HASELTON, C.J.
In this employment age discrimination action, ORS 659A.030, plaintiff appeals from a general judgment of dismissal, ORCP 21 A, that was predicated on plaintiff's failure to follow the alternative dispute resolution procedure prescribed in his employee handbook. Plaintiff contends that the prescribed grievance and arbitration procedure is unenforceable for three reasons: (1) the procedure in the employee handbook was "not presented explicitly enough to constitute a knowing and voluntary waiver of statutory rights"; (2) defendant waived its right to assert plaintiff's failure to utilize the procedure as a defense; and (3) the procedure is unconscionable. For reasons explained below, we conclude that the prescribed grievance and arbitration procedure is not unconscionable either substantively or procedurally, and we reject plaintiff's waiver arguments. Accordingly, we affirm.
The facts material to our review are undisputed. Plaintiff worked for defendant from November 2000 until defendant terminated plaintiff's employment on July 7, 2008. At that time, plaintiff, who had worked in sales and marketing for most of his professional life, was 65 years old. Plaintiff questioned the sincerity of defendant's explanation that he had been laid off for financial reasons, because defendant had recently hired a younger woman to fulfill some of the job duties that plaintiff had performed. In response to plaintiff's inquiry, defendant's vice president sent him a letter reiterating, and further explaining, the reasons for his termination. The vice president denied any discriminatory motive and closed her letter as follows:
As we describe more precisely below, in general under the grievance and arbitration procedure set out in the employee handbook, an employee with an employment-related dispute must submit a written grievance to his or her immediate supervisor, which commences an informal grievance process with three levels of internal "appeal." If that grievance process fails to resolve the matter to the employee's satisfaction, he or she is entitled to initiate arbitration for certain types of disputes — including disputes regarding employment discrimination and termination. Here, plaintiff did not contact the human resources director; nor did he submit a written grievance in accordance with the procedure. Instead, in September 2008, he filed a charge of discrimination with the Equal Employment Opportunity Commission (EEOC) and, on April 2, 2009, filed this age discrimination action under ORS 659A.030.
Defendant moved to dismiss the action under ORCP 21 A, arguing that plaintiff was precluded from raising his employment-related claim in court because he had failed to follow the internal grievance and arbitration procedure. Defendant alternatively moved the court to abate the action and refer it to
Because it is the predicate for the trial court's order of dismissal — and the object of plaintiff's challenge — we begin with a detailed description of the internal grievance and arbitration process, as well as the documents describing and prescribing that process and plaintiff's conduct in relation to those documents. When plaintiff started working for defendant in 2000, defendant provided him with an employee handbook, and plaintiff signed an acknowledgement recognizing his receipt of the handbook and his responsibility to read and understand its contents. Additionally, plaintiff agreed that,
Defendant updated its employee handbook in 2003 and again in 2006. As pertinent here, defendant most recently signed an acknowledgement in 2006, which provides, in part:
Thus, unlike the 2000 acknowledgement, the 2006 acknowledgement did not explicitly reference the grievance and arbitration procedure.
The 2006 employee handbook stated that employees
The prescribed procedure for resolving employee complaints and claims consists of two seriatim components: (a) the grievance process and (b) with respect to certain specified matters that either party elects to pursue beyond the final level of the grievance process, the arbitration process. The handbook precisely delineates those types of matters that are subject to arbitration upon demand following timely and complete pursuit of the grievance process:
Generally, to initiate that integrated procedure, an employee "must submit a written grievance and [employee's] requested solution * * * within 90 calendar days of the event giving rise to the grievance." However, the arbitration process provides for an alternative deadline for initiation of the grievance process for matters that are, ultimately, subject to arbitration:
The grievance process provides for four successive stages of internal process before reaching arbitration, with the internal decision-makers at each stage being, respectively: (1) the aggrieved employee's immediate supervisor; (2) the department head; (3) an "administrative officer" in concurrence with the human resources department (HR); and finally (4) defendant's president or his or her designee. At each stage of the grievance process, the decision-maker is required to provide the aggrieved employee with a written response "[w]ithin 14 calendar days, or as soon thereafter as practicable." If the employee is dissatisfied with that result, the employee must renew the grievance and "advance" to the next level within 14 days. The handbook provides that, with respect to the fourth and final level of the grievance process, "[t]he decision of the President or designee is final, except to the extent that a grievance is arbitrable." Significantly, the failure of the employee to timely initiate or, as applicable, timely "advance" the grievance from one step to the next "shall result in the waiver of [employee's] right to pursue the underlying issue in court or arbitration."
If an employee is dissatisfied with the final result of the grievance process with respect to a matter that is arbitrable, the employee must initiate arbitration by giving defendant written notice of the intent to arbitrate "within the longer of the applicable statute of limitations or 60 calendar days of the mailing of the President's written decision." The handbook states that "arbitration shall be the exclusive remedy for resolving any such arbitrable disputes" and that the arbitrator's decision "shall be final and binding on all parties." The rights of the parties in arbitration "are the same as those available * * * in a court of competent jurisdiction." Failure to timely initiate arbitration "shall constitute a waiver of the dispute in any forum."
The processes just described pertain to employee-initiated grievances. With respect to defendant employer's claims against an employee, the processes, while similar, differ in some respects. Defendant "must, within the longer of 90 calendar days or the period of time allowed by the applicable statute of limitations, notify the employee in writing of the claim and the requested solution." The employee is then required to arrange, through HR, a meeting with defendant's representative. If that meeting does not lead to resolution, or if the employee fails to respond, defendant may initiate arbitration by giving the employee written notice of the intent to arbitrate within the longer of 60 calendar days or the applicable statute of limitation. Defendant's failure "to pursue a grievance in a timely fashion shall result in the waiver of its right to pursue the underlying issue in court or arbitration."
Against that factual backdrop, we address plaintiff's contention that the grievance and arbitration procedure is unenforceable because it is unconscionable. Before describing and applying pertinent principles of unconscionability, it is essential to identify the object to which that analysis properly refers. In particular, although plaintiff directs his unconscionability challenge to certain aspects of the grievance process individually and collectively, defendant remonstrates that that approach is impermissibly selective and skewed. Rather, defendant asserts, the grievance process and the arbitration process are merely two components of an integrated procedure for addressing and resolving those employment-related claims that are, ultimately, subject to arbitration upon demand — and, thus, any unconscionability must be assessed with respect to that procedure in toto.
In the circumstances of this case, we agree with defendant for either of two interrelated reasons on which we will elaborate below.
As the party asserting unconscionability, plaintiff bears the burden of demonstrating that the grievance and arbitration procedure is unconscionable. W.L. May Co. v. Philco-Ford Corp., 273 Or. 701, 707, 543 P.2d 283 (1975). Plaintiff's burden of persuasion is hardly ameliorated by the substantive rigor that we have historically employed in reviewing claims of unconscionability:
Motsinger v. Lithia Rose-FT, Inc., 211 Or.App. 610, 626-27, 156 P.3d 156 (2007) (internal quotation marks, footnote, and citations omitted; emphasis in original); see also The Hays Group, Inc. v. Biege, 222 Or.App. 347, 351-52, 193 P.3d 1028 (2008) (same).
We most recently summarized the test for unconscionability as follows:
Livingston v. Metropolitan Pediatrics, LLC, 234 Or.App. 137, 151, 227 P.3d 796 (2010) (citations omitted); see also Vasquez-Lopez v. Beneficial Oregon, Inc., 210 Or.App. 553, 566-67, 152 P.3d 940 (2007).
Our case law has not fully explained the interplay between the two identified unconscionability "components." In Carey v. Lincoln Loan Co., 203 Or.App. 399, 423, 125 P.3d 814 (2005), aff'd, 342 Or. 530, 157 P.3d 775 (2007), we observed that "[t]he substantive fairness of the challenged terms is always an
It is clear that, if a challenged provision is substantively unconscionable, it is unenforceable — regardless of whether it is procedurally unconscionable. Conversely, a contractual provision that is neither substantively nor procedurally unconscionable is enforceable. Our case law has not clarified the proper result when a court determines that the challenged provision is procedurally unconscionable but substantively fair. See Vasquez-Lopez, 210 Or.App. at 567, 152 P.3d 940 (noting that, "[i]n some jurisdictions, unconscionability
We begin our analysis with the "essential issue," Carey, 203 Or.App. at 423, 125 P.3d 814: whether the grievance and arbitration procedure is substantively unconscionable. Plaintiff argues that the procedure is substantively unconscionable for three reasons: (1) the procedure does not allow plaintiff to effectively vindicate his statutory rights because the grievance process component "involves no discovery, no real hearing, no witnesses, no impartial decision maker * * *, no lawyers * * * and unclear remedies;" (2) the grievance process "is entirely one sided in favor of the defendant" because it "applies only to employees and does not bind defendant" (i.e., lack of mutuality); and (3) the 90-day period in which to initiate a grievance "effectively severely shortens all employment claim statutes of limitation to 90 days."
In response, defendant contends that the terms do not unfairly favor defendant. Defendant responds that the protections that plaintiff complains the grievance process lacks would have been available to him had he complied with the prescribed procedure by pursuing the grievance process to completion and, if then dissatisfied, invoking arbitration. Defendant also argues that parties are free to agree to limit rights and remedies and may contractually shorten the length of an otherwise applicable statute of limitations, so long as the contractual period is "reasonable." Defendant notes that the arbitration process allows for an extension of the contractual deadline to the time allowed by the applicable statute of limitation.
We address each of plaintiff's contentions in turn. Plaintiff first emphasizes that the grievance process involves no discovery, no real hearing, no witnesses, no impartial decision-maker (because the only decision-makers are defendant's employees), no lawyers to help grievants with complex civil rights claims, no jury to hear his complaint, and "unclear" remedies. Plaintiff's challenge in that regard fails for two related reasons. First, as we explained, the proper referent for assessing unconscionability in this case is the entire alternative dispute resolution process, as prescribed by the handbook. Second, plaintiff does not contend that the arbitration process is similarly (or even materially) deficient with respect to procedural protections — nor could he credibly. As noted, under the terms of the handbook, the rights of the parties in arbitration "are the same as those available * * * in a court of competent jurisdiction." See 252 Or.App. at 215, 287 P.3d at 1117; accord ORS 36.665(1) ("An arbitrator may conduct an arbitration in such manner as the arbitrator considers appropriate for a fair and expeditious disposition of the proceeding."). To be sure, as plaintiff points out, there is no right to a jury trial under the grievance and arbitration procedure, but that feature is hardly unconscionable — or, more precisely, if it were, virtually every system of alternative dispute resolution would be substantively unconscionable.
Plaintiff next contends that the grievance process is impermissibly one-sided because only the employee, and not the defendant employer, is required to pursue the grievance process. Motsinger is instructive in that regard. There, we held that an arbitration clause that required an employee to submit claims to arbitration, while not similarly requiring the employer to submit claims against an employee to arbitration, lacked mutuality but was not substantively unconscionable. 211 Or.App. at 619, 627, 156 P.3d 156. In so holding, we emphasized that the proper focus is on the "one-sided effect of an arbitration clause — rather than its one-sided application." Id. at 623, 156 P.3d 156 (emphasis in original). Applying that principle, we concluded that the challenged arbitration clause was not totally one-sided in its effect because, under the clause, "plaintiff [was] entitled to all of the same remedies — and most of the same procedural protections — as defendant." Id. at 626, 156 P.3d 156. For example, the agreement did not limit the amount or type of recovery available to the plaintiff, nor did it impose limits on discovery or "tight deadlines" on the filing of claims. Id.
Plaintiff is correct that, under the alternative dispute resolution procedures at issue here, defendant is not required to follow the same grievance process as its employees. Specifically, as noted, 252 Or.App. at 214, 287 P.3d at 1117, defendant is only required to notify an employee of its claim and requested solution. The employee is then required to contact HR to set up a meeting with defendant's representative. If the employee fails to respond, or if the parties fail to resolve the issue at that meeting, defendant may then initiate arbitration. Thus, defendant is subject to only two steps of internal process before reaching arbitration, as compared to the four stages of the internal grievance process that plaintiff must negotiate before reaching arbitration. Moreover, the process that applies to defendant almost immediately shifts the burden to act onto the employee. Thus, the grievance process is, in fact, one-sided in application. Nevertheless, the effect of the grievance process is not impermissibly one-sided. That is so because, again, an employee does have ultimate access to the arbitration process which is completely mutual. Thus, any interim imbalance is ultimately subject to correction upon demand within the overall design of the alternative dispute resolution process.
Additionally, in characterizing the grievance process as an impermissible impediment to his ability to vindicate his statutory rights, plaintiff fails to acknowledge that the grievance and arbitration procedure also benefits employees. That is so because the informal process allows for potentially faster, easier, and cheaper resolution of employment-related disputes in comparison to litigation. The internal dispute resolution process provides an opportunity for an employee to resolve the issue to his or her satisfaction at any one of the four internal steps or in arbitration.
Finally, with respect to substantive unconscionability, plaintiff argues that the 90-day period in which an employee must commence the grievance process is a burden that defendant does not share and that the contractual period "severely shortens all employment claim statutes of limitation to 90 days." In that regard, plaintiff refers particularly to the one-year statute of limitation for age discrimination claims pursuant to ORS 659A.875.
That argument fails for one of several reasons. First, the plain language of the 2006 alternative dispute resolution provisions belies plaintiff's "90-day limit" premise. As noted, 252 Or.App. at 214, 287 P.3d at 1117, the pertinent provision states, "[I]f the applicable statute of limitations provides a longer period of time in which to initiate a claim, the grievance will be considered timely if [the aggrieved party] initiate[s] the Procedure within the period of time allowed by the
Second, even if plaintiff were somehow contractually compelled to initiate a grievance regarding this matter within 90 days, parties are free to contractually limit the timeframe in which to bring a claim, and that limit will be enforced unless unreasonable. Biomass One, L.P. v. S-P Construction, 103 Or.App. 521, 526 n. 4, 799 P.2d 152 (1990) ("`The parties to a contract may stipulate that an action for a breach of an agreement must be brought within a certain period, and, if such limitation is reasonable, it will be upheld[.]'" (quoting Ausplund v. Aetna Indemnity Co., 47 Or. 10, 22, 81 P. 577 (1905))); accord Thurman v. DaimlerChrysler, Inc., 397 F.3d 352, 358 (6th Cir.2004) (holding that a six-month limitation in the plaintiff's employment application was "reasonable" and applicable to the employment discrimination action). To be sure, at some point a contractual deadline could be void as against public policy if it effectively deprives a party of the reasonable opportunity to vindicate his or her rights. Cf. Motsinger, 211 Or.App. at 624, 156 P.3d 156 (explaining that unconscionability "overlaps with rules which render particular bargains or terms unenforceable on grounds of public policy" (internal quotation marks omitted)). Here, however, plaintiff does not so contend. Finally, as we observed in Sprague, a contractually shortened period for initiating a claim can both burden and benefit a potential plaintiff. 213 Or.App. at 527, 162 P.3d 331 ("[A]lthough the shorter period can impose hardship on those who would bring claims, it also provides them with an incentive to do so while the disputed events are fresh in the memories of witnesses and parties."). Thus, the contractual time limit for initiating the grievance process is not substantively unconscionable.
We thus conclude that the procedure is not substantively unconscionable.
Having determined that the terms of the agreement are not substantively unconscionable, we proceed to plaintiff's argument that the agreement is procedurally unconscionable. That issue, although not "essential," is nonetheless "relevant." Vasquez-Lopez, 210 Or.App. at 567, 152 P.3d 940. As noted, procedural unconscionability refers to the conditions of contract formation and focuses on oppression and surprise. Livingston, 234 Or.App. at 151, 227 P.3d 796. Plaintiff does not contend that his agreement was the product of oppression; rather, he argues that "the contractual terms at issue were hidden from [him], justifying a finding of surprise."
Vasquez-Lopez is instructive on the issue of surprise. 210 Or.App. 553, 152 P.3d 940. There, the plaintiffs did not read nor speak English and, thus, they could not read the arbitration rider in the loan contract at issue in that case. Id. at 556, 152 P.3d 940. The defendant had misled the plaintiffs by convincing them that the terms of the agreement were favorable to them and that the arbitrator's decision would not be binding or exclusive. Id. at 568, 152 P.3d 940. We concluded that the formation of the contract involved unconscionable surprise "because defendant affirmatively concealed the arbitration rider's terms." Id. at 567-69, 152 P.3d 940.
The facts here are markedly different from those in Vasquez-Lopez. Here, defendant updated its employee handbook in 2006 and notified plaintiff. Plaintiff, an experienced and educated professional, acknowledged and agreed that his employment was "governed by the handbook and the policies contained therein." See Livingston, 234 Or.App. at 152, 227 P.3d 796 (noting that the plaintiff was "highly educated" in determining that the employment agreement was not unconscionable). The 2006 acknowledgement evidences plaintiff's awareness, at the very least, that the handbook existed and that it contained policies governing his employment. See Wyss v. Inskeep, 73 Or.App. 661, 667, 699 P.2d 1161, rev. den., 300 Or. 64, 707 P.2d 582 (1985) ("All that was necessary was that the terms of the plan were capable of ascertainment and that plaintiff knew that there was a plan."). Further, although by its own terms, the 2006 handbook "supersede[d] and replace[d] any inconsistent Policies and all
We thus conclude that, unlike in Vasquez-Lopez, the procedure was not "hidden" from plaintiff here. There was no procedural unconscionability.
We turn finally to plaintiff's two "waiver" arguments. First, plaintiff contends that he did not explicitly waive his entitlement to pursue his claim under ORS 659A.030 in a judicial forum and, thus, any purported waiver in that regard is invalid. As support for that proposition, plaintiff invokes a federal appellate decision, Nelson v. Cyprus Bagdad Copper Corp., 119 F.3d 756, 762 (9th Cir.1997), cert. den., 523 U.S. 1072, 118 S.Ct. 1511, 140 L.Ed.2d 665 (1998), which issued 20 years after the enactment of the anti-age discrimination provisions of the antecedent of the current ORS 659A.030,
(Emphasis added.) Plaintiff emphasizes the "explicitness requirement" and proposes that we should "adopt the Nelson reasoning in this matter." We decline that invitation because Nelson is inapposite here.
In Nelson, the plaintiff, an electrical technician at the defendant's copper mine, complained that the employer defendant had violated the Americans with Disabilities Act and state law by terminating his employment after he experienced medical difficulties while working rotating 12-hour shifts. 42 USC §§ 12101-12213. The defendant had issued the plaintiff an employee handbook that contained a grievance and arbitration procedure, which stated that an employee is "precluded from filing any action with any court concerning any matter which could have been addressed through these procedures." Nelson, 119 F.3d at 758. The district court granted summary judgment to the defendant because the court determined that the arbitration clause was enforceable and that the plaintiff had agreed to waive his right to a judicial forum. Id. at 759.
The Ninth Circuit reversed after first observing that "Congress can and sometimes does preclude waivers of a plaintiff's rights under a particular statute." Id. at 760. The court then determined that Congress had intended to restrict a plaintiff's waiver of the right to a judicial forum (in favor of arbitration) for ADA claims to situations where the plaintiff "knowingly and voluntarily" agreed to waive that right. Id. at 760-61. The court concluded that the plaintiff had not "knowingly and voluntarily" waived his right to a judicial forum because the choice was not "explicitly presented" to the plaintiff and the plaintiff did not "explicitly agree" to waive that specific right. Id. at 762. In so holding, the court applied the waiver analysis from a Title VII case, Prudential Ins. Co. of America v. Lai, 42 F.3d 1299 (9th Cir.1994), cert. den., 516 U.S. 812, 116 S.Ct. 61, 133 L.Ed.2d 24 (1995). There, the court had held that it was "apparent from the text and legislative history of Title VII" that "Congress intended there to be at least a knowing agreement to arbitrate employment disputes before an employee may be deemed to have waived the comprehensive statutory rights, remedies and procedural protections prescribed in Title VII and related state statutes." Id. at 1304. The Lai court, in turn, had derived the "knowing and voluntary" requirement from a senator's statement contained in the Congressional record associated with Title VII. Id. at 1305.
Plaintiff does not direct us to any similar legislative history in relation to ORS
Plaintiff alternatively argues that defendant waived its right to assert as a defense plaintiff's failure to utilize the grievance and arbitration procedure because defendant did not "press the issue" when plaintiff filed his charge of discrimination with the EEOC. As plaintiff acknowledges, there are no reported Oregon decisions addressing "when or under what conditions an employer waives the right to assert failure to exhaust internal remedies or the existence of an arbitration agreement as a defense" in the specific context of employment discrimination litigation. However, in Wilbur-Ellis Co. v. Hawkins, 155 Or.App. 554, 557-58, 964 P.2d 291 (1998), we have more generally addressed that question with respect to a matter arbitrable under the Federal Arbitration Act (FAA). There, we noted that, given the FAA's strong policy of encouraging arbitration, "a party does not waive arbitration merely by engaging in action inconsistent with an arbitration provision." Id. at 558, 964 P.2d 291 (internal quotation marks omitted). Rather,
Id. We do not understand plaintiff to contest the applicability of that construct in this context.
Plaintiff's waiver argument fails here because he cannot establish (at least) the second and third of the conjunctive components of that formulation. Specifically, as defendant emphasizes, its cooperation in the EEOC preliminary investigation process cannot, without more, be deemed to be inconsistent with its right to have the merits of the dispute and the appropriate relief, if any, ultimately, substantively determined pursuant to the prescribed alternative dispute resolution process. Further, even if defendant's conduct were somehow "inconsistent," plaintiff has not established, and cannot establish, cognizable prejudice. As noted, immediately after the termination of plaintiff's employment and before he initiated the EEOC process, defendant explicitly reminded plaintiff of the prescribed internal grievance and arbitration procedure. See 252 Or.App. at 211-12, 287 P.3d at 1115-16. Thereafter, nothing in the course of the EEOC investigation process precluded plaintiff from timely initiating a grievance pertaining to an asserted violation of ORS 659A.030 — indeed, as noted, under the prescribed procedures, plaintiff had up to one year, the operative statute of limitations, to initiate such a grievance. See 252 Or.App. at 222, 287 P.3d at 1120-21. Defendant did not waive the alternative dispute resolution procedure.
In sum, the prescribed alternative dispute resolution procedure is not substantively unconscionable, and plaintiff's agreement to that procedure is not the product of unconscionable means. Further, plaintiff's "waiver" arguments are unavailing. Accordingly, the trial court did not err in dismissing plaintiff's action.
Affirmed.