Mitchell v. HCL Am., Inc.

• Decision Date: 02 June 2016
• Docket Number: No. 5:15-CV-565-FL,5:15-CV-565-FL
• Citation: 190 F.Supp.3d 477
• Court: U.S. District Court — Eastern District of North Carolina
• Parties: Margaret Mitchell, Plaintiff, v. HCL America, Inc., Defendant.

190 F.Supp.3d 477

Margaret Mitchell, Plaintiff,

v.HCL America, Inc., Defendant.

No. 5:15-CV-565-FL

United States District Court, E.D. North Carolina, Western Division.

Signed June 2, 2016

Laura Noble, The Noble Law Firm, PLLC, Chapel Hill, NC, Nicholas Joseph Sanservino, Jr., The Noble Law Firm, PLLC, Durham, NC, for Plaintiff.

Robert A. Sar, Brodie D. Erwin, Ogletree Deakins Nash Smoak & Stewart, P.C., Raleigh, NC, for Defendant.

ORDER

LOUISE W. FLANAGAN, United States District Judge

This matter is before the court on defendant's motion to compel arbitration and stay proceedings, made pursuant to the Federal Arbitration Act("FAA"), 9 U.S.C. §§ 3and4.The issues raised have been briefed fully and are ripe for ruling.For the reasons and on the terms that follow, the court grants defendant's motion.

STATEMENT OF THE CASE

Plaintiff filed this suit against defendant, her current employer, on October 23, 2015.Plaintiff asserts six causes of action, including three federal statutory claims for disparate treatment on the basis of gender, in violation of Title VII of the Civil Rights Act of 1964("Title VII"), 42 U.S.C. § 2000e–2; disparate treatment on the basis of age, in violation of the Age Discrimination in Employment Act("ADEA"), 29 U.S.C. § 623(a); and retaliation for engaging in protected activity, in violation of both Title VII,42 U.S.C. § 2000e–3, and the ADEA,29 U.S.C. § 623(d).Plaintiff's three remaining claims are asserted under North Carolina law and include: a statutory claim for violation of the North Carolina Wage and Hour Act, N.C. Gen. Stat. § 95–25.1 et seq., as well as common law claims for fraud and negligent misrepresentation.

Defendant filed the instant motion on January 11, 2016.Defendant argues that plaintiff's employment contract obligates her to submit all of her claims to arbitration in Sunnyvale, California, where defendant is headquartered.This is so, defendant maintains, because plaintiff's employment contract contains a valid arbitration provision (the "arbitration provision"), which requires all but a select few disputes arising between the parties be submitted to and decided by an arbitrator.

Defendant also argues that the arbitration provision is conscionable under either the law of this forum, or the substantive law selected by the parties to govern plaintiff's employment contract, California law.Defendant first argues the court should determine the conscionablity of the arbitration provision by applying the law of this forum, where in North Carolina the existence of a contract, like the arbitration provision, is a procedural issue.Under that law, defendant argues, the arbitration provision plainly is conscionable.Defendant next argues that, even if the court were to apply California law, the substantive law selected by the parties, the arbitration provision is conscionable, or, in all events, that the relevant California law is preempted by the FAA.

Plaintiff opposes the motion on the ground that the arbitration provision is unconscionable.Relying on California law, plaintiff contends that the arbitration provision is both procedurally and substantively unconscionable.The arbitration provision is procedurally unconscionable, says plaintiff, because it is an adhesion contract.Further, plaintiff argues that the arbitration provision is substantively unconscionable in three ways.First, plaintiff contends that the arbitration provision is unconscionable because it lacks mutuality.In particular, plaintiff argues it is unconscionable because it exempts from arbitration certain claims related to her "undertakings," essentially claims related to intellectual property that are more likely to be brought by defendant.Second, plaintiff attacks that portion of the arbitration provision that incorporates by reference the Commercial Arbitration Rules of the American Arbitration Association(the "AAA"), which require the parties to share equally the cost of arbitration.That "cost-splitting clause,"plaintiff maintains, is unconscionable under California law because it requires her to bear a type of cost that she would not be required to bear if she were free to pursue her claims in court.Third, and finally, plaintiff argues that the arbitration provision's "arbitral forum selection clause," which operates as a "place and manner" restriction and compels her to arbitrate in California, is unconscionable, where it unfairly impedes her ability to pursue fully her various claims against defendant.

In any case, notwithstanding California law allowing the court to sever from the arbitration provision any unconscionable clause ancillary to the primary purpose of that provision, plaintiff suggests that the arbitration provision should be struck in its entirety.Considered together, plaintiff argues, those three objectionable clauses provide evidence that the arbitration provision is permeated with unconscionability.Put another way, plaintiff suggests that defendant drafted the arbitration provision to take advantage of her, the relatively weaker party.In support of her opposition, plaintiff relies on her own declaration.(Pl.'sDecl., DE 18-1).

STATEMENT OF FACTS

Sometime prior to February 2011, defendant contacted plaintiff concerning a position in its employment insurance department, headquartered in Cary, North Carolina.(Pl.'sDecl. ¶¶ 2,5; Compl., DE 1, ¶¶ 7,10;see alsoPl.'sDecl. ¶ 1).Plaintiff never met with defendant's representatives in person; nevertheless, defendant extended to her an offer of employment by letter dated February 18, 2011(plaintiff's "Offer of Employment").(Id.¶ 3; Offer of Employment, DE 14-1).

Plaintiff's Offer of Employment contains two provisions that are relevant here.First, section 8, the arbitration provision, provides:

Except for disputes arising under or in connection with the attached agreement called "Undertaking", all disputes arising under or in connection with this Agreement or concerning in any way employee's employment shall be submitted exclusively to arbitration in Sunnyvale, CA under the Commercial Arbitration Rules of the American Arbitration Association then in effect, and the decision of the arbitrator shall be final and binding upon the parties.Judgment upon the award rendered may be entered and enforced in any court having jurisdiction.The parties to this Agreement hereby waive their right to a trial by a jury of their peers.

(Id., 3 § 8).¹The arbitration provision can be deconstructed into the three challenged clauses at issue in this case.First, that portion of the arbitration provision providing that "[e]xcept for disputes arising under or in connection with the attached agreement called ‘Undertaking’, all disputes arising under or in connection with this Agreement ... shall be submitted exclusively to arbitration" is the "undertakings clause," which plaintiff attacks as lacking mutuality.Second, that portion of the arbitration provision providing that "all disputes arising under or in connection with this Agreement or concerning in any way employee's employment shall be submitted exclusively to arbitration ... under the Commercial Arbitration Rules of the [AAA]" incorporates by reference the cost-splitting clause, which plaintiff attacks as requiring her to bear a type of cost nonexistent in litigation, namely the arbitrator's fee.Finally, that portion of the arbitration provision providing "all disputes arising under or in connection with this Agreement or concerning in any way employee's employment shall be submitted exclusively to arbitration in Sunnyvale, CA," is the arbitral forum selection clause, which plaintiff contends unfairly benefits defendant and denies her the opportunity to vindicate fully her claims.

In any case, plaintiff's Offer of Employment also includes a choice of law provision.In particular, section 9, titled "Miscellaneous," provides "This letter agreement shall be governed by and construed in accordance with [the] laws of California, as well as all the other laws as applicable to employees on non immigration work permits."(Id.§ 9).

Following receipt of her Offer of Employment, plaintiff objected to the arbitration provision.(Pl.'sDecl. ¶ 6).However, defendant told her that the agreement was "standard" and that she either had to "take it or leave it."(Id.).

Plaintiff accepted defendant's Offer of Employment and thereafter relocated to Cary, North Carolina, from Denver, Colorado.(Pl.'sDecl. ¶ 2).Shortly after plaintiff began her employment, defendant allegedly denied her a bonus to which she was entitled and passed her over for a promotion, which defendant awarded to a less-qualified male who was younger than 40.In July 2013, plaintiff filed a charge of discrimination with the Equal Employment Opportunity Commission.Subsequently, defendant allegedly gave plaintiff an unwarranted, negative job performance review and reassigned her to a position performing less desirable work.In December 2013, plaintiff filed a second charge with the EEOC, alleging retaliation.The EEOC issued to plaintiff two notice of right to sue letters, one corresponding to each of her charges, on July 26, 2015.

COURT'S DISCUSSION

A.Standard of Review

A motion to compel arbitration is akin to a motion for summary judgment.SeeChorley Enters. v. Dickey's Barbecue Rests., Inc., 807 F.3d 553, 563–64(4th Cir.2015).Therefore, such motions should be granted where an examination of the pleadings, affidavits, and other discovery materials properly before the court demonstrates "that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law."Fed. R. Civ. P. 56(a);see alsoAnderson v. Liberty Lobby, Inc., 477 U.S. 242, 247–48, 106 S.Ct. 2505, 91 L.Ed.2d 202(1986)(holding that a factual dispute is "material" only if it might affect the outcome of the suit and "genuine" only if there is sufficient evidence for a reasonable jury to find for the non-moving party).Where a...