Hermida v. JP Morgan Chase Bank, N.A., 3:15-cv-00810-HZ
Decision Date | 03 November 2015 |
Docket Number | No. 3:15-cv-00810-HZ,3:15-cv-00810-HZ |
Court | U.S. District Court — District of Oregon |
Parties | LARRY HERMIDA, Plaintiff, v. JP MORGAN CHASE BANK, N.A., a wholly-owned subsidiary of JPMorgan Chase & Co., a Delaware corporation, Defendant. |
Donald B. Potter
Spaulding & Potter LLP
3236 S.W. Kelly Avenue
Suite 101
Portland, OR 97239
Attorney for Plaintiff
Jennifer A. Nelson
Ogletree Deakins Nash Smoak & Stewart P.C.
222 SW Columbia Street
Suite 1500
Portland, OR 97201
Attorney for Defendant
Plaintiff Larry Hermida brings this action against his former employer, Defendant JPMorgan Chase Bank, N.A. Plaintiff alleges Defendant wrongfully discharged him in retaliation for complaining about violations of federal or state laws, rules, or regulations. Now before me is Defendant's Motion to Compel Arbitration, seeking to stay or abate this lawsuit pending arbitration.
For the following reasons, I conclude that there was a valid arbitration agreement that encompasses the dispute between Plaintiff and Defendant. Accordingly, I grant Defendant's Motion to Compel Arbitration and dismiss this lawsuit.
Defendant hired Plaintiff on or about October 19, 2009. Compl. ¶ 5, ECF No. 1. On July 13, 2011, Plaintiff executed a Chase Investment Services Corp. Supervision, Arbitration, Confidentiality and Non-Solicitation Agreement (the "Agreement"). Nelson Decl. Ex. A, ECF No. 7. The Agreement contains a provision that claims between Plaintiff and Defendant would be resolved through arbitration:
Id. at 8-9. The Agreement also addresses applicable procedural rules, the duties of the arbitrator, available remedies, location of the arbitration, and the allocation of arbitration costs. Id. at 8-10.
On or about July 8, 2013, Defendant terminated Plaintiff's employment. Compl. ¶ 5, ECF No. 1. In May 2015, Plaintiff filed this case in the United States District Court forthe District of Oregon. Compl., ECF No. 1. Defendant now brings this Motion to Compel Arbitration and stay or abate the lawsuit pending completion of arbitration.
Congress enacted the Federal Arbitration Act (FAA) to "advance the federal policy favoring arbitration agreements." Lowden v. T-Mobile USA, Inc., 512 F.3d 1213, 1217 (9th Cir. 2008). The FAA provides that arbitration agreements generally "shall be valid, irrevocable, and enforceable." Id.; see also 9 U.S.C. § 2. Courts must "rigorously enforce" arbitration agreements and "must order arbitration if it is satisfied that the making of the agreement for arbitration is not in issue." Simula, Inc. v. Autoliv, Inc., 175 F.3d 716, 719 (9th Cir. 1999) (citing Dean Witter Reynolds v. Byrd, 470 U.S. 213, 218 (1985)). Accordingly, the court determines "(1) whether a valid agreement to arbitrate exists, and, if it does, (2) whether the agreement encompasses the dispute at issue." Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000).
In the context of a motion to compel arbitration, the burden of proof is on the party contesting arbitration. Shearson/Am. Express, Inc. v. McMahon, 482 U.S. 220, 227 (1987). "[A]ny doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration, whether the problem" is construction of the contract language, "an allegation of waiver," or a "defense to arbitrability." Moses H. Cone Mem'l Hosp. v. Mercury Const. Corp., 460 U.S. 1, 24-25 (1983). If the court finds the matter subject to arbitration, it may either stay the matter pending arbitration or dismiss the matter. EEOC v. Waffle House, Inc., 534 U.S. 279, 289 (2002); see also 9 U.S.C. § 3, 4.
In its motion, Defendant contends the Agreement is a valid, written, and enforceable agreement between it and Plaintiff and that under the Agreement, Plaintiff agreed to arbitrate hisclaims. Therefore, according to Defendant, the Court must order the parties to resolve this matter in binding arbitration. In response, Plaintiff argues that: (1) under Oregon law, the Agreement is an invalid contract, and (2) even if such an agreement were formed, it is not enforceable because it is substantively unconscionable.
First, the Court must determine the validity of the Agreement as a contract. Plaintiff contends that under Oregon law, the Agreement is not a valid contract. To determine the validity of the Agreement, the Court must examine Oregon law in the context of the FAA. Next, the Court must analyze whether there was adequate consideration to form the Agreement.
The FAA provides that arbitration clauses "shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or equity for the revocation of any contract." 9 U.S.C. § 2. The FAA applies broadly to arbitration agreements involving "commerce among the several States or with foreign nations" or territories. 9 U.S.C. § 1. Specifically, the Supreme Court held that "[e]mployment contracts, except for those covering workers engaged in transportation, are covered by the FAA." Waffle House, 534 U.S. at 289. Thus, the Agreement in this case, if properly formed, is an employment contract subject to the FAA.
The FAA preempts Oregon arbitration law when Oregon law imposes additional enforceability conditions not applicable to other contracts. See, e.g., Bettencourt v. Brookdale Senior Living Communities, Inc., No. 09-CV-1200-BR, 2010 WL 274331 (D. Or. Jan. 14, 2010). The Oregon Arbitration Act imposes conditions beyond those in the FAA for enforcing arbitration agreements, such as notice of arbitration agreements prior to employment or "subsequent bona fide advancement of the employee by the employer" after signing anarbitration agreement during the course of employment. ORS 36.620(5). The FAA preempts these additional conditions.
Plaintiff argues that under Oregon law, the Agreement is invalid because there was no consideration. Adequate consideration under Oregon arbitration law requires an advancement along with entry into an arbitration agreement if the agreement is entered into during the course of employment. Id. However, because the FAA preempts this requirement, the Court looks to basic Oregon contract law for consideration requirements. See, e.g., Bettencourt, 2010 WL 274331. Under Oregon contract law, continued employment is sufficient consideration to support a change in the terms and conditions of employment. See McHorse v. Portland Gen. Elec. Co., 268 Or. 323, 331, 521 P.2d 315, 319 (1974) (...
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