United States District Court, D. Hawaii
RAYMOND P. GABRIEL, Plaintiff,
SECURITAS SECURITY SERVICES USA, INC., Defendant.
FINDINGS AND RECOMMENDATION TO GRANT DEFENDANT
SECURITAS SECURITY SERVICES USA, INC.'S MOTION TO COMPEL
ARBITRATION AND TO STAY THIS LITIGATION
RICHARD L. PUGLISI, UNITED STATES MAGISTRATE JUDGE
the Court is Securitas Security Services USA, Inc.'s
Motion to Compel Arbitration (“Motion”). See ECF
No. 30. Plaintiff filed an Opposition on March 11, 2019.
See ECF No. 33. Defendant filed its Reply on March
18, 2019. See ECF No. 34. The Court found this
matter suitable for disposition without a hearing pursuant to
Local Rule 7.2(d). See ECF No. 31. After careful
consideration of the filings of the parties and the relevant
legal authority, the Court FINDS AND RECOMMENDS that
Defendant's Motion be GRANTED and that this litigation be
STAYED pending arbitration.
an employment discrimination case based on alleged violations
of the Americans with Disabilities Act. Plaintiff was hired
by Defendant in 2012, and was terminated in 2016. ECF No. 1
¶¶ 3, 4, 8, 14. Prior to his employment, Plaintiff
signed a Dispute Resolution Agreement
(“Agreement”), which “applies to any
dispute arising out of or related to Employee's
employment, or termination of employment.” ECF No.
30-3. The Agreement applies “to the resolution of
disputes that otherwise would be resolved in a court of
law” and “requires all such disputes to be
resolved only by an arbitrator through final and binding
arbitration and not by way of court or jury trial.” ECF
No. 30-3. The Agreement also expressly states that it applies
to claims arising under the Americans with Disabilities Act.
Id. The Agreement contains an affirmative statement
that Plaintiff has read and understands all of the terms and
was signed by Plaintiff and a witness. Id.
filed this action on November 6, 2017. ECF No. 1. Defendant
filed its Answer on December 27, 2017, which made no
reference to the Agreement. See ECF No. 8. At a
Status Conference before the district judge on February 14,
2019, it appears that Defendant raised the issue of
arbitration for the first time. ECF No. 26. The present
Motion followed. This case is set for trial on May 13, 2019.
See ECF No. 20.
Federal Arbitration Act (“FAA”), 9 U.S.C. §
1 et seq., provides that written arbitration agreements
“shall be valid, irrevocable, and enforceable, save
upon such grounds as exist at law or equity for the
revocation of any contract.” 9 U.S.C. § 2;
Circuit City Stores, Inc. v. Adams, 532 U.S. 105,
114 (2001) (holding that the FAA is not limited to commercial
contracts but also includes employment contracts). The FAA
provides that “any doubts concerning the scope of
arbitrable issues should be resolved in favor of arbitration,
whether the problem at hand is the construction of the
contract language itself or an allegation of waiver, delay,
or a like defense to arbitrability.” Moses H. Cone
Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1,
24-25 (1983); see also Lowden v. T-Mobile USA,
Inc., 512 F.3d 1213, 1217 (9th Cir. 2008)
(“Congress enacted the FAA more than eighty years ago
to advance the federal policy favoring arbitration
deciding whether to compel arbitration, “the court must
determine (1) whether a valid agreement to arbitrate exists
and, if it does, (2) whether the agreement encompasses the
dispute at issue.” Lowden, 512 F.3d at 1217
(quotation and citation omitted). “If the answer is yes
to both questions, the court must enforce the
agreement.” Lifescan, Inc. v. Premier Diabetic
Servs., Inc., 363 F.3d 1010, 1012 (9th Cir. 2004)
(citations omitted). To determine whether a valid arbitration
agreement exists, the court must apply “ordinary
state-law principles that govern the formation of
contracts.” Norcia v. Samsung Telecomms. Am.,
LLC, 845 F.3d 1279, 1283 (9th Cir. 2017) (quoting
First Options of Chi., Inc. v. Kaplan, 514 U.S. 938,
944 (1995)). In making this determination, the Court must
also consider “what is unconscionable and unenforceable
under . . . state law.” Lowden, 512 F.3d at
Hawaii law, a valid arbitration agreement must be in writing,
reflect an unambiguous intent to submit disputes to
arbitration, and be supported by consideration. Siopes v.
Kaiser Found. Health Plan, Inc., 312 P.3d 869, 878 (Haw.
2013). Plaintiff does not dispute that the Agreement is in
writing, that the parties intended to submit all employment
disputes to arbitration, and that the Agreement was supported
by consideration. See ECF No. 33. However, Plaintiff
argues that the Agreement cannot be enforced because it is
unconscionable. Id. “Hawaii courts recognize
unconscionability as a defense to enforcement of an
arbitration agreement.” S. Glazer's Wine &
Spirits, LLC v. Denyer, No. CV 17-00407 JMS-RLP, 2017 WL
6417810, at *7 (D. Haw. Dec. 15, 2017) (citing Gabriel v.
Island Pac. Acad., Inc., 400 P.3d 526, 537-38 (Haw.
2017)). Under Hawaii law, “a determination of
unconscionability requires a showing that the contract was
both procedurally and substantively unconscionable when
made.” Balogh v. Balogh, 332 P.3d 631, 643
(Haw. 2014) (citation omitted); see also Branco v.
Norwest Bank Minn., N.A., 381 F.Supp.2d 1274, 1280-81
(D. Haw. 2005) (discussing unconscionability under Hawaii
law). Here, Plaintiff argues that the Agreement is
procedurally unconscionable because the print of the
Agreement is unreasonably small and substantively
unconscionable because Plaintiff is required to pay for some
arbitration costs. Id. The Court disagrees.
the Court finds that the Agreement is not procedurally
unconscionable based on the small print. Courts may consider
“the use of fine print in the contract” as one
factor in determining procedural unconscionability. See
Narayan v. The Ritz-Carlton Dev. Co., Inc., 400 P.3d
544, 552 (Haw. 2017) (citation omitted). However, the facts
of this case do not support such a finding. Although the
Agreement appears to be a standard form in small print, the
Agreement is titled “DISPUTE RESOLUTION
AGREEMENT” in all capital letters, which is repeated at
the bottom of the document next to Plaintiff's signature.
ECF No. 30-3. The Agreement contains eight separate numbered
paragraphs detailing the agreement to arbitrate. Id.
Although Plaintiff's Declaration states that he was not
able to read the document on the date he signed it because of
the small print, he does not dispute that he did sign it. ECF
No. 33-3 ¶ 3. Plaintiff's Declaration states that he
was not asked if he could read the document or if he
understood it prior to signing, but the Agreement contains
the statement “I HAVE READ AND UNDERSTAND AND AGREE TO
ALL OF THE TERMS CONTAINED IN THIS DISPUTE RESOLUTION
AGREEMENT, ” in all capital letters next to
Plaintiff's signature. See ECF No. 33-3 ¶
3; ECF No. 30-3. Plaintiff does not dispute that he was given
an opportunity to review the Agreement before he signed it.
See ECF No. 33-3. Based on the facts of this case,
the Court finds that the small print does not render this
Agreement procedurally unconscionable.
the Court finds that the Agreement is not substantively
unconscionable based on the cost provision. The Supreme Court
has rejected the position that an arbitration agreement is
unenforceable because it may potentially result in
substantial arbitration costs. Green Tree Fin.
Corp.-Alabama v. Randolph, 531 U.S. 79, 89 (2000). In
that case, the arbitration agreement was silent as to costs
and the Supreme Court held that the possibility that one
party “will be saddled with prohibitive costs is too
speculative to justify the invalidation of an arbitration
agreement.” Id. at 91. The Hawaii Supreme
Court has rejected a per se rule that cost-splitting
provisions are unconscionable and has held that
“whether cost-splitting in arbitration is
unconscionable depends on the facts of each case.”
Gabriel v. Island Pac. Acad., Inc., 400 P.3d 526,
538 (Haw. 2017). Here, the cost provision in the Agreement
provides that Defendant will pay the arbitrator's and the
arbitration fees “where required by law, ” and if
Defendant is not required to pay by law, the fees “will
be apportioned between the parties” in accordance with
the law by the arbitrator. ECF No. 30-3. The Court notes that
the Agreement provides that the arbitration will be conducted
within 45 miles of where Plaintiff resides and will be
conducted by an attorney or a retired judge mutually agreed
to by the parties. Id. Plaintiff's Declaration
states that paying for arbitration will be a hardship for him
because his gross income is approximately $17, 000, in
addition to social security and retirement benefits. ECF No.
33-1 ¶ 5. Looking at the facts of this case, the Court
finds that Plaintiff has failed to establish substantive
unconscionability based on cost. The Agreement's
provisions do not necessarily suggest that the cost of
arbitration will be prohibitive. The Agreement requires the
arbitration to be conducted locally and does not require the
parties to use any particular administrative service, which
may aid in keeping the costs low. Based on these facts, the
Court finds that the Agreement is not unconscionable based on
the cost provision. Because Plaintiff has failed to
demonstrate that the Agreement is unconscionable, the Court
FINDS AND RECOMMENDS that the district court GRANT
provides that the district court shall stay any pending
litigation until arbitration has been held in accordance with
the terms of the arbitration agreement. See 9 U.S.C.
§ 3. Accordingly, the Court RECOMMENDS that the district
court STAY this action pending arbitration and DIRECT the
parties to file a status report regarding arbitration no
later than September 2, 2019.
accordance with the foregoing, the Court FINDS that a valid
and enforceable arbitration agreement exists and RECOMMENDS
that the district court GRANT Defendant Securitas Security
Services USA, Inc.'s Motion to Compel Arbitration, STAY
this litigation pending arbitration, and DIRECT the ...