Smith v. Express Check Advance of Miss., LLC.

• Decision Date: 02 October 2014
• Docket Number: No. 2013–CA–00369–SCT.,2013–CA–00369–SCT.
• Citation: 153 So.3d 601
• Parties: Lacie Cyless SMITH v. EXPRESS CHECK ADVANCE OF MISSISSIPPI, LLC.
• Court: Mississippi Supreme Court

153 So.3d 601

Lacie Cyless SMITH

v.EXPRESS CHECK ADVANCE OF MISSISSIPPI, LLC.

No. 2013–CA–00369–SCT.

Supreme Court of Mississippi.

Oct. 2, 2014.

Rehearing Denied Jan. 15, 2015.

Jim Waide, Jim Waide, Ron L. Woodruff, attorneys for appellant.

J. Tucker Mitchell, Stephen Dean Stamboulieh, Ridgeland, attorneys for appellee.

EN BANC.

Opinion

DICKINSON, Presiding Justice, for the Court:

¶ 1. When Express Check Advance of Mississippi, LLC, employed Lacie Smith, she agreed to submit “any employment-related dispute” to arbitration. Later, in response to her termination, Smith commenced legal proceedings against Express Check in circuit court. The trial judge compelled arbitration and Smith appealed. We affirm.

FACTS AND PROCEDURAL HISTORY

¶ 2. When Express Check hired Smith for a clerical position, she signed a two-page document entitled “Non–Competition and Confidentiality Agreement.” Section six of that document stated:

6. ENFORCEMENT.

6.1 Injunctive Relief. Associate acknowledges that it would be difficult to fully compensate the Employer for damages resulting from any breach by Associate of the provisions of, this Agreement. Accordingly, Associate agrees that, in addition to, but not to the exclusion of, any other remedy, the Employer shall have the right to enforce the provisions of this Agreement by applying for and obtaining temporary and permanent restraining orders or injunctions from a court of competent jurisdiction without the necessity of filing a bond therefore, and without the necessity of proving actual damages, and the Employer shall be entitled to recover from Associate its reasonable attorneys' fees and costs in enforcing the provisions of this Agreement.

6.2 Settlement by Arbitration. Pursuant to the terms of this Agreement, and in valuable consideration received in exchange therefore, the parties hereto agree that any employment-related dispute, controversy or claim that Associate may have with Employer and/or any of its associates, officers, members, managers, governors, parents, subsidiaries, affiliates or agents, in their capacity as such or otherwise, or that Employer and/or any of its associates, officers, members, managers, governors, parents, subsidiaries, affiliates or agents may have with Associate, shall be resolved only through arbitration and not through litigation in federal, state or local court.

Associate agrees that he/she cannot bring any claim or lawsuit, or act as a lead plaintiff in or otherwise participate in any class action lawsuit, in any federal, state or local court involving this Agreement, application or candidacy for employment, employment, or cessation of employment with Employer, including, but in no way limited to, claims arising under Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Family and Medical Leave Act of 1993, 42 U.S.C. § 1981, the Associate Retirement Income Security Act (ERISA), the Fair Labor Standards Act, the Occupational Health and Safety Act, the Worker Adjustment and Retraining Notification Act, the human rights act, or similar act, of any state, the public protection act, or similar act, of any state, any claim based on express or implied contract, any claims of promissory estoppel, any action arising in tort, including, but in no way limited to, libel, slander, defamation, intentional infliction of emotional distress, or negligence, any claim for wrongful discharge, any constitutional claims or any claims under all laws relating to the violation of public policy, retaliation or compensation, any claims arising under employment or disability discrimination or whistleblower laws, or any other statutory or common-law claims under federal, state or local law. A dispute, controversy or claim is also considered subject to this policy if it arises or involves any issue pertaining to this Agreement, the formation of this Agreement, the scope of this Agreement or the Party's performance of this Agreement. Associate understands that he/she is waiving the right to a jury trial for any such claim. This provision is mutually binding upon both Employer and Associate, as indicated by the acknowledgment set forth below.

Associate understands that he/she has the right to be represented by the attorney of his/her choice in pursuing any employment-related dispute, controversy or claim under this Agreement. Associate further understands and agrees that the decision of the Arbitrator will be FINAL AND BINDING on all parties to the dispute. There is no appeal on the merits of the dispute to federal, state or local courts.

This section is to be construed pursuant to the terms of the Federal Arbitration Act, 9 U.S.C. § 1 et seq. The provisions of any arbitration act or statute under the laws of the State of Mississippi, do not apply to this section.

¶ 3. Section seven included miscellaneous provisions, including a severability clause, a choice-of-law provision, and a notation that “[t]he headings contained in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.”

¶ 4. Smith signed the agreement and separately initialed an acknowledgment accepting the arbitration provision. She also initialed an acknowledgment that she had read the entire agreement.

¶ 5. After Express Check terminated Smith, she filed suit, claiming that she was fired for reporting her supervisor's illegal acts. Express Check answered, denied the allegations, and moved to compel arbitration pursuant to the “Non–Competition and Confidentiality Agreement.” Smith responded to Express Check's motion by arguing that the agreement was procedurally and substantively unconscionable, that she never knowingly agreed to arbitrate her claims, and that she signed the agreement under duress.

¶ 6. At the hearing on its motion, Express Check introduced the agreement and Smith testified, arguing that the arbitration clause was procedurally unconscionable because no one told her to read the agreement or explained its meaning. She also argued that the agreement was substantively unconscionable because she lacks the financial resources to bear the cost of arbitration.

¶ 7. In his order compelling arbitration, the trial judge stated that the agreement was not procedurally unconscionable because, unless illiterate, Smith had a duty to read it, and that she could have refused to sign the agreement and sought employment elsewhere. He also found that the agreement was not substantively unconscionable because Smith failed to produce any evidence of the cost of arbitration. Smith appealed.

ANALYSIS

¶ 8. In reviewing an appeal of an order compelling arbitration, we review the trial judge's factual findings under an abuse-of-discretion standard,¹ and we conduct a de novo review of all legal conclusions.²

The Federal Arbitration Act

¶ 9. Through the Federal Arbitration Act, Congress imposed a national policy in favor of arbitration.³ Arbitration agreements “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.”⁴ The statute's effect extends to arbitration agreements in employment contracts.⁵

¶ 10. The Act ensures that “[a]rbitration agreements and other contract terms should be on equal footing, in that state courts may not invalidate arbitration agreements under laws that affect only arbitration agreements,”⁶ and that “arbitration clauses shall not receive especial treatment not otherwise available under basic state contract principles.”⁷ So, courts must compel arbitration if the parties validly agreed to arbitrate the dispute at issue.⁸

¶ 11. To determine whether parties agreed to arbitrate their disputes, courts invoke a two-pronged inquiry. Under the first prong, a court must ascertain whether an agreement to arbitrate exists, the scope of which encompasses the parties' dispute.⁹ Under the second prong, the court must question “whether legal constraints external to the parties' agreement foreclosed arbitration of those claims.”¹⁰ Under this prong, state contract defenses may invalidate the agreement to arbitrate as they would any other contractual provision.¹¹ But because of the national policy favoring arbitration, the party opposing arbitration bears the burden to prove that a contract defense applies in the particular case.¹²

¶ 12. Here, neither party disputes that the arbitration clause purports to submit Smith's claim to arbitration. Indeed, the arbitration provision's broad language references “all employment-related disputes,” and it specifically includes “any claim for wrongful discharge.” Instead, Smith attacks the enforcement of that provision based on the doctrine of unconscionability, one of the “legal constraints external to the parties' agreement” which may foreclose enforcement.¹³

Unconscionability

¶ 13. So important to our Founders was the freedom to contract without interference from the government or the courts, that they constitutionally prohibited any State from passing any law “impairing the obligations of contracts....”¹⁴ That is not to say that our Founders believed courts should never, for any reason, set aside a contractual obligation. But such instances should be the rare exception rather than the general rule; and the basis for granting such extraordinary relief to a contracting party should not be a judge's subjective conclusion that the contract is not fair. Fairness is for the parties to decide. That is why the doctrine of unconscionability traditionally has applied only to the most egregious of contractual situations.

¶ 14. An unconscionable contract is “one such as no man in his senses and not under a delusion would make on the one hand, and as no honest and fair man would accept on the other....”¹⁵ We previously have held:

Corbin expounds on the meaning of “unconscionable” as follows:

“Unconscionable” is a word that defies lawyer-like definition. It is a term

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