Faber v. Menard, Inc., No. C 03-3034-MWB.

CourtUnited States District Courts. 8th Circuit. Northern District of Iowa
Writing for the CourtBennett
Citation267 F.Supp.2d 961
PartiesSteve FABER, Plaintiff, v. MENARD, INC., Defendant.
Docket NumberNo. C 03-3034-MWB.
Decision Date17 June 2003
267 F.Supp.2d 961
Steve FABER, Plaintiff,
v.
MENARD, INC., Defendant.
No. C 03-3034-MWB.
United States District Court, N.D. Iowa, Central Division.
June 17, 2003.

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Elizabeth A. Katz, John Werner, Grefe & Sidney, Des Moines, IA, for defendant.

Mark D. Sherinian, Sherinian & Walker Law Firm, West Des Moines, IA, for plaintiff.

MEMORANDUM OPINION AND ORDER REGARDING DEFENDANT'S MOTION TO COMPEL ARBITRATION

BENNETT, Chief Judge.


TABLE OF CONTENTS
I. INTRODUCTION....... ................................................. 965
                A. Factual Background....................................................965
                B. Procedural Background................................................968
                II. LEGAL ANALYSIS.......................................................968
                A. The Timeliness OfFaber's Resistance..................................968
                B. The Merits Of Menard's Motion To Compel Arbitration....................969
                I. Arguments of the parties...........................................969
                2. Prerequisites for arbitration.......................................971
                3. Faber's "validity" challenges......................................972
                a. Lack of consideration........................... ...............972
                i. Lack of mutuality..........................................972
                ii. Continued employment.....................................972
                b. Unconscionability...............................................972
                i. Adhesion contract....... .................................972
                

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ii. Procedural and substantive unconscionability...................974
                4. Severability........................................983
                C. Certification For Interlocutory Appeal....................985
                III. CONCLUSION .....................986
                

Is the arbitration clause of the plaintiffs employment contract unconscionable? The plaintiff employee asserts that it is in response to the defendant employer's motion to compel arbitration of his age discrimination and retaliation claims in this action. The Supreme Court recently concluded in Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 121 S.Ct. 1302, 149 L.Ed.2d 234 (2001), that arbitration clauses, in general, are enforceable in employment contracts, but left open the possibility that such arbitration clauses could still be subject to challenge under state contract law. The decision of the Ninth Circuit Court of Appeals on remand, see Circuit City Stores, Inc. v. Adams, 279 F.3d 889 (9th Cir.2002), cert, denied, 535 U.S. 1112, 122 S.Ct. 2329, 153 L.Ed.2d 160 (2002), has, perhaps, had as great an impact as the Supreme Court's decision in Circuit City, because it put the issue of whether particular arbitration clauses are unconscionable as a matter of state law squarely in the spotlight. Indeed, the Ninth Circuit Court of Appeals held that the arbitration agreement at issue in that case was both procedurally and substantively unconscionable under California law. The issue of the unconscionability of the arbitration clause in the present plaintiffs employment agreement under Iowa law is now squarely in the spotlight here.

I. INTRODUCTION
A. Factual Background

This matter comes before the court on a pre-answer motion to compel arbitration. Nevertheless, it appears that certain facts are undisputed or, at least, that certain allegations in the Complaint, the defendant's Motion To Compel Arbitration, and the plaintiffs Resistance to that motion have a factual basis. Therefore, the court will survey the factual background to the present dispute as it can be gleaned from the parties' filings.

Plaintiff Steve Faber began his employment with defendant Menard, Inc., in 1981, and was eventually promoted to Store Manager of the Menards store in Mason City, Iowa. In February 2000, Faber traveled to Eau Claire, Wisconsin, for a meeting with Larry Menard, Operations Manager for Menard, Inc., and Ron Mehr, Personnel Manager, apparently concerning annual renewal of his employment contract. Faber was presented with a new version of his employment contract, some provisions of which he found objectionable. Specifically, he apparently stated objections to a new provision reducing his bonus percentage and to a provision concerning commercial contractors, which required Faber to pay a $200 deductible if there was an accident. When Faber would not sign the contract, Larry Menard allegedly told Faber that he could replace him with someone younger who would work for less pay and that he (Menard) could not change individual contracts. As a result of Larry Menard's comments, which Faber describes as "threats," Faber alleges that he felt compelled to sign the employment agreement as it was presented to him.

The employment agreement that Faber then signed, which is dated February 25, 2000, but which states that it is "effective" February 1, 2000, contains the following arbitration clause:

In consideration of employment, or continued employment, or a promotion and

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the compensation outlined in Part B of the agreement by Menards, Menards and Manager agree that all claims and disputes between them, including but not limited to:

Statutory claims arising under the

• Age Discrimination in Employment Act

• Fair Labor Standards Act

• Title VII of the Civil Rights Act of 1964

• Title I of the Civil Rights Act of 1991

• Americans with Disabilities Act

• Family Medical Leave Act, and Non-Statutory claims

• contractual claims

• quasi-contractual claims

• tort claims and

• any and all causes of action arising under state laws or common law

shall be resolved by binding arbitration by the American Arbitration Association ("AAA") located at 225 North Michigan Avenue, Suite 2527, Chicago, IL 60601-7601, under its National Arbitration Rules. A copy of the Code, Rules and fee schedule of the American Arbitration Association may be obtained by contacting it at the address listed above.

Each party shall pay their own AAA fees, one half of the arbitrators fees and their own attorney's fees.

The parties agree that all arbitrators selected shall be attorneys. This provision shall supersede any contrary rule or provision of the forum.

Menards is engaged in commerce using the U.S. Mail and telephone Service. Therefore, the Agreement is subject to the Federal Arbitration Act, 9 U.S.C. Sections 1-14 as amended from time to time.

THIS DOCUMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES.

Plaintiffs Affidavit, E:rfvibit (unnumbered), Partial Copy of Employment Agreement, ¶ 20. The final paragraph of the employment agreement also contained the following provision concerning "invalidity":

Invalidity. In case any one or more of the provisions of this Agreement should be invalid, illegal, or unenforceable in any respect, the validity, legality, and enforceability of the remaining provisions contained in this Agreement will not in any way be affected or impaired thereby.

Id. at ¶ 25. Faber signed the bottom of both pages of the employment agreement on which portions of the quoted provisions appeared, indicating that he had read those pages, and also signed and dated the agreement in a signature block at the bottom of the second of those pages evidencing his acceptance of the agreement. Id.

Although Menard originally asserted that the controlling employment agreement was a different agreement, with a different arbitration clause, dated February 10, 1999,1 Menard now concedes that

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the February 25, 2000, employment contract is the controlling agreement. Therefore, the court's analysis of the enforceability of any agreement to arbitrate the claims at issue in this litigation will relate to the February 25, 2000, employment agreement and its arbitration provisions.

In his Complaint in this action, which was filed April 14, 2003, Faber alleges that he was relieved from his position as Store Manager of the Mason City Menards store on May 15, 2001, and that he was terminated on June 5, 2001, when he would not accept a lesser position at another store.2 Based on these events, Faber filed a complaint of age discrimination with the Mason City Human Rights Commission on June 14, 2001. His suspension and termination also form the factual basis for Faber's age discrimination claims in this lawsuit.

Thereafter, on July 10, 2001, Faber alleges in his Complaint that he was "trespassed" from the Mason City Menards store, which meant that he was banned from ever reentering that Menards location. In his resistance to Menard's motion to compel arbitration, Faber fills out the facts surrounding his "trespassing." He explains that, shortly after he was terminated

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he and his daughter were shopping at the Menards store in Mason City, when they were approached by management personnel and informed that Faber was "trespassing." After demanding to see, and being shown, a "trespass" notice, Faber contends that he promptly left the store. In his Complaint, Faber alleges that, on July 11, 2001, he filed a second complaint with the Mason City Human Rights Commission in which he alleged retaliation, apparently based on this incident. Faber's retaliation claims in this lawsuit are also apparently based on this incident.

Faber alleges that he has obtained "right-to-sue" letters from both the Iowa Civil Rights Commission (ICRC) and the Equal Employment Opportunity Commission (EEOC). However, he does not allege in his Complaint, and does not contend in his resistance to Menard's motion to compel arbitration, that he has ever submitted either his age discrimination claims or his retaliation claims to arbitration.

B. Procedural Background

Faber filed his Complaint in this matter on April 14, 2003, alleging age discrimination in violation of the Age Discrimination In Employment Act (ADEA), 29 U.S.C. § 621 et seq., and the Iowa Civil Rights Act (ICRA), IOWA CODE CH. 216, (Counts I and II, respectively), and retaliation in violation of...

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5 practice notes
  • In re Universal Serv. Fund Tele. Billing Practices, No. 02-MD-1468-JWL.
    • United States
    • United States District Courts. 10th Circuit. United States District Courts. 10th Circuit. District of Kansas
    • December 1, 2003
    ...(11th Cir.2002) (same); Rickard v. Teynor's Homes, Inc., 279 F.Supp.2d 910, 914-18 (N.D.Ohio 2003) (same); Faber v. Menard, Inc., 267 F.Supp.2d 961, 974-83 (N.D.Iowa 2003) Thus, the FAA allows plaintiffs to raise procedural unconscionability challenges to the enforceability of the arbitrati......
  • Vis v. Am. Family Life Assurance Co. of Columbus, No. C 11–4008–MWB.
    • United States
    • U.S. District Court — Northern District of Iowa
    • April 21, 2011
    ...from the date of this order and not less than every thirty days thereafter. IT IS SO ORDERED.--------Notes: FN1. Faber v. Menard, Inc., 267 F.Supp.2d 961 (N.D.Iowa 2003) (holding that, under Iowa law, an arbitration clause was procedurally unconscionable, where the employee was plainly told......
  • Vis v. Am. Family Life Assurance Co. of Columbus, No. C 11-4008-MWB
    • United States
    • U.S. District Court — Northern District of Iowa
    • April 21, 2011
    ...21st day of April, 2011. MARK W. BENNETT U. S. DISTRICT COURT JUDGE NORTHERN DISTRICT OF IOWA --- Notes: 1. Faber v. Menard, Inc., 267 F. Supp. 2d 961 (N.D. Iowa 2003) (holding that, under Iowa law, an arbitration clause was procedurally unconscionable, where the employee was plainly told t......
  • De Dios v. Brand Energy & Infrastructure Servs., No. C 18-4011-MWB
    • United States
    • United States District Courts. 8th Circuit. Northern District of Iowa
    • June 13, 2018
    ...Faber, and I held that the arbitration agreement at issue was both procedurally and substantively unconscionable, see Faber v. Menard, 267 F. Supp. 2d 961 (N.D. Iowa 2003), but the Eighth Circuit Court of Appeals reversed, even though the plaintiff's argument that the arbitration agreement ......
  • Request a trial to view additional results
5 cases
  • In re Universal Serv. Fund Tele. Billing Practices, No. 02-MD-1468-JWL.
    • United States
    • United States District Courts. 10th Circuit. United States District Courts. 10th Circuit. District of Kansas
    • December 1, 2003
    ...(11th Cir.2002) (same); Rickard v. Teynor's Homes, Inc., 279 F.Supp.2d 910, 914-18 (N.D.Ohio 2003) (same); Faber v. Menard, Inc., 267 F.Supp.2d 961, 974-83 (N.D.Iowa 2003) Thus, the FAA allows plaintiffs to raise procedural unconscionability challenges to the enforceability of the arbitrati......
  • Vis v. Am. Family Life Assurance Co. of Columbus, No. C 11–4008–MWB.
    • United States
    • U.S. District Court — Northern District of Iowa
    • April 21, 2011
    ...from the date of this order and not less than every thirty days thereafter. IT IS SO ORDERED.--------Notes: FN1. Faber v. Menard, Inc., 267 F.Supp.2d 961 (N.D.Iowa 2003) (holding that, under Iowa law, an arbitration clause was procedurally unconscionable, where the employee was plainly told......
  • Vis v. Am. Family Life Assurance Co. of Columbus, No. C 11-4008-MWB
    • United States
    • U.S. District Court — Northern District of Iowa
    • April 21, 2011
    ...21st day of April, 2011. MARK W. BENNETT U. S. DISTRICT COURT JUDGE NORTHERN DISTRICT OF IOWA --- Notes: 1. Faber v. Menard, Inc., 267 F. Supp. 2d 961 (N.D. Iowa 2003) (holding that, under Iowa law, an arbitration clause was procedurally unconscionable, where the employee was plainly told t......
  • De Dios v. Brand Energy & Infrastructure Servs., No. C 18-4011-MWB
    • United States
    • United States District Courts. 8th Circuit. Northern District of Iowa
    • June 13, 2018
    ...Faber, and I held that the arbitration agreement at issue was both procedurally and substantively unconscionable, see Faber v. Menard, 267 F. Supp. 2d 961 (N.D. Iowa 2003), but the Eighth Circuit Court of Appeals reversed, even though the plaintiff's argument that the arbitration agreement ......
  • Request a trial to view additional results

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