Case Style: Jacquelyn Allen v. Dish Network, LLC
Case Number: CJ-2012-689
Judge: Jefferson D. Sellers
Court: District Court for Tulsa County, Oklahoma
Plaintiff's Attorney: J.Derek Ingle
Defendant's Attorney: Lisa Silvestri;Tammy Barrett
Description: PARTIES, JURISDICTION AND VENUE
1. Plaintiff Jacquelyn Allen is a resident of Tulsa, Tulsa County, State of Oklahoma.
2. Defendant Dish Network, LLC is a foreign limited liability company doing business in Tulsa County, Oklahoma.
3. The Plaintiff was an employee of Defendants as defined by state and federal law.
4. The events giving rise to this action occurred in Tulsa County, Oklahoma.
5. The jurisdiction of this Court is proper pursuant to 12 0. S. § 2004(f). Venue: is properly laid pursuant to 12 O.S. § 133, t34.
6. Plaintiff began her employment with Defendant in May 2004.
7. Plaintiff developed a serious health condition in November 2010 and requested intermittent FMLA leave. She used the intermittent FMLA through the end of 2010 and again in August 2011 until her termination on November 2, 2011. She did not exceed her 12 week allotment.
8. Plaintiff was wrongfully terminated on or about November 2, 2011. This termination was interfering with her FMLA request and/or in retaliation for taking FMLA.
9. Plaintiff has actual damages in the form of back pay and front pay in lieu of reinstatement, as well as consequential damages, including but not limited to emotional distress. Further, the acts of Defendant were carried out in a willful and/or wanton manner and/or with reckless disregard for the rights of others entitling Plaintiff to punitive and/or liquated damages.
CLAIMS FOR RELIEF
COUNT 1 INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS
10. The Defendant’s actions throughout the relevant periods were both intentional and/or reckless; and further were of an extreme and outrageous nature.
11. Plaintiff suffered and experienced emotional distress because of Defendant’s actions and such distress was severe.
COUNT 2 VIOLATIONS OF FAMILY MEDICAL LEAVE ACT
12. Defendant is an employer as defined by 29 U.S.C. §2611, in that all relevant times to the filing of this cause of action, Defendant has employed in excess of fifty (50) employees, during each of twenty (20) or more calendar workweeks in the current preceding calendar year.
13. Plaintiff was an employee as defined by 29 U.S.C. §2611, in that she was employed with the Defendant in excess of twelve (12) months prior to the requesting leave.
14. Plaintiff requested leave under FMLA.
15. Plaintiff's absence of reporting to work was protected by 29 U.S.C. §2612.
16. Defendant subsequently interfered with Plaintiff's FMLA rights and retaliated against Plaintiff because of her need to be off work and wrongfully terminated her. This interference and retaliation was a clear, direct, and substantial violation of 29 U.S.C. §2612.
17. The events described herein constitute a clear, substantial, and egregious violation of 29 U.S.C. §2612.
18. As a result of the aforementioned violation, Defendant hereby injured Plaintiff, depriving her of having exercised rights and privileges of employment, for her having taken time due to a serious health condition. Plaintiff has suffered, among other things, damages in the form of back pay, front pay, loss of consortium, emotional distress and liquidated damages.
DAMAGES 19. As a result of the aforementioned violations, Defendant hereby injured Plaintiff, causing actual and consequential damages. Further, the acts of Defendant were intentional, reckless and done without regard to the rights of the Plaintiff Plaintiff is entitled to damages in the form of back pay, front pay, consequential damages (including but not limited to emotional distress damages), punitive and liquidated damages.
WHEREFORE, Plaintiff prays for judgment over and against the Defendant for actual, compensatory, liquidated and punitive damages in the amount in excess of $75,000 and for all other relief this Court deems just and proper including interest at the statutory rate, reasonable attorney fees and costs.
DEFENDANT’S MOTION TO STAY ACTION AND COMPEL ARBITRATION AND REOUEST FOR ATTORNEYS’ FEES AND COSTS
Defendant DISH Network, L.L,C. files this Motion to Stay Action and Compel Arbitration and Request for Attorneys’ Fees and Costs and shows: I. INTRODUCTION
Plaintiff Jacquelyn Allen executed a Mandatory Arbitration of Disputes — Waiver of Rights Agreement (the “Agreement”)’ with her former employer, DISH. The Agreement is a binding contractual commitment for both parties to submit disputes relating to or arising out of Allen’s employment to final and binding arbitration. Although the claims asserted in this case arise out of her employment, Allen has refused to submit them to arbitration. Accordingly, Dish asks that Allen be compelled to arbitrate her claims in compliance with the Agreement.
II. FACTUAL BACKGROUND
Allen worked at DISH as a customer service specialist in its Tulsa, Oklahoma location from May 17, 2004 through November 3, 2011. On May 17, 2004, as a condition of employment, Allen signed the Agreement which states, in relevant part, that the Parties “agree that any claim, controversy and/or dispute between them, arising out of and/or in any way related to [Allen’s] application for employment, employment and/or termination of employment, whenever and wherever brought, shall be resolved by arbitration.”2
The Parties agreed to submit covered disputes to a single arbitrator from the American Arbitration Association (AAA) and waived their rights to litigate those disputes in court.3 The Parties further agreed to pay the attorneys’ fees and costs incurred by a party to enforce their agreement to arbitrate.4 The Agreement states that: “In the event either party hereto files a judicial or administrative action asserting claims subject to this Agreement, and the other party successfully stays such action and/or compels arbitration of the claims made in such an action, the party filing the administrative or judicial action shall pay the other party’s reasonable attorneys’ fees and costs incurred in obtaining a stay and/or compelling arbitration.”5
On February 7, 2012, Allen filed this lawsuit against DISH, claiming that she was “wrongfully terminated” after requesting time off from work pursuant to the Family and Medical Leave Act (FMLA). Allen’s Petition asserts two claims: (1) intentional infliction of emotional distress and (2) violations of the FMLA. Both relate to her employment with and/or termination from DISH and are covered under the Agreement. Because the Agreement captures Allen’s claims, this case should be compelled to arbitration pursuant to the Federal Arbitration Act (FAA): 9 U.S.C. § 1-16, and the Oklahoma Uniform Arbitration Act, 12 0.5. § 1851-81.
III. ARGUMENT AND AUTHORITIES
A. Because a Binding and Applicable Arbitration Agreement Exists, Arbitration Should Be Compelled. Under the FAA, a court must compel a dispute to arbitration if: (1) there is a valid arbitration agreement and (2) the dispute falls within the scope of the agreement.6 The FAA mandates that courts shall direct parties to proceed to arbitration on issues as to which an arbitration agreement exists.7 Valid agreements to arbitrate must be enforced.8
Arbitration is also favored under Oklahoma law.9 The Oklahoma Uniform Arbitration Act, 12 O.S. § § 1851-81, mandates the enforcement of arbitration agreements.’° Oklahoma law also dictates that “any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration,” and that “arbitration should be compelled unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute.”1
Here, there is no dispute that a valid, enforceable arbitration agreement exists and that the issues raised in this lawsuit are within the scope of the Agreement. Allen signed the Agreement, and it requires arbitration of “any claim, controversy and/or dispute between them, arising out of and/or in any way related to (Allen’s) application for employment, employment and/or termination of employment.”2 Allen’s Petition alleges two claims stemming from her employment with DISH. Because both claims are covered by the Agreement, this case should be compelled to arbitration.
Given the existence of an enforceable agreement to arbitrate and the fact that the instant dispute falls within the scope of the Agreement, both the FAA and the Oklahoma Uniform Arbitration Act require arbitration of the claims raised in Allen’s Petition.
B. Under the Express Terms of the Parties’ Arbitration Agreement, Allen Must Pay DISH’s Reasonable Attorneys’ Fees and Costs for Preparing this Motion.
Allen, moreover, should be ordered to pay DISH’s attorneys’ fees and costs incurred in preparing this Motion. Because of Allen’s refusal to submit her claims to arbitration, DISH has been required to file this Motion.’3 DISH has incurred attorneys’ fees and costs. Under the express terms of the Agreement, Allen should be required to pay DISH’s “reasonable attorneys’ fees and costs incurred in obtaining a stay and/or compelling arbitration.”4 DISH will supplement this Motion with an account of its attorneys’ fees and costs once the Court has ruled on this Motion.
IV. CONCLUSION For the foregoing reasons, DISH respectfully requests that the Court grant this Motion, entering an order: (1) staying this action; (2) compelling arbitration before the AAA; (3) requiring Allen to pay DISH’s reasonable attorneys’ fees and costs incurred in preparing this Motion and (4) awarding DISH such other and further relief to which it is justly entitled.
6 See 9 U.S.C. § 2; Fierman v. Green Tree Fin. Serv. Corp., 933 P.2d 955, 956-57 (Okla. Civ. App. 1997). 79 U.S.C. § 3,4 (emphasis added). See Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218 (1985) (“agreements to arbitrate must be enforced, absent a ground for revocation of the contractual agreement”). James v. Zachritz, 20060K CIV APP 46, ¶ 5, 134 P.3d 926, ° See 12 0.S. § 1857 (“An agreement contained in a record to submit to arbitration any existing or subsequent controversy arising between the parties to the agreement is valid, enforceable, and irrevocable except upon a ground that exists at law or in equity for the revocation of a contract.”); see also v. City of Olda. City, 19800K 148, ¶ 5, 618 P.2d 925, 928 (“Where arbitration has been contracted for it constitutes a substantive and mandatory right.”). “Fleming Cos. v. Tru Discount Foods, 19990K CIV APP 18, ¶ 16, 977 P,2d 367, 371; accord City of WarrAcres v. Int’l Ass’n v. Firefighters, Local No. 2374,20020K CIV APP 124, ¶ 6,64 P.3d 1118, 1121. 12 See Exhibit A. “ As evidenced by the April 10, 2011 letter attached hereto as Exhibit B, prior to filing this Motion, Defendant’s counsel, E. Cynthia Uduebor, made good faith attempts to confer with Plaintiff’s counsel, J. Derek Ingle, by telephone and letter to avoid the unnecessary litigation and expense of filing this Motion. Plaintiff’s counsel has not responded to any of these attempts to reach him. ‘41d.
PLAINTIFF’S RESPONSE & OBJECTION TO DEFENDANT’S MOTION TO COMPEL ARBITRATION
Although there is a general presumption in favor of the arbitrability of dispute, there is no presumption that the parties have entered into a valid agreement to arbitrate. Such illusory agreements are not saved by the so-called presumption in favor of arbitration:
The presumption in favor or arbitration is properly applied in interpreting the scope of an arbitration agreement; however, this presumption disappears when the parties dispute the existence of a valid arbitration agreement. See First Options of Chicago, Inc. v, Kaplan, 514 U.S. 938, 944-45; Riley Mfg. Co., Inc. v. Anchor Glass Container Corp., 157 F.3d 775, 779 (l0 Cir.1998) (‘[Wihen the dispute is whether there is a valid and enforceable arbitration agreement in the first place, the presumption of arbitrability falls away.’) (citing Mose H. Cone Mem ‘I Hasp. v. Mercury Constr. Corp., 460 U.S- 1, 24-25 (t983). - -
Dumais v. American Golf Corp., 299 F.3d 1216, 1220 (10th Cir.2002); See also Klay v. Pacficare Health Sys., Inc., 2004 U.S. App. LEXIS 23277, 20-21 (11th Cir., 2004):
Because arbitration is a matter of contract, however, the FAA’s strong / proarbitration policy only applies to disputes that the parties have agreed to arbitrate. Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52, 57 (1995). In the absence of an agreement to arbitrate, a court cannot compel the parties to settle their dispute in an arbitral forum. See AT&T Techs., Inc. v. Communications Workers of Am., 475 U.S. 643, 648 (1986) (citation omitted); see Volt Info. Set, Inc. v. Bd. of Tr. of Leland Stanford Junior Univ., 489 U.S. 468, 479 (‘Arbitration under the [FAA] is a matter of consent, not coercion. . . The second step in ruling on a motion to compel arbitration involves deciding whether ‘legal constraints external to the parties’ agreement foreclosed arbitration.’ Mitsubishi Motors Corp., 473 U.S. at 628.
Defendant must prove the existence of a valid agreement in the same manner as any other person claiming the existence of a contract.
I. VALIDITY OF ARBITRATION AGREEMENTS ARE GOVERNED BY STATE LAW. “[T]here is no [federal] common law of arbitration.” Anderson v. Dalkon Shield Claimants Trust (In rcA. H. Robins Co.), 42 F.3d 870, 875 (4th Cir. 1994). Rather the validity of arbitration agreements is governed by the law of the forum state:
States may regulate contracts, including arbitration clauses, under general contract law principles,’ Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 281 (1995) ‘The interpretation of private contracts is ordinarily a question of state law, which this Court does not sit to review.’ Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior Univ., 489 U.S. 468, 474 (1989).
Green Tree Fin. Corp. v. Bazzle, 539 U.S. 444, 458 (2003) (Rehnquist, J., dissenting on other grounds). As explained in Allied-Bruce Termin& Cos. v. Dobson, 513 U.S. 265, 281 (U.S., 1995):
[The FAA] § 2 gives States a method for protecting consumers against unfair pressure to agree to a contract with an unwanted arbitration provision. States may regulate contracts, including arbitration clauses, under general contract law principles and they may invalidate an arbitration clause ‘upon such grounds as exist at law or in equity for the revocation of any contract.’ 9 U.S.C. § 2 (emphasis added). What States may not do is decide that a contract is fair enough to enforce all its basic tcrns (price, service, credit), but not fair enough to enforce its arbitration clause. The Act makes any such state policy unlawful, for that kind of policy would place arbitration clauses on an unequal ‘footing,’ directly contrary to the Act’s language and Congress’ intent. See Volt information Sciences, Inc., 489 U.S. at 474.
Thus, it remains the case that arbitration ‘is a matter of consent, not coercion.’ Volt information Sciences v. Board of Trustees, 489 U.S. 468, 479 (1989). Specifically, “arbitration is a matter of contract,” and therefore “a party cannot be required to submit to arbitration any dispute which [it] has not agreed so to submit.” Vera v. Saks & Co., 335 F.3d 109, 116 (2d Cir. 2003) (quoting Transit Mix (Concrete Corp. v. Local Union No. 282, International Brotherhood of Teamsters, etc., 809 F.2d 963, 967 (2d Cir. 1987)). Thus, ‘while the FAA expresses a strong federal policy in favor of arbitration, the purpose of Congress in enacting the FAA “was to make arbitration agreements as enforceable as other contracts, but not more so.” Cap Gemini Ernst & Young, US., L.L.C. v. Nackel, 346 F.3d 360, 364 (2d Cir. 2003) (quoting Opals on ice Lingerie, Designs by Bernadette, Inc. v. Bodylines Inc., 320 F.3d 362, 369 (2d Cir. 2003); further internal quotation omitted).
JLMIndus. v. Stolt-Nielsen SA, 387 F.3d 163, 171 (2d Cir., 2004) (emphasis added).
The Tenth Circuit has, of course, agreed with such declarations: “Because arbitration is a matter of contract, a party may not be required to arbitrate a dispute unless it has agreed to arbitration of that dispute.” Gibson v. Wal-Mart Stores, Inc., 181 F.3d 1163, 1169 (10th Cir. 1999).
In this matter, Oklahoma law must be applied, and under Oklahoma law, the agreement is invalid.
II. THE AGREEMENT IS INVALID UNDER OKLAHOMA LAW.
The arbitration agreement is not enforceable under Oklahoma law. Other arbitration agreements which are similar to the Defendant’s have been found invalid. The grounds of invalidity are summarized as follows:
In [Circuit City Stores, Inc. v.1 Mantor, [335 F.3d 1101 (9th Cir.2003)], ingle [v. Circuit City Stores, inc., 328 F.3d 1165 (9t Cir.2003)], and [Circuit City Stores v.] Adams, [278 F.3d 889 (9th Cir.2002)j we held that Circuit City’s arbitration agreement is substantively unconscionable under California law and rejected contract provisions: (1) forcing employees to arbitrate claims against Circuit City, but not requiring Circuit City to arbitrate claims against employees, ingle, 328 F.3d at 1173; Adams, 279 F.3d at 893-94; (2) limiting remedies, Ingle, 328 F.3d at 1178-79; Adams, 279 F.3d at 894; (3) splitting costs and fees, Mantor, 335 F.3d at 1107; Ingle, 328 F.3d at 1177-78; Adams, 279 F.3d at 894; (4) imposing a one- year statute of limitations, Mantor, 335 F.3d at 1107; Ingle, 328 F.3d at 1175; Adams, 279 F.3d at 894; (5) prohibiting class actions, Mantor, 335 F.3d at 1107; Ingle, 328 F.3d at 1175-76; (6) regarding the filing fee and waiver of the fee, Mantor, 335 F.3d at 1107-08; Ingle, 328 F.3d at 1177; and (7) giving Circuit City the unilateral right to terminate or modify the agreement, Mantor, 335 F.3d at 1107; Ingle, 328 F.3d at 1179.
Some of these same defects appear in the Defendant’s arbitration agreement and preclude enforcement of this agreement. Such defects will be addressed separately.
A. There Was No Meeting Of Minds.
The Defendant is asking the Court to enforce its arbitration agreement. Plaintiff signed an Arbitration agreement which indicates that any disputes between Plaintiff and Defendant will be governed by the Federal Arbitration Act. However, there is absolutely no indication that Defendant provided the Plaintiff with the Federal Arbitration Act. Plaintiff asserts that Plaintiff was not given a copy of the FAA rules at any time.
Oklahoma contract law requires: 1) parties capable of contracting, 2) consent, 3) a lawful object, and 4) sufficient consideration. 15 0.5. § 2. In this matter, the Arbitration agreement is between Plaintiff an entity known as EchoStar Communications Corporation. However, Plaintiff was an employee of Defendant Dish Network, L.L.C — not EchoStar Communication Corporation. There is absolutely nothing in the agreement mentioning Dish Network, L.L.C. However, Defendant Dish Network, L.L.C. is the entity attempting to enforce this Arbitration Agreement. Clearly, Dish Network, L.L.C. is not a party to this contract and cannot seek its enforcement.
Further, consent must be 1) free, 2) mutual and 3) communicated. 15 0.5. § 51. “Consent is not mutual unless the parties all agree upon the same thing in the same sense.” 15 O.S. § 66. “Before there can be an agreement there must be a meeting of the minds of the parties on the matter attempted to be agreed on, and no contract can be said to have been created where their minds have not agreed on one and the same thing.” LB. Klein Iron & Foundry Co. v. Midland Steel & Equip. Co., 183 Okla. 487, 83 P.2d 157, 158 (1938) (quotation omitted). “[T]here must be a meeting of the minds of the contracting parties upon all the material terms and provisions of the contract”. Roads West., Inc. v. Austin, 2004 OK CIV APP 49, ¶ 15, 91 P.3d 81, 85.
This applies to arbitration agreements. “[W]hen an employee enters into an arbitration agreement, that waiver of a judicial forum must be ‘knowing.” Penn v. Ryan’s Family Steakhouse, 95 F.Supp.2d 940, 952 (N.D.Ind.2000). Accord Gibson v. Neighborhood Health Clinics, Inc., 121 F.3d 1126, 1131 (7th Cir.1997) (mutual consideration necessary for a binding agreement cannot exist when “employee was unaware of the terms. . . at the time she signed the Understanding.”). In this case, Plaintiff never received a copy of the FAA rules. Therefore, Plaintiff was not aware of the essential terms and could not “knowingly” waive a judicial forum.
B. The Arbitration Agreement Is Unconscionable.
As pointed out above, Defendant’s arbitration agreement is invalid under Oklahoma law. Although Oklahoma law governs the enforceability of the agreement, California, Washington and Oklahoma law apply substantially the same standards of unconscionability. In Al-Safin, at *17-18, the Court noted that “California applies virtually the same definition of substantive unconscionability as Washington [in that] under California law, substantive unconscionability refers to whether terms of the agreement ‘are so one-sided as to shock the conscience’ [while] under Washington law, substantive unconscionability refers to contract terms that are ‘one-sided or overly harsh’ and ‘shocking to the conscience”’. (Internal citations omitted). This is the same test used by Oklahoma. See Tate v. Murphy, 202 Okla. 671, 680, 217 P.2d 177, 187 (Okia., 1949) (contract is unconscionable when “the consideration is so grossly inadequate as to shock the conscience”) and Bratcher v. State Farm Fire & Cay. Co., 1998 OK 63, 8 961 P.2d 828, 830 (“contract provisions are unconscionable if, under the circumstances at the time of contracting, they are so onc-sided as to oppress or unfairly surprise one of the parties”).
The rationale for holding an Agreement similar to Defendant’s unconscionable was discussed in Circuit City Stores v. Adams, 279 F.3d 889, 893-894 (9th Cir., 2002):
The DRA is procedurally unconscionable because it is a contract of adhesion: a standard-font contract, drafted by the party with superior bargaiuing power, which relegates to the other party the option of either adhering to its terms without modification or rejecting the contract entirely. 60 Cal. Rptr. 2d at 145-46 (indicating that a contract of adhesion is procedurally unconscionable). Circuit City, which possesses considerably more bargaining power than nearly all of its employees or applicants, drafted the contract and uses it as its standard arbitration agreement for all of its new employees. The agreement is a prerequisite to employment, and job applicants are not permitted to modify the agreement’s terms--they must take the contract or leave it. See Armendariz, 6 P.3d at 690 (noting that few applicants are in a position to refuse a job because of an arbitration agreement).
The California Supreme Court’s recent decision in Armendariz counsels in favor of finding that the Defendant’s arbitration agreement is substantively unconscionable as well. In Armendariz, the California court reversed an order compelling arbitration of a FEHA discrimination claim because the arbitration agreement at issue required arbitration only of employees’ claims and excluded damages that would otherwise be available under the FEHA. Armendariz, 6 P.3d at 694. The agreement in Armendariz required employees, as a condition of employment, to submit all claims relating to termination of that employment -- including any claim that the termination violated the employee’s rights -- to binding arbitration. 6 P.3d at 675. The employer, however, was free to bring suit in court or arbitrate a dispute with its employees. In analyzing this asymmetrical arrangement, the court concluded that in order for a mandatory arbitration agreement to be valid, some ‘modicum of bilaterality’ is required. 6 P.3d at 692. Since the employer was not bound to arbitrate all its claims and there was no apparent justification for the lack of mutual obligations, the court reasoned that arbitration appeared to be functioning ‘less as a forum for neutral dispute resolution and more as a means of maximizing employer advantage.’ Id. * * *
We find the arbitration agreement at issue here virtually indistinguishable from the agreement the California Supreme Court found unconscionable in Armendariz. Like the agreement in Armendariz, the DRA unilaterally forces employees to arbitrate claims against the employer. The claims subject to arbitration under the DRA include ‘any and all employment-related legal disputes, controversies or claims of an Associate arising out of, or relating to, an Associate’s application or candidacy for employment, employment or cessation of employment with Circuit City.’ (emphasis added). The provision does not require Circuit City to arbitrate its claims against employees. Circuit City has offered no justification for this asymmetry, nor is there any indication that ‘business realities’ warrant the one-sided obligation. This unjustified one-sidedness deprives the DRA of the ‘modicum of bilaterality’ that the Califomia Supreme Court requires for contracts to be enforceable under California law.
Again, there is no doubt that the Defendant’s arbitration agreement is a contract of adhesion under Oklahoma law, because it was a form contract created by Defendant without negotiation or the opportunity to negotiate. Indeed, Plaintiff could essentially not even discuss the terms of the agreement with Defendant. “An ‘adhesion contract’ is a standardized contract prepared entirely by one party for acceptance by the other on a ‘take it or leave it’ basis without opportunity for bargaining.” Brannon v. Boatmen’s Nat’! Bank, 1999 OK CIV APP 17, ¶ 11, 975 P.2d 1077, 1083 ii. 6.
Under Oklahoma law an adhesion contract may be unenforceable if it “was not negotiated by the parties, or is the result of overreaching or of the unfair use of unequal bargaining power”. Adams v. Bay, Ltd., 2002 OK CIV APP 117 ¶ 6, 60 P.3d 509, 511. “A ‘form’ contract may be evidence of unfair advantage of one party over the other.” Id. citing Janko v. Outhoard Marine Corp., 605 F. Supp. 51, 52 (W.D. OkIa. 1985).
Thus, contracts which impose grossly unequal obligations are invalid. In the case of arbitration agreements Ditto v. REMAX Preferred Props., Inc., 1993 OK CIV APP 151, 861 P.2d 1000, 1002 noted that “arbitration has been refused due to lack of mutuality [when] they involve truly one-sided obligations to arbitrate [such as when a] contract clause required only subcontractor’s claims to be arbitrated, but not general contractor’s claims [or when] only one party’s claims are subject to arbitration”.
Moreover, the agreement is unconscionable because it is not supported by adequate consideration. The consideration from Defendant was merely Plaintiff's employment. There is no guarantee for employment. Indeed Plaintiff could have been terminated immediately after signing the agreement. Defendant, however, was not bound to do anything. There was no promise to employ the Plaintiff beyond the signing of the agreement. A contract may be set aside when the proposed consideration is so “grossly inadequate as to shock the conscience.” Ferrero v. Sic!, 19640K 248, 397 P.2d, 501, 504. “Adequacy and sufficiency of consideration should be judged by circumstances and conditions existing at the time the contract is made”. Id. A promise to do nothing more than to accept an employment application offers either nothing or so minimal a value as to not represent adequate consideration. See Phox v. Atriums Mgmt. Co., 230 F. Supp. 2d 1279, 1283 (D. Kan., 2002) (“defendant argues that its ‘promise of employment’ was sufficient consideration. . . . Such a promise was illusory, however, because of the at will nature of plaintiffs employment. Defendant could have fired plaintiff ‘the very minute she signed the acknowledgment fonm’ Tenet Health care Ltd. v. Cooper, 960 S.W.2d 386 (Tex. Ct.App. 1998) (disclaimers in handbook negate implication that it altered at will nature of plaintiffs employment)”). Put another way, the agreement is either not supported by adequate consideration because Defendant has “a free way out” of the agreement; it may simply not consider the application after it is received. “The rule may be somewhat tersely stated that a contract is unenforceable for want of mutuality if one of the parties may be said to have a ‘free way out.’ That is, if one of the parties, not having suffered any previous detriment, can escape future liability under the contract, that party may be said to have a ‘free way out’ and the contract lacks mutuality.” Consolidated Pipe Line Co. v. British American Oil Co., 1933 OK 221, 163 Okla. 171,21 P.2d 762, 766.
C. The Attorney Fee Provision Is Unenforceable.
The arbitration agreement requires the Plaintiff to pay Defendant’s attorney fees should Defendant be a prevailing party at arbitration. This is not proper. Plaintiff filed this claim alleging that she was terminated as a result of Defendant interfering with Plaintiffs rights under the FMLA. Attorney fees are not generally awarded to a prevailing party under the FMLA. In Circuit City Stores, Inc. v. Mantor, 335 F.3d 1101, 1107-08 (9th Cir.2003) the Circuit addressed this issue:
Under its arbitration program, Circuit City requires an employee to pay a seventy- five dollar filing fee to initiate an arbitration proceeding. In Ingle, we criticized the filing fee rule in the 1998 version of the arbitration agreement because ‘the employee is required to pay Circuit City for the privilege of bringing a complaint.” This, we held, was ‘not the “type of expense that the employee would be required to bear’ in federal court.’ Id. at 1177 (quoting Armendariz, 6 P.3d at 687). Thus, we concluded that it was improperly one-sided.
As stated in Ingle v. Circuit City Stores, Inc., 328 F.3d 1165, 1177 (9th Cir.2003): Though denominated a ‘filing fee,’ the employee-claimant must pay the required seventy-five dollars here directly to Circuit City, rather than to the arbitration service Circuit City identifies in the arbitration agreement. It thus appears that the employee is required to pay Circuit City for the privilege of bringing a complaint. While a true filing fee might be appropriate under Armendariz, the fee required by Circuit City is not the ‘type of expense that the employee would be required to bear’ in federal court, and is therefore inappropriate under Arenendariz. Moreover, by requiring employees to pay the fee to the very entity against which they seek redress, Circuit City may very well deter employees from initiating complaint.
Again, Oklahoma law is in accord. 15 O.S. § 216 provides: “Every stipulation or condition in a contract, by which any party is restricted from enforcing his right under the contract by the usual legal proceedings in ordinary tribunals. . is void.” It is not a condition of any tribunal that one party must pay his opponent a fee to proceed against him and thus this requirement is void.
D. The Ability To Unilaterally Modify the Agreement Makes It Illusory.
In Dumais v. American Golf Corp., 299 F.3d 1216, 1219 (1 0th Cir.2002) the court stated as follows:
We join other circuits in holding that an arbitration agreement allowing one party the unfettered right to alter the arbitration agreement’s existence or its scope is illusory. See Floss v. Ryan’s Steak Houses, Inc., 211 F.3d 306, 315-16 (6th Cir.2000) (ability to choose nature of forum and alter arbitration without notice or consent renders arbitration agreement illusory); Hooters of Am., Inc. v. Phillips, 173 F.3d 933, 939 (4U Cir.l999) (among other reasons, employer’s ability to modify rules ‘in whole or in part’ without notice to employee renders arbitration agreement illusory); Gibson v. Neighborhood Health Clinics, Inc., 121 F.3d 1126, 1133 (7th Cir.1997) (Cudahy, J., concurring) (handbook provision allowing employer to change arbitration agreement at will renders agreement illusory).
In this case it appears that Defendant may alter or terminate the Agreement in its discretion upon notice to the employee. The Tenth Circuit has not determined whether a requirement of notice saves the agreement from being illusory, but it must be observed that the power to modify the agreement exists only on the part of Defendant. There is no requirement to give specific notice to employees other than a general “posting” and, significantly, there is no requirement that employees assent to such agreement. Employees are not even notified that their continued employment will constitute an implied assent to the modification.
The unilateral reservation of a right to modify the contract, coupled with the lack of any contractual obligations or benefits applying to the employee makes the agreement illusory.
E. Waiver of Punitive or Exemplary Damages.
The agreement calls for Plaintiff to waive all claims of punitive and exemplary damages. This likewise is not proper under Oklahoma law. Once again, Oklahoma law states at 15 O.S. § 216: “Every stipulation or condition in a contract, by which any party is restricted from enforcing his right under the contract by the usual legal proceedings in ordinary tribunals. . . is void.” Here Defendant is attempting to restrict Plaintiff’s ability to seek punitive or exemplary damages. Under Oklahoma law, that is not proper and the contract is “void” under statutory law.
F. Severability Will Not Save The Agreement
Although there is a severability clause in the Agreement such clause will not empower the Court to rewrite the Agreement. Shankle v. B-G Maintenance, 163 F3d 1230, 1235 n. 6 (10th Cir.1999) (refusing to modify arbitration agreement to make it lawful because “[a] Court is without authority to alter or amend contract terms and provisions absent an ambiguity in the contract.” quoting Avbrey v. Pennzoil Co., 961 F.2d 928, 930 (10th Cir.1992).
Allowing a business to draft a one-sided arbitration agreement and then “save” the agreement when it is challenged merely serves to encourage employers to draft unfair agreement because they suffer no penalty if their efforts fail. On the other hand, they secure the benefit of deterring at least some employees from pursuing valid claims. This policy precludes “saving” the arbitration Agreement by severing out invalid clauses:
It should be noted that, Perez suggested that even the presence of a severability clause would likely not have saved the agreement:
If an employer could rely on the courts to sever an unlawful provision and compel the employee to arbitrate, the employer would have an incentive to include such unlawful provision in its arbitration agreements. Such provisions could deter an unknowledgeable employee from initiating arbitration, even if they would ultimately not be enforced. It would also add an expensive procedural step to prosecuting a claim; the employee would have to request a court to declare a provision unlawful and sever it before initiating arbitration. Including an unlawful provision would cost the employer little, particularly where, as here, the arbitration agreement provides the employee must bear the employer’s court costs and attorneys’ fees incurred defending the agreement if arbitration is challenged and the employer prevails. If the court were inclined to reform the agreement, it would be more appropriate to limit the causes of action covered and exclude claims under Title VII and other statutes that permit an award of fees and costs to the prevailing party.
Perez v. Globe Airport Security Servy, Inc., 253 F.3d 1280, 12857 (11th Cir.200l). Accord Dumais, supra, (refusing to reform an invalid arbitration agreement because the employer, as the drafter, must bear the responsibility for the agreement’s ambiguities and deficiencies). Cf Thomas James Assocs. v. Jameson, 102 F.3d 60 (2d Cir. 1996) (“courts must not be timid in voiding agreements which tend to injure the public good or contravene some established interest of society.”).
Since the arbitration agreement is substantively contrary to Oklahoma law, the arbitration agreement should not be enforced and Defendant’s Motion to Compel Arbitration should be denied.
DEFENDANT’S UNOPPOSED MOTION FOR LEAVE TO FILE A REPLY IN SUPPORT OF ITS MOTION TO COMPEL ARBITRATION
Pursuant to Rule CV 18, Defendant DISH Network, L.L.C. moves the Court for leave to file a reply brief in support of its motion to compel arbitration. Counsel for Defendant has conferred with Counsel for Plaintiff; and he has indicated that Plaintiff is unopposed to this motion for leave,
I. On May 8, 2012, DISH filed its Motion to Stay Action and Compel Arbitration and Request for Attorneys’ Fees and Costs. DISH contends that the mandatory arbitration agreement signed by Plaintiff Jacquelyn Allen requires that the parties submit the employment9ispute raised by this lawsuit to arbitration. . .
On May 23, 2012, Allen filed her response and objection to the motion to compel arbitration. Allen, for the first time, claimed that the arbitration agreement is invalid under Oklahoma law.
Rule CV 18 gives the Court discretion to allow a party to file a reply. DISH believes that a reply is necessary to the issues and arguments raised by Allen in her response to its motion to compel arbitration. As indicated above, Allen has no objection to DISH filing a reply.
III. For the foregoing reasons, DISH respectfully requests that the Court grant this motion for leave, allowing DISH to file a reply brief in support of its motion to compel arbitration within five (5) days of the Court’s order.
ORDER The Court, having considered Defendant’s Unopposed Motion for Leave to File a Reply in Support of Its Motion to Compel Arbitration, is of the opinion that the Motion should be and is hereby GRANTED. Accordingly, without limiting the foregoing: IT IS ORDERED, ADJUGED AND DECREED that Defendant may file a reply brief in support of its motion to compel arbitration no later than five (5) days from the date this order if filed.
DEFENDANT’S REPLY BRIEF IN SUPPORT OF ITS MOTION TO STAY ACTION AND COMPEL ARBITRATION AND REQUEST FOR ATTORNEYS’ FEES AND COSTS
Under the FAA and the OUAA, a court must compel arbitration if: (1) there is a valid arbitration agreement and (2) the dispute falls within the scope of the agreement. Allen executed a Mandatory Arbitration of Disputes — Waiver of Rights Agreement (the “Agreement”).1 The Parties agreed to submit all employment-related claims to final and binding arbitration,2 Despite the Agreement, Allen filed this lawsuit that asserts claims arising out of her employment with DISH. Arbitration should be compelled because: (1) the Agreement covers all of the claims raised by Allen and (2) the Agreement is a valid contract between Allen and DISH, an “affiliate” of EchoStar Communications Corporation.
I. ARGUMENT AND AUTHORITIES
A. The Agreement Covers All of the Claims Raised By Allen in this Lawsuit. There is no dispute that all of the claims asserted by Allen relate to her employment and are, therefore, within the scope of the Agreement.
B. The Agreement Is a Valid, Enforceable Contract Between Allen and DISH. For a valid contract to exist, Oklahoma law requires: (1) parties capable of contracting; (2) their consent; (3) a lawful object; and (4) sufficient cause or consideration.3
1. The Agreement Is Between Parties Capable of Contracting. Oklahoma law provides that “[a]ll persons are capable of contracting, except minors, persons of unsound mind, and persons deprived of civil rights.” None of the exceptions apply here.
2. Allen and DISH Consented to the Agreement. Allen concedes she signed the Agreement and understood that it was an agreement to arbitrate. Allen, however, argues that “there was no meeting of the minds” because: (1) she did not receive a copy of the FAA and (2) the Agreement did not mention DISH. Neither argument negates her consent. First, Allen cites no legal authority supporting the proposition that a party must receive a copy of the FAA in order for the party to “knowingly” consent to the agreement’s terms. Notice that the Agreement was an agreement to arbitrate is sufficient.5
The Agreement, moreover, provides that it is “between EchoStar Communications Corporation and all of its affiliates (the term “affiliates” means companies controlling, controlled by or under common control with, EchoStar Communications Corporation).”6 DISH is a wholly-owned subsidiary and an “affiliate” of EchoStar Communications Corporation (now known as DISH Network Corporation),7 DISH, therefore, is a party to the Agreement with full rights to enforce it.8
3. The Agreement Has a Lawful Object. Not only is it lawful to enter into an arbitration agreement, under Oklahoma law and public policy, there is a “strong presumption in favor of arbitration.”9
4. The Agreement Is Supported By Sufficient Consideration. The Parties’ mutual promise to forego litigation of their disputes is sufficient consideration.’° Unlike the “unconscionable” cases cited by Allen in her Response, the Agreement between Allen and DISH involves a mutual obligation to arbitrate, and there is nothing in the Agreement that gives DISH the “unfettered,” unilateral right to avoid this obligation.”
5. The Agreement Is Enforceable. Allen argues that the Court should not enforce the Agreement because it is “substantively unconscionable” since: (1) it is a “contract of adhesion” and (2) it is unsupported by adequate consideration. But courts applying Oklahoma law have recognized that so-called “adhesion” or “form” contracts are not per se unconscionable.’2 Moreover, as discussed above, courts have found that the parties’ mutual promise to submit their disputes to arbitration is adequate consideration.13 The attorneys’ fees and damages provisions of the Agreement are also enforceable. In her Response, Allen challenges the attorneys’ fees provision, citing the Ninth Circuit and an Oklahoma statute. Allen’s reliance on the Ninth Circuit’s Armendariz opinion is misguided. Unlike Armendariz, the Agreement here does not require Allen as a condition of proceeding to split the cost of the arbitration itself. Nor does the Agreement here violate Oklahoma law by requiring Allen to “pay his opponent a fee to proceed against him.” Rather, the Agreement between the Parties provides that DISH will “pay all the arbitrator’s fees and expenses” and merely gives the arbitrator the authority to award attorneys’ fees to the prevailing party. Allen’s challenge to the punitive and exemplary damages waiver of the Agreement also fails. The waiver does not limit Allen’s ability to enforce her “right under the contract [i.e., the AgreementJ by the usual legal proceedings in ordinary tribunals.” She cannot cite a single case applying Oklahoma law invalidating an agreement because it contained a similar waiver. C. DISH Is Entitled to Its Reasonable Attorneys’ Fees and Costs for Preparing This Motion. There is no dispute that the Agreement requires the payment by the party resisting arbitration of the other party’s “reasonable attorneys’ fees and costs incurred in obtaining a stay and/or compelling arbitration.”
II. CONCLUSION For the foregoing reasons, DISH respectfully requests that the Court grant this Motion, entering an order: (1) staying this action; (2) compelling arbitration before the AAA; (3) requiring Allen to pay DISH’s reasonable attorneys’ fees and costs incurred in preparing this Motion and (4) awarding DISH such other and further relief to which it is justly entitled.
‘See Plaintiff’s Response & Objection to Defendant’s Motion to Compel Arbitration (the “Response”) atp. 4; see also Tab A, DISH Dec. ¶ 4, Ex. 1. 2TabA,DISHDec.J4,Ex. 1. See 15 0.5. § 2. See 15 0.5. § 11 (emphasis added). See Cole v. Halliburton Co., No. CIV-00-0862-T, 2000 U.S. Dist. LEXIS 14640 (W.D. OkIa. Sept. 6, 2000) (granting motion to compel arbitration despite the fact that the employee had not received all materials related to arbitration program and finding that the materials he did receive, along with his continued employment, were sufficient to put him on notice of the program); see also Dexter v. The Prudential Ins. Co. of America, No, 99-3137, 2000 U.S. App. LEXIS 12499, *4 (10th Cir. June 7, 2000) (It is “well-settled... contract law that a party to an agreement is charaed with knowledge of the terms of the agreement.”) (emphasis added). Moreover, for a valid contract to exist, Oklahoma law “requires only consent which is not procured through duress, menace, fraud, undue influence, or mutual mistake.” Grossman v. McAfee & Taft, Case No. CIV-1O-853-M, 2011 U.S. Dist. LEXIS 11702, *4..5 (W.D. Okia. Feb. 4,2011) (Oklahoma law “does not require ‘informed consent’ for there to be a valid contract.”); see 15 0.5. § 53 (defming when consent is “not real”) (emphasis added). Allen has not alleged nor has she presented evidence that her consent to the Agreement was obtained by these means. 6 Tab A, DISH Dec. ¶ 4, Ex. 1 (emphasis added). On May 2, 2008, EchoStar Communications Corporation changed its name to DISH Network Corporation. See Tab A, DISH Dec. ¶ 5, Ex. 2. DISH, Allen’s former employer and the defendant in this action, is a wholly-owned subsidiary of DISH Network Corporation. See Tab A, DISH Dec. ¶ 6, Ex. 3. As a subsidiary, DISH is “controlled by” and is an “affiliate” of EchoStar Communications Corporation (now known as DISH Network Corporation). 8 Other courts have upheld the enforcement of similar arbitration agreements by DISH. See Tab B, October 5,2011 Order by the District Court of Colorado in Becker v. DISH Network LL. C. See Towe, Hester & Erwin, Inc. v. Kansas City fire & Marine Ins. Co., 19970K CIV APP 58, ¶ 24; see James v. Zachritz, 20060K CIV APP 46, ¶ 5, 134 P.3d 926 (“Arbitration is favored in Oklahoma.”). ‘°See e.g., Penninglon v. Northrop Grumman Space & Mission Sys. Corp., 269 Fed.Appx. 812, 820(10th Cir. 2008) (holding that “the reciprocal obligation to arbitrate provides the requisite consideration”); Pierce v. Kellogg, Brown & Root, Inc., 245 F.Supp.2d 1212, 1215-16 (ED. Okla. 2003) (fmding the dispute resolution policy “is supported by sufficient consideration in the form of the parties’ mutual promises to forgo litigation of their disputes”). The Agreement, moreover, is supported by DISH’s promise of employment to Allen. In her Response, Allen contends that the Agreement is not supported by adequate consideration because “[t]here is no auarantee of employment.” But Allen cannot cite a single case applying Oklahoma law to support her argument. The Oklahoma Supreme Court has held that “[i]t is well recognized that contracts may be valid although performance on the part of one party may be optional, or conditional or contingent.” Petroleum Research Corp. v. Barnsdall Refining Corp., 105 P.2d 1047, 1051 (OkIa. 1940). That Allen’s employment was at-will does not nullify the Agreement. Oklahoma courts have enforced arbitration agreements supported by a promise of employment, even at-will employment. While Allen argues that the Agreement is “illusory” because “it appears that Defendant may alter or terminate the Agreement in its discretion upon notice to the employee,” she cannot cite a single piece of evidence to support this belief. See Response, p. 10. There is nothing in the Agreement that gives DISH the “unfettered” unilateral right to avoid its obligation to arbitrate. 12 See Lloydv. Northrop Grumman ys Corp., No. CIV-07-887-C, 2008 U.S. Dist. LEXIS 8148, *7 (W.D. OkIa. Feb. 4, 2008) (upholding mandatory arbitration agreement of an at-will employee despite employee’s argument that the agreement was a “contract of adhesion”; “Under Oklahoma law, an adhesion contract is not necessarily unconscionable or unenforceable.”) (citing In re Mako, Inc. 127 BR. 474, 477 (Bank ED. OkIa. 1991)). The arbitration agreements in the cases cited by Allen were found to be unconscionable because they were so “grossly one-sided.” Those agreements did not require both parties to submit their disputes to arbitration. That is not the case here. The Agreement obligates both Allen and DISH to submit their employment disputes to binding arbitration, and Oklahoma courts have enforced similar arbitration agreements. 13 See e.g, Pennington, 269 Fed.Appx. at 820 (10th Cir. 2008) (holding that “the reciprocal obligation to arbitrate provides the requisite consideration”); Pierce, 245 F.Supp.2d at 1215-16 (finding the dispute resolution policy “is supported by sufficient consideration in the form of the parties’ mutual promises to forgo litigation of their disputes”).
AGREED ORDER GRANTING MOTION TO STAY ACTION AND COMPEL ARBITRATION
On this date, the Parties' agreement regarding Defendant’s Motion to Stay Action and Compel Arbitration and Request for Attorneys’ Fees and Costs (the “Motion”) came before the Court. The Court, having considered the Parties’ agreement that Plaintiffs claims should be arbitrated in accordance with the mandatory arbitration agreement and that these proceedings should be stayed pending arbitration, is of the opinion that the Motion should be granted. It is, therefore, ORDERED, that the Motion is granted and all of Plaintiff’s claims against Defendant shall be and are hereby referred to final and binding arbitration; ORDERED, that the arbitration shall be held in accordance with the terms of the mandatory arbitration agreement executed by Plaintiff; ORDERED, that proceedings before this Court shall be stayed pending final and binding arbitration of the Plaintiff’s claims against Defendant; and ORDERED, that Plaintiff and Defendant each bear their own attorneys’ fees and costs incurred in connection with the Motion.
NOTICE OF DISPOSITION DOCKET Pursuant to 12 Oklahoma Statutes Section 1083 and Rule 9 of the Supreme Court Rules for the District Courts, NOTICE IS HEREBY GIVEN that the above case is scheduled for disposition for failure to prosecute on the above Judge’s disposition docket to be held on August 27, 2013 at 1:30 PM in Courtroom 713. THIS CASE WILL BE DISMISSED WITHOUT PREJUDICE by the Court unless counsel appears and shows good cause why the case should be allowed to remain on the docket.
ORDER OF DISMISSAL FOR FAILURE TO PROSECUTE The above case came on for hearing on Tuesday, August 27, 2013 on this Court’s disposition docket pursuant to notice to the parties as shown in the court file. It appears that this case has not been diligently prosecuted, and good cause has not been shown for this lack of prosecution. IT IS THEREFORE ORDERED that this case is dismissed without prejudice pursuant to Rule 9 of the Supreme Court Rules for the District Courts and 12 Oklahoma Statutes Section 1083.
Outcome: Stayed pending final and binding arbitration of the Plaintiff’s claims against Defendant. Dismissed without prejudice.