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House v. Rent-A-Center Franchising International, Inc.

United States District Court, S.D. West Virginia, Huntington Division

December 21, 2016

ERIC HOUSE, and MARQUEL ALI Plaintiffs,
v.
RENT-A-CENTER FRANCHISING INTERNATIONAL, INC., Defendant.

          MEMORANDUM OPINION AND ORDER

          ROBERT C. CHAMBERS, CHIEF JUDGE.

         Pending before the Court is Defendant Rent-A-Center, Inc.'s[1] Motion to Dismiss, or Stay the Case and Compel Arbitration (ECF No. 5). For the following reasons, the Court GRANTS the Motion to Compel Arbitration and DISMISSES this case without prejudice pending arbitration.

         I. Background

         Plaintiffs both work at Defendant's Rent-A-Center store in Huntington, West Virginia. See Pls.' Compl., ECF No. 1, at ¶ 9. Plaintiffs' claims revolve around a series of alleged racial discriminatory acts by Defendant's customers that Defendant has failed to prevent or rectify. In each instance, Plaintiffs allegedly reported the racist comments and conduct to Defendant's supervisors, and the supervisors, in turn, made reports to corporate headquarters. Id. at ¶ 15. However, Plaintiffs allege that they still fear for their safety and suffer emotional distress during their daily job duties. Id. at ¶ 29-30.

         Plaintiffs allege the following events as evidence to racial discrimination. When speaking to Plaintiff Eric House on the phone, a customer used “the racial epithet ‘ni**er' and threated (sic) to travel to the store and ‘kill all you ni**ers.'” Id. at ¶ 14. After informing Defendant about this conversation, Plaintiffs were told they would have to continue to conduct business with these customers. Id. at ¶ 16. Plaintiff Marquel Ali came to work one day and saw a burned couch sitting in front of the store with the letters “KKK” painted on the wall above it. Id. at ¶ 17. Plaintiffs filed a police report and internal report with Defendant following the incident. Id. at ¶ 18. Defendant allegedly told Plaintiff Ali that it would resolve the matter but as of the complaint, has not taken action. Id. at ¶ 21. Plaintiff House allegedly feared for his safety when he saw two white men enter the store openly carrying pistols. Id. at ¶ 22. He reported the incident to corporate headquarters. Id. On June 20, 2016, another burned couch was discovered outside Defendant's store, resulting in another police report. Id. at ¶ 24.

         Plaintiffs argue that they have continued to face racial discrimination and harassment that other employees do not experience. Id. at ¶ 28. Although Plaintiffs have reported these incidents to Defendant, Plaintiffs allege that Defendant has failed to investigate, take action, and ensure the safety of Plaintiffs and like-situated employees. Id. at ¶¶ 27, 30. As a result, Plaintiffs have suffered emotional distress and consider Defendant's store a hostile working environment. Id. at ¶¶ 29, 44. Plaintiffs filed suit with this Court on July 20, 2016 asking for injunctive relief, actual damages, compensatory damages, punitive damages, and attorneys' fees and costs. Defendant subsequently filed its motion to dismiss and to compel arbitration.

         II. Legal Standard

         Defendant's motion is brought pursuant to the Federal Arbitration Act (FAA) to compel arbitration.[2] 9 U.S.C. § 1, et seq. The FAA specifies that a written arbitration agreement “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. Federal courts can invalidate an arbitration agreement, however, by applying traditional contract defenses such as “fraud, duress, or unconscionability … without contravening § 2.” Doctor's Assocs., Inc. v. Casarotto, 517 U.S. 681, 687 (1996). If a person subject to an arbitration agreement brings a civil suit before a federal district court, “the court in which such suit is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had.” 9 U.S.C. § 3.

         A party can compel arbitration by demonstrating that: (1) a dispute exists between the parties; (2) a written arbitration agreement covers that dispute; (3) the transaction relates to interstate commerce; and (4) the other party failed to arbitrate the dispute. See Adkins v. Labor Ready, Inc., 303 F.3d 496, 500-01 (4th Cir. 2002). “The FAA reflects a liberal federal policy favoring arbitration agreements.” Id. at 500 (internal quotation marks and citation omitted). A federal district court, therefore, must resolve any “ambiguities as to the scope of the arbitration clause itself … in favor of arbitration.” Volt Info. Scis. Inc. v. Bd. of Tr. of Leland Stanford Junior Univ., 489 U.S. 468, 476 (1989).

         III. Discussion

         In support of its motion, Defendant attached a declaration of Mr. Marc Tuckey, Defendant's Human Resources Director, who verified the signed documentation by both Plaintiffs regarding arbitration agreements. ECF No. 5-1. During the employment application process, Plaintiff House electronically signed the document that included an arbitration agreement on December 28, 2012, and Plaintiff Ali electronically signed the same on December 2, 2015. Id. at 20-21, 24-25. The agreement stated “that any and all claims and/or disputes, past, present or future, between me and the Company, arising out of or related to my … employment … shall be decided by an arbitrator through arbitration and not by way of court or jury trial.” Id. at 20, 24-25. In the middle of the paragraph, the agreement contains a delegation provision, specifying that “covered claims and/or disputes include any claim or controversy regarding this Arbitration Agreement or any portion of the Arbitration Agreement or its interpretation, enforceability, applicability, unconscionability, arbitrability or formation, or whether the Arbitration Agreement or any portion of it is void or voidable.” Id. at 20, 25. Before the signature, in all capital letters, the agreement warned the applicant “BY ELECTRONICALLY SIGNING BELOW, YOU ARE AGREEING THAT YOU HAVE CAREFULLY READ THIS ARBITRATION AGREEMENT AND ARE (sic) YOU ARE GIVING UP YOUR RIGHT TO A COURT OR JURY TRIAL, AND … YOU AND THE COMPANY ARE AGREEING TO ARBITRATE DISPUTES COVERED BY THIS ARBITRATION AGREEMENT.” Id.

         The Mutual Agreement to Arbitrate Claims (Mutual Agreement), which contains a more detailed description of Defendant's arbitration process, was physically signed by Plaintiff House on January 9, 2013 and electronically signed by Plaintiff Ali on December 17, 2015. See Id. at 5-9, 10-14. The Mutual Agreement is included as part of the documentation employees must review and agree to during the onboarding process. Id. at 2. Under the heading Arbitration Procedures, the agreement again contains a delegation provision, stating that “[t]he Arbitrator, and not any federal, state, or local court or agency, shall have exclusive authority to resolve any dispute relating to the interpretation, applicability, enforceability or formation of this Agreement including, but not limited to any claim that all or part of this Agreement is void or voidable.” Id. at 7, 12. Before the signature of this document, the agreement warns in all capital letters that applicants are waiving “our rights to a jury trial” and had “been given the opportunity to discuss this agreement with my private legal counsel.” Id. at 9, 14.

         Plaintiffs argue that these agreements to arbitrate should not be enforced for a variety of reasons. First, Plaintiffs challenge the timeliness of Defendant's motion. Second, Plaintiffs attack the applicability of the agreement over claims brought under § 1981 for racial discrimination in the workplace.[3] Third, Plaintiffs challenge the delegation provision affording the arbitrator the ability to determine the enforceability of the agreement.[4] Plaintiffs also assert the alleged lack of consideration, the procedural and substantive unconscionability of the agreement, and a constitutional right to a jury to prevent the enforcement of the agreement.

         This Court must first determine whether Defendant's motion is timely and allowed to be considered. Finding that it is, the Court follows the Supreme Court's guidance from Rent-A-Center, West, Inc. v. Jackson to determine ...


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