Opinion
CV-03-1564-ST.
February 20, 2004
FINDINGS AND RECOMMENDATION
INTRODUCTION
On November 14, 2003 plaintiff, Gregory Roque ("Roque") filed this action against defendant, Applied Materials, Inc. ("Applied"), alleging that he was the victim of discrimination in his employment because: (1) he has an actual or perceived disability, in violation of the Americans with Disability Act ("ADA"), 42 U.S.C. § 12101-12213 and ORS 659A.100 — 659A.145; and (2) he used medical leave, pursuant to the Family Medical Leave Act ("FMLA"), 29 U.S.C. § 2601-2654, and the Oregon Family Leave Act ("OFLA"), ORS 659A.150 — 659A.186. Roque also asserts a tort claim for wrongful discharge.
On December 15, 2003, Applied filed a Motion to Dismiss or in the Alternative to Abate and Compel Arbitration (docket #7), arguing that Roque's claims are governed by an arbitration clause in his employment agreement with Applied.
This court has federal question jurisdiction over the ADLA and FMLA claims pursuant to 28 U.S.C. § 1331 and supplemental jurisdiction over plaintiff's state law claims pursuant to 28 U.S.C. § 1367.
Now before this court is defendant's Motion to Dismiss or in the Alternative to Abate and Compel Arbitration (docket #7). For the reasons that follow, defendant's motion should granted and this case should be dismissed in favor of arbitration.
FACTUAL BACKGROUND
Roque began his employment with Applied on October 30, 2000. On September 23, 2000, Roque was presented by Applied with a standard form document entitled "Employee Agreement." Roque Aff, ¶ 2. The Employee Agreement and other documents were given to Roque in a room of approximately 150-200 people and he was rushed through the paperwork in an "assembly line fashion." Id. "[E]veryone was to sign and then the documents were passed to the left. There was very little time, if any, given to explain or ask for clarification of the particular documents before [Roque] had to sign." Id.
Pages one, two, three, and five of the Employee Agreement contain various restrictions on, and duties of, the employee, such as to protect Applied's confidential information, patents, trade secrets, etc. and to not engage in solicitation of its employees for a period of one year after termination of employment. Defendant's Ex 1, pp. 1-3, 5. Page four contains a page long paragraph 6 ("the Arbitration Provision") that states in pertinent part: "[A]ny controversy or claim arising out of or relating to my employment or the termination of my employment as against [Applied], and as against me, shall be finally settled by binding arbitration[.]" Id at 4. It also states that "[t]he parties are each waiving their rights to trial by jury, in exchange for arbitration," and further specifies that such claims subject to arbitration shall include, "but are not limited" to:
any claims under (as amended) Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1866, the Civil Rights Act of 1991, the Age Discrimination in Employment Act ["ADEA"], the Rehabilitation Act of 1973, the [ADA], the [FMLA], the Employee Retirement Income Security Act of 1974, and any other federal, state or local statute, regulation or common law doctrine, including contract or tort, regarding employment discrimination, the terms and conditions of employment or termination of employment.Id.
With respect to remedies, the Arbitration Provision provides that:
the parties will have the same statutory remedies in arbitration as to those statutory claims as they would otherwise have had if such a claim had been filed in a court of law, including, where authorized by statute, compensatory and punitive damages, injunctive relief and attorneys' fees.Id.
The Arbitration Provision requires Applied to pay all costs of the American Arbitration Association ("AAA") and the arbitrator "less those amounts [Roque] would otherwise be required to pay were his claims litigated in a court of law." Id. Depositions may be taken and discovery obtained as provided in the Federal Rules of Civil Procedure ("FRCP"), "subject to the limitation by the arbitrator to a reasonable amount necessary for both parties to be able to present their claims and defenses." Id. Finally, the Arbitration Provision does not apply to:
claims for workers compensation or unemployment compensation or to claims for injunctive relief arising out of or related to misappropriation of trade secrets or confidential information, unfair competition or breach of any non-competition or non-solicitation agreement[.]Id.
No one explained the Arbitration Provision to Roque and he was not given an opportunity to refuse to agree to it or to negate any of its terms. Roque Aff, ¶ 3. Roque signed the Employee Agreement and initialed each of its five pages. Defendant's Ex 1.
DISCUSSION
Applied argues that the Employee Agreement requires Roque's claims to be submitted to arbitration because they arise out of his employment relationship, which is purportedly governed by the Arbitration Provision. Therefore, Applied argues that the Federal Arbitration Act ("FAA"), 9 U.S.C. § 1-16, requires dismissal of this case in favor of arbitration, or alternatively, a stay of the case pending the outcome of arbitration.
Roque counters that: (1) a Motion to Dismiss is not the appropriate mechanism for testing the validity of the Arbitration Provision; (2) Applied has not served him properly under the FAA and the FRCP; (3) the Arbitration Provision is not enforceable because it is unconscionable; and (4) even if arbitration is required, this case should be stayed and not dismissed. I. Enforceability of the Arbitration Clause A. Applicable Law
The 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. 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).
The district court must order arbitration under § 4 of the FAA 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 held in Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 122-23 (2001), that an agreement to arbitrate claims arising out of an employment contract, such as the Employee Agreement in this case, is not exempt from the FAA. In reaching this conclusion, the Court noted the benefits of enforcing arbitration provisions in the employment context. Id at 123 ("[A]rbitration agreements allow parties to avoid the cost of litigation, a benefit that may be of particular importance in employment litigation. . . ."). However, as provided under § 2 of the FAA, employment contracts containing arbitration agreements are subject to "such grounds as exist at law or in equity for the revocation of any contract." See id at 112. When these grounds exist, such as unconscionability, courts may refuse to enforce arbitration agreements. Ingle v. Circuit City Stores, Inc., 328 F.3d 1165, 1170 (9th Cir 2003).
Therefore, under the FAA and relevant case law, this court must compel arbitration of the claims if: (1) the parties have entered into a valid agreement to arbitrate; (2) the claims fall within the scope of the agreement; and (3) for federal statutory claims, the party opposing arbitration has not met his burden of proving that Congress intended to preclude a waiver of judicial remedies. See Mitsubishi Motors Corp. v. Solar Chrysler-Plymouth, Inc., 473 U.S. 614, 626-27 (1985); Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 25 (1991); Torrance v. Aames Funding Corp., 242 F. Supp.2d 862, 868 (D Or 2002).
The Court has repeatedly affirmed that all doubts as to the scope of arbitrability must be resolved in favor of arbitration. Volt Info. Sci. v. Bd. of Tr. 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. Procedural Compliance with the FAA
This court must first address whether Applied has fulfilled the following procedural requirements of § 4 of the FAA:
A party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition any United States district court which, save for such agreement, would have jurisdiction under Title 28, in a civil action or in admiralty of the subject matter of a suit arising out of the controversy between the parties, for an order directing that such arbitration proceed in the manner provided for in such agreement. Five days' notice in writing of such application shall be served upon the party in default. Service thereof shall be made in the manner provided by the Federal Rules of Civil Procedure. The court shall hear the parties, and upon being satisfied that the making of the agreement for arbitration or the failure to comply therewith 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.1. Use of a Motion to Dismiss
Roque argues that Applied's Motion to Dismiss based on a contractual arbitration clause is not authorized by any of the seven explicitly enumerated defenses in FRCP 12(b). Instead, Roque asserts that § 4 of the FAA requires Applied to "petition" this court (or any applicable federal district court) in a statutory proceeding brought under the FAA itself.
Roque is incorrect. If a claim must be submitted to arbitration because the standards set forth in the FAA are met ( e.g. it is a valid, enforceable arbitration clause), then the FAA removes a district court's subject matter jurisdiction to hear the claim. A motion to dismiss can be based on a lack of subject matter jurisdiction under FRCP 12(b)(2). Therefore, Applied's Motion to Dismiss pursuant to FRCP 12(b) is one means to raise its arbitration defense. In effect, Applied's motion is a petition to this court within the meaning of § 4 of the FAA.
2. Service on Roque
Roque next argues that Applied did not give him five days' written notice of its application, as required by § 4 of the FAA. Roque's argument fails for two reasons.
First, the five day notice period in § 4 of the FAA requires the party opposing arbitration to be given five days' notice before a hearing is held regarding the application for arbitration. It does not require that the party be given five days' notice from the date the application is made. See Unionmutual Stock Life Ins. Co. of Am. v. Beneficial Life Ins. Co., 774 F.2d 524, 526 (1st Cir 1985) (holding that service and notice satisfied the FAA's five day notice requirement when "as of January 18 [the date the defendant received the application], [defendant] was on notice that a hearing on the order compelling arbitration could be held by the district court any time after January 23 [five days after the date the application was received]"). Here Applied served notice of its Motion to Dismiss in the manner provided by FRCP 12 on December 15, 2003. At that point, the FAA's five day notice requirement was satisfied as long as the hearing on Applied's motion was scheduled for December 20, 2003, or later. The hearing on the motion was scheduled for January 20, 2004 (docket #11). Therefore, Roque was given proper service under § 4 of the FAA.
Second, the notice and service provision in § 4 of the FAA is unnecessary where the party opposing arbitration has initiated litigation. See First Family Fin. Serv., Inc. v. Fairley, 173 F. Supp.2d 565, 572 (SD Miss 2001) ("The Court cannot conceive of a more explicit refusal to arbitrate than the bringing of an arbitrable claim in state court that one has contractually agreed to arbitrate"). The purpose of the notice and service provision is to give the adverse party an opportunity to unequivocally refuse to arbitrate. "The statutory procedure [of § 4] ensures that there is a genuine dispute as to whether to arbitrate. Where an application for arbitration is in fact filed, and five days' written notice of the demand is given, the court will not be involved unless the responding party fails to agree to the demand" All Saint's Brands, Inc. v. Brewery Group Denmark, A/S, 57 F. Supp.2d 825, 828 (D Minn 1999). By filing a complaint in court, a party gives the adverse party actual notice of a refusal to arbitrate sufficient to satisfy § 4 of the FAA. Id ("We conclude that the notice requirement could be satisfied by a Complaint itself"); see also Downing v. Merrill Lynch, Pierce, Fenner Smith, Inc., 725 F.2d 192 (2d Cir 1984) (Mansfield, J., concurring) ("I would note in this regard that the plaintiff's failure to provide the five-day written notice required by § 4 would not prevent the district court from proceeding in this case, since [the defendant] clearly had received actual notice of the demand to arbitrate").
C. Unenforceable Contract of Adhesion
As a threshold issue, Roque contends that the Arbitration Provision is an unenforceable contract of adhesion. Under Oregon law, a contract of adhesion is a form contract imposed by a party with superior bargaining power and not subject to negotiation. Collins v. Farmers Ins. Co of Or., 312 Or. 337, 362, 822 P.2d 1146, 1160 (1991) (citing cases). Applied responds that whether the Employee Agreement was an unenforceable contract of adhesion must be decided by the arbitrator, not this court.
Where a court is called upon to determine the "threshold question of arbitrability," the court should consider only "the validity and scope of the arbitration clause itself," and not the contract as a whole. Republic of Nicaragua v. Standard Fruit Co., 937 F.2d 469, 475 (9th Cir 1991), cert denied, 503 U.S. 919 (1992). However, a court may resolve the claim that an arbitration clause contained in a contract was procured through fraud. Moseley v. Electronic Missile Facilities, Inc., 374 U.S. 167, 171 (1963) (holding that when the petitioner "attacked not only the subcontracts, but also the arbitration clauses contained therein, as having been procured through fraud," the district court must determine whether there was fraud in the inducement of the arbitration clause); Cohen v. Wedbush, Noble, Cooke, Inc., 841 F.2d 282, 286-87 (9th Cir 1988), overruled on other grounds by Tichnor v. Choice Hotels Int'l, Inc., 265 F.3d 931, 941-42 (9th Cir 2001) (holding that when plaintiff claimed fraud in the inducement of both the arbitration clause and the contract as a whole, the claim of fraud in the inducement of the arbitration "bears directly on the validity of their assent to the arbitration clause" which "is therefore not suitable for arbitration and the courts `may proceed to adjudicate it'").
If Roque were challenging the entire Employee Agreement as a contract of adhesion, rather than the Arbitration Provision in particular, then the arbitrator, not the court, must decide the validity of the Employee Agreement. See Torrance, 242 F. Supp.2d at 871-71 ("to the extent the plaintiffs claim the entire refinancing transaction was an unenforceable contract of adhesion, they attack the contract as a whole, rather than the arbitration clause in particular"). However, Roque is not arguing that the entire Employee Agreement is unenforceable. Instead, he is contesting only the Arbitration Provision contained in the Employee Agreement. Therefore, this court is empowered under § 2 of the FAA to determine the validity of the Arbitration Provision.
D. Validity of the Arbitration Provision 1. Legal Standard
In determining the validity of an arbitration agreement, federal courts "should apply ordinary state-law principles that govern the formation of contracts." Circuit City Stores, Inc. v. Adams, 279 F.3d 889, 892 (9th Cir), cert denied, 122 S Ct 2329 (2002), citing First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995). Accordingly, this court must apply Oregon contract law. Additionally, under Oregon law, unconscionability is a legal issue that must be assessed at the time the contract was formed. Best v. US Nat'l Bank, 303 Or. 557, 560, 739 P.2d 554, 556 (1987).
Oregon has a dearth of case law concerning unconscionability in employment contracts. However, both Oregon and California have relied on UCC § 2-302 (Unconscionable Contract or Clause) in interpreting unconscionability in contracts of other types. Compare W.L. May Co. v. Philco-Ford Corp, 273 Or. 701, 707, 543 P.2d 283, 286-87 (1976) with AM Produce Co. v. FMC Corp., 186 Cal.Rptr. 114, 121-22 (Cal 1982). As a result, Roque urges this court to adopt California's test for ascertaining unconscionability.
Under California law, unconscionability refers to "an absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party." Ingle, 328 F.3d at 1170. Thus, in California, the test to determine if a contract to arbitrate is unconscionable is whether there is " both procedural and a substantive element of unconscionability." Id, quoting Fergeson v. Countrywide Credit Indus., Inc., 298 F.3d 778, 783 (9th Cir 2002) (emphasis added). Courts can use a sliding scale in which the greater the unreasonableness of the substantive terms, the less procedural unconscionability is required to find the contract unenforceable. Id at 1171.
However, it is unnecessary for this court to decide whether Oregon would adopt the California test to evaluate an arbitration clause in an employment contract. As discussed below, the Arbitration Provision is procedurally unconscionable, but lacks any substantive unconscionability. Therefore, even under California precedents using a sliding scale approach, the Arbitration Provision is enforceable regardless of the manner in which it was presented to Roque.
2. Procedural Unconscionability
The Arbitration Provision here is procedurally unconscionable under California precedents. "[W]hen a party who enjoys greater bargaining power than another party presents the weaker party with a contract without a meaningful opportunity to negotiate, `oppression, and, therefore, procedural unconscionability, are present.'" Id at 1172, quoting Fergeson, 298 F.3d at 784, Szetela v. Discover Bank, 97 Cal App4th 1094, 1100, 118 Cal Rptr2d 862 (Cal Ct App. 4th 2002). In this case, Applied had superior bargaining power as an employer presenting Roque, a potential employee, with a form "as is" Arbitration Provision. Roque was presented with this Arbitration Provision in a room full of hundreds of people and asked to sign it in a rushed, assembly line fashion. He had no meaningful opportunity to negotiate its terms. Therefore, the Arbitration Provision was procedurally unconscionable.
3. Substantively Unconscionable Due to Lack of Mutuality
Roque asserts that the Arbitration Provision is substantively unconscionable by overly favoring Applied. The Arbitration Provision states that any employment-related controversy "as against Applied . . . and against [Roque], shall be finally settled by binding arbitration," thereby clearly demonstrating that the provision requires both the employer and the employee to arbitrate all employment related disputes, whether brought by or against the employee. Nonetheless, Roque believes that in reality the Arbitration Provision applies only to claims by employees, while excluding an employer's claims against an employee. As support, Roque notes that each of the statutory claims specifically mentioned in the Arbitration Provision involve causes of action that can only be brought by an employee against an employer, such as ADA and ADEA claims.
Furthermore, the first three pages of the Employee Agreement place various duties on an employee to protect confidential information, patents, trade secrets, etc. and not to engage in solicitation of Applied's employees for a period of one year after termination of employment. Yet the last paragraph of the Arbitration Provision specifically indicates that its terms do not apply to claims for injunctive relief arising out of misappropriation of trade secrets or confidential information, unfair competition, or breach of any non-competition or non-solicitation agreement. Roque argues that a comparison of these employee duties with the Arbitration Provision's exceptions further demonstrates a lack of mutuality of obligation.
a. Oregon Law
In asserting that this lack of mutuality is unconscionable, Roque relies primarily on Ingle, supra, which held unconscionable an arbitration provision in an employment application that lacked mutuality of obligation. In reaching that conclusion, the Ninth Circuit applied California law which requires "some modicum of bilaterality" in an arbitration agreement. Armendariz v. Found. Health Psychcare Servs., Inc., 24 Cal.4th 83, 117, 99 Cal.Rptr.2d 745, 770, 6 P.3d 669, 692 (2000). "[W]ithout at least some reasonable justification for such one-sidedness based on `business realities,'" the California Supreme Court has reasoned that arbitration is "less a forum for neutral dispute resolution and more as a means of maximizing employer advantage." Id. Oregon rejects California law on this point, holding instead that equivalent obligations are not required for a contract to be enforceable. Torrance, 242 F. Supp.2d at 872, citing Davis v. Dean Vincent, Inc., 255 Or. 233, 240, 465 P.2d 702, 705 (1970) ("mutuality of remedy (as distinguished from mutuality of obligation) is no longer required"); Tiggelbeck v. Russell, 187 Or. 554, 583, 213 P.2d 156, 169 (1949) ("The rule which required that there must have been mutuality of remedy at that time when the contract was entered into, or the contract will not afterward be specifically enforced, has been repudiated for all practical purposes"). Mutuality of obligation means that "each party is under a legal duty to the other; each has made a promise and each is an obligor." Id, citing Pac. Pines Constr. Corp. v. Young, 257 Or. 192, 196, 477 P.2d 894, 896 (1970), quoting 1A Corbin, CONTRACTS § 152, p. 4.
Here, mutuality of obligation exists because Applied agreed to give Roque a job in exchange for: (1) Roque agreeing to arbitrate any of his employment-related claims; and (2) subjecting most of Applied's employment-related claims to arbitration. This is not a particularly uneven tradeoff. But even if it were, the requirement of consideration is met despite one party being more obligated than the other.
b. California Law
Even under California law on mutuality of obligation, the Arbitration Provision is acceptable. First, "the list of legal claims the arbitration agreement covers is telling" when determining whether it is unconscionable or not. Ingle 328 F.3d at 1174 n 8. Here, the Arbitration Provision specifically applies to "any" employment-related claim brought by or against Applied, unlike the one involved in Ingle. Id at 1173 ("Circuit City's arbitration agreement applies only to `any and all employment-related legal disputes, controversies or claims of an Associate,' thereby limiting its coverage to claims brought by employees"). Furthermore, the Arbitration Provision explicitly states that the statues listed are examples of the types of claims to which it applies, but its scope is "not limited to" claims brought under these statutes (nor does it limit common law actions). Therefore, the Arbitration Provision does not lack mutuality of obligation by only specifically mentioning employee claims.
Second, Roque is incorrect when he argues that the Arbitration Provision could only realistically regulate employee claims. Although it lists no statutes where an employer can bring claims against an employee, very few federal statutes provide an employer with a specific cause of action against an employee. Therefore, the absence of their listing is not surprising. Furthermore, Applied could still bring numerous potential claims against Roque that would be governed by the Arbitration Provision, despite the specific exclusions for an employer's claims for injunctive relief related to trade secrets, confidential information, non-solicitation, etc. The other claims Applied could bring include: damages related to disclosure of trade secrets, confidential information, etc. and breach of the non-solicitation agreement; breach of contract; conversion; breach of fiduciary duty or duty of loyalty; intentional interference with contract; intentional interference with prospective economic advantage; or indemnification. Additionally, despite exceptions to the Arbitration Provision for claims for injunctive relief related to the use of confidential information, trade secrets, etc., none of these claims could be heard by a jury. Thus, the tradeoff between a court hearing and arbitration is not particularly substantial. Finally, despite the injunctive relief exceptions, the Arbitration Provision excludes several specific claims an employee could bring, such as workers and unemployment compensation claims. Because the exemptions flow to both sides, the parties' obligations are mutual even under California law. 4. Other Arguments for Substantive Unconscionability
Even under California law there can be "some reasonable justification for such one-sidedness based on business realities;" the principle of mutuality of obligation does not require the parties to have made identical promises to each other. See Torrance, 242 F. Supp.2d at 872. An employer has a strong interest in maintaining its confidential information or protecting its employees from solicitation. Therefore, it does not strike this court as unreasonable or overly oppressive for an employment agreement to forego arbitration of claims for injunctive relief regarding such matters in favor of permitting claims in a court of law where an employer might get swifter (and more complete) injunctive relief. This is especially so where claims for damages regarding such matters are still subject to arbitration, as in the Arbitration Provision, and there have been other trade-offs to bar arbitration for certain claims to which swift relief from an established administrative framework would likely be important to an employee (unemployment and workers compensation).
Roque does not raise any further arguments for substantive unconscionability. As a result, this court will not review every potentially applicable unconscionability precedent for him, but does note that the Arbitration Provision lacks the terms found unconscionable in Torrance and Ingle, whether applying Oregon or California law.
In Torrance, this court found the arbitration agreement unconscionable because it placed a limitation on statutorily-granted damages, required the plaintiffs to pay a portion of the arbitrator's fees, and required the proceedings to be kept confidential. 242 F. Supp.2d at 873-76. Here, the Arbitration Provision has no limit on statutorily-granted damages. In fact, it specifically states that the parties will have the same remedies for their statutory claims in arbitration as they would otherwise have in a court. The Arbitration Provision also does not require the employee to pay any of the arbitration costs, other than those he would be required to pay were his claims litigated in court. This requirement does not seem unreasonable because it ensures the employee gets the same opportunity, at the same costs, to arbitrate his claims as he would to litigate them. See Circuit City Stores, Inc. v. Adams, 279 F.3d at 895, citing Cole v. Burns Int'l Sec. Serv., 105 F.3d 1465, 1482 (DC Cir 1997) (focusing on whether "an employee who is made to use arbitration as a condition of employment "effectively may vindicate [his or her] statutory cause of action in the arbitral forum"). Finally, the Arbitration Provision does not require arbitration proceedings be kept confidential, unlike the provision found unacceptable in Torrance.
The requirement that Roque pay no arbitration costs, except the amount he would otherwise have to pay were his claims litigated in court, would be upheld even under California law. Ingle rejected an arbitration provision that required the employee to split the costs of the arbitration with the employer, which is wholly different than just requiring him to pay the same costs as he would pay in court. See Ingle, 328 F.3d at 1177-78 ("Under California law, `when an employer imposes mandatory arbitration as a condition of employment, the arbitration agreement or arbitration process cannot generally require the employee to bear any type of expense that the employee would not be required to bear if he or she were free to bring the action in court'" (quoting Armendariz, 24 Cal.4th at 110-11, 99 Cal Rptr2d 745, 764-65, 6 P.3d 669, 687-88) (emphasis in original)).
In Ingle, applying California law, the Ninth Circuit found an arbitration clause unreasonable because (in addition to the reasons discussed previously) it set a different statute of limitations than set by statute or common law, prohibited class actions, required a filing fee, limited available remedies, and allowed the employer to unilaterally modify the terms of the arbitration agreement. 328 F.3d at 1175-79. The Arbitration Provision here contains none of these terms.
II. Scope of the Arbitration Clause and Waiver of Judicial Remedies
Because the Arbitration Provision is valid, this court must next determine whether the claims Roque asserts are within its scope. Furthermore, with respect to the federal statutory claims, Roque has the burden of proving that Congress intended to prevent judicial remedies from being waived through the use of an arbitration clause.
The party resisting arbitration bears the burden of proving that the claims at issue are unsuitable for arbitration. See Gilmer, 500 US at 26. In determining the scope of an arbitration clause, the court applies state law principles of contract interpretation "while giving due regard to the federal policy in favor of arbitration by resolving ambiguities . . . in favor of arbitration." Wagner v. Stratton Oakmont, Inc., 83 F.3d 1046, 1049 (9th Cir 1996); accord Intel Corp. v. Advanced Micro Devices, Inc., 12 F.3d 908, 914 (9th Cir 1993), cert denied, 512 U.S. 1205 (1994). The court must bear in mind, however, that "arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which [it] has not agreed to submit." United Steelworkers of Am. v. Warrior Gulf Nav. Co., 363 U.S. 574, 582 (1960); accord, ATT Tech., Inc. v. Communications Workers of Am., 475 U.S. 643, 648 (1986).
Here the language of the Arbitration Provision applies to "any controversy or claim arising out of or relating to [Roque's] employment or the termination of [Roque's] employment[.]" Defendant's Ex 1, p. 4. This is sufficiently broad to cover all of Roque's claims in this case. See Torrance, 242 F. Supp.2d at 877 (finding that an arbitration clause covering "anything arising out of, in connection with, or relating to [the securities transaction in question]" would cover all of the plaintiffs' claims). In fact, it is difficult to imagine any broader phraseology. Moreover, Roque has not even attempted to prove that any of the claims are unsuitable for arbitration if the Arbitration Provision is valid and enforceable.
Finally, Roque has failed to demonstrate that Congress intended to prevent the waiver — using arbitration — of the judicial remedies for any of the federal statutory claims he is asserting. In fact, the statutory claims may be the subject of an arbitration agreement "[s]o long as the prospective litigant effectively may vindicate [his] statutory cause of action in the arbitral forum[.]" Gilmer, 500 US at 26-28 (ADEA subject to arbitration pursuant to NYSE Rule 347); see also Mitsubishi Motors Corp., 473 U.S. 614 at 637 (holding that federal antitrust claims can be subject to arbitration).
III. Dismissal Versus Abatement Pending Arbitration
This court next must decide whether to dismiss this case in favor of arbitration or to issue a stay pending the completion of arbitration. Roque argues that the express language of § 3 of the FAA ("the court . . . shall on application of one of the parties stay the trial of the action until such arbitration has been had. . . .) requires this court to stay the case pending arbitration.
The Ninth Circuit has explicitly found that § 3 of the FAA gives a court authority, upon application by one of the parties, to grant a stay pending arbitration, but does not preclude dismissal when all claims are barred by an arbitration clause. Sparling v. Hoffman Constr. Co., 864 F.2d 635, 638 (9th Cir 1988); see also Martin Marietta Aluminum, Inc. v. Gen. Elec. Co., 586 F.2d 143 (9th Cir 1978) (holding that judge had discretion to grant summary judgment when all the plaintiff's claims were barred by an arbitration clause). Other courts are in accord. See e.g. Alford v. Dean Witter Reynolds, 975 F.2d 1161, 1164 (5th Cir 1992) ("The weight of authority clearly supports dismissal of the case when all of the issues raised in the district court must be submitted to arbitration"); Fedmet Corp. v. M/V Buyalyk, 194 F.3d 674, 678 (5th Cir 1999); Bercovitch v. Balwin Sch., Inc., 133 F.3d 141, 156 n 21 (1st Cir 1998) ("[A] court may dismiss, rather than stay, a case when all of the issues before the court are arbitrable").
This court recognizes that other courts have chosen to stay a case pending arbitration rather than dismiss it, even when confronted with an arbitration clause that covers all the plaintiff's claims. See e.g., Bosinger v. Phillips Plastics Corp., 57 F. Supp.2d 986, 993 n 7 (SD Cal 1999). However, this court recommends dismissal because the Arbitration Provision requires arbitration of all of Roque's claims. Nothing will remain for the court to resolve after arbitration.
RECOMMENDATION
For the reasons set forth above, this court recommends that defendant's Motion to Dismiss or in the Alternative to Abate and Compel Arbitration (docket #7) be GRANTED and the case be DISMISSED.
SCHEDULING ORDER
Objections to the Findings and Recommendation, if any, are due March 12, 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 March 29, 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.