Opinion
Case No. 04-588-KI.
July 30, 2004
Scott N. Hunt, Matthew B. Duckworth, Busse Hunt, Portland, Oregon, Attorneys for Plaintiff.
Lawrence B. Hunt, Brad A. Macomber, Hunt Associates, PC, Portland, Oregon, Attorneys for Defendant.
OPINION AND ORDER
Plaintiff Arnesia Gaines alleges race discrimination and retaliation claims under 42 U.S.C. § 1981, Title VII, and ORS Ch. 659A, along with a wrongful discharge claim, against her former employer Mr. Formal, Inc. Before the court is Defendant's Motion to Abate Proceedings and Compel Binding Arbitration (#5). For the reasons below, I deny the motion.
FACTS
At some point in her employment for defendant, Gaines signed a one-page Acknowledgement which states in part:
4. The undersigned agrees and contracts that any dispute between the undersigned and Mr. Formal, Inc., which may arise at any time concerning any matter must be resolved by binding arbitration pursuant to the rules of the American Arbitration Association. In any such arbitration proceeding, each party will be responsible for one half of the costs of such arbitration, aside from the filing fee for which the Claimant will be solely responsible.
Def.'s Mem., Ex. 1.
Gaines states that when she signed the Acknowledgement, no one explained that it would require her to arbitrate employment discrimination claims, no one explained what arbitration meant or what types of disputes would be subject to arbitration, and no one explained that she was entering into a contract of any nature. She did not realize that she was waiving her right to a jury on these claims.
DISCUSSION
Gaines contends that she did not knowingly agree to arbitrate her employment discrimination claims so the court should not enforce the arbitration agreement.The Federal Arbitration Act (FAA), 9 U.S.C. § 1 et seq., was enacted "to reverse the longstanding judicial hostility to arbitration agreements." Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 24 (1991). The United States Supreme Court has concluded that the FAA demonstrates a "liberal federal policy favoring arbitration agreements." Id. at 25 (citing Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 24 (1983)). Statutory claims, as well as common law claims, may be arbitrated. See Gilmer (Age Discrimination in Employment Act subject to arbitration pursuant to NYSE Rule 347);Saari v. Smith Barney, Harris Upham Co., Inc., 968 F.2d 877, 883 (9th Cir.) (slander subject to arbitration pursuant to NYSE Rule 347), cert. denied, 506 U.S. 986 (1992).
Employers may require employees to sign agreements to arbitrate Title VII claims as a condition of employment. The agreements are enforceable as long as they comply with traditional principles of contract law. EEOC v. Luce, Forward, Hamilton Scripps, 345 F.3d 742, 750 (9th Cir. 2003).
Under certain statutes, such as Title VII and related state statutes, an employee must knowingly agree to arbitrate employment disputes before he waives his statutory rights.Prudential Ins. Co. of America v. Lai, 42 F.3d 1299, 1304 (9th Cir. 1994), cert. denied, 116 S.Ct. 61 (1995). Moreover, any agreement to waive the right to a judicial forum for civil rights claims in exchange for employment must be explicitly presented to the employee and the employee must explicitly agree to waive the specific right in question. Nelson v. Cyprus Bagdad Copper Corp., 119 F.3d 756, 762 (9th Cir. 1997), cert. denied, 523 U.S. 1072 (1998).
Although the cases cited by Gaines are not on point factually, their analyses are helpful. In Nelson, the employee signed an acknowledgment that he had received a company handbook and that he agreed to read and understand its contents. The handbook contained a grievance procedure culminating in arbitration which stated that it would be the exclusive procedure for processing any disputes that arise, including those based on state or federal laws, and that the employee was precluded from filing an action in court concerning any matter that could have been addressed through the described procedures. Id. at 758. The court held that the employee did not enter into a knowing agreement to arbitrate his disability discrimination claim. The court noted that the employee only agreed to read the handbook but did not agree to be bound by its terms. Furthermore, the acknowledgement form did not notify the employee that he was waiving specific statutory remedies under civil rights statutes. Consequently, the court did not compel arbitration. Id. at 761-62.
In Lai, employees signed a U-4 form when applying for work which contained an agreement "to arbitrate any dispute, claim or controversy that . . . is required to be arbitrated under the rules, constitutions, or bylaws of the organizations with which I register." Lai, 42 F.3d at 1301. The employees were told that the form was an application to take a required test and were not given the chance to read the forms. Further, the employees were not given a copy of the NASD manual which contained the terms of the arbitration agreement but did not mention employment disputes. The court did not compel the employees to arbitrate their state statutory discrimination claims after concluding that they did not knowingly agree to submit that type of dispute to arbitration. The court noted that neither the U-4 nor the NASD manual adequately described the types of disputes the parties agreed to arbitrate. Id. at 1305.
The court reasoned that the FAA applied to the state claims the employee raised in the same manner as it applied to Title VII claims. Id. at 1303 n. 1.
Here, the paragraph concerning arbitration to which Gaines agreed refers to "any dispute between the undersigned and Mr. Formal, Inc., which may arise at any time concerning any matter." There is no mention of a waiver of a right to a jury trial. Thus, the clause does not meet Nelson's requirement that a waiver of the right to a judicial forum for civil rights claims be expressly presented and agreed to by the employee. The paragraph does not reference any of the statues under which Gaines brings her claims. No mention is made of any particular claims, including discrimination claims. As in Lai, the paragraph does not even state that it applies to employment disputes.
I conclude that Gaines did not knowingly agree to arbitrate the employment disputes she has alleged. Accordingly, I deny the motion to compel arbitration of those disputes. I do not need to reach Gaines' argument concerning whether the agreement is unconscionable.
CONCLUSION
Defendant's Motion to Abate Proceedings and Compel Binding Arbitration (#5) is denied.
IT IS SO ORDERED.