Bayer v. Neiman Marcus Holdings, Inc.

Decision Date08 November 2011
Docket NumberNo. CV 11-3705 MEJ,CV 11-3705 MEJ
PartiesTAYLER BAYER, Plaintiff, v. NEIMAN MARCUS HOLDINGS, INC., Defendant.
CourtU.S. District Court — Northern District of California
ORDER DENYING DEFENDANT'S
MOTION TO COMPEL
ARBITRATION

(Docket No. 17)

I. INTRODUCTION

Plaintiff Tayler Bayer ("Plaintiff") brings this action against Defendant Neiman Marcus Holdings, Inc. ("Defendant" or "Neiman Marcus"), his former employer, alleging disability discrimination under the Americans with Disabilities Act, 42 U.S.C. § 12101, et seq. ("ADA"). Compl., Dkt. No. 1. Pending before the Court is Defendant's Motion to Compel Arbitration and Dismiss. Dkt. No. 17. In its Motion, Defendant argues that Plaintiff has brought this action in violation of the parties' agreement to arbitrate claims. Def.'s Mot. at 1. Because the Court finds this matter suitable for resolution based on the parties' written submissions, the Court VACATES the hearing set for November 17, 2011. See Civil L.R. 7-1(b). After careful consideration of the parties' arguments, the Court DENIES Defendant's motion for the reasons set forth below.

II. BACKGROUND

Neiman Marcus owns and operates a chain of upscale specialty retail department stores. Compl. ¶ 4. Plaintiff began working for Defendant as a full-time Cosmetic Sales Associate on March 29, 2006. Id. ¶ 5. In March 2007, Plaintiff was placed on medical leave by his physician due to respiratory problems. Id. ¶ 6. In April 2007, Plaintiff was diagnosed as suffering from emphysema, and he subsequently remained on medical leave until June 1, 2007. Id. Although Plaintiff wasauthorized by his physician to return to work on that date, his physician placed certain restrictions on his work, including working no more than eight-hour shifts, four days per week. Id. ¶ 7. Plaintiff alleges that Defendant refused to accommodate his medical condition and would not modify his work schedule in the manner requested. Id. ¶ 8. Instead, Plaintiff alleges that Defendant insisted he work no more than a six-hour shift per day. Id. This refusal to accommodate meant that he could only work a maximum of 24 hours per week and, since Defendant required full-time employees to work a minimum of 30 hours per week, Plaintiff subsequently lost his status as a full-time employee. Id. ¶¶ 5, 9. Plaintiff contends that he therefore lost all Neiman Marcus benefits. Id. ¶ 9.

On June 20, 2007, Plaintiff filed an administrative complaint with the Equal Employment Opportunity Commission ("EEOC"), alleging that Defendant had discriminated against him on the basis of his disability/medical condition, that it failed to accommodate his medical condition/disability, and that it had retaliated against him, all in violation of the ADA. Id. ¶ 10, Ex. A.

On or about June 11, 2007, all Neiman Marcus employees were mailed notice of the implementation of a dispute resolution program, which included a mandatory arbitration agreement titled "The Neiman Marcus Group, Inc. Mandatory Arbitration Agreement" ("the Arbitration Agreement"). Id. ¶ 11, Ex. B; Kern Decl. ¶¶ 6, 9-10, Dkt. No. 11. Plaintiff alleges that Defendant told him that the Arbitration Agreement was not optional, and that he would be bound by its terms if he continued to show up for work. Compl. ¶ 11. Plaintiff further alleges that, by "threatening to terminate [his] employment unless he consented to the terms of its mandatory Arbitration Agreement, Neiman Marcus was attempting to coerce and intimidate [him] into giving up certain rights provided to him under the ADA." Id. As part of the mailing, Defendant included a form titled

THE NEIMAN MARCUS GROUP, INC.

MANDATORY ARBITRATION AGREEMENT

ASSOCIATE ACKNOWLEDGMENT FORM

Kern Decl. ¶ 10 fn.1, Ex. F. This form required the employee's signature and provided that the employee "acknowledge and affirm that":

I have received and had an opportunity to review the [Neiman Marcus] Mandatory Arbitration Agreement . . .I understand that the Arbitration Agreement is an important legal document that requires me to submit all complaints, disputes, and legal claims ("Disputes") I have against the Company, and the Company to submit all Disputes it has against me, to binding arbitration;
I understand that the Arbitration Agreement means both I and the Company are waiving the right to a trial by jury or to a trial before a judge in a court of law on all Disputes. Instead, all Disputes must be submitted to final and binding arbitration;
I understand that the Arbitration Agreement is not optional. Rather, it is mandatory and a condition and term of my employment if I am employed or continue employment on or after July 15, 2007.

Id. at Ex. F (emphasis in original). Plaintiff did not sign this form. Id. ¶ 10 fn.1.

In response to the Arbitration Agreement, Plaintiff filed a second administrative claim against Defendant with the EEOC on or about July 9, 2007. Compl. ¶ 12, Ex. C. In his second claim, Plaintiff alleged that Defendant had discriminated against him in violation of his rights under the ADA by attempting to coerce him into signing the Arbitration Agreement as a condition of continued employment. Id. ¶ 12.

In October 2007, the EEOC issued a right to sue letter to Plaintiff in connection with his original EEOC charge of discrimination. Id. ¶ 14. In January 2008, Plaintiff filed a civil lawsuit against Defendant in this Court for violation of the ADA, based on Defendant's alleged discriminatory conduct in June 2007 with respect to Plaintiff's physical disability and Defendant's refusal to accommodate him by providing full-time employment. Taylor Bayer v. Neiman Marcus Holdings, Inc., C08-0480 PJH. In April 2008, the parties entered into a settlement of the January 2008 Complaint. Compl. ¶ 14. The Settlement Agreement specifically excluded from its scope any claims which Plaintiff might have with respect to challenging the validity or enforceability of the Arbitration Agreement. Id.

Plaintiff continued to work at Neiman Marcus throughout 2008. Id. In January 2009, Defendant terminated Plaintiff's employment. Id. ¶ 16. Plaintiff alleges that it terminated him in retaliation for his having filed discrimination and retaliation charges against Defendant with the EEOC. Id. Plaintiff filed a third claim of discrimination and retaliation against Defendant with the EEOC in or about August 2009. Id. ¶ 17, Ex. D. The EEOC has issued a right to sue letter to Plaintiff with respect to this third claim. Id. ¶ 18.

On July 27, 2011, Plaintiff filed the present Complaint, alleging one cause of action under 42 U.S.C. § 12203(a) for discrimination and retaliation by Defendant against Plaintiff for his having opposed Defendant's alleged unlawful actions, including for his having filed EEOC charges. Id. ¶ 22. Plaintiff seeks economic, general, and punitive damages; attorneys' fees and costs; interest; and such other relief as the Court deems proper. Id. at 8-9.

On September 22, 2011, Defendant filed the present Motion to Compel Arbitration and Dismiss. Dkt. No. 17. Plaintiff filed his Opposition on October 6, 2011. Dkt. No. 18. Defendant filed its Reply on October 25, 2011. Dkt. No. 27.

III. DISCUSSION

In its motion, Defendant argues that, as a matter of law, it has a valid and enforceable agreement with Plaintiff to arbitrate claims, including those brought in this action. Def.'s Mot. at 1. Specifically, Defendant argues that Plaintiff was put on notice of the terms of the Arbitration Agreement when Defendant sent notice documents to Plaintiff that stated that all employees would be deemed to have agreed to the agreement if they continued to work at Neiman Marcus. Id. at 4, 7-8. Because Plaintiff admits that he received the notice and continued working at Neiman Marcus, Defendant contends that Plaintiff is deemed to have accepted the Arbitration Agreement. Id. at 8. Thus, Defendant argues that the Arbitration Agreement extends to the claims brought in this action, and it now moves this Court for an order compelling Plaintiff to arbitrate his claims pursuant to the Arbitration Agreement and dismissing this action or, in the alternative, staying this action pending completion of the arbitration. Id. at 1.

In his Opposition, Plaintiff states that, when Defendant "tried to impose an arbitration policy on its employees in 2007 under threat of termination, [Plaintiff] expressly refused to become a party to the arbitration agreement; refused to sign the arbitration agreement form; and repeatedly told Neiman both orally and in writing that he would not agree or consent to Neiman's arbitration program." Pl.'s Opp'n at 1 (emphasis in original). Thus, Plaintiff argues that he is not a party to an agreement to arbitrate because there is a lack of consent. Id. Plaintiff further argues that, even if Defendant could show that he consented to the agreement, Defendant's arbitration policy isunconscionable and violates public policy, and is therefore unenforceable. Id. Specifically, Plaintiff argues that the Arbitration Agreement is procedurally unconscionable because it is an adhesion contract, drafted and imposed by the stronger party on one with less bargaining power. Id. at 17. Plaintiff further argues that the agreement is also substantively unconscionable because it has a shortened statute of limitations, the arbitration panel and selection process are not neutral, it places undue limitations on discovery, restricts the remedies available to an employee because it expressly prohibits class action claims, and requires that the employee pay arbitrator fees as a condition of access to the arbitration forum. Id. at 17-24.

A. Legal Standard

The Federal Arbitration Act ("FAA") provides that written agreements to settle a controversy through arbitration "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. The FAA placed arbitration agreements on equal footing with other contracts and created a federal policy in favor of arbitration....

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