AMY BERMAN JACKSON, District Judge.
Plaintiff Phillip Fox has sued his former employers: Computer World Services Corp. ("CWS"); C2 Essential, Inc. ("C2"); Farrukh Hameed, President and CEO of CWS; and Kimberly Lundy, Director of Strategic Human Resources for C2. He brings this action under the District of Columbia Human Rights Act ("DCHRA"), D.C.Code § 2-1402.11 et seq., and District of Columbia common law, alleging age discrimination, retaliation, and failure to pay earned bonus compensation. Compl. [Dkt. #1-1] ¶¶ 1, 61-109. In response, defendants have moved to dismiss the case on the grounds that the Court should compel Fox to arbitrate his claims in accordance with an arbitration agreement between the parties. For the reasons set forth below, the Court concludes that the arbitration agreement is enforceable and that Fox must arbitrate his claims against all defendants. Therefore, it will grant defendants' motions to dismiss and compel arbitration.
The following facts are undisputed except where noted. Defendant CWS is an information technology solutions and network operations company that outsources
On his first day of work, Fox attended a new employee orientation that was conducted by a C2 employee. Fox Aff. ¶ 8; see also Catherine Gouldin Affidavit, Ex. A to C2 Reply in Supp. of Mot. to Compel. Arb. ("C2 Reply") [Dkt. #26-1] ¶ 3. During the orientation, the C2 employee asked Fox to review, acknowledge, and complete a number of online forms including an arbitration agreement that provided in part:
Agreement to Arbitrate, Ex. 2 to Compl. at 1-2; Fox Aff. ¶ 9. The arbitration agreement ("Agreement") included signature lines for "Employee" on one side and for "C2 Portfolio Essentials, Inc." and a "Co-Employer" on the other side. Agreement to Arbitrate at 3. Fox electronically signed the arbitration agreement on September 30, 2009, and a C2 representative signed it two days later on October 2, 2009. Id. CWS never signed the signature line for a "co-employer" and was never mentioned by name in the agreement. Id.
In his complaint, Fox asserts that on March 7, 2011, defendants Hameed, president and CEO of CWS, and Lundy, Director of Strategic Human Resources for C2, "summarily terminated [him] — effective immediately — because his `position was being eliminated due to the lack of new business and the need for his technical skill set.'" Compl. ¶ 37. In an exchange of letters between March 11 and May 6, 2011, Fox accused CWS and C2 of terminating him because of his age in violation of the Age Discrimination in Employment Act and demanded additional compensation according to the terms of the CWS employment offer letter. Fox Letters to CWS and C2 (March 11, 2011 and April 1, 2011), Exs. 3-4 to Compl. Both companies disputed Fox's allegations and directed Fox to submit his claims to arbitration pursuant to the arbitration agreement. Letters from CWS and C2 and Their Attorneys (March 28, 2011 and May 6, 2011), Exs. 4 and 6 to Compl. In an April 1, 2011 letter to defendants, Fox questioned the enforceability of the arbitration agreement and refused to submit his claims to arbitration. Fox Letter to CWS and C2, Ex. 4 to Compl. at 1-2. On August 23, 2011, Fox filed a discrimination and retaliation claim against CWS with the Equal Employment Opportunity Commission ("EEOC"). Fox EEOC Claim, Ex. B to C2 Reply [Dkt. #26-2].
On January 25, 2012, Fox filed an action against CWS and C2 under the DCHRA and D.C. common law in the District of Columbia Superior Court alleging age discrimination, retaliation, and failure to pay earned bonus compensation. Compl. ¶¶ 61-109. In his complaint and his later pleadings, Fox asserts that the arbitration agreement with C2 is unenforceable because the provisions regarding the filing of administrative claims, the statute of limitations, discovery, and fee-sharing are unconscionable. Compl. ¶ 16; Pl.'s Opp. to Defs.' Mot. to Dismiss [Dkt. #24] ("Pl.'s Opp.") at 18-19. He further argues that he did not agree to arbitrate his disputes with CWS because CWS did not sign the arbitration agreement. Compl. ¶ 15.
After removing the case to this Court, the C2 defendants ("C2") filed a motion to compel arbitration and dismiss Fox's complaint, or, in the alternative, to stay the underlying proceedings pending the outcome of the arbitration. C2 Mem. in Supp. of Mot. to Compel Arb. [Dkt. #6] ("C2 Mem.") at 1. In its motion, C2 contends that the arbitration agreement is not unconscionable but to address Fox's concerns about the cost of arbitration, it offered to waive the fee-sharing provision and bear all the arbitration costs. C2 Mem. at 10-11. The CWS defendants ("CWS") also moved to compel arbitration
In opposition to defendants' motions, Fox argues that defendants' waiver of the fee-sharing provision "cannot save the agreement from a finding of unconscionability" because since the agreement does contain a severability clause, defendants cannot unilaterally alter it by waiving the fee-sharing provision. Pl.'s Opp. at 16-17. Defendants have filed additional briefs in support of their motions. See C2 Reply; CWS Reply in Supp. of Mot. to Dismiss [Dkt. #25] ("CWS Reply").
The appropriate standard of review for a motion to compel arbitration is the summary judgment standard under Federal Rule of Civil Procedure 56(c). See Aliron Int'l., Inc. v. Cherokee Nation Indus., Inc., 531 F.3d 863, 865 (D.C.Cir.2008). "How the parties style the motion seeking arbitration is not determinative." Booker v. Robert Half Int'l, Inc., 315 F.Supp.2d 94, 99 (D.D.C.2004) ("Booker I") aff'd, 413 F.3d 77, 81 (D.C.Cir.2005) ("Booker II"). Under this standard, the party seeking to compel arbitration must first present "evidence sufficient to demonstrate an enforceable agreement to arbitrate." Hill v. Wackenhut Services Int'l, 865 F.Supp.2d 84, 89 (D.D.C.2012), quoting SmartText Corp. v. Interland, Inc., 296 F.Supp.2d 1257, 1263 (D.Kan.2003). "The burden then shifts to [the non-moving party] to raise a genuine issue of material fact as to the making of the agreement, using evidence comparable to that identified in Fed. R.Civ.P. 56." Id. (internal quotation marks and citation omitted). The Court will compel arbitration if the pleadings and the evidence show that "there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Booker I, 315 F.Supp.2d at 99, quoting Fed.R.Civ.P. 56(c).
The existence of a factual dispute is insufficient to preclude summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A dispute is "genuine" only if a reasonable fact-finder could find for the non-moving party; a fact is "material" only if it is capable of affecting the outcome of the litigation. Id. at 248, 106 S.Ct. 2505; Laningham v. U.S. Navy, 813 F.2d 1236, 1241 (D.C.Cir. 1987). "A party asserting that a fact cannot be or is genuinely disputed must support the assertion by citing to particular parts of materials in the record...." Fed.R.Civ.P. 56(c)(1)(A). In assessing a party's motion, "[a]ll underlying facts and inferences are analyzed in the light most favorable to the non-moving party." N.S. ex rel. Stein v. District of Columbia, 709 F.Supp.2d 57, 65 (D.D.C.2010), citing Anderson, 477 U.S. at 247, 106 S.Ct. 2505.
By enacting the Federal Arbitration Act, Congress adopted "a liberal federal policy favoring arbitration agreements,
In this case, Fox argues that the Court should deny defendants' motions to compel arbitration because (1) his arbitration agreement with C2 is unconscionable and thus unenforceable, and (2) CWS is not a party to the agreement. These arguments are unpersuasive.
Fox does not dispute the existence of an arbitration agreement with C2; rather he argues that the "agreement to arbitrate with C2 ... is so pervaded with unconscionable provisions that it cannot be enforced by any of the defendants." Pl.'s Opp. at 11. "Like other contracts, ... [arbitration agreements] may be invalidated by `generally applicable contract defenses, such as fraud, duress, or unconscionability.'" Rent-A-Center, West, Inc. v. Jackson, ___ U.S. ___, 130 S.Ct. 2772, 2776, 177 L.Ed.2d 403 (2010), quoting Doctor's Assocs., Inc. v. Cassarotto, 517 U.S. 681, 687, 116 S.Ct. 1652, 134 L.Ed.2d 902 (1996). State law governs these contract-based challenges and D.C. law governs the enforceability of this arbitration agreement because there is no choice of law provision in the Agreement designating another state's law be followed. See Booker I, 315 F.Supp.2d at 98-99. The parties have also accepted the application of D.C. law by asserting arguments based on D.C. law in their briefs.
Under D.C. law, a court can void a contract on the grounds that it is unconscionable if the party seeking to avoid the contract proves that the contract was both procedurally and substantively unconscionable. See Urban Invs., Inc. v. Branham, 464 A.2d 93, 99 (D.C.1983); see also Smith, Bucklin & Assoc., Inc. v. Sonntag, 83 F.3d 476, 480 (D.C.Cir.1996).
Fox argues that the arbitration agreement is procedurally unconscionable because it was presented to him on a "take it or leave it basis and buried within a larger series of new employee documents sent to him electronically for acknowledgement," and CWS and C2 did not disclose that they were joint-employers. Pl.'s Opp. at 13. A contract is procedurally unconscionable where a party lacked meaningful choice as to whether to enter the agreement. Urban Invs., 464 A.2d at 99.
The evidence in this case demonstrates that Fox had a meaningful choice as to whether to sign the arbitration agreement. First, the fact that the Agreement was presented to Fox as a condition of employment without further negotiation does not render it unenforceable. See Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 33, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991) ("Mere inequality in bargaining power [] is not a sufficient reason to hold that arbitration agreements are never enforceable in the employment context."). Second, the Agreement was not "hidden in a maze of fine print" but was presented as separate document with the title "
Agreement to Arbitrate at 3.
Third, Fox's assertion that he did not "understand that by acknowledging the purported agreement that he was agreeing to its terms," Pl.'s Opp. at 8, is immaterial to the determination of the Agreement's validity. Nur v. K.F.C., USA, Inc., 142 F.Supp.2d 48, 51 (D.D.C.2001) ("That [the plaintiff] may not have comprehended the implications of his decision [to sign the arbitration agreement] is irrelevant as to whether the agreement is valid."). What matters is that Fox had a fair opportunity to review the Agreement, and he does not contend that he failed to understand its terms. See Paterson v. Reeves, 304 F.2d 950, 951 (D.C.Cir.1962) ("One who signs a contract which he had an opportunity to read and understand is bound by its provisions.").
Fourth, that Fox received and signed the Agreement electronically does not render it unconscionable: "a contract ... may not be denied legal effect, validity, or enforceability solely because an electronic signature or electronic record was used in its formation." 15 U.S.C. § 7001(a).
The cases that Fox cites to support his argument of procedural unconscionability are inapposite because they do not arise in the employment context or they apply the law of a different state. See Pl.'s Opp. at 12-13, citing Morris v. Capitol Furniture & Appliance Co., 280 A.2d 775, 776 (D.C. 1971) (holding that a consumer contract for the purchase of furniture was not unconscionable where the plaintiff was able to buy the goods from another seller); Toledano v. O'Connor, 501 F.Supp.2d 127, 138-39 (D.D.C.2007) (applying California contract law to an agreement to arbitrate a dispute over book royalties). Therefore, Fox has failed to allege facts demonstrating that the Agreement is procedurally unconscionable.
Fox next avers that the Agreement is substantively unconscionable because the statute of limitations period is impermissibly short, the fee-sharing provision is invalid, discovery is extremely limited, and the Agreement prohibits the filing of administrative discrimination claims. Pl.'s Opp. at 13-19.
Hill, 865 F.Supp.2d at 95, quoting Hume v. United States, 132 U.S. 406, 411, 10 S.Ct. 134, 33 L.Ed. 393 (1889). The present case does not meet this standard.
Fox contends that the statute of limitations and administrative claims provisions of the Agreement are unconscionable because they deprive him of the ability to enforce his substantive rights. Compl. ¶ 16; Pl.'s Opp. at 13, 18-19. The statute of limitations provision requires the aggrieved party to notify "the other party within six (6) months of the date that party first has knowledge of the event giving rise to the Claim. Otherwise, the claim shall be void and deemed waived even if there is a federal or state statute of limitations that would have given more time to pursue such Claim." Agreement to Arbitrate at 1. The Agreement also requires all parties to "agree not to initiate or prosecute any lawsuit or administrative action in any way related to any Claim covered by this Agreement...." Id.
Fox also argues that the discovery provision in the Agreement is "extremely limited" because it allows each party to take the deposition of only one individual and any expert witness designated by another party. Compl. ¶ 16. To be enforceable, an arbitration agreement must provide for more than minimal discovery. Cole v. Burns Int'l Sec. Servs., Inc., 105 F.3d 1465, 1482 (D.C.Cir.1997). An arbitration agreement that leaves the decision about which discovery tool to use and in what manner to the discretion of the arbitrator will not be invalidated based on speculation that the arbitrator may not allow adequate discovery. See Booker II, 413 F.3d at 82 (holding that an arbitration agreement that gave the arbitrator discretion about what discovery to allow was enforceable despite the plaintiff's speculation that the arbitrator might not provide him with adequate discovery). Here, the Agreement allows the arbitrator to order additional discovery if the requesting party shows "substantial need" for such discovery. Agreement to Arbitrate at 2. Since the arbitrator has the discretion to order additional discovery as necessary, "speculation about what might happen in the arbitral forum is plainly insufficient to render the agreement to arbitrate unenforceable." See Booker II, 413 F.3d at 82.
Fox lastly contends that the Agreement's requirement that he "share the fees and costs of the arbitrator" and pay for a court reporter violates "the D.C. Circuit's seminal decision in Cole, [which held that] it is substantially unconscionable to require an employee to pay all or part of the arbitrator's fee." Pl.'s Opp. at 14.
In Cole, an employer sought to compel an employee to submit his Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq. ("Title VII") employment discrimination claim to arbitration pursuant to an arbitration agreement between the parties. 105 F.3d at 1467. Since the arbitration agreement was silent as to who would pay for the arbitrator's fees, the court went on to decide who should bear the cost. Id. at 1484. The court reasoned that requiring an employee to pay arbitration fees, other than "reasonable costs" analogous to federal court "filing fees and other administrative expenses," would be "prohibitively
After Cole, the Supreme Court in Green Tree Fin. Corp.-Ala. v. Randolph, considered the validity of an arbitration agreement that was similarly silent on the payment of filing fees, arbitrators' costs, and other arbitration expenses. 531 U.S. 79, 84, 121 S.Ct. 513, 148 L.Ed.2d 373 (2000). The Green Tree Court rejected the plaintiff's argument that "the arbitration agreement's silence with respect to costs and fees creates a `risk' that she will be required to bear prohibitive arbitration costs if she pursues her claims in an arbitral forum." Id. at 90-92, 121 S.Ct. 513. Instead, it concluded that "where, as here, a party seeks to invalidate an arbitration agreement on the ground that arbitration would be prohibitively expensive, that party bears the burden of showing the likelihood of incurring such costs." Id. at 92, 121 S.Ct. 513.
Since Green Tree, the D.C. Circuit has not addressed whether Cole remains fully intact but it has limited its application. In Brown v. Wheat First Sec., Inc., the D.C. Circuit considered whether the Cole per se rule invalidating arbitration agreements requiring an employee to pay any part of the arbitrator's fees applies when the employee is pursuing non-statutory claims. 257 F.3d 821, 823 (D.C.Cir.2001). In answering this question, the court explained that the Cole decision was based on balancing the goals of two competing federal statutes: promoting arbitration under the FAA and preventing employment discrimination under Title VII. Id. at 826-27. However, Cole's "central rationale — respecting congressional intent [in enacting the two competing federal statutes] — does not extend beyond the statutory context." Id. at 825. Therefore, the court concluded that the Cole per se invalidation rule did not apply where the plaintiff is pursuing a non-statutory claim and those cases should to be resolved in favor of the only federal law involved, the FAA's "liberal federal policy favoring arbitration agreements." Id.
Brown's limitation of Cole and its rationale has led a court in this district to conclude that Cole's per se invalidation rule applies only in the context in which it was originally announced, i.e. when an employee is pursing federal statutory claims. Nelson v. Insignia/Esg, Inc., 215 F.Supp.2d 143, 156-57 (D.D.C.2002). But the court said, it "does not apply [when] only District of Columbia statutory and common law claims are being pursued." Id. at 157. In those circumstances, the party seeking to invalidate the agreement on the basis that it would be prohibitively expensive must demonstrate the likelihood of incurring such costs pursuant to the Supreme Court's decision in Green Tree. Id.
Since Fox is pursuing claims under the DCHRA and D.C. common law, the Court will not apply the Cole rule because Cole's "central rationale — respecting congressional intent" is not directly implicated. See id. at 156. Instead, the Court will apply the Green Tree standard
Moreover, Fox cannot show that he would incur "prohibitively expensive" costs from the arbitration because defendants have waived the fee-sharing provision and have agreed to "bear the entirety of the arbitrator's fees," C2 Mem. at 10. See Nelson, 215 F.Supp.2d at 157 (enforcing an arbitration agreement with a fee-splitting provision because "the defendant's offer to pay all arbitration fees and expenses effectively obviated any concerns the plaintiff may have raised regarding her ability to vindicate her claims in an arbitral forum because of the fee-splitting provision"). Defendants' waiver of the fee-sharing provision also distinguishes this case from the situation that the court addressed in Cole because Fox will not be required to pay any of the arbitrator's fees and expenses.
Regarding Fox's argument that he cannot be required to pay for a court reporter, Cole does not bar arbitration agreements that require the employee to pay administrative fees. See LaPrade v. Kidder, Peabody & Co., Inc., 246 F.3d 702, 707-08 (D.C.Cir.2001) (concluding that requiring the plaintiff to pay a limited amount of arbitral forum fees, such as a filing fee or fees solely related to non-statutory claims is not barred by Cole). Thus, the term providing that Fox may be required to pay administrative costs, such as a court reporter's fees, is not unconscionable because he would have to pay for court transcripts in D.C. federal and local courts. See id. at 707 (stating that arbitration is not required to be cost-free for the plaintiff, just as litigating in court would not be).
Therefore, the fee-sharing provision is not substantively unconscionable because the risk that Fox might be saddled with prohibitive costs based on the language of the Agreement is too speculative, and in any event, defendants' waiver of the fee-sharing provision has eliminated this risk.
Fox also contends that the Court should not compel him to arbitrate his claims against CWS because CWS is a non-signatory and thus not a party to the arbitration agreement. Pl.'s Opp. at 6-11. Under the doctrine of estoppel, a signatory to an arbitration agreement may be compelled to arbitrate with a non-signatory when the non-signatory is seeking to resolve issues that are intertwined with an agreement that the signatory has signed. See Khan v. Parsons Global Servs., Ltd., 480 F.Supp.2d 327, 341-42 (D.D.C.2007), rev'd on other grounds, 521 F.3d 421 (D.C.Cir.2008).
In Khan, the plaintiffs asserted identical tort claims against one of the plaintiff's employers and the employer's agents. Id. at 341. The employer and its agents moved to compel the plaintiffs to arbitrate their claims pursuant to an arbitration agreement contained in the plaintiff's employment agreement. Id. at 331-32. The plaintiffs argued that even if their claims against the employer had to be arbitrated pursuant to the arbitration agreement, they could not be required to arbitrate their claims against the remaining defendants who were not signatories to the employment agreement (or the arbitration provision it contained). Id. at 341. The court disagreed and explained that courts in other circuits have been "willing to estop a signatory from avoiding arbitration with a nonsignatory when the issues the nonsignatory is seeking to resolve in arbitration are intertwined with the agreement that the estopped party has signed." Id., quoting Thomson-CSF, S.A. v. Am. Arbitration Ass'n., 64 F.3d 773, 779 (2d Cir.1995) (internal quotation marks omitted). Applying this principle, the court compelled the plaintiffs to arbitrate their disputes with the non-signatory defendants because: (1) their claims against the signatory and non-signatory defendants were identical; and (2) the claims arose from one plaintiff's employment with defendants and were thus "intertwined with the [plaintiff's] employment agreement (and the arbitration therein)." Id.
Similarly, this Court will compel Fox to arbitrate his claims against CWS under the doctrine of estoppel.
Despite admitting that he accepted the terms of the employment offer letter — which include an agreement to arbitrate claims arising out of his employment with CWS — Fox argues that requiring him to arbitrate his claims against CWS under the doctrine of estoppel "would create an unfair asymmetry where CWS could compel Plaintiff to arbitrate his claims but Plaintiff could not compel CWS to arbitrate its potential claims against him." Pl.'s Opp. at 10. This argument fails because the arbitration clause in the employment offer letter requires arbitration of all disputes arising out of the employment relationship regardless of whether those claims are initiated by Fox or CWS. Moreover, Fox's acceptance of the employment letter is critical to his case because a number of his claims are based on his alleged reliance on the terms of the letter, specifically the provisions regarding compensation and benefits. Compl. ¶¶ 76-91, 98-105. As Fox put it, allowing him to pursue claims based on the employment offer letter and to simultaneously avoid the arbitration clause in that letter "would create [an] unfair asymmetry."
The Court will therefore compel Fox to arbitrate his disputes with CWS under the doctrine of estoppel because the issues CWS is seeking to resolve in arbitration are intertwined with the claims against the C2 defendants and with the employment offer letter that Fox has accepted (and the arbitration clause it contained).
The Court concludes that the arbitration agreement between Fox and C2 is not
