Fields v. NCR Corporation, 4:09-cv-460.

Decision Date10 February 2010
Docket NumberNo. 4:09-cv-460.,4:09-cv-460.
Citation683 F. Supp.2d 980
PartiesKevin FIELDS, Plaintiff, v. NCR CORPORATION, Defendant.
CourtU.S. District Court — Southern District of Iowa

Mark D. Sherinian, Sherinian & Walker PC, West Des Moines, IA, for Plaintiff.

Paul R. Harris, William D. Edwards, Ulmer & Berne LLP, Cleveland, OH, Jon K. Swanson, Gaudineer Comito & George LLP, West Des Moines, IA, for Defendant.


ROBERT W. PRATT, Chief Judge.

Before the Court is NCR Corporation's ("Defendant") Motion to Compel Arbitration, filed on November 19, 2009. Clerk's No. 7. Plaintiff, Kevin Fields ("Plaintiff"), filed a resistance on December 8, 2009. Clerk's No. 8. Defendant filed a reply on December 15, 2009. Clerk's No. 9. The matter is fully submitted.


On October 15, 2009, Plaintiff filed a Petition (hereinafter "Complaint") in the Iowa District Court in and for Warren County, Iowa, asserting claims against Defendant for age and disability discrimination in violation of the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. § 621 et. seq., the Americans with Disabilities Act ("ADA"), 42 U.S.C. § 12101 et seq., and Iowa Code Chapter 216 (the "ICRA"). See Clerk's No. 1. NCR timely removed the matter to the United States District Court for the Southern District of Iowa, pursuant to 28 U.S.C. §§ 1331 and 1441(b). See Clerk's No. 1.

Plaintiff was employed by Defendant from September 3, 1983 to October 9, 2009. Compl. ¶ 3.1 During his tenure with Defendant, Plaintiff worked as a Professional Services Technical Consultant, providing multiple support services to Defendant's clients from his home in Norwalk, Iowa. Pl.'s Resistance ¶ 2. In 1999, Plaintiff began experiencing walking and stability problems. Id. ¶ 3. Plaintiff nonetheless made a trip to London on behalf of Defendant in April 2000. Id. ¶¶ 4, 6. Upon return from London, Plaintiff sought out medical advice for his walking and stability problems, and notified his manager of the problems. Id. ¶¶ 4-5. In January 2005, Plaintiff was diagnosed with Parkinson's disease. Id. ¶ 7. According to Plaintiff, Defendant "accommodated his disability by not requiring him to travel" after the 2000 London trip. Id. ¶ 8. In March 2009, however, Defendant notified Plaintiff that he would be terminated because he could not perform an essential function of his job— traveling. Id. ¶ 9. In lieu of termination, Plaintiff was given the option of applying for short term disability ("STD") benefits, which he promptly did. Id. ¶ 10. Shortly after applying for STD benefits, Plaintiff filed a charge of discrimination against Defendant with the Iowa Civil Rights Commission ("ICRC"). Id. ¶ 11. On September 2, 2009, Defendant informed Plaintiff that his employment was going to be terminated because of his inability to travel.2 Id. ¶ 12. On September 3, 2009, Defendant informed Plaintiff's counsel that any discrimination claim by Plaintiff was subject to arbitration pursuant to Defendant's Internal Dispute Resolution ("IDR") policy, enacted in 2002. Id. ¶ 13.

Defendant contends that in August 1996, it introduced a three-step conflict resolution process called "Addressing Concerns Together" ("ACT"). See Def.'s Ex. A (Affidavit of Edward Gallagher) ¶ 3. The third stage of the ACT policy provides for "Final and Binding Arbitration." Id. The ACT policy was available for viewing by all employees, including Plaintiff, on Defendant's intranet. Id. In November 2002, Defendant replaced the ACT policy with the IDR policy—a two-step conflict resolution process. Id. ¶ 4. Like the ACT policy, the IDR policy ultimately provides that employment-related disputes not resolved in the first stage of the IDR process be submitted in the second stage "to a neutral outside arbitrator for a final and binding decision." Def.'s Ex. 3 at 2. The IDR policy was communicated to existing NCR employees through a company-wide e-mail sent to "All Users (NCR)" and was additionally posted on NCR's intranet. Def.'s Ex. A ¶¶ 4, 13; Def.'s Ex. 2 (e-mail).

Defendant argues that the Court must compel arbitration in this matter, pursuant to the Federal Arbitration Act ("FAA"), 9 U.S.C. § 1 et seq., and that due to the arbitration provision, the Court lacks jurisdiction over Plaintiff's claims pursuant to Federal Rule of Civil Procedure 12(b)(1).3 See Def.'s Mot. at 1. Plaintiff counters that the Court should not enforce the IDR policy in this case because the arbitration provision is unconscionable. Pl.'s Resistance ¶ 20. Accordingly, Plaintiff contends the Court should hold a jury trial in accordance with the FAA to determine whether there is an enforceable arbitration agreement governing this matter. Id. ¶ 21.


Under the FAA, a written arbitration agreement "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; see also Shearson/Am. Express, Inc. v. McMahon, 482 U.S. 220, 226, 107 S.Ct. 2332, 96 L.Ed.2d 185 (1987) ("The Arbitration Act thus establishes a `federal policy favoring arbitration,' requiring that we `rigorously enforce agreements to arbitrate.'") (quoting Moses H. Cone Mem. Hosp. v. Mercury Construction Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983) and Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213, 221, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985)). The language of § 2 "reflects congressional intent `to overcome judicial hostility to arbitration agreements'" while at the same time providing "`States a method for protecting consumers against unfair pressure to agree to a contract with an unwanted arbitration provision,' if the contract violates state law." Cicle v. Chase Bank USA, 583 F.3d 549, 553 (8th Cir. 2009) (quoting Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 272, 281, 115 S.Ct. 834, 130 L.Ed.2d 753 (1995)).

Under Eighth Circuit jurisprudence, when a party moves to compel arbitration under the FAA, the district court's role is limited to determining: (1) whether there is a valid agreement to arbitrate between the parties, and (2) whether the claims asserted fall within the arbitration agreement. Faber v. Menard, Inc., 367 F.3d 1048, 1052 (8th Cir.2004); see also Larry's United Super, Inc. v. Werries, 253 F.3d 1083, 1085 (8th Cir.2001) (noting that the review should address "only such issues as are essential to defining the nature of the forum in which a dispute will be decided"). Once a court determines that there is a valid arbitration agreement and that the specific dispute at issue falls within the substantive scope of that agreement, the court must compel arbitration, and its duties are at an end. See Larry's United, 253 F.3d at 1086; Lyster v. Ryan's Family Steak Houses, 239 F.3d 943, 945 (8th Cir. 2001).

A. Is there a Valid Arbitration Agreement?

"Arbitration is simply a matter of contract law." First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995). "Under the FAA, ordinary contract principles govern whether parties have agreed to arbitrate." Patterson v. Tenet Healthcare, Inc., 113 F.3d 832, 834 (8th Cir.1997). The FAA does not specify rules for contract interpretation; therefore, state law controls. See Lyster, 239 F.3d at 946.

In the present case, Plaintiff argues that Defendant's IDR policy is unenforceable because it is unconscionable. See Pl.'s Resistance at ¶ 20. "Unconscionability... is a recognized defense to the enforcement of the contract." Fed. Land Bank of Omaha v. Steinlage, 409 N.W.2d 173, 174 (Iowa 1987). "Under Iowa law, the burden of proof that a particular provision or contract is unconscionable rests on the party claiming it is unconscionable." Faber, 367 F.3d at 1053 (citing In re Estate of Ascherl, 445 N.W.2d 391, 392 (Iowa Ct.App.1989)). The determination of "whether a contractual term is unconscionable is a question of law." Brunsman v. DeKalb Swine Breeders, Inc., 138 F.3d 358, 360 (8th Cir.1998) (citing Iowa Code § 554.2302(1) and comment 3).

The Iowa Supreme Court has identified five factors to be considered in assessing whether a contract or a contract provision is unconscionable: 1) assent; 2) unfair surprise; 3) notice; 4) disparity of bargaining power; and 5) substantive unfairness. Home Fed. Sav. & Loan Ass'n of Algona v. Campney, 357 N.W.2d 613, 618 (Iowa 1984); see also Faber, 367 F.3d at 1053. The Court will evaluate each factor in turn.

1. Assent.

Plaintiff first contends that he did not "assent" to the IDR policy's arbitration provision. In support of this contention, Plaintiff states that "had he known about the policy he would not have agreed to it" and that "once he learned of the policy he objected, through his attorney, to its applicability." Pl.'s Resistance at 3. The Court agrees that Plaintiff's failure to read the IDR policy's arbitration provision prohibits a finding that he actually assented to the provision. A lack of actual assent does not, however, give rise to an automatic conclusion that a contract provision is unconscionable. See Campney, 357 N.W.2d at 618 ("With regard to assent, defendants point out that because they did not read the mortgage before signing it, they cannot be said to have actually assented to paragraph 17. This is true, but does not end our inquiry."). Indeed, were such the rule, contract provisions would routinely be struck down as unconscionable merely because one party failed to read it and, thus, failed to actually assent to it. Thus, actual assent, or the lack thereof, is but one facet of the assent calculus which, in turn, is but one facet of the overall unconscionability analysis.4

Plaintiff argues that the facts regarding assent in this case are "virtually identical" to those in Stepp v. NCR Corp., 494 F.Supp.2d 826 (S.D.Ohio 2007). In Stepp, the plaintiff was a long-time employee of NCR, having been hired in 1968. Stepp, 494 F.Supp.2d at 829. In 1996, NCR adopted the ACT policy (the predecessor to the...

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