Opinion
No. 3:19-cv-00264
04-28-2020
Penny RUBIO, individually, and on behalf of others similarly situated, Plaintiff, v. CARRECA ENTERPRISES, INC. d/b/a Pizza Hut Clarksville, et al., Defendants.
James Gerard Stranch, IV, Joey P. Leniski, Jr., Branstetter, Stranch & Jennings, PLLC, Nashville, TN, Jay Forester, Forester Haynie PLLC, Dallas, TX, for Plaintiff. Courtney L. Leyes, Fisher & Phillips, LLP (Memphis Office), Memphis, TN, Franklin Wolf, Joel Rice, Fisher & Phillips LLP (Chicago Office), Chicago, IL, for Defendants.
James Gerard Stranch, IV, Joey P. Leniski, Jr., Branstetter, Stranch & Jennings, PLLC, Nashville, TN, Jay Forester, Forester Haynie PLLC, Dallas, TX, for Plaintiff.
Courtney L. Leyes, Fisher & Phillips, LLP (Memphis Office), Memphis, TN, Franklin Wolf, Joel Rice, Fisher & Phillips LLP (Chicago Office), Chicago, IL, for Defendants.
MEMORANDUM OPINION
ELI RICHARDSON, UNITED STATES DISTRICT JUDGE
Pending before the Court is Defendants’ Motion to Dismiss and Compel Arbitration on an Individual Basis. (Doc. No. 30, "Motion"). Plaintiff has filed a response, and Defendants have replied. (Doc. Nos. 38, 40). For the reasons stated herein, Defendants’ Motion will be GRANTED . The Court will compel the parties to arbitrate this matter and dismiss this action without prejudice.
The background facts are drawn from the allegations in Plaintiff's Complaint, Plaintiff's declaration, and Ms. Kimberly Scott's declaration. All such (alleged) facts are accepted as true for purposes of the instant Motion.
Plaintiff began her employment with Defendants as a pizza delivery driver in April 2018. (Doc. No. 1 at ¶ 7; Doc. No. 30-1 at ¶ 7). Plaintiff's employment ended in May 2018, but she began working for Defendants again in July 2018. (Doc. No. 30-1 at ¶ 8). Plaintiff's employment with Defendants ended in April 2019 when Defendants sold the Company (a.k.a. Pizza Hut Clarksville). (Doc. No. 1 at ¶ 7; Doc. No. 30-1 at ¶ 8).
On April 1, 2019, Plaintiff filed her Complaint in this case, on behalf of herself and other similarly situated current and former employees ("putative plaintiffs"), which alleges violations of the Fair Labor Standards Act, 29 U.S.C. § 216(b) ("FLSA"). (Doc. No. 1 at ¶ 2). Plaintiff alleges that Defendants Carreca Enterprises, Inc. d/b/a Pizza Hut Clarksville and Nona Carreca ("Defendants") failed to reimburse her and putative plaintiffs, specifically those employed as delivery drivers, "the reasonably approximate amount of their automobile expenses to such an extent that it diminishe[d] these employees’ wages beneath the federal minimum wage." (Id. at ¶ 43). Additionally, Plaintiff asserts an individual claim of unjust enrichment wherein she asserts that she "conferred a benefit upon Defendants by working on their behalf without compensation" and that "Defendants accepted and retained the benefit under such circumstances to make it inequitable for Defendants to retain the benefit without payment of its value." (Id. at ¶¶ 50-54).
Defendants filed the instant Motion, wherein they seek an order compelling arbitration of Plaintiff's claims, precluding class arbitration, and dismissing Plaintiff's Complaint with prejudice. (Doc. No. 30). Defendants assert that the Employee Policy Acknowledgement that Plaintiff signed, in which she agreed that she had read the "Arbitration of Employee Rights," binds her to arbitrate all claims arising between Plaintiffs and Defendants. (Id. at 3, Doc. No. 30-1 at 8). The "Agreement to Arbitrate" provides:
Agreement to Arbitrate. Bullock-Scott Restaurant Group/Carreca Enterprises, Inc. on behalf of itself and its parents and affiliates, officers and directors (collectively, "BSRG" or "CEI") and I agree to use binding arbitration, instead of going to court, for any claims, including any claims now in existence or that may exist in the future (a) that I may have against BSRG/CEI, its affiliates, and/or their current or former employees or (b) that BSRG/CEI and/or its affiliates may have against me or (c) any claim that I may have against Pizza Hut Inc. ("PHI") and/or PHI's parents, subsidiaries, and/or affiliates. Without limitation, such claims including any concerning wages, expense reimbursement, compensation, leave, employment (including, but not limited to, any claims concerning harassment, discrimination, or retaliation), conversion, breach of fiduciary duty, and/or termination of employment. [...]
BSRG/CEI and I agree that any and all claims subject to arbitration under this Agreement to Arbitrate may be instituted and arbitrated only in an individual capacity, and not on behalf of or as part of any purported class, collective, representative, private attorney general action, or consolidated action (collectively referred to in this Agreement to Arbitrate as a "Class Action"). Furthermore, BSRG/CEI and I agree that neither party can initiate a Class Action in court or in arbitration in order to pursue any claims that are subject to arbitration under this Agreement to Arbitrate.
Moreover, neither party can join a Class Action or participate as a member of a Class Action instituted by someone else in court or in arbitration in order to pursue any claims that are subject to arbitration under this Agreement to Arbitrate. [...]
I acknowledge and agree that this Agreement to Arbitrate is made in exchange for my employment or continued employment, as well as the mutual promises to resolve disputes through arbitration contained in this Agreement. [...]
I understand that, by entering into this Agreement to Arbitrate, I am waiving my right to a jury trial and any right I may have to bring any employment related claim covered by this agreement as a Class Action (as defined herein) or any class or representative action (either in court or in arbitration) or to participate in such an action.
(Doc. No. 30-1 at 5-6). Defendants contend that both of Plaintiff's claims concern an employment dispute; therefore, they fall under the Agreement to Arbitrate and this Court should compel the parties to arbitrate her claims and dismiss Plaintiff's Complaint. (Doc. No. 30 at 3). Plaintiff does not dispute that her claims fall within the scope of the Agreement to Arbitrate, but argues that the Court should not compel arbitration in this matter because she did not assent to the Agreement to Arbitrate, and, alternatively, because the Agreement to Arbitrate is unconscionable.
LEGAL STANDARD
The Federal Arbitration Act ("FAA") provides that a written provision in a contract "to settle by arbitration a controversy thereafter arising out of such contract ... 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. This section of the FAA "embodies the national policy favoring arbitration and places arbitration agreements on equal footing with all other contracts." Seawright v. Am. Gen. Fin. Servs., Inc. , 507 F.3d 967, 972 (6th Cir. 2007) (internal citation and quotation omitted).
Under the FAA, if a party establishes the existence of a valid agreement to arbitrate, the district court must grant the party's motion to compel arbitration and stay or dismiss proceedings until the completion of arbitration. Glazer v. Lehman Bros., Inc. , 394 F.3d 444, 451 (6th Cir. 2005) (citing 9 U.S.C. §§ 3 – 4 ). "Courts are to examine the language of the contract in light of the strong federal policy in favor of arbitration." Stout v. J.D. Byrider , 228 F.3d 709, 714 (6th Cir. 2000) (citation omitted). Therefore, any doubts regarding arbitrability must be resolved in favor of arbitration. Fazio v. Lehman Bros., Inc. , 340 F.3d 386, 392 (6th Cir. 2003). However, while the courts must respect "the liberal federal policy favoring arbitration agreements ... arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed to submit." Seawright , 507 F.3d at 972 (internal citation and quotation omitted). Because arbitration agreements are fundamentally contracts, the enforceability of a purported agreement to arbitrate is evaluated according to the applicable state law of contract formation. Id.
When considering a motion to dismiss and compel arbitration under the FAA, a court has four tasks:
[F]irst, it must determine whether the parties agreed to arbitrate; second, it must determine the scope of that agreement; third, if federal statutory claims are asserted, it must consider whether Congress intended those claims to be nonarbitrable; and fourth, if the court concludes that some, but not all, of the claims in the action are subject to arbitration,
it must determine whether to stay the remainder of the proceedings pending arbitration.
Stout , 228 F.3d at 714 (citing Compuserve, Inc. v. Vigny Int'l Finance, Ltd. , 760 F. Supp. 1273, 1278 (S.D. Ohio 1990) ).
"In order to show that the validity of the agreement is in issue, the party opposing arbitration must show a genuine issue of material fact as to the validity of the agreement to arbitrate, a showing that mirrors the summary judgment standard." Great Earth Cos. v. Simons , 288 F.3d 878, 889 (6th Cir. 2002) (internal quotation marks omitted). Thus, the court views "all facts and inferences drawn therefrom in the light most favorable" to the party opposing arbitration and "determine[s] whether the evidence presented is such that a reasonable finder of fact could conclude that no valid agreement to arbitrate exists." Id. ; see Green Tree Fin. Corp.-Ala. v. Randolph , 531 U.S. 79, 91, 121 S.Ct. 513, 148 L.Ed.2d 373 (2000) (stating that the party challenging arbitration has the burden of proving that the claims at issue are not arbitrable).
DISCUSSION
Here, Plaintiff challenges the arbitrability of her claims on validity grounds, asserting that there is no agreement to arbitrate. Specifically, Plaintiff claims that there was no mutual assent or meeting of the minds. (Doc. No. 38 at 4-10). Alternatively, Plaintiff argues that even if the Court were to find that there was mutual assent, and therefore an agreement existed, the Agreement to Arbitrate is nevertheless unenforceable because it is unconscionable. The Court will explore each of these assertions in turn.
A. Choice of Law
First, the Court must determine which state's law to apply when determining whether a valid agreement exists. When exercising diversity jurisdiction, the Court applies the choice of law principles of the forum state. see Klaxon Co. v. Stentor Elec. Mfg. Co. , 313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). Tennessee follows the rule of lex loci contractus , which provides that "a contract is presumed to be governed by the law of the jurisdiction in which it was executed absent a contrary intent." Williams v. Smith , 465 S.W.3d 150, 153 (Tenn. Ct. App. 2014) (citing Ohio Cas. Ins. Co. v. Travelers Indem. Co. , 493 S.W.2d 465, 467 (Tenn. 1973) ); see also Smith v. Servicemaster , No. 3:09-025, 2009 WL 1457143, at *3 (M.D. Tenn. May 22, 2009) ("Because arbitration agreements are fundamentally contracts, arbitration agreements are evaluated according to the applicable state law of contract formation." (citing Seawright , 507 F.3d at 972 )). Here, as both parties agree, Tennessee law applies because Plaintiff signed the Acknowledgment while at work in Tennessee. Nevertheless, in applying general state-law principles of contract interpretation to the interpretation of an arbitration agreement within the scope of the Act, see Perry v. Thomas , 482 U.S. 483, 493, n.9, 107 S.Ct. 2520, 96 L.Ed.2d 426 (1987), due regard must be given to the federal policy favoring arbitration, and ambiguities as to the scope of the arbitration clause itself resolved in favor of arbitration. see Volt Info. Scis., Inc. v. Bd. of Trustees of Leland Stanford Junior Univ. , 489 U.S. 468, 475–76, 109 S.Ct. 1248, 103 L.Ed.2d 488 (1989).
The Agreement to Arbitrate does not contain a choice-of-law clause. The Court notes the absence of a choice-of-law provision because " ‘Tennessee will honor a choice of law clause if the state whose law is chosen bears a reasonable relation to the transaction and absent a violation of the forum state's public policy.’ " SunTrust Bank v. Ritter , No. E201701045COAR3CV, 2018 WL 674000, at *3 (Tenn. Ct. App. Feb. 1, 2018) (quoting Boswell v. RFD–TV the Theater, LLC , 498 S.W.3d 550, 556 (Tenn. Ct. App. 2016) ) (internal quotation marks omitted).
B. Assent
Plaintiff argues that Defendants’ Motion fails because there was no mutual assent to the Agreement to Arbitrate; therefore, a valid arbitration agreement does not exist. (Doc. No. 38 at 4).
Under Tennessee law, "for a contract to be consummated, the parties must mutually assent to the material terms." Allstate Ins. Co. v. Tarrant , 363 S.W.3d 508, 528 (Tenn. 2012). To determine whether there was mutual assent, courts must objectively assess the parties’ intent as manifested by their actions. Id. In Tennessee, "mutual assent need not be manifested in writing," but "may be manifested, in whole or in party, by the parties’ spoken words or by their actions or inactions." Burton v. Warren Farmers Co-op , 129 S.W.3d 513, 521 (Tenn. Ct. App. 2002) (citing Cole-McIntyre-Norfleet Co. v. Holloway , 141 Tenn. 679, 214 S.W. 817, 818 (1919) ); see also Moody Realty Co., Inc. v. Huestis , 237 S.W.3d 666, 674 (Tenn. Ct. App. 2007) ("The parties’ actions or inactions, as well as spoken words, can establish mutual assent."). It follows that signatures of the parties are not necessary to establish a binding contract, but are merely one form of evidence of assent. see Moody Realty , 237 S.W.3d at 674 (noting that "other manifestations of assent can serve the same purpose in the absence of signature"). "Cases interpreting Tennessee law [ ] have found that continued employment can amount to assent to be bound by an agreement to arbitrate, even in the absence of a signature or other express assent to the terms of the agreement." Sevier Cty. Sch. Fed. Credit Union v. Branch Banking & Tr. Co. , 432 F.Supp.3d 735, 745 (E.D. Tenn. 2020) (citing Seawright , 507 F.3d at 970 ; Fisher v. GE Med. Sys. , 276 F. Supp. 2d 891, 895 (M.D. Tenn. 2003) ).
Defendants assert that because Plaintiff signed the Acknowledgement, which stated "By initialing above and signing below you are agreeing that you have read the above listed policies," Plaintiff undeniably was aware of the Agreement to Arbitrate because one of the policies listed in the Acknowledgment was the "Arbitration of Employee Rights," (Doc. No. 30-3). Defendants contend that Plaintiff's (alleged) awareness of the arbitration agreement, combined with her continued employment, requires its enforcement. (Doc. No. 40 at 1-4). In support, Defendants cite Byrd v. CIGNA Healthcare , No. 1:00-cv-337, 2002 WL 32059026 (E.D. Tenn. 2002), where the district court applied Tennessee law and found that the signing of an acknowledgment (rather than an arbitration agreement), combined with the plaintiff's continued employment, sufficed to demonstrate an intention of the parties to enter into a contract. Id. at *2. Defendants also cite Seawright , where the Sixth Circuit examined Tennessee law and held that the plaintiff's "knowing continuation of employment after the effective date of the arbitration program constituted acceptance of a valid and enforceable contract to arbitrate." 507 F.3d at 970. Thus, Defendants contend that "Plaintiff's continued employment demonstrates the parties’ mutual assent to the Agreement" and the Court should find that Plaintiff assented to the Agreement to Arbitrate. (Doc. No. 30 at 7).
Plaintiff argues that Defendants fail to demonstrate the existence of a valid agreement because "[t]hey have not presented the Court with any version of an arbitration agreement signed and executed by [Plaintiff] .... [n]or have Defendants demonstrated that [Plaintiff] was shown that document at any time." (Doc. No. 38 at 4). Plaintiff contends that "[a]t most, [all] Defendants have produced is an Acknowledgment that does not explicitly identify or incorporate the Employee Arbitration Agreement by name, and on its face does not state that [Plaintiff] was binding herself to any arbitration ‘agreement.’ " (Id. ). Plaintiff asserts that Byrd and Seawright , upon which Defendants rely, are distinguishable because in those cases, it was not disputed that the plaintiffs had notice of and an opportunity to review either the arbitration agreement or policy. (Id. at 9 (citing Byrd , 2002 WL 32059026, at *1-2, Seawright , 507 F.3d at 971 )). Plaintiff maintains that is not the case here, because she was not shown the Agreement to Arbitrate; therefore, she could not have assented to the agreement by her continued employment. (Id. at 5).
As noted above, at this stage, the Court merely determines whether Plaintiff has raised a "genuine issue of material fact as to the validity of the agreement to arbitrate," using an analysis standard that mirrors the summary judgment analysis standard; that is, the Court will view all facts and inferences drawn therefrom in the light most favorable to Plaintiff and will determine whether the evidence presented is such that a reasonable finder of fact could conclude that no valid agreement to arbitrate exists. Great Earth , 288 F.3d at 889.
Defendants submit the declaration of Defendants’ corporate secretary, Kimberly Scott, who stated that each restaurant owned by Defendants maintains a "New Employee Binder" that contains numerous documents, including the Agreement to Arbitrate. (Doc. No. 30-1 at ¶ 3). Ms. Scott averred that the New Employee Binder was accessible to any employee at any time, and is not locked away in any manner. (Id. at ¶ 5). Ms. Scott further averred that "[a]fter being hired by [Defendants] to work in one of [their] restaurants, employees receive and have an opportunity and are encouraged to review the New Employee Binder, including the [Arbitration] Agreement. Once an employee does so, they sign an ... Acknowledgment stating that they ‘agree[ ] that [they] have read the above listed policies’ including but not limited to the Agreement." (Id. at ¶ 6). Attached to Ms. Scott's declaration is an Acknowledgment signed by Plaintiff and dated December 4, 2018. (Id. at 8).
Plaintiff submitted her own declaration wherein she does not dispute that she signed the Acknowledgment, averring that she "was given the Acknowledgement Form ... by a manager named Adam sometime in December 2018 and instructed to sign it." (Doc. No. 38-1 at ¶ 1). However, she averred that she did not make the checkmarks on the Acknowledgment Form and "was never given a copy of a document titled Employee Arbitration Agreement during [her] employment with Defendants" nor did she see any document titled Employee Arbitration Agreement during her employment with Defendants. (Id. at ¶¶ 3, 6-7).
Technically, Plaintiff's averment that she never received or read a document entitled "Employee Arbitration Agreement" is irrelevant because the arbitration agreement at issue here was entitled, "Agreement to Arbitrate." There has been no suggestion that there ever was a relevant arbitration agreement (or "policy") called anything other than "Agreement to Arbitrate." Nevertheless, viewing the fact in the light most favorable to Plaintiff, the Court will construe each reference to the "Employee Arbitration Agreement" as a reference to the Agreement to Arbitrate and thus will construe Plaintiff's declaration as averring that she never saw or received the Agreement to Arbitrate.
Viewing the declarations in a light most favorable to Plaintiff, the Court cannot conclude at this stage that Plaintiff received a copy of the Agreement to Arbitrate. True, Plaintiff's only evidence in support of the contention that she never received or saw the Agreement to Arbitrate is her own affidavit. Smith , 2009 WL 1457143, at *6 ("Plainly, the plaintiff's affidavit is self-serving, and it should not entirely control the decision here. If other factors and evidence indicated that the plaintiff's position was not credible, the court would not afford these statements significant weight."). However, Defendants do not submit any evidence that directly negates Plaintiff's credibility on this point, and their own evidence that Plaintiff did review the Agreement to Arbitrate is weak at best. Not having just fallen off the turnip truck, the undersigned can say with confidence that the mere fact that someone signs a form saying she has read something does not necessarily mean she in fact has read it; often it just means she signed whatever was placed in from of him or her.
And Defendants do not submit the declaration of a manager, or other supervisory employee that contends Plaintiff in fact did receive the Agreement to Arbitrate. Rather, they submit the declaration of the corporate secretary that contends that, generally, all new employees of Defendants at every restaurant are given an opportunity to review the New Employee Binder and then sign the Acknowledgment after they are given such opportunity to review. However, Plaintiff signed the Acknowledgment in December 2018, months after her initial hire in April 2018, and rehire in July 2018. Accordingly, this evidence, when viewed in the light most favorable to Plaintiff, is fairly weak evidence that Plaintiff had an opportunity to review the Agreement to Arbitrate when she was hired. Further, Defendants do not submit any evidence demonstrating that Plaintiff was aware that the Agreement to Arbitrate was present on a bookshelf in the restaurant's office (if indeed it even was, as Defendants contend), and that she knew such agreement was accessible at any time.
Thus, if the affidavits were the only evidence in this case, the facts would be analogous to Smith v. Servicemaster , No. 3:09-0250, 2009 WL 1457143, at *6 (M.D. Tenn. May 22, 2009), where this Court distinguished Seawright and held there was "insufficient evidence that the plaintiff assented to the terms of the [arbitration] program [because] the defendants [ ] failed to demonstrate ... that the plaintiff reviewed the [arbitration] program or that the plaintiff was familiar with the program in any way while he was employed." Id. at *8. The Court explained that "[w]ithout this evidence, the defendants cannot establish that the plaintiff manifested his assent to the terms of the program by continuing to work for the defendants." Id. The evidence before the Court was an affidavit submitted by the plaintiff "in which he contend[ed] that he never received any mailing or e-mail about the [arbitration] program, that he never heard the program being discussed at work, and that he never saw any signs discussing the program while he was at work." Id. at *7. The Court explained that "the defendants have come forth with little evidence that would tend to refute the plaintiff's statements and show that the plaintiff was exposed to the relevant materials." Id. Significantly, however, the Court noted that "[d]uring the time that the plaintiff was an employee, there was apparently no effort made by the defendants to have employees sign a form acknowledging their receipt and understanding of the [arbitration] program. " Id.
Regarding this kind of form, however, the situation here is very different. Defendants do have one significant piece of evidence in their favor: the Acknowledgment signed by Plaintiff, wherein she agrees that she "read" the "Arbitration of Employee Rights" policy. (Doc. No. 38-1). Tennessee law holds that "an individual who signs a contract is presumed to have read the contract and is bound by its contents." 84 Lumber Co. v. Smith , 356 S.W.3d 380, 383 (Tenn. 2011) ; see also Giles v. Allstate Ins. Co. , 871 S.W.2d 154, 156–57 (Tenn. Ct. App. 1993) (explaining that there is a general presumption that a party is bound by a signed contract expressing an agreement because both parties have a duty to learn a contract's contents before signing); see also Birdwell v. Psimer , 151 S.W.3d 916, 920 (Tenn. Ct. App. 2004) (applying Tennessee contract principles to a signed acknowledgement). The above presumption applies unless there is a showing that the individual has been the "victim of fraud." Id.
Here, there are no allegations of fraud, and therefore Plaintiff is presumed to have read the Acknowledgment. And this single-page form is so concise and sparsely populated that one does not have to be gullible to believe that she likely actually read it in full. As discussed, the Acknowledgment states that Plaintiff read a policy regarding arbitration of employee rights, even if the Acknowledgment did not refer to the "Agreement to Arbitrate" by its precise name. Thus, the question is whether a plaintiff who acknowledges, in writing, having read a policy regarding the arbitration of employee rights is deemed to have assented to it even if the plaintiff created a genuine issue of material fact as to whether she actually read or received the agreement.
The Court agrees with Defendants that precluding enforcement of the Agreement to Arbitrate merely because the Acknowledgment instead referenced a "policy" regarding "Arbitration of Employee Rights" would be an "unfortunate triumph of form over substance." (Doc. No. 40 at 2 (citing Bill Brown Const. Co., Inc. v. Glens Falls Ins. Co. , 818 S.W.2d 1, 11 (Tenn. 1991) )). This is because, among other reasons, in referring to an arbitration "policy," the Acknowledgement was not necessarily referring to something different from an arbitration agreement. In the employment context, the line between a "policy" and an agreement is thin, indeed, even if not called an "agreement," an employee "policy" can be the subject of an agreement between an employer and employee if the employee is deemed to have accepted the policy. See , e.g., Vaughn v. Lawrenceburg Power Sys. , 269 F.3d 703, 719 (6th Cir. 2001) (referring to employer's termination of employee for refusing to agree with the employer's policy); Berry v. Cty. of Sonoma , 30 F.3d 1174, 1181-82 (9th Cir. 1994) (employee constructively agreed to the employer's overtime compensation policy by working pursuant to it); United States v. Alfaro , 935 F.2d 64, 65 (5th Cir. 1991) (finding an employer's search of an employee to be consensual when it was conducted pursuant to an "employee-agreed-to company policy"). Indeed, Seawright , a leading Sixth Circuit case, involved no formal written "agreement" per se , but rather the plaintiff's assent to a "program" of arbitration, set forth in a brochure provided to the plaintiff. 507 F.3d at 971. And yet the court had no qualms about speaking in terms of the arbitration "agreement." Id. at 972. In these respects, Smith is identical; there the plaintiff's employer had implemented an arbitration "program" explained to employees in a brochure, and the court described the factual issue as whether an "arbitration agreement" had been formed between the plaintiff and his employer. 2009 WL 1457143, at *8-9. In summary, it is clear that when an employer has an arbitration policy (or "program") to which the plaintiff is deemed to have assented, the (accepted) policy is often referred to as an "agreement" even absent a written document containing the classic hallmarks of a written agreement.
Thus, the Court has little trouble finding that the reference to this arbitration "policy" was in fact a reference to an arbitration "agreement," namely, the Agreement to Arbitrate. Additionally, to the extent that the Acknowledgment's referral to the "Arbitration of Employee Rights" creates any ambiguity, the Court is cognizant that any doubts regarding arbitrability must be resolved in favor of arbitration. Fazio , 340 F.3d at 392.
Although no Tennessee case appears to be directly on point, other jurisdictions with contract law principles substantially similar to Tennessee have held that a sworn statement by a plaintiff that they never received an arbitration policy in the face of a signed acknowledgment that an employee in fact read that arbitration policy will not create a genuine issue of material fact as to whether the parties mutually assented to the agreement. In Douglas v. Oceanview Healthcare, Inc. , No. 3:15-CV-225, 2016 WL 4147244 (S.D. Tex. Aug. 2, 2016), the plaintiff admitted to signing an acknowledgment which clearly stated that she had received a copy of the arbitration agreement. Id. at *4. In Texas, like in Tennessee, "a person that signs a contract is presumed to have read it and is bound by its terms." Id. (citing In re Prudential Co. of Am. , 148 S.W. 3d 124, 134 (Tex. 2004) ). Thus, the court concluded that the plaintiff's "statements that she never received the documents are insufficient to raise a fact issue in light of her signature acknowledging that she received a copy of the Mutual Agreement to Arbitrate." Id. The court further reasoned that to conclude otherwise "would open the floodgate doors, allowing plaintiffs who sign contracts to get around their terms by simply alleging that they did not receive the forms indicated in the contract." Id. Accordingly, the court held "that by signing the [a]cknowledgment [the plaintiff] was placed on inquiry notice of the arbitration agreement" and "by continuing to work after receiving notice of the arbitration agreement, [the plaintiff] accepted the terms of the arbitration agreement." Id. (citing Hathaway v. General Mills, Inc. , 711 S.W.2d 227, 229 (Tex. 1986) ).
Additionally, one court in this circuit, analyzing Kentucky law, has held that "to create an issue of fact on the issue of formation of an arbitration agreement, a plaintiff must do more than simply provide evidence, in the form of her own statement, that she did not see the arbitration agreement notice," when faced with Defendants’ evidence that notice was sent to the plaintiff. Aldrich v. Univ. of Phoenix, Inc. , No. 3:15-CV-00578-JHM, 2016 WL 915287, at *10 (W.D. Ky. Mar. 4, 2016), aff'd , 661 F. App'x 384 (6th Cir. 2016) ; see also Mitchell v. Cambridge Franchise Holdings, LLC , 433 F.Supp.3d 1064, 1071–72 (W.D. Ky. 2020) (reviewing Kentucky law and holding that Plaintiff's denial that she had ever seen the arbitration agreement was insufficient to create a genuine issue of material fact where there was evidence that the plaintiff had notice of the arbitration agreement); Sultanem v. Bright House Networks, L.L.C. , No. 8:12-cv-1739-T-24, 2012 WL 4711963, *2 (M.D. Fla. Oct. 3, 2012) (analyzing Florida law and holding plaintiff's denial of receipt of arbitration agreement alone not sufficient to create issue of fact as to existence of arbitration agreement where plaintiff signed work orders acknowledging agreement containing arbitration clause).
The Court finds persuasive the analysis of the above cited cases, which applied contract interpretation principles substantially similar those applied by Tennessee courts. Here, Plaintiff signed an Acknowledgment stating that she had read the Arbitration of Employee Rights policy; thus, she will be held to this statement that she read Defendants’ policy regarding arbitration of employee rights. see 84 Lumber Co. , 356 S.W.3d at 383 (explaining that under Tennessee law, an individual who signs a contract is presumed to have read the contract and is bound by its contents). This rule is supported by sound policy considerations—namely, the imperative of allowing a party to rely on representations signed (or otherwise made in writing) by a counterparty without having to independently document or confirm the truth of those representations for fear the counterparty will recant them. And the contrary rule would raise serious policy concerns; it well may foster bad (and not employee-friendly) policy by prompting employers to believe that they need to, for example, videotape a new employee receiving orientation materials because a signed confirmation of receipt well may not do the trick.
Furthermore, the Agreement to Arbitrate provides that "I acknowledge and agree that this Agreement to Arbitrate is made in exchange for my employment or continued employment, as well as the mutual promises to resolve disputes through arbitration contained in this Agreement." (Doc. No. 30-1 at 5)."[W]hen the employee was provided with [an arbitration] agreement, the employee did not object to the terms of the [arbitration] agreement, and the [arbitration] agreement specifically stated that continued employment after the effective date would amount to acceptance of the terms of the agreement, Tennessee law treats continued employment as assent to an agreement to arbitrate." Sevier Cty. Sch. Fed. Credit Union , 432 F.Supp.3d at 747 (citing Seawright , 507 F.3d at 970 ; Fisher , 276 F. Supp. 2d at 895 ). Therefore, in light of Plaintiff's signing of the acknowledgment and continued employment thereafter, even viewing the evidence in a light most favorable to Plaintiff, the Court does not find sufficient evidence from which a reasonable fact finder could conclude that Plaintiff did not assent to the Agreement to Arbitrate. Accordingly, Plaintiff has not met her burden to show that a genuine issue of material fact exists as to the arbitration agreement's validity.
The cases Plaintiff rely on do not sway the Court. Plaintiff cites Wofford v. M.J. Edwards & Sons Funeral Home Inc. , 490 S.W.3d 800 (Tenn. Ct. App. 2015) in support of her argument that she could not assent to an arbitration agreement that she has not seen, but this case is inapposite. The issue in Wofford was whether the section of the parties’ contract containing the arbitration clause, a section that the plaintiff undisputedly had not seen, was incorporated by reference into the contract, so that there was a meeting of the minds as to that section. Id. at 813. Here, the issue, is quite different: whether Plaintiff assented to an agreement—of which she is deemed to have been aware based on her signing the Acknowledgment—by her continued employment. Additionally, Plaintiff relies on Capps v. Adams Wholesale Co., Inc. , No. E201401882COAR3CV, 2015 WL 2445970, at *3 (Tenn. Ct. App. May 21, 2015). However, that case also is inapposite because it also involves an arbitration agreement in the consumer setting, and in Capps , "the notices provided on the product [to the individual] did not reference an arbitration agreement[.]" Id. at *3.
C. Unconscionability
Plaintiff next argues that the Agreement to Arbitrate is unenforceable because it is unconscionable. (Doc. No. 28 at 11-13). "Unconscionability may arise from a lack of a meaningful choice on the part of one party (procedural unconscionability) or from contract terms that are unreasonably harsh (substantive unconscionability)." Trinity Indus., Inc. v. McKinnon Bridge Co. , 77 S.W.3d 159, 170 (Tenn. Ct. App. 2001) ; see also Cooper v. MRM Inv. Co. , 367 F.3d 493, 505 (6th Cir. 2004). Tennessee courts "lump the two together" and find unconscionability "when the inequality of the bargain is so manifest as to shock the judgment of a person of common sense, and where the terms are so oppressive that no reasonable person would make them on one hand, and no honest and fair person would accept them on the other." Trinity Indus. , 77 S.W.3d at 171. It is not enough for the moving party to establish procedural or substantive unconscionability alone. Both must be established. see Iysheh v. Cellular Sales of Tenn., LLC , No. 3:17-cv-542, 2018 WL 2207122, at *5 (E.D. Tenn. May 14, 2018) ("Even if the Agreement was [procedurally unconscionable], it is enforceable unless plaintiff can also show it is substantively unconscionable.").
Plaintiff argues that "Defendants’ failure to provide [Plaintiff] with the Employee Arbitration Agreement, failure to refer to it by name on the Acknowledgment, and unilaterally demand that she sign the Acknowledgement without seeing the underlying agreement ... is unquestionably unconscionable." (Doc. No. 38 at 12-13). Plaintiff has not provided the Court with any authority that stands for the proposition that a "failure to provide" an arbitration agreement referred to in an acknowledgment is unconscionable, other than her own unsupported argument. And even if the Court did find such failure unconscionable, Plaintiff at most would have established only acts of Defendants that are procedurally unconscionable. By contrast, what Plaintiff actually needs to establish is that the Agreement to Arbitrate is substantively unconscionable. And Plaintiff has not provided any authority, or argument, showing that the Agreement to Arbitrate itself is substantively unconscionable. And such a showing can hardly be based on the proposition that there is something inherently unreasonably harsh about arbitration agreements, which in fact are favored under federal law. Absent the required showing of substantive unconscionability, Plaintiff's unconscionability defense fails.
As before, the Court finds the cases Plaintiff relies on in support of this argument inapposite, or not fleshed out. Plaintiff cites Hill v. NHC HealthCare/Nashville, LLC , No. M200501818COAR3CV, 2008 WL 1901198 (Tenn. Ct. App. Apr. 30, 2008), where the court noted that "[t]he provisions in the case before us did not explain arbitration in any detail, and no such explanation was otherwise offered. The provisions are less than clear in several particulars, and certainly did not place a patient on notice that large fees might be required as a prerequisite to pursuing any claim against the nursing home." Id. at *17. However, Plaintiff does not develop this argument and explain how this applies to the Agreement to Arbitrate in this case, and the Court does not see how it applies as these concerns are not present from a review of the Agreement to Arbitrate. Additionally, Plaintiff again cites Wofford , but in that case, the court analyzed only a small portion of the arbitration agreement, as it concluded that the full terms of the arbitration agreement were not incorporated into the contract. 490 S.W.3d at 810. Accordingly, Wofford is inapposite.
CONCLUSION
As noted above, when considering a motion to dismiss and compel arbitration under the FAA, a court has four tasks:
[F]irst, it must determine whether the parties agreed to arbitrate; second, it must determine the scope of that agreement; third, if federal statutory claims are asserted, it must consider whether Congress intended those claims to be nonarbitrable; and fourth, if the court concludes that some, but not all, of the claims in the action are subject to arbitration, it must determine whether to stay the remainder of the proceedings pending arbitration.
Stout , 228 F.3d at 714 (citing Compuserve, Inc. , 760 F. Supp. at 1278 ).
For the above-mentioned reasons, the Court determined the parties agreed to arbitration. The Court further concludes that Plaintiff's claims are within the scope of that agreement, and she must arbitrate those claims on an individual basis, as the Agreement to Arbitrate provides. see Epic Sys. Corp., v. Lewis , ––– U.S. ––––, 138 S. Ct. 1612, 1633, 200 L.Ed.2d 889 (2018) (upholding class action waivers in arbitration agreements). Further, the Court finds that Congress did not intend for FLSA claims to be non-arbitrable.
see Holt v. City of Battle Creek , No. 1:15-CV-931, 2017 WL 9883345, at *4 (W.D. Mich. Feb. 14, 2017) ("the Sixth Circuit has held that an arbitration clause like the one at bar, which requires arbitration of ‘any’ dispute arising out of an agreement, is ‘extremely broad’ " and includes FLSA claims arising out of the employment contract at issue).
see Pruiett v. W. End Restaurants, LLC , No. CIV. 3:11-00747, 2011 WL 5520969, at *2 (M.D. Tenn. Nov. 14, 2011) ("There is no dispute that employment-related claims, including FLSA claims, are arbitrable" (citing Floss v. Ryan's Family Steak Houses, Inc. , 211 F.3d 306, 311–12 (6th Cir. 2000) )).
The last issue remaining is whether to stay the action or dismiss it entirely. "Section 3 of the FAA suggests that staying the case and retaining jurisdiction until the arbitration is concluded is appropriate, but the Sixth Circuit has frequently held that a case may be dismissed rather than stayed when all claims in the case are referred to arbitration." Mitchell , 433 F.Supp.3d at 1071 (citing Ozormoor v. T–Mobile USA, Inc. , 354 F. App'x 972, 975 (6th Cir. 2009) ). Accordingly, the Court will grant Defendants’ Motion to Compel Arbitration on an Individual Basis (Doc. No. 30), and will dismiss this action without prejudice subject to the parties’ right to move to re-open this case for entry of an arbitration award or for any other relief to which the parties may be entitled.
An appropriate Order will be entered.