Gist v. Zoan Mgmt., Inc.

• Decision Date: 12 August 2020
• Docket Number: A159509
• Citation: 473 P.3d 565,305 Or.App. 708
• Parties: Jeff GIST, individually and on behalf of all similarly situated, Plaintiff-Appellant, v. ZOAN MANAGEMENT, INC. ; Senvoy, LLC; and Driver Resources, LLC, a domestic limited liability company, Defendants-Respondents.
• Court: Oregon Court of Appeals

305 Or.App. 708

473 P.3d 565

Jeff GIST, individually and on behalf of all similarly situated, Plaintiff-Appellant,

v.ZOAN MANAGEMENT, INC. ; Senvoy, LLC; and Driver Resources, LLC, a domestic limited liability company, Defendants-Respondents.

A159509

Court of Appeals of Oregon.

Argued and submitted November 12, 2019

August 12, 2020

Lisa Hunt argued the cause for appellant. On the opening brief were Phil Goldsmith and Law Office of Phil Goldsmith; and David A. Schuck, Stephanie J. Brown, and Schuck Law, LLC. Also on the reply brief were Law Office of Lisa T. Hunt, LLC; and David A. Schuck and Shuck Law, LLC.

Erin N. Dawson argued the cause for respondents. Also on the brief were Charles J. Paternoster and Parsons Farnell and Grein, LLP.

Before DeVore, Presiding Judge, and DeHoog, Judge, and Mooney, Judge.

DeVORE, P. J.,

Defendants’ petition to compel arbitration frustrated plaintiff's hope for class action wage claims. The trial court ordered the parties to arbitrate despite plaintiff's argument that the arbitration provisions were part of an unconscionable contract. On appeal, plaintiff contends that the arbitration provisions are unenforceable because the contract is procedurally and substantively unconscionable. The defendants disagree, adding that the issue is not reviewable. We conclude that the issue is reviewable, that the arbitration provisions are enforceable, and that substantive conflicts, if any, between plaintiff's wage claims and contract terms remain for resolution in arbitration.

I. PROCEEDINGS

Plaintiff was a delivery driver for defendant Driver Resources, LLC, which operates with defendants ZoAn Management, Inc. and Senvoy, LLC to provide delivery service to businesses. In December 2010, plaintiff signed a Driver Services Agreement with Driver Resources to work as a driver. In November 2013, plaintiff filed a putative class-action complaint against defendants, alleging wage and hour claims under Oregon law. The complaint sought unpaid wages ( ORS 652.120 ; ORS 653.010 ), unpaid overtime wages ( ORS 653.261 ), statutory penalty wages ( ORS 652.150 ), compensation for unlawful deductions from wages ( ORS 652.610 ), and recovery of attorney fees ( ORS 652.200(2), ORS 652.615, and ORS 653.055(4) ).

In May 2014, defendants petitioned the trial court for an order to stay proceedings and compel arbitration pursuant to the terms of the Driver Services Agreement.¹ Because the agreement did not provide for arbitration of class action claims, defendants sought arbitration of plaintiff's individual claims.² Plaintiff opposed the petition, contending that the arbitration provisions were unenforceable as part of an unconscionable contract. The trial court, however, abated further proceedings and ordered the parties to arbitrate. After two unsuccessful attempts to initiate an appeal from the order, plaintiff filed a motion to dismiss his claims with prejudice, while reserving his challenge to the order on appeal. The trial court granted plaintiff's motion and entered a general judgment of dismissal.

Initially, plaintiff's appeal was rebuffed. Defendants moved to dismiss the appeal on the ground that the judgment was not appealable because plaintiff had requested it. This court dismissed. On review, the Oregon Supreme Court reversed our decision and remanded the case to us. Gist v. Zoan Management, Inc. , 363 Or. 729, 741, 428 P.3d 893 (2018). In the process, the court clarified Steenson v. Robinson , 236 Or. 414, 385 P.2d 738 (1963), which provided a common-law rule limiting when a party may or may not appeal from a voluntarily-requested judgment. Id. at 738-39, 428 P.3d 893. The court held that Steenson did not bar plaintiff's appeal, because dismissal of all claims with prejudice prevented the risk of simply refiling the claims if he lost the appeal. Id. at 739-40, 428 P.3d 893. The court concluded that the judgment was appealable but expressed no view whether all the issues raised by plaintiff on appeal are reviewable. Id . at 731, 428 P.3d 893. The court added that "certain of defendants’ arguments may more appropriately be directed to what issues the Court of Appeals may properly review on appeal rather than the appealability of the judgment." Id . at 740, 428 P.3d 893.

II. REVIEWABILITY

By necessity, we begin with defendants’ assertion that plaintiff's appeal is not reviewable. The assertion is ill-founded. Defendants cite Snider v. Production Chemical Manufacturing, Inc. , 348 Or. 257, 267-68, 230 P.3d 1 (2010), which involved an intermediate order—an order denying arbitration—and a defendant who delayed appealing the order and only later appealed from a judgment for plaintiff. The court held that, while the eventual judgment was appealable, the earlier order was not reviewable, because ORS 36.730 had specially provided for an interlocutory appeal from an intermediate order denying arbitration, but the defendant had failed to timely appeal from that order.

Id. Snider is inapposite because the order here compels, not denies, arbitration. Because ORS 36.730 does not permit appeals from an order compelling arbitration, that statute does not apply, and it does not limit review of an order compelling arbitration. It does not limit review of such an order in an appeal from a final judgment.

Defendants also cite ORS 19.425, a general statute on appeals from judgments. It is a statute that, in an appeal from a judgment, allows review of earlier rulings. In relevant part, it provides, "Upon an appeal, the appellate court may review any intermediate order involving the merits or necessarily affecting the judgment appealed from[.]" Defendants argue that an order to arbitrate does not involve the merits or affect the judgment. We disagree.

To explain, we recount that plaintiff made two earlier, unsuccessful attempts to initiate an appeal before this one. First, he attempted an appeal from the arbitration order itself, but he was forced to abort the attempt for lack of jurisdiction. Second, he asked the trial court to authorize an interlocutory appeal under ORS 19.225, but the court refused. Both attempts were efforts to avoid loss of the class action wage claims or impairment of the remedies contemplated in the complaint. Neither party disputes that, under prevailing law, arbitration means a loss of the class action process and a conversion to an individual's set of claims. Stolt-Nielsen S. A. v. AnimalFeeds Int'l Corp. , 559 U.S. 662, 684, 130 S. Ct. 1758, 176 L. Ed. 2d 605 (2010). Only after those failed attempts did plaintiff move to voluntarily dismiss his claims with prejudice. He did so to secure an appealable judgment that, as the Supreme Court has held, would allow him to challenge the order compelling arbitration. He was left with a judgment that, while allowing him to arbitrate the merits of his claims, denied his procedural opportunity to resolve those claims in court.³ This record reveals that the order compelling arbitration resulted in the nature of the judgment of dismissal of plaintiff's claims. Consequently, the order "affected" the judgment and is reviewable on appeal from that judgment. See ORS 19.425 (court may review the appeal of an intermediate order affecting judgment).

III. ARBITRATION

A. Arguments

On appeal, plaintiff contends that the trial court erred in compelling arbitration because the parties’ arbitration provisions were part of an unconscionable contract. He argues that the Driver Services Agreement was procedurally unconscionable because it was a form agreement presented to him as a precondition to employment. He argues that the agreement was substantively unconscionable in several ways. First, he argues that arbitration is too expensive. The agreement presumes that he may pay half the cost of the fees of a three-person arbitration panel. He argues that his half of the cost could be $9,375 if there was a two-day hearing. By the time of the dispute, he said he was unemployed and could not afford the cost. Second, he argues that the agreement requires that each party pay their own attorney fees. He contrasts his right to recover attorney fees with a wage claim, if successful, under ORS 652.200(2). Third, he argues that the arbitrators are forbidden by the agreement from rewriting the terms of the agreement. In his view, that provision could mean that the Driver Services Agreement denies him the more favorable terms of Oregon wage claim statutes. All things taken together, plaintiff urges the court to declare the agreement, as a whole, unconscionable, rendering its arbitration provisions unenforceable.

Defendants respond that federal precedent takes much of the force out of plaintiff's arguments because, in substantial part, plaintiff challenges inherent attributes of arbitration, which case law favors despite plaintiff's criticism. As for procedural unconscionability, defendants respond that plaintiff was free to negotiate the terms of the agreement, "which many contractors do, especially as to the price to be paid under the contract." On substantive unconscionability, defendants respond that the agreement permits the arbitrators to shift the division of the arbitrators’ fees to the losing party. Defendants suggest that the arbitration may take less time and cost less than plaintiff says. On attorney fees, defendants argue that the agreement is not per se unconscionable just because each party bears their own fees. They argue that the provision is mutual in that the provision applies just the same if defendants were asserting claims under the non-competition or non-solicitation provisions of the agreement. On the issue of differences between the provisions and remedies of the agreement versus those of wage claims, defendants argue that those are matters for arbitration, not the court. Moreover, defendants say, "Plaintiff is not prohibited from bringing statutory wage-and-hour claims to arbitration." Defendants allow that such claims are within the scope of the agreement. All things...