Theis v. Aflac Inc.

• Decision Date: 18 March 2021
• Docket Number: Cause No. CV 20-11-SPW-TJC
• Parties: GERALD THEIS, JR., Plaintiff, v. AFLAC INC., Defendant.
• Court: U.S. District Court — District of Montana

GERALD THEIS, JR., Plaintiff,
v.
AFLAC INC., Defendant.

Cause No. CV 20-11-SPW-TJC

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MONTANA BILLINGS DIVISION

March 18, 2021

ORDER RE FINDINGS AND RECOMMENDATIONS OF UNITED STATES MAGISTRATE JUDGE

Before the Court is United States Magistrate Judge Cavan's Findings and Recommendations (Doc. 22) regarding Defendant Aflac's Motion to Compel Arbitration, Dismiss or Stay Proceedings, and for Attorney's Fees (Doc. 6), filed December 28, 2020. Judge Cavan recommended that the Court grant Aflac's Motion in part and deny the motion in part. (Doc. 22 at 1). Plaintiff Gerald Theis filed objections to the Findings and Recommendations on January 11, 2021. (Doc. 23). Aflac responded to the objections on January 25, 2021. (Doc. 24). For the following reasons, the Court adopts Judge Cavan's Findings and Recommendations in full.

I. STANDARD OF REVIEW

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Parties are entitled to de novo review of those portions of Judge Cavan's findings and recommendations to which they timely and properly object. 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b)(3). The Court may accept, reject, or modify, in whole or in part, those findings and recommendations properly objected to. 28 U.S.C. § 636(b)(1). "A party makes a proper objection by identifying the parts of the magistrate's disposition that the party finds objectionable and presenting legal argument and supporting authority, such that the district court is able to identify the issues and the reasons supporting a contrary result." Lance v. Salmonson, 2018 WL 4335526, at *1 (D. Mont. Sept. 11, 2018) (quoting Montana Shooting Sports Ass'n v. Holder, 2010 WL 4102940, at *2 (D. Mont. Oct. 18, 2010)). Simply restating the party's argument previously made before the magistrate judge is not a sufficient objection. Id.

Absent an objection, a court reviews a magistrate's findings and recommendations for clear error. United States v. Reyna-Tapia, 328 F.3d 1114, 1121 (9th Cir. 2003). Clear error exists if the Court is left with a "definite and firm conviction that a mistake has been committed." United States v. Syrax, 235 F.3d 422, 427 (9th Cir. 2000).

II. RELEVANT BACKGROUND

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No party objected to Judge Cavan's recitation of the case's relevant factual background. Therefore, finding that no clear error exists, Judge Cavan's factual findings of the relevant background of the case are adopted in full.

III. DISCUSSION

Judge Cavan found that a valid and enforceable arbitration agreement existed in the Associate's Agreement entered into by Theis and Aflac. (Doc. 22 at 8). Further, Judge Cavan found that the arbitration agreement was not unconscionable and that Theis had failed in his burden to show the fee-splitting arrangement contemplated in the arbitration agreement was prohibitively costly. (Doc. 22 at 15). Judge Cavan was not convinced by Theis's argument that because Aflac allegedly breached the contract, the arbitration agreement was unenforceable. Judge Cavan found that the arbitration agreement survives in the face of these allegations. (Doc. 22 at 16). The arbitration agreement was also found to encompass the disputes alleged by Theis (Id. at 17), and Judge Cavan recommended that the pending matter be stayed while the arbitration process proceeded. (Id. at 18). Finally, Judge Cavan found that the determination of attorney fees should be reserved for the arbiter's decision. (Id. at 19).

Theis objected to Judge Cavan's finding that the arbitration agreement's fee-splitting arrangement was not unconscionable as a matter of law. (Doc. 23 at 5). Theis also objected to Judge Cavan's finding that Theis failed in his burden to

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prove that the fee-splitting arrangement in the Associate's Agreement was not prohibitively costly. (Id. at 3;13). Each objection will be addressed below.

a. Unconscionability

In his original response, Theis argued that fee-splitting arrangements in arbitration agreements are unconscionable as a matter of law. Theis supported this argument with references to numerous cases from outside Montana including several Ninth Circuit opinions relying on California law. In his objection, Theis once again cites to opinions from outside Montana to support his argument that fee-splitting arrangements are averse to public policy...