Motsinger v. Lithia Rose-Ft, Inc.

• Decision Date: 04 April 2007
• Docket Number: 04CV2574CC.,A128192.
• Citation: 211 Or. App. 610,156 P.3d 156
• Parties: Rechelle MOTSINGER, Plaintiff-Respondent, v. LITHIA ROSE-FT, INC., dba Lithia Ford Lincoln Mercury of Roseburg, Defendant-Appellant.
• Court: Oregon Court of Appeals

156 P.3d 156

211 Or. App. 610

Rechelle MOTSINGER, Plaintiff-Respondent, v. LITHIA ROSE-FT, INC., dba Lithia Ford Lincoln Mercury of Roseburg, Defendant-Appellant.

04CV2574CC.

A128192.

Court of Appeals of Oregon.

Argued and Submitted September 6, 2006.

Decided April 4, 2007.

William G. Wheatley, Eugene, and Jaqua & Wheatley, LLC, filed the briefs for appellant.

Shane Swilley argued the cause for respondent. On the brief were Martin C. Dolan, Portland, and Dolan Griggs LLP.

Before EDMONDS, Presiding Judge, and BREWER, Chief Judge,^* and WOLLHEIM, Judge.^**

EDMONDS, P.J.

This case involves an interlocutory appeal from the trial court's denial of defendant's petition to abate the proceeding below pending arbitration. The trial court ruled that the arbitration clause contained in plaintiff's employment contract with defendant is unenforceable because it constitutes an unconscionable contract of adhesion. On appeal, defendant argues that the trial court erred in ruling that the arbitration clause was unconscionable. We agree and therefore reverse and remand.

The relevant facts are brief and undisputed. Plaintiff was employed by defendant as a part-time receptionist. She alleges that, during the 14 months that plaintiff worked for defendant, she was subjected to repeated acts of sexual harassment by several male employees. Eventually, plaintiff was terminated and she alleges that her termination was due, in part, to retaliation for reporting the alleged sexual harassment to management. Consequently, plaintiff brought a wrongful termination action against defendant, alleging claims of sexual harassment under ORS 659A.030(1)(a), retaliation under ORS 659A.030(1)(f), wrongful discharge, battery and intentional infliction of emotional distress.

Prior to trial, defendant petitioned the court to abate the proceedings pending arbitration based on the fact that plaintiff, at the time of hiring, signed an employment contract that included an arbitration clause requiring any claims against defendant to be submitted to arbitration. The trial court denied defendant's petition because it determined that the "arbitration agreement was unenforceable due to unconscionability."¹

On appeal, defendant advances two assignments of error. Defendant's first assignment of error presents the issue of whether the court or the arbitrator should decide whether the employment contract is a contract of adhesion. Defendant did not raise that issue to the trial court, and we decline defendant's invitation to treat it as error apparent on the face of the record.² The issue is not clearly defined by the parties, and, given the nature of the trial court's ruling, it is not apparent to us that the court erred. Under the circumstances, further discussion of that assignment would not benefit the bench, the bar, or the public.

In its second assignment of error, defendant contends that the trial court erred in concluding that the arbitration clause is unenforceable due to unconscionability.³ The arbitration clause at issue is governed by the Federal Arbitration Act (FAA), 9 USC sections 1 to 16, and the Oregon Arbitration Act (OAA), former ORS 36.300 to 36.365 (2001).⁴ Section 2 of the FAA provides that the enforceability of an arbitration clause may be challenged in state court "upon such grounds as exist at [state] law or in equity for the revocation of any contract," including unconscionability. Accordingly, even though the arbitration clause is governed by the FAA, we must look to state law to determine whether it is unconscionable. See Vasquez-Lopez v. Beneficial Oregon, Inc., 210 Or.App. 553, 560, 152 P.3d 940 (2007); Dex Media, Inc. v. National Management Services, 210 Or.App. 376, 150 P.3d 1093 (2007).

Whether, under Oregon law, the facts of this case support a finding of unconscionability is a question of law that must be determined based on the facts in existence at the time the contract was made. Best v. U. S. National Bank, 303 Or. 557, 560, 739 P.2d 554 (1987). The party asserting unconscionability bears the burden of demonstrating that the arbitration clause in question is, in fact, unconscionable. W. L. May Co., Inc. v. Philco-Ford Corp., 273 Or. 701, 707, 543 P.2d 283 (1975).

In Oregon, the test for unconscionability has two components—procedural and substantive. Vasquez-Lopez, 210 Or.App. at 566, 152 P.3d 940. Procedural unconscionability refers to the conditions of contract formation, and substantive unconscionability refers to the terms of the contract. Id. at 566-67, 152 P.3d 940. An analysis of procedural unconscionability focuses on two factors: oppression and surprise. Oppression arises when there is inequality in bargaining power between the parties to a contract, resulting in no real opportunity to negotiate the terms of the contract and the absence of meaningful choice. Id. Surprise involves the extent to which the supposedly agreed terms were hidden from the party seeking to avoid enforcement of the agreement. Id. at 567, 152 P.3d 940.

Plaintiff contends that the arbitration clause is procedurally unconscionable because there was unequal bargaining power between the parties. Namely, plaintiff argues that (1) at the time of her hire she was only 19 years of age; (2) the arbitration clause was contained in a packet of approximately 70 new hire forms, 50 of which she had to read and sign; (3) she had less than two hours to review all the documents; and (4) she would not have been hired if she had refused to sign any of the documents.

Plaintiff argues that those conditions created unequal bargaining power, because the arbitration clause was imposed on her as a condition of employment and she had no meaningful opportunity to negotiate its terms. The trial court agreed that plaintiff had no opportunity to negotiate the terms of the arbitration clause, and the evidence in the record supports the trial court's finding. Plaintiff was given a standardized printed form as part of the hiring process, and plaintiff had to accept the arbitration clause on a "take-it-or-leave-it" basis if she wanted the job.⁵ See Reeves v. Chem Industrial Co., 262 Or. 95, 101, 495 P.2d 729 (1972) (defining an adhesion contract as a "take-it-or-leave-it" contract that is the product of unequal bargaining power between the parties).

Apart from a showing of unequal bargaining power, plaintiff has not demonstrated that the circumstances of contract formation carried other indicia of procedural unconscionability. First, plaintiff has not demonstrated that the arbitration clause was the product of deception or compulsion. See Carey v. Lincoln Loan Co., 203 Or.App. 399, 422, 125 P.3d 814 (2005), rev. allowed, 341 Or. 449, 143 P.3d 772 (2006) (unconscionability may involve deception, compulsion, or genuine lack of consent). As defendant points out, it did not use high pressure tactics to compel plaintiff to consent to arbitration. To the contrary, defendant asserts that it gave plaintiff time to read through all of the forms and to ask questions, and the record supports that assertion. At the hearing on defendant's petition to abate, defendant's regional personnel coordinator testified:

"A. When [employees] are hired, they come into the local personnel office. We go over our—what we call a registration packet. It's a book of forms. We go over each form with them and explain it in detail.

"They then watch a video pertaining to those documents and—just sort of giving them a general idea how to complete the forms.

"They sign all the documents in that registration packet. * * * And then we give them an employee handbook and give them back their copy, any informational papers that they would receive back. And then they go to work.

"Q. How long does that process take, this signing documents process?

"A. On average I would say about two hours. Sometimes it's shorter; sometimes it's longer, just depending on how long it takes each individual person to read through the documents and sign them. But on average, it's about two hours.

"Q. Are employees given the opportunity to completely read through the documents before they sign them?

"A. Yeah. We not only encourage them to do so when we are going over the papers, but then also on our videotape it states don't—you know, make sure you understand. We tell them, if you don't understand any document, come back to us and ask us questions."

That testimony is the only evidence in the record regarding the conditions under which plaintiff agreed to enter into binding arbitration with defendant. It does not show that plaintiff was in any way confused by the forms or misled into signing them. Nor is there any evidence in the record that plaintiff was surprised by the terms of the arbitration clause. The fact that the employment contract contained an arbitration clause was not hidden or disguised from plaintiff. The clause appeared in a one-page document that was labeled with the heading "COMPREHENSIVE AGREEMENT EMPLOYMENT AT-WILL AND ARBITRATION." (Uppercase in original.) The arbitration clause itself encompassed the majority of that one-page document and was, except for its last sentence, written in the same size and style of font as the other provisions of the document. The last sentence of the clause was typed in a font larger than the rest of the clause and provided: "I UNDERSTAND THAT BY VOLUNTARILY AGREEING TO THIS BINDING ARBITRATION PROVISION, BOTH I AND THE COMPANY GIVE UP OUR RIGHTS TO TRIAL BY JURY." (Boldface and uppercase in original.)⁶ Further, plaintiff signed the bottom of the document indicating that she had read and understood its terms. A party is "presumed to be familiar with the contents of any document that bears the person's signature." First Interstate Bank v. Wilkerson, 128 Or.App. 328, 337 n. 11, 876 P.2d 326 (1994) (citing Broad v. Kelly's Olympian Co., 156 Or. 216, 229, 66 P.2d 485 (1937)).

Thus, the only indicia of procedural unconscionability here is unequal bargaining power....