscionable, a court may sever or restrict the unconscionable provision or refuse to enforce the entire agreement. A clause cannot be severed from a contract when it is an integrated part of the contract. W.J. Seufert Land Co. v. Greenfield, 262 Or. 83, 87, 496 P.2d 197, 199 (1972); Hagan v. O'Connell, Goyak Ball, P.C., 68 Or. App. 700, 683 P.2d 563 (1984) (severing the penalty provision in a buy-sell agreement and enforcing the remaining provisions). A "`contract is entire, and not severable, when, by its terms, nature, and purpose, it contemplates and intends that each and all of its parts, [and] material provisions . . . are common to the other, and interdependent.'" Hudson v. Wylie, 242 F.2d 435, 446 (9th Cir 1957), quoting Leeker v. Marcotte, 41 Ariz. 118, 128-29, 15 P.2d 969, 972 (1932).

Here the offending parts of the ADR Document involve more than a single, isolated provision. As discussed above, this court finds several provisions (fees, costs, confidentiality) unconscionable. Despite the strong federal policy favoring arbitration, this court concludes that the ADR Document is sufficiently permeated by unconscionability so as to render it invalid. It establishes a unified program for handling all disputes of which its unconscionable provisions are part and parcel. To remove those key provisions would rewrite the ADR Document, which is not a proper role of this court:

In addition to the damages limitation and the fee-sharing scheme, the unilateral aspect of the [dispute resolution agreement] runs throughout the agreement and defines the scope of the matters that are covered. Removing these provisions would go beyond mere excision to rewriting the contract, which is not the proper role of this Court.
Circuit City Stores, Inc., 279 F.3d at 896.

As discussed above, this court is to be guided by the ordinary state-law principles that govern the formation of contracts. Wolsey Ltd., 144 F.3d at 1210. Section 12 of the ADR Document allows for reformation of the ADR Document and enforcement of the reformed ADR Document. However, in Oregon, "[t]he law entertains a presumption which favors the validity and correctness of written instruments" and reformation is permissible only where there is clear and convincing evidence of mutual mistake and proof of a valid antecedent agreement. Koennecke v. Waxwing Cedar Products, Ltd., 273 Or. 639, 643, 543 P.2d 669, 671 (1975). There was no such mistake in this case; instead, Ash Grove alone prepared the ADR Document and presented it to its employees, including Taylor, on a take-it-or-leave-it basis. Just as Taylor is bound by what she signed, so Ash Grove is bound by what it authored. Unfortunately for Ash Grove, its ADR Document falls short of being conscionable. Accordingly, this court concludes that the ADR Document is not enforceable.

RECOMMENDATION

For the reasons stated above, Ash Grove Cement Company's Motion to Compel Arbitration and to Abate Further Proceedings (docket #3) should be DENIED.

SCHEDULING ORDER

Objections to the Findings and Recommendation, if any, are due March 15, 2004. If no objections are filed, then the Findings and Recommendation will be referred to a district court judge and go under advisement on that date.

If objections are filed, the response is due no later than April 1, 2004. When the response is due or filed, whichever date is earlier, the Findings and Recommendation will be referred to a district court judge and go under advisement.


Summaries of

Taylor v. Ash Grove Cement Company

United States District Court, D. Oregon
Feb 25, 2004
CV-03-1509-ST (D. Or. Feb. 25, 2004)
Case details for

Taylor v. Ash Grove Cement Company

Case Details

Full title:CHERI TAYLOR, Plaintiff, v. ASH GROVE CEMENT COMPANY, Defendant

Court:United States District Court, D. Oregon

Date published: Feb 25, 2004

Citations

CV-03-1509-ST (D. Or. Feb. 25, 2004)