Carson v. Higbee Co ( 2005 )


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  •                                                        United States Court of Appeals
                                                                    Fifth Circuit
                                                                 F I L E D
                   IN THE UNITED STATES COURT OF APPEALS
                            FOR THE FIFTH CIRCUIT              September 30, 2005
    
                          ))))))))))))))))))))))))))         Charles R. Fulbruge III
                                                                     Clerk
                                No. 04-60572
    
                          ))))))))))))))))))))))))))
    
                              VERA P. CARSON,
    
                            Plaintiff–Appellee,
    
                                     v.
    
                       HIGBEE COMPANY; WILLIAM CARR,
    
                           Defendants–Appellants.
    
    
               Appeal from the United States District Court
                 for the Southern District of Mississippi
    
    
    Before SMITH, DENNIS, and PRADO, Circuit Judges.
    
    PER CURIAM:*
    
         Higbee Company d/b/a Dillard’s (“the Company” or
    
    “Dillard’s”) and William Carr (collectively, “Defendants”) appeal
    
    the district court’s denial of their motion to compel
    
    arbitration.   We reverse and remand.
    
                                      I.
    
         Vera Carson began working at Dillard’s as a sales associate
    
    in 1993 and was eventually promoted to the position of assistant
    
    
    
         *
           Pursuant to 5TH CIRCUIT RULE 47.5, the court has determined
    that this opinion should not be published and is not precedent
    except under the limited circumstances set forth in 5TH CIRCUIT
    RULE 47.5.4.
    
                                      1
    sales manager.   She was still working in that position when in
    
    2001, the Company adopted an arbitration policy for employment-
    
    related disputes.   That year, the Company held a management
    
    meeting to discuss the policy.    Carson attended.
    
         During the 2001 meeting, the store manager, William Carr,
    
    showed the attendees two documents related to the Company’s new
    
    arbitration policy: the Rules of Arbitration and an
    
    acknowledgment form.    The acknowledgment form was labeled
    
    “Acknowledgment of Receipt of Rules of Arbitration.”    It
    
    described the purposes of the arbitration policy and contained
    
    the following notice provision:
    
         Effective immediately, all employees (as hereinafter
         defined) of Dillard’s, Inc., its affiliates, subsidiaries
         and Limited Liability Partnerships (the “Company”) shall
         be subject to the RULES OF ARBITRATION (the “Rules”)
         described below. Employees are deemed to have agreed to
         the provisions of the Rules by virtue of accepting
         employment with the company and/or continuing employment
         therewith.
    
    (Emphasis added).   Below the notice provision was a space for
    
    both the Company employee’s signature as well as that of a
    
    Company representative.    The notice provision was printed in the
    
    same font size, but different font style, as the rest of the
    
    acknowledgment form.1
    
         Carson continued her employment with Dillard’s after the
    
    Rules of Arbitration were implemented.    During this time, she
    
    
         1
          The notice provision was in roman type; the rest of the
    acknowledgment form was italicized.
    
                                      2
    dealt with the acknowledgment form on a daily basis.   A copy of
    
    the form was on display in the Company’s personnel office.     In
    
    addition, Carson assisted Dillard’s in obtaining signatures on
    
    the acknowledgment form from other employees and signed several
    
    forms herself as a witness to other signatures.
    
         Nevertheless, Carson testified that she could not remember
    
    whether she signed the acknowledgment form.   However, she did not
    
    refuse to sign the form either verbally or in writing.2    Carson
    
    also claims she was told that the arbitration policy would be
    
    optional for employees in management positions.
    
         In March 2002, Carson applied for and was denied the
    
    position of assistant store manager.   The following month, she
    
    brought suit against the Company and Carr, alleging claims of sex
    
    and race discrimination.
    
         The Defendants filed a motion to compel arbitration, which
    
    the district court denied.   The Defendants timely appealed.
    
                                    II.
    
         We review the denial of a motion to compel arbitration de
    
    novo.    Freudensprung v. Offshore Technical Servs., Inc., 
    379 F.3d 327
    , 337 (5th Cir. 2004).    Where, as here, the issue is whether
    
    the parties have a valid and enforceable agreement to arbitrate,
    
    courts apply the contract law of the state governing the
    
         2
          Some employees did refuse to sign the acknowledgment form.
    Those employees were not terminated, nor is there any evidence
    that they suffered adverse employment-related consequences for
    their failure to sign.
    
                                      3
    agreement.     Wash. Mut. Fin. Group, LLC v. Bailey, 
    364 F.3d 260
    ,
    
    264 (5th Cir. 2004).3    Mississippi contract law applies here.4
    
         Carson raises three issues on appeal: First, she claims that
    
    she did not assent to arbitration.     Second, she claims that if an
    
    agreement to arbitrate does exist, that agreement is
    
    unconscionable.    Finally, Carson claims that any agreement to
    
    arbitrate was procured by fraudulent inducement.    We will address
    
    each argument in turn.
    
                                      A.
    
         Arbitration must proceed by agreement: “[A]rbitration is a
    
    matter of contract and a party cannot be required to submit to
    
    arbitration any dispute which he has not agreed so to submit.”
    
    May v. Higbee Co., 
    372 F.3d 757
    , 763 (5th Cir. 2004) (quoting
    
    AT&T Techs., Inc. v. Communications Workers of Am., 
    475 U.S. 643
    ,
    
    648 (1986)).    Carson’s first argument is that no agreement to
    
    arbitrate exists in this case.    Specifically, she makes two
    
    claims: First, Carson argues that “there are no actions which
    
    
         3
          See also 9 U.S.C. § 2 (stating that arbitration agreements
    are enforceable “save upon such grounds as exist at law or in
    equity for the revocation of any contract”); Doctor’s Assocs.,
    Inc. v. Casarotto, 
    517 U.S. 681
    , 687 (1996) (“[G]enerally
    applicable [state-law] contract defenses, such as fraud, duress,
    or unconscionability, may be applied to invalidate arbitration
    agreements without contravening § 2.”).
         4
          Both Carson and Carr are citizens of Mississippi, and
    Mississippi is the site of the controversy. See Boardman v.
    United Servs. Auto. Ass’n, 
    470 So. 2d 1024
    , 1031 (Miss. 1985)
    (explaining that Mississippi follows the “center of gravity”
    approach to choice-of-law issues).
    
                                       4
    indicate that [she] intended to be bound by the arbitration
    
    agreement”; that is, there was no written acceptance of the
    
    arbitration policy, nor was her continued employment with
    
    Dillard’s enough to manifest assent.   Second, Carson argues that
    
    even if she had signed the acknowledgment form, it is an
    
    ambiguous document, and thus parol evidence may be introduced to
    
    clarify its meaning.   According to Carson, she was told that the
    
    arbitration policy would be optional for management employees.
    
    Thus, she argues, her continued employment did not constitute
    
    acceptance of the contract.
    
         We must reject both of these claims in light of May v.
    
    Higbee Company, 
    372 F.3d 757
     (5th Cir. 2004), issued shortly
    
    before the district court ruled in this case.5    That case is
    
    indistinguishable: it involved the same defendants, the same
    
    arbitration policy and acknowledgment form, and a plaintiff
    
    similarly situated to Carson.
    
         In May, a panel of this court rejected the same argument
    
    that Carson makes here.   May, 372 F.3d at 764.   First, the court
    
    held that the acknowledgment form was not ambiguous, explaining,
    
         Properly construed, . . . the Acknowledgment Form and
         May’s signature thereon did not by themselves constitute
         May’s   assent  to   arbitration.      By  signing   the
         Acknowledgment Form, May indicated that she had received
    
    
         5
          See also Marino v. Dillard’s, Inc., 
    413 F.3d 530
    , 533 (5th
    Cir. 2005) (“As in May, the Acknowledgment Form here is clear in
    advising Marino . . . of the means of consent, i.e., Marino’s
    continued employment with Dillard’s.”).
    
                                     5
           the Rules, but the signature did not all by itself bind
           May to the arbitration program. Rather, May became bound
           through her subsequent conduct, for the Acknowledgment
           Form unambiguously notified May that “[e]mployees are
           deemed to have agreed to the provisions of the Rules by
           virtue of . . . continuing employment [with Dillard’s].”
    
    Id. (second ellipsis in original).        Thus, the court explained,
    
    the acknowledgment form “notified May of how she would manifest
    
    her assent to be bound”——by her continued employment.        Id.
    
    Furthermore, May undisputedly continued her employment with
    
    Dillard’s, manifesting her assent to be bound by the Rules of
    
    Arbitration.       Id.   Therefore, the court held, the district court
    
    had erred in looking to parol evidence “to vary the terms of the
    
    unambiguous writings that were before it.”        Id.
    
           The May court also noted that “Mississippi courts have long
    
    held that a party’s conduct may manifest assent to an agreement.”6
    
    And even though there was no Mississippi case specifically
    
    addressing continued employment in the context of arbitration
    
    agreements,7 the May court “[saw] no reason to think that the
    
    Mississippi courts would reject the general rule when it comes to
    
    this particular species of assent-manifesting conduct.”        Id. at
    
    765.       To buttress that conclusion, the May court pointed out that
    
    
           6
          May, 372 F.3d at 764 (citing Edwards v. Wurster Oil Co.,
    
    688 So. 2d 772
    , 775 (Miss. 1997); Misso v. Nat’l Bank of
    Commerce, 
    95 So. 2d 124
     (Miss. 1957)).
           7
          Our more recent research continues to reveal no
    Mississippi case addressing continued employment in the context
    of arbitration agreements.
    
                                          6
    many other courts had “held under the law of various states that
    
    a party may manifest assent through continued employment.”8
    
    Because the acknowledgment form was not ambiguous and May
    
    assented to the Rules of Arbitration through her continued
    
    employment, this court reversed the district court’s denial of
    
    the Company’s motion to compel arbitration.         Id. at 765.
    
         Carson attempts to distinguish May by pointing out that the
    
    plaintiff in that case admitted to having signed the
    
    acknowledgment form.   That fact, however was irrelevant to the
    
    court’s decision in May: it was May’s continued employment——not
    
    her signature——that manifested her assent to be bound by the
    
    arbitration policy.    Id. at 764.       Thus, the factual difference
    
    between this case and May changes nothing.        Carson, like May,
    
    manifested her assent to arbitration by continuing her employment
    
    with Dillard’s.   Her first argument is rejected.
    
                                     B.
    
         Carson next argues that the arbitration agreement is
    
    unconscionable and therefore invalid.        Mississippi courts
    
    recognize two types of unconscionability: procedural and
    
    substantive.   East Ford, Inc. v. Taylor, 
    826 So. 2d 709
    , 714
    
         8
          May, 372 F.3d at 765 (citing Gutman v. Baldwin Corp., No.
    Civ. A 02-CV-7971, 
    2002 WL 32107938
    , at *4 (E.D. Pa. Nov. 22,
    2002); Lang v. Burlington N. R.R. Co., 
    835 F. Supp. 1104
    , 1105–06
    (D. Minn. 1993); Baptist Health Sys., Inc. v. Mack, 
    860 So. 2d 1265
    , 1273–74 (Ala. 2003); In re Haliburton Co., 
    80 S.W.3d 566
    ,
    568–69 (Tex. 2002); Asmus v. Pac. Bell, 
    999 P.2d 71
    , 79 (Cal.
    2002)).
    
                                         7
    (Miss. 2002).   Carson argues both types of unconscionability
    
    here.
    
                                      1.
    
         Carson may prove that the agreement to arbitrate is
    
    procedurally unconscionable by showing “a lack of knowledge, lack
    
    of voluntariness, inconspicuous print, the use of complex
    
    legalistic language, disparity in sophistication or bargaining
    
    power of the parties and/or a lack of opportunity to study the
    
    contract and inquire about the contract terms.”     East Ford, 
    826 So. 2d
     at 714 (internal quotation marks omitted).    She has not
    
    done so.
    
         Carson’s procedural unconscionability arguments can be
    
    summarized as follows: Carson did not voluntarily enter into the
    
    arbitration agreement because it was a contract of adhesion,
    
    unilaterally imposed on her by the Company; the provision of the
    
    acknowledgment form notifying the employee that continued
    
    employment would constitute acceptance of the arbitration
    
    contract was “an inconspicuous statement within the document[] in
    
    legalistic language”; there was a “lack of knowledge” by Carson
    
    of the contract terms because she did not have “the least
    
    opportunity to discuss or negotiate the . . . policy’s
    
    provisions”; and there was a disparity in bargaining power
    
    between Carson and the Company.
    
         Carson principally relies on East Ford, Inc. v. Taylor, 826
    
    
    
                                      
    8 So. 2d 709
     (Miss. 2002), to support these arguments.     In that
    
    case, Taylor filed suit against East Ford, alleging that East
    
    Ford had sold him a used truck that was represented to him as
    
    new.    Id. at 711.   When he bought the vehicle, Taylor signed a
    
    purchase agreement that contained an arbitration clause.      Id.
    
    After Taylor filed suit, East Ford moved to compel arbitration
    
    based on the contract clause.     Id.   The trial court found the
    
    arbitration agreement to be unconscionable, and the Mississippi
    
    Supreme Court affirmed.     Id.
    
           The East Ford court held that the arbitration clause at
    
    issue in that case was procedurally unconscionable because Taylor
    
    was not told of the arbitration provision before signing the
    
    contract; the font size of the provision was one-third the size
    
    of other terms of the contract; and the arbitration provision was
    
    not underlined or emphasized and did not otherwise alert the
    
    reader to its importance.     Id. at 714–17.   The facts of this case
    
    are not comparable.
    
           Here, Carson undoubtedly knew of the arbitration policy: she
    
    attended the 2001 meeting where Carr introduced the policy to
    
    Company employees; a copy of the acknowledgment form was on
    
    display in the Company personnel office; and Carson assisted
    
    Dillard’s in obtaining signed acknowledgment forms from other
    
    employees, even signing several forms herself as a witness.
    
    Moreover, the arbitration agreement in the acknowledgment form is
    
    
                                       9
    the entire contract.   In East Ford, by contrast, the arbitration
    
    agreement was just one provision of a contract for the sale of an
    
    automobile.    Here, the notice provision was in the same font size
    
    as the rest of the acknowledgment form and in a different font
    
    type; there, the arbitration provision was obscured.       Finally, as
    
    the East Ford court recognized, this court has previously held
    
    that contracts of adhesion are not automatically void.        Id. at
    
    716 (citing Hughes Training, Inc. v. Cook, 
    254 F.3d 588
    , 593 (5th
    
    Cir. 2001)).    East Ford is distinguishable.    The arbitration
    
    agreement is not procedurally unconscionable.
    
                                     2.
    
         Carson also argues that the arbitration agreement is
    
    substantively unconscionable.   Substantive unconscionability may
    
    be proven by showing that the terms of the arbitration agreement
    
    are oppressive.    East Ford, 
    826 So. 2d
     at 714.      “Substantively
    
    unconscionable clauses have been held to include waiver of choice
    
    of forum and waiver of certain remedies.”       Id.
    
         Carson again relies on East Ford to make her substantive
    
    unconscionability argument.   The court did not reach the issue of
    
    substantive unconscionability in that case, id. at 717, but
    
    suggested in a later case that the terms of the East Ford
    
    provision might have indeed been substantively unconscionable,
    
    see Russell v. Performance Toyota, Inc., 
    826 So. 2d 719
    , 726 n.1
    
    (Miss. 2002) (distinguishing East Ford from the case before the
    
                                     10
    court).
    
         The contract provision at issue in East Ford allowed East
    
    Ford to unilaterally rescind the arbitration agreement, while
    
    Taylor could only rescind the agreement if his Lemon Law rights
    
    were implicated.    East Ford, 
    826 So. 2d
     at 715; Russell, 
    826 So. 2d
     at 726 n.1.    Carson argues that the Company’s arbitration
    
    agreement is substantively unconscionable because it suffers from
    
    the same defect as the provision in East Ford.    Specifically, she
    
    claims that under the Rules of Arbitration, “nearly all
    
    conceivable employee rights to a judicial forum are waived,”
    
    while the Company is permitted to seek judicial relief in cases
    
    involving unfair competition, the use or disclosure of trade
    
    secrets or confidential information, and potential criminal
    
    claims.
    
         This argument ignores the record evidence showing that many
    
    employee claims are, in fact, not covered by the agreement.      For
    
    example, claims under ERISA, wage claims not brought under a
    
    statute or ordinance, and claims precluded from arbitration under
    
    the National Labor Relations Act may be brought in a judicial
    
    forum.    Under the agreement at issue here, both the Company and
    
    the employee retain the right to a judicial forum in certain
    
    instances; thus, this agreement is wholly unlike that in East
    
    Ford, where East Ford could unilaterally rescind the agreement in
    
    any circumstance.    The agreement here is not substantively
    
    
                                     11
    unconscionable.
    
                                    C.
    
         Finally, Carson argues that she was fraudulently induced to
    
    enter into the arbitration agreement.   Carson failed to raise
    
    this argument before the district court; therefore, we will not
    
    consider it here.   See, e.g., Alford v. Dean Witter Reynolds,
    
    Inc., 
    975 F.2d 1161
    , 1163 (5th Cir. 1992) (refusing the consider
    
    a fraudulent inducement claim raised for the first time on
    
    appeal).
    
                                  III.
    
         For the foregoing reasons, the district court erred in
    
    denying the Company’s motion to compel arbitration.   The judgment
    
    is reversed.
    
         REVERSED and REMANDED.
    
    
    
    
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