Jensen v. Fisher Communications, Inc. et al, No. 3:2014cv00137 - Document 26 (D. Or. 2014)
Court Description: OPINION and ORDER - The Court GRANTS Fisher's Motion 15 to Dismiss and Compel Arbitration and REFERS this matter to arbitration in King County Washington pursuant to the Employment Agreement. DATED this 1st day of December, 2014, by United States Magistrate Judge John V. Acosta. (peg)
Download PDF
<![CDATA[
Jensen v. Fisher Communications, Inc. et al Doc. 26 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF OREGON THOMJENSEN Civ. No. 3:14-cv-00137-AC OPINION AND ORDER Plaintiff, v. FISHER COMMUNICATIONS, INC., aka Sinclair Broadcast Group, Inc., FISHER BROADCASTING COMPANY, aka Sinclair Television Media, Inc., and FISHER BROADCASTING- PORTLAND TV, LLC, aka Sinclair Television ofPortland, LLC. Defendants. ACOSTA, Magistrate Judge: Introduction This case arises out of an employment agreement ("Employment Agreement") between Thorn Jensen ("Jensen") and his former employers, Fisher Communications, Inc., Fisher Broadcasting OPINION AND ORDER- I [RMD] Dockets.Justia.com 1 Company, and Fisher Broadcasting - Portland TV, LLC (collectively "Fisher"). Jensen filed this suit in January 2014 stating ten employment-related claims for relief. Fisher now moves to dismiss or stay this case, and compel arbitration pursuant to an arbitration clause governing disputes arising out of the Employment Agreement. Jensen opposes arbitration. He argues the arbitration clause is unconscionable and unenforceable under Oregon and federal law, and that Fisher has waived its right to compel arbitration. Factual Background In October 2006, Fisher hired Jensen to serve as an investigative repmter on a news program broadcast on KATU-TV, a television station in Pmtland, Oregon. (Declaration of John Tamerlano in Support of Motion to Compel Arbitration ("Tamerlano Dec!.") Ex. Bat 1, 8.) Jensen served for seven years atKATU-TV. (Tamerlano Dec!. Exs. C, D.) After he completed his three-year contract signed in 2006, he subsequently signed two-year extensions in 2009 and 2011. The three employment agreements are largely identical, the primary difference being Jensen's yearly salary, which increased from $75,000 to $88,000 during his seven years with KATU-TV. (Id.) Included in each of Jensen's three contracts is a section entitled "Resolutio n ofDisputes, Fees and Costs." (Tamerlano Dec! Exs. B, C, D.) That section provides that, for any controversy or claim "arising out of, or relating to, [Jensen's] employment or termination of employment" with Fisher, the patties will first attempt to negotiate the matter. (Tamerlano Dec!, Ex B, C, D at 6-7.) If the Fisher Communications, Inc., Fisher Broadcasting Company, and Fisher Broadcasti ngPortland TV, LLC have changed their names and are now known as Sinclair Broadcasting Group, Inc., Sinclair Television Media, Inc., and Sinclair Television of Portland, LLC respectively. The court will nonetheless refer to Defendants as "Fisher," as that is the name used by both parties in their comt filings. 1 FINDINGS & RECOMM ENDATIO N- 2 [RMD] parties cannot successfully negotiate a mutually agreeable resolution, the contract calls for a nonbinding mediation. (Tamerlano Dec!, Ex. D at 7.) If the dispute persists after mediation, then: [t]he dispute shall be settled by final and binding arbitration in Seattle, Washington, in accordance with the national rules for the resolution of employment disputes ofthe American Arbitration Association. The arbitrator shall have the power to award monetary damages, costs, and reasonable attomeys' fees to the prevailing pmty. The only disputes not covered by this Agreement shall be worker's compensation claims, claims for unemployment compensation, and claims for injunctive relief and/or equitable relief by the Company for violation of Section 6 above. The parties agree to abide by and perfmm in accordance with any award rendered by the arbitrator, and agree that judgment upon the award may be entered by the prevailing party in any coUlt having jurisdiction thereof. The arbitrator's fees and costs of arbitration shall be home equally by the pmties, subject to the authority above of the arbitrator to awm·d costs and reasonable attomeys' fees to the prevailing party; provided, however, that arbitration costs which are prohibitively expensive for the Employee may be borne by the company, including such costs as the arbitration filing fee and the arbitrator's expenses. Should either party file a judicial or administrative action asserting claims which are subject to this arbitration provision, and the other party successfully stays such action and/or succeeds in compelling arbitration of such claims, the party which filed the action shall pay the other pmty's costs and expenses incurred in seeking a stay or compelling arbitration, including its reasonable attorneys' fees. (Tamerlano Dec!. Exs. B, C, D at 7.) Procedural Background In March 2013, Jensen filed a claim for Declaratory Judgment in Multnomah County Circuit Court. (Declaration of Aaron W. Baker ("Baker Dec!.") Ex. A.) In his complaint, Jensen asked the court to declare the non-compete provisions of the Employment Agreement void and award him attomey fees and costs pursuant to OR. REv. STAT. § 28.1 00. (Baker Dec!. Ex. A at 3.) Fisher filed an answer followed by a motion for summary judgment. Neither ofFisher's documents mentioned the arbitration clause or asserted that the matter was improperly before the Multnomah County CoUlt. The record does not reflect if, when, or how Jensen's Multnomah County CoUlt case resolved. FINDINGS & RECOMMEN DATION- 3 [RMD] In January 2014, Jensen filed the present class-action suit in the U.S. District Court for the District of Oregon. (Dkt. No. 1.) Fisher answered Jensen's complaint and again did not asse1t or otherwise raise its contractual right to arbitration. (Dkt. No. 10.) However, on June 5, 2014, Fisher filed a Motion to Compel Arbitration. (Dkt. No. 15.) In it, Fisher asks the court to dismiss, or alternatively, stay the present suit and order Jensen to participate in a binding arbitration in Seattle, Washington pursuant to the Employment Agreement. (Id.) Legal Standard The Federal Arbitration Act ("the FAA") establishes the validity and enforceability of agreements to arbitrate disputes arising out of contract, "save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. As a general principle, the Supreme Comt has held that arbitration agreements in employment contracts are valid and enforceable. See Circuit City Stores v. Saint Clair Adams, 532 U.S. 105, 119 (2001) (the exemptio n in the FAA for employment contracts extends only to those of transportation workers). The FAA expresses the strong federal policy in favor of arbitration. Moses H Cone Mem 'I Hosp. V. Mercury Constr. Corp., 460 u.s. 1, 24 (1983). "Evaluating a motion to compel arbitration requires a court to determine: '(1) whether a valid agreement exists, and if it does, (2) whether the agreement encompasses the dispute at issue."' Simpson v. Lifestyles, LLC, Civil No. 07-1251-HA, 2008 WL 1882838, at *2 (D. Or. Apr. 24, 2008), quoting Chiron Corp. v. Ortho Diagnostic Sys., 207 F.3d 1126, 1130 (9th Cir.2000). If the agreement is valid and encompasses the dispute, the comt must "enforce the arbitration agreement in accordance with its terms." Id Furthermore, there is "a presumption in favor of arbitrability." Livingston v. Metropolitan Pediatrics, LLC, 234 Or. App. 137, 147 (2010). FINDINGS & RECOMM ENDATI ON - 4 [RMD] An othe1wise valid arbitration clause may be found unconscionable and, thus, unenforceable. This is a question of law to be determined by the comt and is "based on the facts in existence at the time the contract was made." Id at 151, citing Bestv. US. National Bank, 303 Or. 557, 560 (1987). Contract terms are evaluated for both procedural and substantive unconscionability, and the party asserting it bears the burden of demonstrating unconscionability. Simpson, 2008 WL 1882838, at *9. Discussion I. Applicability of the Federal Arbitration Act Before reaching the merits of Fisher's motion, the court must make first dete~mine the applicable law. Federal courts siting in diversity must apply state substantive law and federal procedural law. Gasperini v. Ctr. for Humanities, Inc., 518 U.S. 415, 427 (1996). However, the distinction between the procedural and substantive is not always clear. Id. In parsing the procedural from the substantive, courts analyze whether the law in question has "so important an effect upon the fortunes of one or both of the litigants that failme to apply it" would lead to inconsistent results or judicial forum shopping. Hanna v. Plummer, 380 U.S. 460, 468 n.9 (1965). More recently, the Supreme Court held that a state statute is substantive if it "significantly affects the result of a litigation" on the merits. Shady Grove Orthopedic Assocs., P.A. v. Allstate Ins. Co., 559 U.S. 393, 406 (2010). The Federal Arbitration Act ("FAA") "was enacted in 1925 in response to widespread judicial hostility to arbitration agreements." AT&T Mobility LLC v. Conception, -U.S.-, 131 S. Ct. 1740, 1745 (2011). It expresses a "liberal federal policy favoring arbitration" and shows an "unmistakably clear congressional purpose that the arbitration procedure, when selected by the FINDINGS & RECOMMENDATION- 5 [RMD] patties to a contract, be speedy and not subject to delay and obstruction in the coutts." Id.; Prima Paint Corp. v. Flood & Conclin Mfg. Co., 388 U.S. 395,404 (1967). The Supreme Court has held that the FAA is "substantive law" for Erie analysis purposes, but nonetheless applies it in diversity cases. Id. The court explained: [t]he question in this case . . . is not whether Congress may fashion federal substantive rules to govern questions arising in simple diversity cases. Rather the question is whether Congress may prescribe how federal courts are to conduct themselves with respect to subject matter over which Congress plainly has power to legislate. The answer to that can only be in the affirmative. And it is clear beyond dispute that the federal arbitration statute is based upon and confined to the incontestable federal foundations of 'control over interstate commerce and over admiralty.' Id. at 405. Although the Court's holding in Prima Paint Corp. appears to entirely obviate the Erie analysis entirely so long as Congress intended a substantive statute to apply in diversity cases, the Coutt has repeatedly upheld Paint Corp., and Erie analyses remain commonplace in diversity cases. Allied-Bruce Terminix Companies, Inc. v. Dobson, 513 U.S. 265,271 (1995). The Court has even extended the FAA to apply in state coutts where no federal jurisdiction exists and held that the FAA preempts state laws which would invalidate arbitration provisions which otherwise are enforceable under the FAA. Id.,AT& T Mobility LLC, 131 S. Ct. at 1753. The FAA applies to all transactions and agreements between individuals in commerce. 9 U.S.C. § 1. Because of the broad language used therein, Congress intended the FAA to have an "expansive" reach and "provide for the enforcement of arbitration agreements within the full reach of the Commerce Clause." Perry v. Thomas, 482 U.S. 483, 490 (1987). In EEOC v. Wajjle House, Inc, the Supreme Comt specifically held that "[e]mployment contracts, except for those covering workers engaged in transpottation, are covered by the FAA." 534 U.S. 279,289 (2002). FINDINGS & RECOM MENDA TION- 6 [RMD] interstate commerce. The parties do not dispute that the Employment Agreement is in and Fisher. Therefore, the FAA applies to the Employment Agreement between Jensen II. Merits of Fisher 's Motion Fisher argues that, under theFAA's broad language, the arbitration clause ofthe Employment to submit to arbitration. Agreement is valid and enforceable, and the court should require Jensen Jensen disagrees and contends that the contract is unenforceable under generally applicable Oregon contract law. The FAA provides that agreements to arbitrate "shall be valid, irrevoc save upon such grounds as exist at law or in equity for the revocation able, and enforceable, of any contract." 9 U.S.C. § according to principles of 2. Thus, under the FAA, an arbitration clause can be invalidated only contract law which may invalidate contracts generally, like unconsciona bility, lack of consideration, n to determine whether or formation problems. State law provides the substantive law of decisio the However, to be consistent arbitration clause is enforceable. AT&T Mobility LLC, 131 S. Ct. at 1746. cts and must not place with the FAA, the state law must be generally applicable to all contra As the court held in Docto r's heightened standards of enforceability on arbitration agreements. !d. tion agreements under state Associates, Inc. v. Casarotto, "[c]ourts may not ... invalidate arbitra laws applicable only to arbitration provisions" because arbitration agreem ents must be put on "the same footing as other contracts." 517 U.S. 681,68 7. ents in Oregon, and OR REv. STAT. § 36.620 governs the validity of arbitration agreem provides: existing or (1) An agreement contained in a record to submit to arbitration any ent is valid, subsequent controversy arising between the patties to the agreem in equity for enforceable and irrevocable except upon a ground that exists at law or the revocation of a contract. FINDINGS & RECO MME NDAT ION- 7 [RMD] an agreement to arbitrate exists or a (2) . . . the court shall decide whether trate. controversy is subject to an agreement to arbi into between an employer and employee (5) A written arbitration agreement entered this section is voidable and may not be and otherwise valid under subsection (1) of enforced by a court unless: the employee's employment, the (a) At least 72 hours before the first day of employment offer from the employee has received notice in a written is required as a condition of employer that an arbitration agreement provided with the required employment, and the employee has been irements of, and includes the arbitration agreement that meets the requ of this section; or acknowledgment set forth in, subsection (6) upon a subsequent bona fide (b) The arbitration agreement is entered into r. advancement of the employee by the employe specifically to, and creates a higher bar of ause OR. REv. STAT. § 36.620(5) applies Bec urt v. it is likely precluded by the FAA. Bettenco validity to enforce, arbitration agreements, at *7 (D. Or. , No. 09-cv-1200-BR, 2010 WL 274331, Brookdale Senior Living Communities, Inc. issue, as ed). However, the court need not decide that Jan. 14, 2010) (finding§ 36.620(5) preempt Instead, he e that the arbitration agreement is invalid. Jensen does not rely on § 36.620(5) to argu the FAA defenses to contract are available even if uses the statute to underscore that state-law (1) the se to apply the arbitration agreement because: applies. He then contends the court should refu Employment Agreement is a contract of adh esion void for public policy reasons; (2) the ved its opportunity to com clause is unconscionable; and (3) Fisher wai arbitration pel arbitration. A. Contract ofAdhesion Jensen first argues that the entire Employm ent Agreement is void or voidable because it is l "an agreement between parties of unequa of adhesion. A contract of adhesion is a contract FINDINGS & RECOMMENDATION- 8 [RM D] it-or-leave-it' basis." Sprague v. Quality bargaining power, offered to the weaker patty on a 'take- Reeves v. Chern Industrial Co. 262 Or. Restaurants Nw., Inc., 213 Or. App. 521, 526 (2007), citing as procedurally unfair, and may be void 95, 101 (1972). Contracts of adhesion are often viewed . See Sprague, 213 Or. App. at 526 when coupled with unfair or umeasonable substantive terms (finding a contract of adhesion evidence of procedural unfai rness). "However, under Oreg on law, it unenf the fact that a contract is adhesive does not alone render orceable." Id. In fact, contracts of ercial life" and are regulm·ly enforced by adhesion "are a comm on feature of contemporary comm contract is but one factor courts use to Oregon courts. Id. Instead, the adhesive nature of a determine whether a contract or contract provision is uncon scionable. Id. Although the Employment Agreement contains some characteristics of a contract of adhesion, this fact alone is not sufficient to invalidate the Employment Agreement. A challenge to the validity of a contract containing an arbitr ation clause can be of two types, that challenge is determined. In Buckeye and the type fo challenge determines the venue in whic h : Check Cashing, Inc. v. Cardegna the Supreme Com t wrote be divided into two types. Challenges to the validity of m·bitration agreements ... can to arbitrate. The other One type challenges specifically the validity of the agreement directly affects the entire challenges the contract as a whole, either on a ground that or on the ground that the agreement (e.g., the agreement was fraudulently induced), whol e contract invalid. illegality of one of the contr act's provisions renders the category of contractual challenges, those 546 U.S. 440, 444 (2006) (citations omitted). The latter be decided by an arbitrator. Id. at 446. whic h challenge the validity of an entire contract, must ed by the court. Id. Conversely, the fmme r category of challenges may be decid FINDINGS & REC OMM END ATIO N- 9 [RMD ] In arguing that the Employment Agreement is a contract of adhesion, Jens en's challeng e falls ract. This urges the com t to invalidate the entire cont into the latter Buckeye category because he challenge must be decided by the arbitrato r, not the comt. B. Unconscionability Second, Jensen argues that the arbitration clau se is unenforceable because it is procedurally Jens en's adhesion argument, this argu and substantively unconscionable. Unlike the unconscionabilit the arbitration clause. Thus, under Buckeye In Oregon, as in most jurisdictions, contrac ment attacks only y issue is decided by the court. ts or pa1ts ther eofmay be invalidated because they (2007). The eficial Oregon, Inc., 210 Or. App. 553, 566 are unconscionable. Vasquez-Lopez v. Ben Or. App. at burden of pro of on the issue. Sprague, 213 party asserting unconscionability bears the s in existence n ofla w "to be assessed on the basis of fact 525. Further, unconscionability is a questio -Lopez, 210 Or. App. at 566. at the time the contract was made." Vasquez ive a procedural component and a substant Unconscionability is defined relative to substantively ire a contract to be both procedurally and component. Id. Some jurisdictions requ onscionable ision. Id. Others will find a contract unc unconscionable to void the one-sided prov not edural unconscionability. Id. "Oregon has n the presence of either substantive or proc give , and substantive unconscionability are relevant a formal template." Id. "[B]oth procedural adopted case lutely necessary. With that proviso, each h only substantive unconscionability is abso althoug is decided on its own unique facts." I d. 1. Procedural Unconscionability Procedural Unconscionability refers to the conditions under which a contract is formed. Id. surprise. Oppression arises from an [It] focuses on two factors: oppression and lts in no real negotiation and an absence inequality of bargaining power which resu FINDINGS & REC OM ME ND ATI ON - 10 [RM D] eedextent to which the supposedly agr ngful choice. Surprise involves the of meani by the party den in a prolix printed form drafted upon terms of the bargain are hid seeking to enforce the terms. rn. ,Inc., 211 F. Supp. 2d 1160, !d., quoting Acorn v. Household Inte California law defining unconscio 1168 (N.D. Cal. 2002) (applying nability). Som e nce of bargaining power exists. tractual relationship, some imbala In nearly any con ion, en Jensen and Fisher were no except icates contract negotiations bet we evidence on the record ind Agreement. Bu t despite Fis her 's certain portions of the Employment as Fisher refused to negotiate g pow er as sho wn t, Jensen clearly had some bargainin negotiate certain terms ofthe contrac refusal to ry, the term of the terms of the contract: Jen sen 's sala ties ' negotiation oftlu-ee express by the pm ess to negotiate to certain holidays. An unwillingn Jen sen 's wo rk schedule as it related contract, and does not render bargaining process oppressive and s of a con trac t does not render the some portion ed above tha t Moreover, although the court not orceable contract unconscionable. an otherwise-enf clusion does of a contract of adhesion, that con reement has some characteristics the Em plo ym ent Ag t-negotiation g process. Therefore, the contrac ing of oppression in the bargainin not mandate a find process wa s not "oppressive." stence of reement do not evidence the exi language of the Employment Ag Th e terms and ment bears the bol d and underlined twelve oft he Em plo ym ent Agree "sm pri se, " however section states the appropriate procedure to put es, Fees and Costs" and clearly heading "Resolution of Dis Employment Agreement: resolve disputes arising out of the otiation dispute through negotiation. If neg pt shall first be ma de to resolve the Attem e to mediation . the pm ties shall submit the disput wit hou t me dia tion is unsuccessful, led by final uccessful, the dispute shall be sett negotiation and mediation are uns . . . If the national rules , Washington, in accordance wit h and binding arbitration in Seattle ociation. es of the American Arbitration Ass resolution of employment disput for the TIO N- 11 FINDINGS & RE CO MM EN DA [RMD] (Tamerlano Dec!. Ex. D at 7.) The language explaining the dispute-resolution process is not hidden in fine print or prolix, or stated in terms incomprehensible to a layperson. Futther, at only nine pages, the Employment Agreement is not so long as to conceal the arbitration agreement by the sheer volume of material. In addition, Jensen signed three nearly identical Employment Agreements between 2006 and 2011, all of which contained the agreement to arbitrate. Parties to a contract generally are presumed to have read the contract's terms. Tokyo Ohlw Kogyo America, Inc. v. Huntsman Propylene Oxide LLC, -F. Supp. 2d -,No. 3:13-cv-01580-SI, 2014 WL 3893031, at *15 (D. Or. Aug. 8, 2014). Therefore, the court must presume that Jensen read the Employment Agreement and its predecessor versions, before signing them and was, thus, not surprised by the contents of the Employment Agreement he now challenges. The record does not show he objected to either of his previous contracts or to the arbitration clauses they contained. At oral argument, Jensen argued that the Employment Agreement and its predecessors contain elements of "surprise" because the arbitration clause does not contain language explicitly waiving Jensen's right to a jury trial. However, Jensen did not present any authority to support his argument, and did not carry his burden on the issue. Therefore, although the Employment Agreement has some elements of procedural unconscionability, is not so unfair as to mandate the contract's invalidation. 2. Substantive Unconscionability Jensen claims the arbitration clause is substantively unconscionable for two reasons. First, he argues it is unreasonable that the arbitration agreement requires arbitration to occur in Seattle, Washington. Second, Jensen contends that arbitration would be prohibitively expensive and would deny him access to an arbitral forum. FINDINGS & RECOM MENDA TION- 12 [RMD] A substantively unconscionable contract is a contract whose terms are unfairly favorable to actual terms of the the party of superior bargaining power, and the comt's analysis focuses on the lity, courts apply contract. Vasquez-Lopez, 210 Or. App. at 567. Like other aspects of unconscionabi However, comts have a totality-of-the-circumstances approach to substantive unconscionability. Id. found arbitration agreements substantively unconscionable where they bar all class-a ction litigation and contain unreasonable fee-sharing provisions. Jd at 571-75. a v. Banco The enforceability of forum-selection clauses is controlled by federal law. Arguet are entitled to a Mexicano, S.A., 87 F.3d 320, 324 (9th Cir. 1996). Forum-selection clauses presumption of validity, "and should not be set aside unless the patty challen ging enforcement ... on marks omitted). can show it is unreasonable under the circumstances." ld. at 325 (internal quotati Under prevailing precedent: t was A forum selection clause is umeasonable if (1) its incorporation into the contrac the the result of fraud, undue influence, or overweening bm·gaining power; (2) party selected forum is so "gravely difficult and inconvenient" that the complaining or (3) enforcement will "for all practical purposes be deprived of its day in court;" suit of the clause would contravene a strong public policy of the forum in which the is brought. !d. (citations omitted). nable. He Jensen does not carry his burden to prove the forum-selection clause is umeaso does not argue the clause resulted from "fraud, undue influence, or overweening bargaining power, " counsel against nor does he point to a "strong public policy" of this jurisdiction which would gton is umeaso nable enforcement. Instead Jensen argues the selected fmum of Seattle, Washin Oregon. The court because at the time he signed the agreement, he lived and worked in Pmtland, t or inconv disagrees. This relatively minor geographic distance is not "so gravely difficul enient" so d, Oregon to Seattle, as to deprive him of his ability to arbitrate this dispute. Driving from Pmtlan FINDINGS & RECO MMEN DATIO N- 13 [RMD] Washington takes only three hours, and Jensen has not produced evidence showing that, similar to the Vasquez-Lopez plaintiffs, his resources and income are disproportionately small compared to the anticipated cost of arbitration. Thus, the court concludes that requiring arbitration in Seattle would not deprive Jensen of his day in comt. ld. Jensen also does not sufficiently demonstrate the fee-shifting provisions of the arbitration agreement make arbitration prohibitively expensive. An arbitration agreement is unenforceable when the cost of arbitrating a matter functionally denies a claimant access to an arbitral forum. Vasquez-Lopez, 210 Or. App. at 573-74. Denial of access to an arbitral forum occurs when the cost of arbitration is large in absolute terms, but also, comparatively, when that cost is significantly larger than the cost of a trial; otherwise, it is the existence of the claim itself and not the forum choice that deters the plaintiff. ld. at 574. The fee-shifting aspect of the arbitration clause does not render the clause unconscionable. In Green Tree Financial Corp.-Ala. v. Randolph, 531 U.S. 79, 91 (2000), the plaintiff asked the court to invalidate an arbitration agreement because arbitrating the dispute at issue would have been prohibitively expensive in comparison to litigation. Id. at 84. However, the agreement did not specify the proportion of costs to be borne by each party or the expected cost of the arbitration. Id. The agreement's silence on these issues would have required the court to estimate the costs involved and speculate as to the manner in which those costs would likely be divided. Id. at 90-91. Because there was insufficient evidence that arbitration would be prohibitively expensive for the plaintiff, the court rejected the plaintiffs argument and held that "[t]he 'risk' that [plaintiff] will be saddled with prohibitive costs is too speculative to justify invalidation of an arbitration agreement." Id. at 91. FINDINGS & RECOMMENDA TION- 14 [RMD] An example of a substantively unconscionable fee-sharing provision can be found in Vasquez-Lopez. 210 Or. App. at 574-75. There, the arbitration agreement in Plaintiffs mmigage provided: (I) the lender-defendant would pay the first $100.00 of arbitration filing costs; (2) the remaining filing costs would be divided equally among the patiies; (3) arbitration costs exceeding the claimant's loan amount were to be paid by the claimant; and (4) the arbitrator's fees for the first day of hearings would be divided equally among the patiies, but the cost for subsequent days of hearings would be borne only by the party requesting arbitration. Id. at 572. The court determined that the precise language of the fee-sharing agreement removed any speculation about the costs associated with the plaintiffs' anticipated arbitration. Id. at 574. Further, the court reasoned that, "by the second hour of the second day of arbitration, [plaintiffs] would owe $1 ,000 in arbitration fees and that, with their cunent earnings and expenses, they would need six months to save that amount of money." I d. at 572. Thus, according to the Oregon Comi of Appeals, the arbitration clause at issue was substantively unconscionable and unenforceable. Id. at 574-75. The fee-shifting provision in the Employment Agreement is not substantively unconscionable. The Employment Agreement provides that "[t]he arbitrator's fees and costs of arbitration shall be borne equally by the patiies," but "[t]he arbitrator shall have the power to award monetary damages, costs, and reasonable attorneys' fees to the prevailing patiy." (Tamerlano Dec!. Ex. D at 7.) However, it goes on to state that "arbitration costs which are prohibitively expensive for the Employee may be borne by the Company, including such costs as the arbitration filing fee and the arbitrator's expenses." (Tamerlano Dec!. Ex. D at 7.) Like the Green Tree fee-shifting provision, the wording of the present agreement leaves the court to speculate as to (I) the amount of fees likely necessaty to fully arbitrate the matter; (2) whether the arbitrator will award fees and FINDINGS & RECOMMENDATION- 15 [RMD] costs to the prevailing party; and (3) whether the cost truly will be prohibitively expensive for Jensen. Further, the agreement specifically provides that, if the costs of arbitration are prohibitively expensive, the costs will be borne by Fisher. In sum, the arbitration clause is neither procedurally nor substantively unconscionable. Therefore, the court will not invalidate the arbitration agreement as unconscionable and grants Fisher's motion to compel arbitration so long as they did not waive their right to arbitration. 3. Waiver Third, Jensen argues even if the arbitration clause is enforceable, Fisher waived its right to compel arbitration by failing to raise the arbitration clause during Jensen's previous Multnomah County Circuit Court case or in Fisher's answer to Jensen's complaint in this case. Fisher denies that they waived their right to arbitrate but that, regardless, the issue should be decided by the arbitrator instead ofthis court. The comt agrees with Fisher and concludes that the arbitrator is the appropriate decisiomnaker on issues of waiver. 2 Under the FAA, state laws governing contract interpretation are determinative when analyzing choice of forum issues. Citigroup Smith Barney v. Henderson, 241 Or. App. 65, 72 (2011). Parties may agree to a particular fotum of decision or to apply "a particular state's substantive contract law to their dispute or a state's procedural rules to their arbitration hearing." !d. at 72, quoting Industria/Matrix Joint Venture v. Pope & Talbot, Inc., 341 Or. 321, 330 (2006). However, "where the arbitration agreement is silent as to whether the court or the arbitrator should 2 The court notes that the arbitration clause expressly exempts from its application "claims for injunctive relief and/or equitable relief by the Company for violation of Section 6 above." (Tamaerlano Dec!., Ex. D at 7.) The parties Multnomah County lawsuit involved Jensen's noncompete obligations in Section 6. FINDINGS & RECOMMENDATION- 16 [RMD] decide issues of waiver, the FAA supplies a default rule: It is presumed that waiver issues are to be decided by the arbitrator." Citigroup Smith Barney, 241 Or. App. at 72, citing Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84-85 (2002). In fact, nearly all issues of procedural arbitrability, like waiver, should be decided by the arbitrator absent a binding agreement otherwise. !d. at 85. The Employment Agreement is silent on the issue of waiver, so the court declines to decide the issue and instead refer it to the arbitrator. Conclusion For the aforementioned reasons, the court GRANTS Fisher's Motion to Dismiss and Compel Arbitration and refers this matter to arbitration in King County Washington pursuant to the Employment Agreement. DATED this 1st day of December, 2014. ~OHN V. A OSTA Unit\~ States FINDINGS & RECOMMENDATION- 17 Magistrate Judge [RMD]
]]>
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You
should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google
Privacy Policy and
Terms of Service apply.
