Opinion
3:21-cv-1868-JR
12-20-2022
DARA LOPEZ, Plaintiff, v. BIOTRONIK, INC., Defendant.
FINDINGS AND RECOMMENDATION
Jolie A. Russo, United States Magistrate Judge
Plaintiff, Dara Lopez, brings this action alleging sex discrimination and retaliation during her employment with defendant, Biotronik, Inc. Defendant moves to compel arbitration and dismiss this case or, alternatively, to stay the proceedings in this court. For the reasons stated below, the motion to compel arbitration should be granted and this action should be dismissed.
ALLEGATIONS
Plaintiff alleges she was employed by defendant, a Delaware corporation with its principal place of business in Oregon, as a field clinical specialist in Polk County Florida. Complaint (ECF 1) at ¶ 11, 14. Plaintiff asserts her supervisor Paul McLoughlin subjected her to numerous forms of harassing behavior including: sending a video clip of the duties of a female secretary in the 1950s, assignment of menial tasks, stating she would never make it in sales because she is a woman, making sexually inappropriate jokes, retaliation for nonpositive responses to the jokes, sending shirtless photos of himself, making remarks with crude sexual inuendo, retaliation for complaints about harassment, and harassment based on race. See id. at ¶¶ 15-33.
Plaintiff alleges she made a formal complaint on April 22, 2020, regarding gender and racial discrimination by McLoughlin. Id. at ¶ 35. Plaintiff asserts defendant did not inform her of the outcome of her complaint. Id.at ¶ 26. Plaintiff alleges, however, that McLoughlin originated complaints against her, but that defendant did not provide any information to plaintiff about those complaints or allow plaintiff to defend herself. Id. at ¶¶ 37-40. Plaintiff asserts defendant used the complaints as a pretext to terminate her employment on July 1, 2020, to disguise its retaliation for her complaints of discrimination. Id. at ¶¶ 41-44.
Plaintiff asserts claims for discrimination and retaliation under Title VII, 42 U.S.C. 2000e, and the Florida Civil Rights Act.
DISCUSSION
Plaintiff's employment agreement with defendant included an arbitration clause. Defendant seeks to compel arbitration pursuant to that agreement.
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 does; (2) whether the agreement encompasses the dispute at issue. Id.
The employment agreement at issue provides, in part:
Mandatory Arbitration and Exclusive Jurisdiction. As a condition to Employee's Employment, Employee agrees that any and all claims, demands, controversies and disputes of any and every nature, arising in common law or by state or federal statute, that relate in any way whatsoever to Employee's Employment or this Agreement against BIOTRONIK and/or any or all of its affiliates, related corporations, parent corporations, employees, representatives, officers, directors and/or shareholders (collectively, the BIOTRONIK Parties) shall be exclusively resolved by final and binding arbitration to be held only in Portland, Oregon in accordance with the Rules of the Arbitration Service of Portland, Inc. before a single arbitrator. Any award granted in such arbitration shall be final and conclusive, and judgment upon such award may be entered in the Circuit Court of the State of Oregon for the County of Clackamas, and no appeal shall lie thereafter. Before signing this Agreement, Employee agrees that Employee has had sufficient opportunity to consult with an attorney in order that Employee may intelligently exercise Employee's own judgment in deciding whether to sign this Agreement. Furthermore, by signing this Agreement, Employee understands and agrees: (1) that Employee is waiving and surrendering Employee's right to file a lawsuit in court and Employee's right to jury trial against any or all of the BIOTRONIK Parties; and (2) that Employee freely and voluntarily consents to all of the terms of this Agreement, including but not limited to, this mandatory arbitration clause.Employment Agreement (ECF 1-1) at pp. 5-6.
Plaintiff does not dispute the agreement to arbitrate covers the claims raised in the complaint. Rather, plaintiff asserts the arbitration clause is unconscionable and therefore unenforceable.
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 arbitration provision is unconscionable because she had no meaningful opportunity to negotiate its terms, it was presented in a confusing format suggesting employment claims may be tried in court and is contrary to public policy.
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 specifically 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). Surprise involves whether terms were hidden or obscured such as being in fine print, or were worded ambiguously Siggelkow v. Nw. Grp., Inc., 2019 WL 294759, at *8 (D. Or. Jan. 22, 2019).
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).
1. Oppression
Plaintiff asserts she had no meaningful opportunity to negotiate the arbitration provision and was faced with a take-it-or-leave-it option. However, “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).
2. Surprise
Plaintiff asserts the “format is confusing, especially to a nonlawyer, with respect to whether a claim may be tried in court, and Plaintiff was confused when she reviewed this provision, believing that she would be able to bring a lawsuit, so long as that was done in the proper court.” Response (ECF 14) at p. 4. However, the clause is highlighted in the agreement and is the only clause in bold print. It contains clear language “that Employee is waiving and surrendering Employee's right to file a lawsuit in court and Employee's right to jury trial against any or all of the BIOTRONIK Parties.” See Employment Agreement (ECF 1-1) at pp. 5-6. And although the agreement does refer to a right to seek preliminary relief in court, no reasonable interpretation can be made that a cause of action seeking money damages may be brought in court. The policy is unambiguous in stating that all disputes will be resolved exclusively by arbitration. Moreover, plaintiff agreed that she “had sufficient opportunity to consult with an attorney in order that Employee may intelligently exercise Employee's own judgment in deciding whether to sign this Agreement.” Id. at p. 6. Thus, her assertion that the “format is confusing, especially to a nonlawyer, with respect to whether a claim may be tried in court” is unavailing. The arbitration provision is not procedurally unconscionable.
3. Public Policy
Plaintiff asserts the arbitration provision is substantively unconscionable because it is contrary to public policy. Plaintiff specifically notes that the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act makes readily apparent that employers cannot force employees to seek to resolve disputes related to sexual harassment via arbitration.
On March 3, 2022, President Joe Biden signed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act into law. The Act provides, in part, as follows:
(a) In general.--Notwithstanding any other provision of this title, at the election of the person alleging conduct constituting a sexual harassment dispute or sexual assault dispute, or the named representative of a class or in a collective action alleging such conduct, no predispute arbitration agreement or predispute joint-action waiver shall be valid or enforceable with respect to a case which is filed under Federal, Tribal, or State law and relates to the sexual assault dispute or the sexual harassment dispute.9 U.S.C. § 402(a). The Act defines the phrase predispute arbitration agreement as follows:
The term “predispute arbitration agreement” means any agreement to arbitrate a dispute that had not yet arisen at the time of the making of the agreement.9 U.S.C. § 401(a)(1). As to Act's applicability to conduct prior to March 3, 2022, the enacted law also states:
This Act, and the amendments made by this Act, shall apply with respect to any dispute or claim that arises or accrues on or after the date of enactment of this Act.PL 117-90, March 3, 2022, 136 Stat 26.
As noted above, whether the facts support a determination of unconscionability is decided based on the facts in existence at the time the contract was made. Nonetheless, plaintiff argues that while the Act may not be retroactively applicable, it does demonstrate that the arbitration provision is contrary to public policy. See Hinman v. Silver Star Grp., LLC, 280 Or.App. 34, 41, 380 P.3d 994, 998 (2016) (Substantive unconscionability concerns whether the terms of a contract are contrary to public policy.).
However, plaintiff's cite to the Congressional record demonstrates that while Congress felt public policy required the legislation to stop protecting predators and to stop silencing survivors, Congress specifically considered whether to make the Act retroactive and chose not to do so. Compare Statement of Senator Kristen Gillibrand (D-N.Y.) (Response (ECF 14) at p. 5) (emphasis added):
This bill is one of the most significant workplace reforms in the last 50 years and is a major step toward changing a system that uses secrecy to protect perpetrators and silence survivors ... The [Act] will void existing forced arbitration agreements for sexual harassment and sexual assault and end their use. It will give survivors their day in court, allow them to discuss their cases publicly and end the days of institutional protection for harassment.with PL 117-90, March 3, 2022, 136 Stat 26. (Act applies to disputes arising on or after March 3, 2022). To discern whether, in the context of a particular transaction, substantive concerns relating to unfairness or oppression are sufficiently important to warrant interference with the parties' freedom to contract as they see fit, courts frequently look to legislation for relevant indicia of public policy. Bagley v. Mt. Bachelor, Inc., 356 Or. 543, 556, 340 P.3d 27, 36 (2014). Here, Congress considered whether public policy required voiding all existing arbitration agreements with respect to disputes involving sexual harassment under the FAA and determined that such policy was not required. See Zinsky v. Russin, 2022 WL 2906371, at *4 (W.D. Pa. July 22, 2022) (“Such plain language indicates no Congressional intent to apply the EFASASH Act retroactively. While the Act represents a significant sea change in the enforcement of arbitration provisions, Congress has chosen to temper that change through prospective rather than retrospective applicability.”). To the contrary of plaintiff's argument, the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act demonstrates a public policy that favors enforcing arbitration agreements pursuant to the FAA, even for claims of sexual harassment, arising before March 3, 2022. Accordingly, the motion to compel arbitration should be granted.
Because all of the claims are subject to arbitration, the Court should dismiss 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 9) 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.