Title: Holloman v. Circuit City

State: maryland

Issuer: Maryland Supreme Court

Document:

La’Tia Holloman v. Circuit City Stores, Inc., et al., No. 53, September Term, 2005.
CONTRACTS – ARBITRATION – ENFORCEABILITY
Petitioner filed a complaint in the Circuit Court for Prince George’s County against the
respondent, alleging sexual discrimination.  Upon the respondent’s motion, the Circuit Court
compelled arbitration and stayed the judicial proceedings.  Petitioner sought review of the
Court of Special Appeals judgment affirming the enforceability of the arbitration clause.  The
Court of Appeals held that the arbitration agreement at issue was enforceable because its
terms provided for consideration such that it was not illusory.  Moreover, the Court
determined that Petitioner waived her constitutional right to a jury trial and that her
submission of her statutory claims to arbitration did not deprive her of her substantive rights.
IN THE COURT OF APPEALS OF
MARYLAND
No. 53 
September Term, 2005
LA’TIA HOLLOMAN
v.
CIRCUIT CITY STORES, INC., ET AL.
Bell, C.J.
Raker
Wilner
Cathell
Harrell
Battaglia
Greene,
JJ.
Opinion by Battaglia, J.
Bell, C.J., and Greene, J., Dissent
Filed:   March 13, 2006
This case presents us with the task of delineating the scope and application of our
decision in Cheek v. United Healthcare of the Mid-Atlantic, Inc., 378 Md. 139, 835 A.2d 656
(2003), to an arbitration agreement between Circuit City Stores, Inc. (“Circuit City”) and one
of its former employees, La’Tia Holloman (“Holloman”), which governed all disputes that
arose during their employment relationship, in which Circuit City reserved the right to alter
or rescind the arbitration agreement on a single day of the year after thirty-days notice of the
impending change.  Holloman also asks this Court to consider whether she “knowingly and
voluntarily” waived her constitutional right to a jury trial and her substantive rights under
Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 200(e), et seq., Maryland Code (1957,
2003 Repl. Vol.), Art. 49B, which prohibits discrimination in employment, and the pertinent
provisions of the Prince George’s County Code when she signed the arbitration agreement.
Because we determine that the terms of the arbitration agreement provide consideration, we
hold that the arbitration agreement is enforceable under Cheek.  Moreover, we find that the
Court of Special Appeals did not err in concluding that Holloman waived her constitutional
right to a jury trial and that Holloman’s submission of her statutory claims to arbitration did
not deprive Holloman of her rights thereunder.  Therefore, we affirm the judgment of the
Court of Special Appeals.
Background
In September of 2001, Holloman applied for a job at Circuit City's store in Marlow
Heights, Maryland.  The first page of her employment application listed several "selection
tools" that Circuit City uses to determine which applicants to hire. One such prerequisite to
2
employment was Circuit City's "Dispute Resolution Agreement" (“arbitration agreement”),
which was described on the employment application as “requir[ing] you and Circuit City to
arbitrate certain legal disputes related to your application for employment or employment
with Circuit City.”  The application then added, "Circuit City will consider your application
only if this agreement is signed."
The arbitration agreement contained the following language pertinent to the case sub
judice: 
If you wish to be considered for employment you must read and
sign the following agreement. You will be considered as an
applicant when you have signed the Agreement. Included with
this application is the Circuit City Dispute Resolution Rules and
Procedures. You should familiarize yourself with these rules and
procedures prior to signing the Agreement. If the Rules and
Procedures are not included in this booklet you must request a
copy from a Circuit City representative prior to signing the
Agreement. You will note that if you sign at this time you do
have three (3) days to withdraw your consent. You may, of
course, take the package with you and return with it signed, if
you wish to continue your application process. 
* * *
[B]oth Circuit City and I agree to settle any and all previously
unasserted claims, disputes or controversies arising out of or
relating to my application or candidacy for employment,
employment and/or cessation of employment with Circuit City,
exclusively by final and binding arbitration before a neutral
Arbitrator. . . . 
I understand that if I do file a lawsuit regarding a dispute arising
out of or relating to my application or candidacy for
employment, employment or cessation of employment, Circuit
City may use this Agreement in support of its request to the
court to dismiss the lawsuit and require me instead to use
3
arbitration.
* * *
I further agree that if I commence an arbitration, it will be
conducted in accordance with the "Circuit City Dispute
Resolution Rules and Procedures." 
I understand that neither this Agreement nor the Dispute
Resolution Rules and Procedures form a contract of employment
between Circuit City and me. I further understand that my
signature to this Agreement in no way guarantees that Circuit
City will offer me employment. If Circuit City does offer me
employment and I become employed at Circuit City, this
Agreement in no way alters the "at-will" status of my
employment. I understand that my employment, compensation
and terms and conditions of employment can be altered or
terminated, with or without cause, and with or without notice, at
any time, at the option of either Circuit City or myself.
Holloman initialed the page on which those provisions appear.  At the top of the next
page, which Holloman signed at the bottom, the arbitration agreement provided: 
The Dispute Resolution Agreement and the Dispute Resolution
Rules and Procedures affect your legal rights. By signing this
Agreement, you acknowledge receipt of the Dispute Resolution
Rules and Procedures. You may wish to seek legal advice before
signing this Dispute Resolution Agreement.
 
* * *
This Agreement will be enforceable through the application
process, my employment, and thereafter with respect to any such
claims arising from or relating to my application or candidacy
for employment, employment or cessation of employment with
Circuit City. We then must arbitrate all such employment-related
claims, and we may not file a lawsuit in court. 
A Circuit City representative signed the arbitration agreement on the company's behalf.
The nineteen Dispute Resolution Rules and Procedures appear in a separate twelve-
1
This Rule was modified in 2003 to change the annual alteration date from
December 31 to March 1, with the date by which notice of any modification  must be
provided changed from December 1 to February 1.  Because the changes made in 2003 did
not substantively change the provisions at issue in the present case, our analysis is not
dependent on a determination of whether the original arbitration agreement or the revised
version from 2003 applies to the case sub judice.  
4
page document contained within Circuit City’s application packet.  Holloman's argument on
appeal focuses on Rule 19, which at the time Holloman was hired1 provided: 
Rule 19. TERMINATION OR MODIFICATION OF DISPUTE
RESOLUTION AGREEMENT OR DISPUTE RESOLUTION
RULES AND PROCEDURES. 
Circuit City may alter or terminate the Agreement and these
Dispute Resolution Rules and Procedures on December 31 of
any year upon giving 30 calendar days written notice to
Associates, provided that all claims arising before alteration or
termination shall be subject to the Agreement and corresponding
Dispute Resolution Rules and Procedures in effect at the time
the Arbitration Request Form and accompanying filing fee, or
Request for Waiver of Filing Fee is received by the Company.
Notice may be given by posting a written notice by December 1
of each year at all Circuit City locations (including locations of
affiliated companies).  A copy of the text of any modification to
the Agreement or Rules and Procedures will be published in the
Applicant Packet, which will be available at such locations after
December 31 of each year. 
Subsequent to her decision to terminate her employment relationship with Circuit City
in August of 2002, Holloman filed charges of sexual harassment with the EEOC and received
a “right to sue” letter.  She then filed a six-count complaint in the Circuit Court for Prince
George’s County in December of 2003 alleging sexual discrimination, to which Circuit City
responded by motion to compel arbitration of Holloman’s claims.  The Circuit Court granted
5
Circuit City’s motion, ordering arbitration and staying the judicial proceedings.
Holloman thereafter initiated arbitration against Circuit City and filed a notice of
appeal and a motion to stay the arbitration proceedings pending the appeal, which Circuit
City opposed.  After a hearing, the Circuit Court granted Holloman's petition for a stay
pending appeal.
The Court of Special Appeals, in a reported opinion, held that the notice requirement
in Circuit City’s arbitration agreement materially distinguished the arbitration agreement at
issue from the agreement in Cheek, 378 Md. 139, 835 A.2d 656 (2003), because Circuit
City’s obligation to give Holloman thirty-days notice prior to changing the terms of the
arbitration agreement provided consideration for its enforcement and because it effectively
bound Circuit City to its agreement to arbitrate for at least thirty days.  Holloman v. Circuit
City Stores Inc., 162 Md. App. 332, 338-40, 873 A.2d 1261, 1265 (2005).  The Court of
Special Appeals also concluded that there was no merit in Holloman’s contention that she
did not knowingly and voluntarily waive her rights to a jury trial or to relief under the
relevant provisions of Title VII of the Civil Rights Act of 1964, the Maryland Code, or the
Prince George’s County Code.
On June 20, 2005, Holloman filed a petition for writ of certiorari with this Court and
presented the following questions for our consideration:
1.  Whether the Court of Special Appeals incorrectly created an
exception to the holding of the Court of Appeals in Cheek v.
United Healthcare of the Mid-Atlantic, Inc., 378 Md. 139, 835
A.2d 656 (2003)?
2
There are only two issues before this Court in the case sub judice: the
application of the illusory promise analysis from Cheek v. United Healthcare of the Mid-
Atlantic, Inc., 378 Md. 139, 835 A.2d 656 (2003), and whether Ms. Holloman waived her
right to a jury trial through the arbitration agreement.  Despite the dissent’s efforts to interject
the issues of adhesion and unconscionability into this case, adhesion and unconscionability
are not properly before us as Ms. Holloman did not raise them in her petition to this Court
nor at any other point in the course of this litigation.
6
2.  Whether the Court of Special Appeals incorrectly determined
that an applicant can give a knowing and voluntary waiver of his
or her constitutional rights and substantive rights under
discrimination statutes even when an employer fails to provide
the applicant with the arbitration rules, which govern the
arbitration agreement?
On August 10, 2005, we granted the petition and issued the writ.  Holloman v. Circuit City
Stores, Inc., 388 Md. 404, 879 A.2d 1086 (2005).  Because we determine that consideration
exists to support the arbitration agreement, we hold that the arbitration agreement is
enforceable.  Moreover, we find that the Court of Special Appeals did not err in concluding
that Holloman waived her constitutional right to a trial by jury and that the arbitration
procedure in the case at bar did not infringe on Holloman’s substantive rights under federal,
state, or local discrimination statutes.  Therefore, we affirm the judgment of the Court of
Special Appeals.2
Standard of Review
“A trial court’s order to compel arbitration constitutes a final and appealable
judgment.”  Walther v. Sovereign Bank, 386 Md. 412, 422, 872 A.2d 735, 741 (2005), citing
Horsey v. Horsey, 329 Md. 392, 403, 620 A.2d 305, 311 (1993) (stating that “an order
7
compelling the parties before the trial court to submit their dispute to arbitration, thereby
denying all relief sought in the trial court and terminating the action there, is a final
appealable judgment”).  Our focus in reviewing the trial court’s order to compel arbitration
“‘extends only to a determination of the existence of an arbitration agreement.’” 
Walther, 386
Md. at 422, 872 A.2d at 741, quoting Allstate Ins. Co. v. Stinebaugh, 374 Md. 631, 645, 824
A.2d 87, 95 (2003).  The trial court’s decision as to whether a “particular dispute is subject
to arbitration is a conclusion of law, which we review de novo.  Walther, 386 Md. at 422, 872
A.2d at 741, citing Wells v. Chevy Chase Bank, F.S.B., 363 Md. 232, 250, 768 A.2d 620,
629-30 (2001).  
Discussion
Holloman argues that the arbitration agreement is invalid on its face because Circuit
City reserved the right to unilaterally terminate and modify its terms without the employee’s
consent, which renders the promise to arbitrate illusory.  Moreover, she asserts that the
appropriate concern with respect to arbitration agreements is not whether the employee was
notified of the change or that the changes can be made only within a limited time period, but,
rather whether the employee’s consent was required before the changes became effective.
Holloman contends that because Circuit City possessed the power to alter or rescind the
arbitration agreement, the agreement was not supported by consideration.  In this respect,
Holloman argues that the case at bar is identical to the situation presented to this Court in
Cheek, which mandates that the agreement be found unenforceable. 
8
Holloman also asserts that because Circuit City did not provide her with a copy of the
arbitration rules, she did not make a knowing and intelligent waiver of her constitutional
right to a jury trial or her substantive rights under Title VII of the Civil Rights Act of 1964,
Maryland Code (1957, 2003 Repl. Vol.), Article 49B, which governs discrimination in
employment, and the Prince George’s County Code.  
Conversely, Circuit City argues that the trial court and the Court of Special Appeals
correctly held that the arbitration agreement between Circuit City and Holloman was
enforceable.  According to Circuit City, the limited modification provision in the arbitration
agreement did not render the company’s promise to arbitrate non-binding.  Thus, Circuit City
states that its obligation to arbitrate constitutes consideration for the agreement.
Furthermore, Circuit City contends that Holloman is bound by the arbitration agreement
through her signature on the document, regardless of whether she read its terms.  Circuit City
also asserts that its rules governing arbitration are procedural in nature and cannot be
construed as waiving any substantive rights.  According to Circuit City, Holloman’s remedial
rights under Title VII of the Civil Rights Act of 1964, Maryland Code (1957, 2003 Repl.
Vol), Article 49B, or the Prince George’s County Code are not infringed through the use of
binding arbitration.  
Arbitration in Maryland is governed by the Maryland Uniform Arbitration Act
(“MAA”), Maryland Code (1974, 2002 Repl. Vol.), Section 3-201 through 3-234 of the
Courts and Judicial Proceedings Article, which was “purposefully meant to mirror the
9
language of [the Federal Arbitration Act, 9 U.S.C. §§ 1-14 (2000)].”  Walther, 386 Md. 423-
24, 872 A.2d at 742.  As we stated in Holmes v. Coverall North America, Inc., 336 Md. 534,
541, 649 A.2d 365, 368 (1994):
The Maryland Arbitration Act has been called the ‘State
analogue . . . to the Federal Arbitration Act.’  See Regina v.
Envirmech, 80 Md.App. 662, 667, 565 A.2d 693, 696 (1989).
The same policy favoring enforcement of arbitration agreements
is present in both our own and the federal acts.
We have previously described arbitration as “the process whereby parties voluntarily agree
to substitute a private tribunal for the public tribunal otherwise available to them.”  Walther,
386 Md. at 424, 872 A.2d at 743, quoting Cheek, 378 Md. at 146, 835 A.2d at 660, quoting
in turn Gold Coast Mall, Inc. v. Larmar Corp., 298 Md. 96, 103, 468 A.2d 91, 95 (1983). 
The issue of whether an agreement to arbitrate exists is governed by contract
principles.  Walther, 386 Md. at 425, 872 A.2d at 743, quoting Cheek, 378 Md. at 147, 835
A.2d at 661; see also Curtis G. Testerman Co. v. Buck, 340 Md. 569, 579, 667 A.2d 649, 654
(1995) (recognizing that “[a]rbitration is ‘consensual; a creature of contract’” and that “‘[i]n
the absence of an express arbitration agreement, no party may be compelled to submit to
arbitration in contravention of its right to legal process.’”), quoting Thomas J. Stipanowich,
Arbitration and the Multiparty Dispute: The Search for Workable Solutions, 72 Iowa L.Rev.
473, 476-77 (1987) (citations omitted).  In most instances, the determination of a contract’s
enforceability is decided by the existence of consideration, Cheek, 378 Md. at 147, 835 A.2d
at 661; Harford County v. Town of Bel Air, 348 Md. 363, 381, 704 A.2d 421, 430 (1998);
10
Chernick v. Chernick, 327 Md. 470, 479, 610 A.2d 770, 774 (1992); Peer v. First Federal
Savings and Loan Assoc. of Cumberland, 273 Md. 610, 614, 331 A.2d 299, 301 (1975);
Broaddus v. First Nat’l Bank, 161 Md. 116, 121, 155 A. 309, 311 (1931), which may be
established through evidence of “‘a benefit to the promisor or a detriment to the promisee.’”
Harford County, 348 Md. at 382, 704 A.2d at 430, quoting 
Vogelhut v. Kandel, 308 Md. 183,
191, 517 A.2d 1092, 1096 (1986). 
We have recognized that a binding promise may serve as consideration for another
promise.  Cheek, 378 Md. at 148, 835 A.2d at 661.  Unless the obligation is binding,
however, the requisite consideration does not exist to support a legally enforceable agreement
and it is considered illusory.  Id.; Tyler v. Capitol Indemnity Ins. Co., 206 Md. 129, 134, 110
A.2d 528, 530 (1954) (observing that “[i]f [an] option goes so far as to render illusory the
promise of the party given the option, there is indeed no sufficient consideration, and
therefore no contract . . .”).  We have previously described an “illusory promise” as
“appear[ing] to be a promise, but . . . not actually bind[ing] or obligat[ing] the promisor to
anything.”  Cheek, 378 Md. at 148, 835 A.2d at 662.  An illusory promise does not constitute
consideration to enforce a contract.  Id.
Holloman argues that because Circuit City reserved the ability to modify the
arbitration agreement without her consent, the agreement is unenforceable for lack of
consideration.  To this end, she relies upon our holding in Cheek, 378 Md. 139, 835 A.2d
656. 
11
In Cheek, Ronnie Cheek, the employee, entered into an arbitration agreement with
United Healthcare, his employer, which provided the following reservation of rights:
United Healthcare reserves the right to alter, amend, modify, or
revoke the Policy at its sole and absolute discretion at any time
with or without notice.  The senior executive of Human
Resources has the sole authority to alter, amend, modify, or
revoke the Policy.
Cheek, 378 Md. at 142-43, 835 A.2d at 658.  We determined that because United retained
the right to “‘alter, amend, modify, or revoke the [Employment Arbitration] Policy at its sole
and absolute discretion at any time with or without notice’ and without consent,” and as such
was not bound by the arbitration agreement, United Healthcare’s promise was illusory and
the agreement was  unenforceable for lack of consideration.  Id. at 149, 161, 835 A.2d at 663,
669 (emphasis added).  In so holding, we aligned ourselves with courts from other
jurisdictions that also have concluded that similar language was unenforceable for lack of
consideration.  See Dumais v. American Golf Corp., 299 F.3d 1216, 1219-20 (10th Cir. 2002)
(stating that because American Golf had the ability to alter the arbitration provisions at any
time, the promise to arbitrate was rendered illusory); Penn v. Ryan’s Family Steak Houses,
Inc., 269 F.3d 753, 759-60 (7th Cir. 2001) (construing a similar agreement where a party had
the sole, unilateral right to amend the arbitration rules; holding that this rendered the promise
to arbitrate illusory); Floss v. Ryan’s Family Steak Houses, Inc., 211 F.3d 306, 315-16 (6th
Cir. 2000) (holding that the arbitration agreement at issue was unenforceable because it
permitted one party to alter the applicable rules without notification or consent of the other
12
parties, thereby lacking consideration).
Holloman asserts that in our opinion in Cheek, we held that “notice does not provide
consideration in Maryland.”  On the contrary, our reasoning in Cheek indicates that the
arbitration agreement at issue in that case was unenforceable because United Healthcare was
not bound to arbitrate and could “opt out” of the arbitration process at anytime, even after
the process was initiated – or even completed.  See Cheek, 378 Md. at 150-51, 835 A.2d at
663 (noting that the agreement was unenforceable because United Healthcare had the right
to alter or revoke the agreement at any time with or without notice and without consent).
United Healthcare’s purported promise to arbitrate was illusory because it “creat[ed] no real
promise” as it allowed “United to revoke the Employment Arbitration Policy even after
arbitration is invoked, and even after a decision is rendered, because United can ‘revoke’ the
Policy “at any time.”  Id. at 149, 835 A.2d at 662.  Thus, we concluded that United’s promise
to arbitrate was illusory and was not consideration to support the enforcement of the
arbitration agreement.  Id.
Unlike United Healthcare in Cheek, Circuit City does not have unfettered discretion
to alter or rescind the arbitration agreement without notice or consent.  Rather, under the
terms of the agreement, Circuit City is bound to the terms of the arbitration agreement for
364 days, must provide thirty-days notice prior to any modification and may only alter the
agreement on a single day out of the year to become effective during the next day.
Holloman, under these terms, could have the opportunity to arbitrate any “grievance” with
13
Circuit City under the terms explicated during the 30-day window without fear of recission
or alteration by Circuit City.  We find these limitations to be adequate to create a binding
obligation on Circuit City to submit to arbitration, such that Circuit City’s promise to
arbitrate under the arbitration agreement constitutes consideration, and the agreement is
enforceable.  Cheek, 378 Md. at 153-54, 835 A.2d at 665 (“[M]utual promises to arbitrate
act as ‘an independently enforceable contract . . . each party has promised to arbitrate
disputes arising from an underlying contract, and ‘each promise provides consideration for
the other.’”).
Our conclusion is consistent with courts in other jurisdictions that have addressed the
enforceability of the same provision of Circuit City’s arbitration agreement.  In Morrison v.
Circuit City Stores, Inc., 317 F.3d 646 (6th Cir. 2003), the United States Court of Appeals
for the Sixth Circuit determined that the limitations imposed by Circuit City’s arbitration
agreement constituted consideration to create an enforceable contract because they created
a binding promise.  According to the court, “Circuit City’s promise to maintain the arbitration
agreement for at least thirty days, and until the end of each calendar year, constitutes . . .
consideration.”  Id. at 668.  Similarly, in Johnson v. Circuit City, 148 F.3d 373 (4th Cir.
1998), the United States Court of Appeals for the Fourth Circuit, addressing the application
of the arbitration agreement at issue in the case sub judice, also determined that the terms of
the arbitration agreement evidenced a promise by Circuit City to arbitrate, which provided
consideration for the enforceability of the agreement.  Id. at 378-79.  
14
The cases to which Holloman cites do not support her position.  She relies on Hooters
of America, Inc. v. Phillips, 39 F. Supp. 2d 582 (D. S.C. 1998), aff’d, 173 F.3d 933 (4th Cir.
1999), in which the parties’ arbitration agreement provided: “These Rules and Procedures
may be modified, in whole or in part, by the Company from time to time, without notice,”
and “the Company may cancel the Agreement and Procedure on 30 days written notice.”  Id.
at 617.  Based on Hooters’ ability to alter the agreement at any time without notice, the
Fourth Circuit found that “Hooters retained to itself an unfettered ‘right to decide later the
nature or extent of [its] performance’ by reserving the authority to modify the Rules, or
terminate the agreement, at its choice.”  Id. at 618.  The unfettered ability to modify the
agreement in Hooters, similar to that which was present in Cheek, distinguishes it from the
present case. 
Holloman also emphasizes the United States Court of Appeals for the Ninth Circuit’s
reasoning in Ingle v. Circuit City Stores, Inc., 328 F.3d 1165 (9th Cir. 2003).  That case,
however, focused on whether the arbitration agreement was substantively unconscionable
because its employees had no power to negotiate the terms of the agreement or any
modification made subsequent to their hiring.  The Ninth Circuit specifically included
language which stated that the court’s opinion did not address whether the notice provision
and power to modify the terms of the arbitration agreement contained in the arbitration
agreement rendered the agreement unenforceable:
Our holding with regard to the provision granting Circuit City
the unilateral authority to modify or terminate the arbitration
3
The remainder of the cases cited by Holloman are inapposite for similar
reasons.  See Hill v. Peoplesoft USA, Inc., 412 F.3d 540 (4th Cir. 2005) (enforcing the
arbitration agreement where neither party had the power to alter or rescind the agreement);
Al-Safin v. Circuit City Stores, Inc., 394 F.3d 1254 (9th Cir. 2005) (finding that the
arbitration clause is unconscionable under Washington law and not addressing the issue of
whether the agreement was otherwise enforceable).  Holloman also cites to Fazio v. Lehman
Bros., Inc., 340 F.3d 386 (6th Cir. 2003), in which the United States Court of Appeals for the
Sixth Circuit relied on its reasoning in Morrison to hold that the arbitration agreement at
issue was enforceable.  Thus, Fazio does not sustain Holloman’s assertion that the arbitration
agreement in the present case is not supported by consideration.  
15
agreement does not collide with that of the Sixth Circuit in
Morrison, 317 F.3d at 667-68.  The court in Morrison held that
Circuit City’s ability to modify or terminate the arbitration
agreement did not, by itself, render the contract unenforceable.
In this case, we hold that the provision is substantively
unconscionable.  We draw no conclusion as to whether this
term, by itself, renders the contract unenforceable.
Id. at 1179 n. 23.  Therefore, the Ninth Circuit’s reasoning in Ingle is not applicable.3
Therefore, we conclude that the provisions of the arbitration agreement which bind
Circuit City to arbitrate for at least thirty days and for the entire year prior to the day upon
which the agreement may be modified constitute consideration.  Thus, the arbitration
agreement between Holloman and Circuit City is enforceable. 
Holloman also argues that she did not knowingly and voluntarily waive her
constitutional right to a jury trial or her substantive rights under Title VII of the Civil Rights
Act of 1964, Maryland Code (1957, 2003 Repl. Vol.), Article 49B, governing discrimination
in employment settings, and the Prince George’s County Code.  We, however, disagree.  
At the outset, we note that under Maryland law, a party who signs a contract is
16
presumed to have read and understood its terms and as such will be bound by its execution.
See Walther, 386 Md. at 444, 872 A.2d at 754 (“If petitioners did not [read the agreement]
before they signed the agreement, they have no person to blame but themselves.  As
expressed earlier in our discussion, we are loath to rescind a conspicuous agreement that was
signed by a party whom now, for whatever reason, does not desire to fulfill that agreement.”);
Binder v. Benson, 225 Md. 456, 461, 171 A.2d 248, 250 (1960) (“[T]he usual rule is that if
there is no fraud, duress or mutual mistake, one who has the capacity to understand a written
document who reads and signs it, or without reading it or having it read to him, signs it, is
bound by his signature as to all of its terms.”) (citations omitted); McGrath v. Peterson, 127
Md. 412, 416, 96 A. 551, 553 (1916) (“It would lead to startling results if a person who
executes, without coercion or undue persuasion, a solemn release under seal, can
subsequently impeach it on the ground of his own carelessness, though at the very time of
its execution, he might, had he seen fit, had advised himself fully as to the nature and legal
effect of the act he was doing”) (emphasis in original).
Holloman’s assertion that she did not waive her right to a jury trial under the
arbitration agreement is without merit.  In Walther, we addressed identical arguments with
respect to an arbitration clause between an employee and his employer.  We stated that
“[b]ecause the right to a jury trial ‘attaches in the context of judicial proceedings after it is
determined that litigation should proceed before a court . . . the “loss of the right to a jury
trial is a necessary and fairly obvious consequence  of an agreement to arbitrate.”’” Walther,
17
386 Md. at 443, 872 A.2d at 754 (emphasis in original), quoting Sydnor v. Conseco Financial
Servicing Corp., 252 F.3d 302, 307 (4th Cir. 2001), quoting in turn Pierson v. Dean, Witter,
Reynolds, Inc., 742 F.2d 334, 339 (7th Cir. 1984).  Thus, we concluded that “the loss of one’s
right to a jury trial is generally implicit in an agreement to arbitrate.”  Id.  In the present case,
Holloman initialed and signed the arbitration agreement, which specifically stated that the
agreement bound her to the arbitration process as opposed to litigation in court, that Circuit
City could use the arbitration agreement to compel arbitration if she filed suit in court, and,
in bold font, that the agreement affected her legal rights.  Moreover, Holloman had three days
within which to withdraw her consent to arbitration.  Because the clear language of the
arbitration agreement indicates that the arbitration agreement forecloses Holloman’s access
to the courts, and Holloman was provided the opportunity to consult an attorney and
withdraw her consent, we hold that the waiver of her right to a jury trial is effective.  
Holloman also argues that her rights under Title VII of the Civil Rights Act of 1964,
Maryland law, and the Prince George’s County Code will be detrimentally affected if she is
required to arbitrate her claims.  Numerous jurisdictions have recognized that arbitration of
statutory claims does not result in the forfeiture of substantive statutory rights.  In Murray
v. UFCW Int’l, Local 400, 289 F.3d 297, 301-02 (4th Cir. 2002), the United States Court of
Appeals for the Fourth Circuit stated:
[i]t is settled that the provisions of the FAA, and its policy
favoring the resolution of disputes through arbitration, apply to
employment agreements to arbitrate discrimination claims
brought pursuant to federal statutes, including Title VII of the
18
Civil Rights Act.  See Circuit City Stores, Inc. v. Adams, 532
U.S. 105, 109, 121 S.Ct. 1302, 143 L.Ed.2d 234 (2001); Hooters
of America, Inc. v. Phillips, 173 F.3d 933, 937 (4th Cir. 1999).
Such an agreement is enforceable because ‘“[b]y agreeing to
arbitrate a statutory claim, a party does not forgo the substantive
rights afforded by the statute; it only submits to their resolution
in an arbitral, rather than judicial, forum.”’ Hooters, 173 F.3d at
937 . . . .  If ‘the prospective litigant effectively may vindicate
his or her statutory cause of action in the arbitral forum,’ the
claim is appropriately subjected to arbitration in lieu of
litigation.’  Green Tree, 531 U.S. at 89, 121 S.Ct. 513.
See also Morrison, 317 F.3d at 665 (noting that “Title VII claims may be heard in an arbitral
forum”); Willis v. Dean Witter Reynolds, Inc., 948 F.2d 305, 309 (6th Cir. 1991).
Holloman relies on Justice Black’s dissenting opinion in Republic Steel Corp. v.
Maddox, 379 U.S. 650, 85 S.Ct. 614, 13 L.Ed.2d 580 (1965), for the proposition that
arbitration does not provide an adequate forum for her to seek redress.  In his dissenting
opinion in Maddox, Justice Black decried the deficiencies of the arbitration process as
compared to a trial by jury.  Id. at 664, 85 S.Ct. at 623, 13 L.Ed.2d at 590.  The majority in
Maddox, however, held that the collective bargaining agreement that specified that
arbitration was the exclusive remedy was applicable to the employee’s action for severance
pay.  Id. at 656, 85 S.Ct. at 618, 13 L.Ed.2d at 588.  The majority’s holding in Maddox is
consistent with the Supreme Court’s recent recognition of “‘liberal federal policy favoring
arbitration agreements,” which, it noted, “requires that we rigorously enforce agreements to
arbitrate.”  Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 625-26,
105 S.Ct. 3346, 3353, 87 L.Ed.2d 444, __(1985), quoting Moses H. Cone Memorial Hosp.
19
v. Mercury Construction Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 941, 74 L.Ed.2d 765 (1983);
see also Green Tree Fin. Corp. - Alabama v. Randolph, 531 U.S. 79, 89, 121 S.Ct. 513, 148
L.Ed.2d 373, __ (2000) (stating that the Federal Arbitration Act was adopted to “reverse the
longstanding judicial hostility to arbitration agreements . . . and to place arbitration
agreements on the same footing as other contracts”); Dean Witter Reynolds, Inc. v. Byrd, 470
U.S. 213, 221, 105 S.Ct. 1238, 1242, 84 L.Ed.2d 158, __ (1985). 
The language of the arbitration agreement specifically lists claims cognizable under
Title VII of the Civil Rights Act of 1964 as well as state and local statutory claims as subject
to arbitration.  This provision is clearly written, and Holloman initialed and signed the
document acknowledging her agreement to arbitrate such claims.  Holloman has not
presented any evidence of fraud, duress, or undue influence with respect to her signature
acknowledging receipt of the Dispute Resolution Rules and Procedures and her agreement
to submit her statutory claims to arbitration.  Therefore, because the terms of the arbitration
agreement plainly stated that federal, state, and local statutory claims are subject to
arbitration and Holloman signed the agreement, she is bound to arbitrate her claims as
arbitration has been recognized as sufficient to protect her rights at issue.
Conclusion
Because we determine that the terms of Circuit City’s arbitration agreement at issue
here provide consideration, we hold that the arbitration agreement is enforceable.  Moreover,
we find that the lower courts did not err in concluding that Holloman waived her
20
constitutional right to a jury trial and that submitting Holloman’s statutory discrimination
claims to arbitration did not impinge on her substantive rights.  Therefore, we affirm the
judgment of the Court of Special Appeals.
JUDGMENT OF THE COURT OF SPECIAL
APPEALS AFFIRMED.  COSTS IN THIS
COURT AND IN THE COURT OF SPECIAL
APPEALS TO BE PAID BY PETITIONER.
IN THE COURT OF APPEALS OF
MARYLAND
No. 53
September Term, 2005
______________________________________
LA’TIA HOLLOMAN
v.
CIRCUIT CITY STORES, INC., ET AL.
Bell, C.J.
Raker
Wilner
Cathell
Harrell
Battaglia
Greene,
JJ.
Dissenting Opinion by Bell, C. J.
 which Greene, J., joins. 
Filed:   March 13, 2006
1
The agreement repeated what the selection tool 2. said: “If you wish to be
considered for employment you must read and sign the following agreement.”   After adding
what was necessarily implicit, “[y]ou will be considered as an applicant when you have
signed the Agreement, provided:
“Included with this application is the Circuit City Dispute Resolution Rules
and Procedures. You should familiarize yourself with these rules and
procedures prior to signing the Agreement. If the Rules and Procedures are not
included In this booklet you must request a copy from a Circuit City
representative prior to signing the Agreement.  You will note that If you sign
at this time you do have three (3) days to withdraw your consent. You may, of
course, take the package with you and return with it signed, if you wish to
continue your application process.”
 
I dissent, and emphatically so.
To be sure, and clearly, La’Tia Y. Holloman, the petitioner, submitted an Employment
Application with Circuit City seeking a sales associate position.  The Employment
Application listed “a number of selection tools,” number 2. of which was:
“Dispute Resolution Agreement - This agreement requires you and Circuit City
to arbitrate certain legal disputes related to your application for employment
or employment with Circuit City.  Circuit City will consider your application
only if this agreement is signed.”
It also included the “Circuit City Dispute Resolution Agreement,”1 which the
petitioner initialed and signed.  By signing the Dispute Resolution Agreement and not
withdrawing within three days, the petitioner “recognized” that she would “be required to
arbitrate, as explained [earlier in the agreement] employment-related claims which I may
have against Circuit City, whether or not I become employed by Circuit City.”   A
representative of Circuit City, its Senior Vice President for Human Resources, signed the
2
This is in contrast to what the dissenting judge in Michalski v. Circuit City
Stores, Inc., 177 F.3d 634, 637-639 (7th Cir. 1999) (Rovner, J., dissenting), determined to
be the situation in that case.   There Circuit City did not sign the Employment Application,
the Dispute Resolution Agreement or the Rules and Procedures, relying on its employee
handbook to indicate its agreement to arbitrate disputes.   In Johnson v. Circuit City Stores,
Inc., 148 F.3d 373, 375 (4th Cir. 1998), however, as in this case, both the applicant for
employment and Circuit City signed a dispute resolution agreement providing that “Circuit
City agrees to follow this Dispute Resolution Agreement and the Dispute Resolution Rules
and Procedures in connection with the Associate whose signature appears above”).   
2
Employment Application, containing the Dispute Resolution Agreement, on its behalf.2 
Circuit City’s undertaking under the agreement was “to consider this Employment
Application and to follow this Dispute Resolution Agreement and the Dispute Resolution
Rules and Procedures in connection with the Associate whose signature appears above.”
Substantively, the Dispute Resolution Agreement provided:
“Except as set forth below, both Circuit City and I agree to settle any and all
previously unasserted claims, disputes or controversies arising out or relating
to my application or candidacy for employment, employment and/or cessation
of employment with Circuit City, exclusively by final and binding arbitration
before a neutral Arbitrator.  By way of example only, such claims include
claims under federal, state and local statutory or common law, such as the Age
Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964,
as amended, including the amendments of the Civil Rights Act of 1991, the
Americans with Disabilities Act, the Family Medical Leave Act, the law of
contract and law of tort.”
Notwithstanding this provision, the last paragraph of the agreement stated:
“l understand that neither this Agreement nor the Dispute Resolution Rules and
Procedures form a contract of employment between Circuit City and me.  I
further understand that my signature to this Agreement in no way guarantees
that Circuit City will offer me employment.  If Circuit City does offer me
employment and I become employed at Circuit City, this Agreement in no way
alters the ‘at-will’ status of my employment. I understand that my employment,
compensation and terms and conditions of employment can be altered or
3
terminated, with or without cause, and with or without notice at anytime, at the
option of either Circuit City or myself. I understand that no store manager or
representative of Circuit City, other than an Officer of Circuit City at the level
of Vice President or above, has any authority to enter into any agreement for
employment for any specific duration, to make any agreement contrary to the
foregoing or to alter the Circuit City Dispute Resolution Rules and
Procedures.”
Rule 2 of the Circuit City Dispute Resolution Rules and Procedures further amplify
and identify the “Claims Subject To Arbitration.”  It provided:
“Except as otherwise limited herein, any and all employment-related legal
disputes, controversies or claims arising out of, or relating to, an Associate's
application or candidacy for employment, employment or cessation of
employment with Circuit City or one of its affiliates shall be settled
exclusively by final and binding arbitration before a neutral, third-party
Arbitrator selected in accordance with these Dispute Resolution Rules and
Procedures.   Arbitration shall apply to any and all such disputes, controversies
or claims whether asserted against the Company and/or against any employee,
officer, alleged agent, director or affiliate company.
“All previously unasserted claims arising under federal, state or local statutory
or common law shall be subject to arbitration. Merely by way of example,
these claims include, but are not limited to, claims arising under the Age
Discrimination in Employment Act (ADEA), Title VII  of the Civil Rights Act
of 1964, as amended, including the amendments of the Civil Rights Act of
1991, the Americans with Disabilities Act (ADA), the Fair Labor Standards
Act (FLSA), 42 U.S.C. § 1981, as amended, including the amendments of the
Civil Rights Act of 1991, the Employee Polygraph Protection Act, the
Employee Retirement Income Security Act (ERISA), state discrimination
statutes, state statutes and/or common law regulating employment  termination,
the law of contract or the law of tort; including, but not limited to, claims for
malicious prosecution, wrongful discharge, wrongful arrest/wrongful
imprisonment, and intentional/negligent infliction of emotional distress or
defamation.  Statutory or common law claims alleging that Circuit City
retaliated or discriminated against an Associate shall be subject to arbitration.”
Rule 19, dealing with termination or modification of the dispute resolution agreement
or the rules and procedures pursuant thereto, permits Circuit City to “alter or terminate the
4
Agreement and these Dispute Resolution Rules and Regulations on March 1st of any year
upon giving 30 days written notice to” the sales associates.   It provides further that the
agreement and rules and procedures in effect “at the time the Arbitration Request Form and
Accompanying filing fee, or Request for Waiver of Filing Fee is received by the Company”
will govern that claim.  
The agreement at issue in this case, consisting of the Employment Agreement, the
Circuit City Dispute Resolution Agreement and the Circuit City Dispute Resolution Rules
and Procedures, is, without any doubt, is a contract of adhesion.   A contract of adhesion, it
is well settled, is one, usually prepared in printed form, “drafted unilaterally by the dominant
party and then presented on a ‘take-it-or-leave-it’ basis to the weaker party who has no real
opportunity to bargain about its terms.” Restatement (Second) of Conflict of Laws §§ 187,
Comment b.  See Meyer v. State Farm Fire and Cas. Co., 85 Md. App. 83, 89, 582 A.2d 275,
278 (1990); Armendariz v. Found. Health Psychcare Servs., 6 P.3d 669, 689 (Cal. 2000),
quoting Neal v. State Farm Ins. Companies, 188 Cal.App.2d 690, 694, 10 Cal.Rptr. 781
(1961) (contract of adhesion is a “standardized contract, which, imposed and drafted by the
party of superior bargaining strength, relegates to the subscribing party only the opportunity
to adhere to the contract or reject it”); Iwen v. U.S. West Direct, 977 P.2d 989, 995 (Mont.
1999), quoting Passage v. Prudential-Bache Securities, Inc., 727 P.2d 1298, 1301 (Mont.
1986) (“contracts of adhesion ‘arise when a standardized form of agreement, usually drafted
by the party having the superior bargaining power, is presented to a party, whose choice is
5
either to accept or reject the contract without the opportunity to negotiate its terms’”); Lackey
v. Green Tree Financial Corp., 498 S.E.2d 898, 901 (S.C. 1998).   
It is also unconscionable.  “[U]nconscionability has both a ‘procedural’ and a
‘substantive' element,’ the former focusing on ‘oppression’ or ‘surprise’ due to unequal
bargaining power, the latter on ‘overly harsh’ or ‘one-sided’ results.” Armendariz v.
Foundation Health Psychcare Servs., Inc., 6 P.3d 669, 690, quoting  A & M Produce Co. v.
FMC Corp., 135 Cal.App.3d 473, 486-487, 186 Cal.Rptr. 114, 121-122 (1982). “The
prevailing view is that [procedural and substantive unconscionability] must both be present
in order for a court to exercise its discretion to refuse to enforce a contract or clause under
the doctrine of unconscionability.”  Armendariz, 6 P.3d at 690, quoting Stirlen v. Supercuts,
Inc., 51 Cal.App.4th at 1533, 60 Cal.Rptr.2d 138.
This is a preemployment arbitration contract.   In such cases, it has been recognized
that “the economic pressure exerted by employers on all but the most sought-after employees
may be particularly acute, for the arbitration agreement stands between the employee and
necessary employment, and few employees are in a position to refuse a job because of an
arbitration requirement.”  Armendariz, 6 P.3d at 690.   Thus, although, even in the ordinary
case, “when a party who enjoys greater bargaining power than another party presents the
weaker party with a contract without a meaningful opportunity to negotiate, ‘oppression and,
therefore, procedural unconscionability, are present,’” Ingle v. Circuit City Stores, Inc., 328
F.3d 1165, 1172 (9th  Cir. 2003), quoting  Ferguson v. Countrywide Credit Industries, Inc.,
6
298 F.3d 778, 784 (9th Cir. 2002); Szetela v. Discover Bank, 97 Cal.App.4th 1094, 1100,
118 Cal.Rptr.2d 862, 867 (2002), that, in other words, contracts of adhesion are procedurally
unconscionable.  Circuit City Stores, Inc. v. Adams, 279 F.3d 889, 893 (9th Cir. 2002) (“The
[arbitration agreement] is procedurally unconscionable because it is a contract of adhesion.”);
Flores v. Transamerica HomeFirst, Inc., 93 Cal.App.4th 846, 853, 113 Cal.Rptr.2d 376, 382
(2001) (“A finding of a contract of adhesion is essentially a finding of procedural
unconscionability”); Acorn v. Household Int’l, Inc., 211 F.Supp.2d 1160, 1168 (N.D.Cal.
2002), the unconscionability is more pronounced and, therefore, more acute in such cases.
The agreement also is substantively unconscionable - the terms of the agreement, on
which this inquiry must focus, are so one-sided as to shock the conscience of this member
of the Court and, I submit, ought to shock the conscience of the entire Court.  While
ostensibly agreeing to be bound by the Dispute Resolution Agreement, Circuit City quickly
extricated itself from that agreement by a subsequent provision that makes clear that the
petitioner’s agreement to be bound by the Dispute Resolution Agreement had no effect on
it, for the simple reason that, by virtue of that provision,  it, in fact, did not agree to be bound
to do anything.   By the last paragraph of the Circuit City Dispute Resolution Agreement, no
contract of employment was formed, it did not agree to offer the applicant employment and,
even if it offered the applicant employment and the applicant accepted, the applicant
remained an at-will employee, with Circuit City retaining the right to alter or terminate the
applicant’s employment, compensation and terms and conditions of employment, “with or
3
To be sure, the phrase, “at the option of either Circuit City or myself,” is
inserted at the end of the sentence.   It is nonsense to suggest that this provision is mutually
for the benefit of the petitioner and Circuit City.   While the petitioner may quit her job, an
option she has in any event unless she enters into a contract for a term, only Circuit City may
alter the terms and conditions of employment or the compensation for that employment.
7
without cause, and with or without notice, at any time.” 3   That leaves absolutely no issue
about which Circuit City has an interest or need to arbitrate.  The only effect of this
agreement is to require the petitioner to arbitrate.   The only meaningful obligation Circuit
City has with regard to arbitration is to appear and defend any arbitration proceeding the
petitioner may bring.
That this is so is buttressed both by the agreement itself and the Rules and Procedures
implementing it.  As we have seen, the Dispute Resolution Agreement refers to
“controversies arising out of or relating to my application or candidacy for employment
and/or cessation of employment with Circuit City.”  More expansively, the Rules and
Procedures repeat that the claims covered are “any and all employment-related legal disputes,
controversies or claims arising out of, or relating to, an Associate’s application or candidacy
for employment, employment or cessation of employment” and make clear that those
controversies are “unasserted claims arising under federal, state or local statutory or common
law” and give examples of what is meant.   It is significant, I think, that all of the examples
relate to and involve claims that an employee, not an employer, would have or want to bring.
Indeed, even those claims not subject to arbitration, which the agreement mentions, are those
4
“Claims by Associates for state employment insurance (e.g., unemployment
compensation, workers' compensation, worker disability compensation) or under the National
Labor Relations Act shall not be subject to arbitration. Statutory or common law claims
alleging that Circuit City retaliated or discriminated against an Associate for filing a state
employment insurance claim, however, shall be subject to arbitration.”
5
Circuit City Stores, Inc. v. Adams, 279 F.3d 889 (9th Cir. 2002)
8
that necessarily would be made by “Associates.”4   That is not surprising, given the rights
Circuit City retained.
The court in Ingle, 328 F.3d at 1173-74 (footnotes omitted), considered the identical
rule as in this case and found, on that basis, that the arbitration agreement was so one-sided
as not to be enforceable.  It reasoned:
“Circuit City's arbitration agreement applies only to ‘any and all employment-
related legal disputes, controversies or claims of an Associate,’ thereby
limiting its coverage to claims brought by employees.  By the terms of this
agreement, Circuit City does not agree to submit to arbitration claims it might
hypothetically bring against employees. Without a reasonable justification for
such a glaring disparity based on ‘business realities,’ ‘it is unfairly one-sided
for an employer with superior bargaining power to impose arbitration on the
employee as plaintiff but not to accept such limitations when it seeks to
prosecute a claim against the employee.’ Armendariz, 24 Cal.4th at 117, 99
Cal.Rptr.2d 745, 6 P.3d at 692; see Cal. Civ. Code §§ 1670.5(b). Therefore,
as we held in Adams III,[5] this ‘unjustified one-sidedness deprives the
[arbitration agreement] of the “modicum of bilaterality” that the California
Supreme Court requires for contracts to be enforceable under California law.’
Adams III, 279 F.3d at 894; Armendariz, 24 Cal.4th at 117, 99 Cal.Rptr.2d
745, 6 P.3d at 692.
“This case presents a broad concern with respect to arbitration agreements
between employers and employees. Circuit City argues that the arbitration
agreement subjects Circuit City to the same terms that apply to its employees.
But this argument is ‘exceedingly disingenuous,’ because the agreement is
9
one-sided anyway. Because the possibility that Circuit City would initiate an
action against one of its employees is so remote, the lucre of the arbitration
agreement flows one way: the employee relinquishes rights while the employer
generally reaps the benefits of arbitrating its employment disputes.
“The only claims realistically affected by an arbitration agreement between an
employer and an employee are those claims employees bring against their
employers.  By essentially covering only claims that employees would likely
bring against Circuit City, this arbitration agreement's coverage would be
substantively one-sided even without the express limitation to claims brought
by employees.”
I am also troubled by the majority’s resolution of the waiver of jury trial issue.   There
is a dispute concerning whether the petitioner received a copy of the Circuit City Dispute
Resolution Rules and Procedures.   I do not imagine that anyone could think that a failure to
provide the petitioner with the Rules and Procedures which will govern her decision to agree
to arbitration is not relevant to the issue of whether the petitioner waived her jury trial right.
So far as the record reflects, however, that disputed issue was not resolved by taking
testimony, rather it was decided on Circuit City’s motion to compel arbitration, without the
taking of any evidence.   A motion to compel arbitration tests whether there is an agreement
to arbitrate.  When there is a dispute of fact in that regard, the court must resolve that dispute
preliminary to disposing of the motion.   When there is a factual dispute, the motion to
compel is akin to a motion to dismiss.   With respect to such motions, the well pleaded facts
in the complaint are taken as true.    That, in my opinion should have been done in this case
and the movant required to prove the existence of the agreement, including that the petitioner
10
received the rules and procedures as that is, to my mind critical to the finding of a valid and
binding agreement to arbitrate.  
I share the opinion expressed by the Supreme Court of California:
“Given the lack of choice and the potential disadvantages that even a fair
arbitration system can harbor for employees, we must be particularly attuned
to claims that employers with superior bargaining power have imposed one-
sided, substantively unconscionable terms as part of an arbitration agreement.
‘Private arbitration may resolve disputes faster and cheaper than judicial
proceedings. Private arbitration, however, may also become an instrument of
injustice imposed on a “take it or leave it” basis. The courts must distinguish
the former from the latter, to ensure that private arbitration systems resolve
disputes not only with speed and economy but also with fairness.’”
Armendariz, 6 P.3d at 690-91, quoting Engalla v. Permanente Medical Group, Inc.,  938 P.2d
903, 989 (1997) (Kennard, J., concurring).
Judge Greene joins in this dissenting opinion.