United States District Court, D. Arizona
ORDER
Douglas L. Rayes United States District Judge
Before
the Court is Defendant Conn's Appliances
Incorporated's (âConn'sâ) motion to dismiss or, in
the alternative, stay proceedings and compel arbitration.
(Doc. 12.) The motion is fully briefed. For the following
reasons, Conn's motion is granted in part and denied in
part.
I.
Background
Conn's
operates retail stores selling furniture, household
appliances, and electric goods. (Doc. 1 ¶¶ 6-7.)
Plaintiff Konnie Drake was an employee at Conn's location
on East Thomas Road, Phoenix, Arizona from July 2015 to June
2018. (Doc. 24-1 at 2.) Drake filed a complaint against
Conn's pursuant to the Civil Rights Act of 1866 and Title
VII of the Civil Rights Act of 1964, alleging that he was the
victim of racial harassment from his manager and other
co-workers; that neither Drake's manager nor human
resources were sufficiently responsive to his complaints; and
that his manager retaliated against Drake for reporting the
racial harassment. (Doc 1 ¶¶ 1, 11-39.) Conn's
subsequently moved to dismiss the action or, in the
alternative, stay proceedings and compel arbitration. (Doc.
12.)
Relevant
to resolution of the present motion before the Court, Drake
signed an acknowledgement form for Conn's Dispute
Resolution Plan (“DRP”) when he began his
employment with Conn's. (Doc. 12-1 at 15.) The DRP
requires that, as a condition of employment, any controversy
or claim arising during or after employment will be submitted
for final and binding arbitration. (Id. at 9.) The
acknowledgement form that Drake signed provides, “I
have received a copy of Conn's Dispute Resolution Plan .
. . . I understand that I am agreeing to substitute one
dispute resolution form (arbitration) for another
(litigation) and that I am, hereby, waiving my right to have
covered disputes resolved by a court and/or jury.”
(Id. at 15.) The DRP expressly requires the
arbitration of “claims for discrimination []including
discrimination based on . . . race . . . [and] claims of
retaliation due to exercising statutorily protected rights .
. . .” (Id. at 9-10.) The DRP also contains a
delegation clause that states the DRP “[c]overs any
dispute concerning the arbitrability of any controversy or
claim.” (Id. at 9.)
II.
Legal Standard
The
Federal Arbitration Act (“FAA”) provides that
written contracts to arbitrate disputes “shall be
valid, irrevocable, and enforceable except upon grounds that
exist at common law for the revocation of a contract.”
9 U.S.C.A. § 2; see AT&T Mobility LLC v.
Concepcion, 563 U.S. 333 (2011) (discussing liberal
federal policy favoring valid arbitration agreements). In
evaluating the validity of an arbitration agreement,
“generally applicable contract defenses, such as fraud,
duress, or unconscionability, may be applied to invalidate
arbitration agreements without contravening [9 U.S.C.] §
2.” Ticknor v. Choice Hotels Int'l, 265
F.3d 931, 936-37 (9th Cir. 2001).
Because
of the strong federal policy favoring arbitration agreements,
the FAA “leaves no place for the exercise of discretion
by a district court, but instead mandates that district
courts shall direct the parties to proceed to arbitration on
issues as to which an arbitration agreement has been
signed.” Dean Witter Reynolds, Inc. v. Byrd,
470 U.S. 213, 218 (1985). Therefore, this Court's limited
role is to determine “(1) whether a valid agreement to
arbitrate exists and, if it does, (2) whether the agreement
encompasses the dispute at issue.” Chiron Corp. v.
Ortho Diagnostic Sys., Inc., 207 F.3d 1126,
1130 (9th Cir. 2000). “Where a contract contains an
arbitration [agreement], courts apply a presumption of
arbitrability as to particular grievances, and the party
resisting arbitration bears the burden of establishing that
the arbitration agreement is inapplicable.” Wynn
Resorts, Ltd. v. Atl.-Pac. Capital, Inc., 497 Fed.
App'x. 740, 742 (9th Cir. 2012).
III.
Discussion
Conn's
seeks to compel arbitration pursuant to the provisions of the
DRP. Conn's argues that the DRP is a valid agreement and
that all issues, including the question of arbitrability,
have been delegated to the arbitrator and are thus outside
the scope of this Court's review. (Doc. 33 at 2-4.) In
response, Drake argues that the DRP is procedurally and
substantively unconscionable, that he did not assent to the
DRP, and that the DRP's requirements to arbitrate are
permissive and not mandatory.
A.
Arbitrability
“Although
gateway issues of arbitrability presumptively are reserved
for the court, the parties may agree to delegate them to the
arbitrator.” Momot v. Mastro, 652 F.3d 982,
987 (9th Cir. 2011). “Courts should not assume that the
parties agreed to arbitrate arbitrability unless there is
‘clear and unmistakable' evidence that they did
so.” First Options of Chi., Inc. v. Kaplan,
514 U.S. 938, 944 (1995). “Clear and unmistakable
‘evidence' of agreement to arbitrate arbitrability
might include . . . a course of conduct demonstrating assent
. . . or . . . an express agreement to do so.”
Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63,
79-80 (2010). Even if a delegation of arbitrability is clear
and unmistakable, it may be found unenforceable if the
delegation itself is unconscionable. Id. at 71-74.
The
Court finds clear and unmistakable evidence that Drake and
Conn's expressly agreed to delegate the issue of
arbitrability to the arbitrator. Pursuant to the DRP, it
“[c]overs any dispute concerning the arbitrability of
any such controversy or claim . . . .” (Doc. 12-1 at
9.) Furthermore, “incorporation of the [American
Arbitration Association (AAA)] rules constitutes clear and
unmistakable evidence that [the] contracting parties agreed
to arbitrate arbitrability.” Brennan v. Opus
Bank, 796 F.3d 1125, 1130 (9th Cir. 2015). The DRP
expressly provides that the arbitration will be conducted
according to the rules of the AAA. (Doc. 12-1, at 12, 13.)
Such provisions are clear and unmistakable evidence of an
express agreement to arbitrate arbitrability.
B.
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