Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-alsd-1_07-cv-00410/USCOURTS-alsd-1_07-cv-00410-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1331 Fed. Question: Breach of Contract

---

1 That Complaint is the operative pleading in this litigation. To be sure, plaintiffs

filed a First Amended Complaint, without leave of court, seeking to add three new plaintiffs and

a “John Doe” defendant; however, this Amended Complaint was stricken by Order (doc. 24)

dated August 20, 2007 on the grounds that defendant ISE had already filed a responsive

pleading, that Rule 15(a) precluded plaintiffs from amending their Complaint without leave of

court as to that defendant, that no leave of court had been requested to amend the Complaint, and

that fictitious party pleading is improper in federal court. To date, plaintiffs have not sought to

refile their amended pleading in permissible form against any defendant.

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF ALABAMA

SOUTHERN DIVISION

LINA SCURTU, et al., )

 )

Plaintiffs, )

 )

v. ) CIVIL ACTION 07-0410-WS-B

 )

INTERNATIONAL STUDENT )

EXCHANGE, et al., )

 )

Defendants. )

 

ORDER

This matter comes before the Court on Defendants’ Motion to Dismiss Complaint as to

Defendants, Hospitality and Catering Management Services and Wendco of Alabama, Inc., or, in

the Alternative, to Stay the Case and Compel Arbitration (doc. 11). The Motion has been briefed

and is ripe for disposition.

I. Background.

On June 5, 2007, plaintiffs Lina Scurtu and Cornelia Grozav filed their Complaint (doc.

1) in this District Court against defendants International Student Exchange (“ISE”), Hospitality

and Catering Management Services (“HCMS”), and Wendco Corp. (“Wendco”).1

 The

Complaint alleges that Scurtu and Grozav are both citizens of the Republic of Moldova,

graduates of the Moldova Academy of Economic Study, and legal resident aliens living in

Baldwin County, Alabama pursuant to the J-1 visa training program. (Complaint, ¶¶ 1-2, 10.) 

This lawsuit concerns the circumstances of their relocation to the United States pursuant to a

Case 1:07-cv-00410-WS-B Document 34 Filed 10/19/07 Page 1 of 20
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foreign exchange program and their treatment by defendants after arriving in this country.

According to the Complaint, in spring 2006 both plaintiffs elected to participate in the J-1

visa training program, pursuant to which they would receive employment training in the United

States and then return to their homeland. (Id., ¶ 10.) In June 2006, Scurtu entered into a contract

with a Moldovan organization, nonparty The Association for Youth Exchange Programs, that

served as an agent of defendants ISE and HCMS, to arrange for her to enroll in a training

program in the United States. (Id., ¶ 11.) The Complaint alleges that Grozav entered into a

similar contract with the same entity in October 2006. (Id., ¶ 14.) Each plaintiff is alleged to

have paid in excess of $3,700 for applications and arrangements for the requisite visas, with

additional payments for travel expenses. (Id., ¶¶ 12-13, 15-16.) The Complaint further alleges

that HCMS undertook to locate a management training program for plaintiffs that would satisfy

the J-1 requirements and afford plaintiffs an opportunity to develop competency in fast-food

restaurant management, and also undertook to provide housing for plaintiffs at plaintiffs’

expense. (Id., ¶¶ 17-18.) According to the Complaint, Scurtu executed a signed training plan

with HCMS on September 20, 2006, with Grozav executing a like plan on October 25, 2006. 

(Id., ¶¶ 19-20.) Both plaintiffs were assigned to work for defendant Wendco at one of its fastfood restaurants in Baldwin County, Alabama.

The driving force of the Complaint is plaintiffs’ contention that defendants did not make

good on their promises to furnish plaintiffs with management training opportunities

commensurate with the J-1 program. The Complaint alleges that neither plaintiff has “received

anything that could even remotely be defined as management training. ... Instead, Plaintiffs have

been forced to labor as simple cashiers, food prep workers, and cleaning crew.” (Id., ¶ 24.) As a

result of this assignment, plaintiffs bring 13 causes of action against defendants, including four

claims of breach of contract (one by each plaintiff against each of ISE and HCMS); four counts

of fraud in the inducement (again, one by each plaintiff against each of ISE and HCMS); civil

conspiracy; violation of Trafficking Victim Protection Reauthorization Act of 2003, which

plaintiffs allege is actionable pursuant to 18 U.S.C. § 1593; a statutory claim under the Racketeer

Influenced and Corrupt Organizations Act (“RICO”), pursuant to 18 U.S.C. §§ 1961-68;

declaratory judgment; and punitive damages. Significantly, the Complaint is not styled as a

Case 1:07-cv-00410-WS-B Document 34 Filed 10/19/07 Page 2 of 20
2 The stricken First Amended Complaint filed without leave of court would have

proliferated the number of claims to 25 (spread across 52 pages and 257 numbered paragraphs),

but would not have added any class allegations.

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putative class action complaint and no class allegations are set forth therein.2

Defendants HCMS and Wendco now seek to have plaintiffs’ claims against them

dismissed or stayed on the grounds that they are subject to binding arbitration provisions. In that

regard, movants have submitted two substantively identical documents, each of which is slightly

over one page in length, entitled “Agreement and Receipt for Foreign Exchange Program

Workers” (the “Agreement”). The Agreement states that the signatory employee is being

employed by HCMS, and that HCMS will assign the employee to work on a temporary basis in a

Wendco restaurant. The Agreement contains a mutually binding arbitration clause, stating in

part that “the parties agree that all legal claims or disputes covered by this Agreement must be

submitted to binding arbitration and that binding arbitration will be the sole and exclusive final

remedy for resolving any such claim or dispute. The parties also agree that any arbitration

between the parties will not be arbitrated on a collective or class-wide basis.” (Movants’ Brief

(doc. 12), at Exhs. A & B.) The scope of the Agreement is quite broad, encompassing “all legal

claims, including: claims for wages or other compensation; claims for breach of any contract,

covenant or warranty ...; tort claims (including, but not limited to, claims for physical, mental or

psychological injury ...) ...; [and] claims for a violation of any other non-criminal federal, state or

other governmental law, statute, regulation or ordinance ....” (Id.) With respect to disputes over

the document itself, the Agreement sets forth the parties’ agreement “that the arbitrator ... shall

have the exclusive authority to resolve any dispute relating to the interpretation, arbitrability,

applicability, enforceability or formation of this Agreement ....” (Id.) The Agreement also

contains a severability clause, under which all of its provisions are deemed severable in the event

that they are held unenforceable, such that the remaining provisions will be valid, binding and

enforceable. Finally, the Agreement includes specific representations that the employee had

carefully read it, that she understood its terms, that she had entered into it voluntarily, and that

she had been given the opportunity to discuss it with counsel of her choosing. (Id.)

Both Scurtu and Grozav executed identical versions of the Agreement. Scurtu’s

Case 1:07-cv-00410-WS-B Document 34 Filed 10/19/07 Page 3 of 20
3 There is some discrepancy in the briefing concerning the proper name of the

Wendco defendant. The Complaint identifies that entity as “Wendco Corp.,” while movants’

briefs counter that the correct entity is “Wendco of Alabama, Inc.” The Court agrees with

plaintiffs that the proper Wendco entity is a subject for discovery and that the Complaint controls

in identifying which Wendco entity is being sued herein. For purposes of the instant Motions,

however, it matters not which Wendco entity is the correct defendant because the Agreements

are executed by “Wendco Corporation / Wendco of Alabama, Inc., its successors and assigns,”

such that the Agreement applies to either or both Wendco entities. Plaintiffs have not argued

otherwise.

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signature on the Agreement is dated September 20, 2006, the very same date on which she

executed a training plan with HCMS. Grozav’s signature is dated October 25, 2006, the very

same date on which she executed a training plan with HCMS. Other signatories to the

Agreement were both HCMS and Wendco, the same entities that now seek to enforce the

Agreement against Scurtu and Grozav.3

II. Analysis

A. Governing Legal Standard.

 The Federal Arbitration Act, 9 U.S.C. §§ 1 et seq. (“FAA”) is “a congressional

declaration of a liberal federal policy favoring arbitration agreements.” Davis v. Southern

Energy Homes, Inc., 305 F.3d 1268, 1273 (11th Cir. 2002) (citation omitted). In that regard,

“federal policy requires us to construe arbitration clauses generously, resolving all doubts in

favor of arbitration.” Becker v. Davis, 491 F.3d 1292, 1305 (11th Cir. 2007); see also Musnick v.

King Motor Co. of Fort Lauderdale, 325 F.3d 1255, 1258 (11th Cir. 2003) (strong federal

preference for arbitration of disputes expressed by Congress in FAA must be enforced wherever

possible).

Under the FAA, parties are generally free to structure their arbitration agreements as they

see fit. See Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior Univ.,

489 U.S. 468, 478-79, 109 S.Ct. 1248, 103 L.Ed.2d 488 (1989). “Generally, a court should

enforce an arbitration agreement according to its terms, and no exception exists for a cause of

action founded on statutory rights.” Davis, 305 F.3d at 1273; see also Caley v. Gulfstream

Aerospace Corp., 428 F.3d 1359, 1367 (11th Cir. 2005) (“courts have consistently found that

claims arising under federal statutes may be the subject of arbitration agreements and are

Case 1:07-cv-00410-WS-B Document 34 Filed 10/19/07 Page 4 of 20
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enforceable under the FAA”) (citation omitted). Simply put, “a court can decline to enforce an

arbitration agreement under the FAA only if the plaintiffs can point to a generally applicable

principle of contract law under which the agreement could be revoked,” such as fraud, duress, or

some other misconduct or wrongful act recognized by law for revocation of a contract. Caley,

428 F.3d at 1371; see also Dale v. Comcast Corp., 498 F.3d 1216, 1219 (11th Cir. 2007)

(“generally applicable contract defenses, such as fraud, duress, or unconscionability, may be

applied to invalidate arbitration agreements”) (citation omitted); General Motors Corp. v. Stokes

Chevrolet, Inc., 885 So.2d 119, 122 (Ala. 2003) (similar).

In determining whether the parties agreed to arbitrate a particular dispute, courts

consider: (1) whether there is a valid agreement to arbitrate; and (2) whether the dispute in

question falls within the scope of that agreement. See Webb v. Investacorp, Inc., 89 F.3d 252,

258 (5th Cir. 1996); Hudson v. Outlet Rental Car Sales, Inc., 876 So.2d 455, 457 (Ala. 2003). To

resolve these questions, courts apply state-law principles relating to ordinary contract formation

and interpretation, construed through the lens of the federal policy favoring arbitration. See

Caley, 428 F.3d at 1368 (“state law generally governs whether an enforceable contract or

agreement to arbitrate exists”). “Thus, in determining whether a binding agreement arose

between the parties, courts apply the contract law of the particular state that governs the

formation of contracts,” taking into account the federal policy favoring arbitration. Id.

Under Alabama law, “[a]rbitration provisions are to be treated like any other contractual

provision.” Service Corp. Int’l v. Fulmer, 883 So.2d 621, 633 n.15 (Ala. 2003). In that regard, a

party seeking to compel arbitration must prove “(1) the existence of a contract containing an

arbitration agreement and (2) that the underlying contract evidences a transaction affecting

interstate commerce.” Allied Williams Companies, Inc. v. Davis, 901 So.2d 696, 698 (Ala. 2004)

(citation omitted). There being no dispute here that HCMS and Wendco have made the requisite

showing, “the burden shifts to the opposing party to present evidence that the arbitration

agreement is not valid or that it does not apply to the dispute in question.” Id. (citation omitted);

see also Blue Cross Blue Shield of Alabama v. Rigas, 923 So.2d 1077, 1086 (Ala. 2005) (once

party seeking to enforce arbitration agreement meets burden of showing existence of agreement,

burden shifts to other side “to present evidence indicating that the arbitration provision is not

valid or that it does not apply to the dispute in question”). 

Case 1:07-cv-00410-WS-B Document 34 Filed 10/19/07 Page 5 of 20
4 Plaintiffs place themselves at a distinct disadvantage by failing to offer evidence

of any kind in support of their position. Plaintiffs do not submit affidavits. They do not submit

exhibits, although their brief references a nonexistent “Exhibit A” that purportedly consists of

copies of plaintiffs’ initial contracts in their native language. Instead, plaintiffs rely almost

exclusively on the unadorned, unsupported representations of counsel, which are not in the form

of evidence that can be considered on a motion to compel arbitration, which is a proceeding akin

to summary judgment. See Providian Nat. Bank, 898 So.2d at 719-20; see generally Texas Dep’t

of Community Affairs v. Burdine, 450 U.S. 248, 255 & n.9, 101 S.Ct. 1089, 67 L.Ed.2d 207

(1981) (“an articulation not admitted into evidence will not suffice” and “the defendant cannot

meet its burden merely ... by argument of counsel”); Nieves v. University of Puerto Rico, 7 F.3d

270, 276 (1st Cir. 1993) (“Factual assertions by counsel in motion papers, memoranda, briefs, or

other such ‘self-serving’ documents, are generally insufficient to establish the existence of a

genuine issue of material fact at summary judgment.”); Bowden ex rel. Bowden v. Wal-Mart

Stores, Inc., 124 F. Supp.2d 1228, 1236 (M.D. Ala. 2000) (“opinions, allegations, and

conclusory statements of counsel do not substitute for evidence”). Plaintiffs do not explain their

failure to submit evidence in support of their arguments that the Agreements are invalid, as to

which they indisputably bear the burden of proof under Alabama law.

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In fixing the relevant burdens of proof in this manner, Alabama courts explain, a motion

seeking to compel arbitration is “analogous to a motion for summary judgment.” The Dunes of

GP, L.L.C. v. Bradford, --- So.2d ----, 2007 WL 1098545, *1 (Ala. Apr. 13, 2007) (citation

omitted). Where a nonmovant seeks to meet its burden by proving that an agreement to arbitrate

is invalid, Alabama courts have cautioned that “[s]tatements in motions and briefs are not

evidence to be considered by the trial court in ruling on a motion to compel arbitration” and that

properly supported motions to compel arbitration should be granted if the nonmovant presents no

opposing evidence. Providian Nat. Bank v. Conner, 898 So.2d 714, 719-20 (Ala. 2004) (internal

citations and quotations omitted).

Scurtu and Grozav do not deny that they actually signed the Agreements, nor do they

contend that those Agreements do not extend to their claims in this action. Rather, plaintiffs ask

the Court to excuse them from abiding by the arbitration clause because such Agreements are

invalid. In this regard, plaintiffs protest that the Agreements are unenforceable for lack of

mutual assent, lack of consideration, lack of consistency, and unconscionability. Each of these

assertions shall be addressed in turn.4

B. Lack of Mutual Assent.

As noted supra, Alabama courts treat arbitration agreements as “essentially creatures of

Case 1:07-cv-00410-WS-B Document 34 Filed 10/19/07 Page 6 of 20
5 For example, plaintiffs’ scattershot brief maintains under this heading that, among

other things, the Agreements signed by the plaintiffs were “missing required elements” (without

saying what they were), that the Agreements violate “the statutory requirements under the

Uniform Commercial Code” (even though this transaction does not relate in any way to the sale

of goods), and that the Agreements are “in contravention to the [unspecified] principles of

common law” because they are “self-serving.” (Plaintiffs’ Brief (doc. 23), at 7-8.) Such cryptic

statements do not assist the Court in understanding the legal basis of plaintiffs’ objection.

6 Instead, plaintiffs’ brief states in conclusory terms that plaintiffs did not have time

to see a lawyer on their own and that HCMS and Wendco presented the Agreement “as if it were

simply a required piece of paperwork akin to an emergency contact sheet, I-9 form or some other

important but insubstantial document.” (Plaintiffs’ Brief, at 8.) Leaving aside the obvious

contradiction in counsel’s characterization of it as an “important but insubstantial document,” the

Court rejects plaintiffs’ inchoate insinuation that these circumstances somehow amount to fraud,

coercion or deception that negates mutuality of assent to the Agreements.

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contract, and ordinary contract rules govern the interpretation of arbitration provisions.” Dunes

of GP, 2007 WL 1098545, at *2 (internal quotations and citations omitted). Plaintiffs assert that

contract-law principles of mutual assent preclude enforcement of the Agreements. It is difficult

to ascertain with precision the nature of plaintiffs’ objection, given that their brief touches on

numerous unrelated topics in the two pages of argument set forth under the heading of “No

Mutual Assent.”5

 Nonetheless, the Court understands the essence of plaintiffs’ position to be

that their assent to the Agreements “was not knowing” and “was not voluntary” because the

Agreements’ terms “were in English (a foreign language to the plaintiffs)” and “were obscured”

within “a complex legal document of two pages that a lay, 23 year old immigrant would not

understand.” (Plaintiffs’ Brief (doc. 23), at 7.)

Contrary to plaintiffs’ argument, the Agreements signed by Grozav and Scurtu are short

and straightforward, and are not steeped in technical terminology or abstruse legal jargon. 

Moreover, each Agreement states that plaintiffs understand its terms and that each was given an

opportunity to consult with counsel before signing it. Plaintiffs present no evidence tending to

undermine these recitations. Indeed, plaintiffs make no showing that Grozav and Scurtu, both of

whom are college graduates, are unable to read English or that they were forced to sign the

Agreement under coercive circumstances.6

Even if such evidence had been presented, which it was not, any argument that the

Case 1:07-cv-00410-WS-B Document 34 Filed 10/19/07 Page 7 of 20
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Agreements are invalid for want of mutual assent because plaintiffs could not read them is

foreclosed by black-letter Alabama law. “A party to a contract is responsible for reading the

contract” before signing it. Advance Tank and Const. Co. v. Gulf Coast Asphalt Co., --- So.2d --

--, 2006 WL 253600, *6 (Ala. Feb. 3, 2006) (internal citations and quotations omitted). More

importantly, Alabama courts have refused to carve out an exception to contract enforcement

where a signatory cannot read or understand the document. Indeed, under Alabama law,

“[c]onditions such as illiteracy and a lack of education do not ... deprive one of the ability to

contract.” Mason v. Acceptance Loan Co., 850 So.2d 289, 296 (Ala. 2002). In Mitchell Nissan,

Inc. v. Foster, 775 So.2d 138 (Ala. 2000), the Alabama Supreme Court rejected the purchaser’s

argument that an arbitration agreement he signed at the time of purchase was unenforceable

because his reading ability is limited to the sixth-grade level. Because the purchaser had not

asked the seller to read the agreement to him and had not informed the seller that he was unable

to read or understand the contract, the Foster court reasoned, he “cannot avoid his contractual

obligation by now asserting that he could not read the contract or understand it.” Id. at 140. In

reaching that conclusion, Foster relied on long-standing Alabama authority for the proposition

that a person who signs an instrument despite an inability to read cannot avoid the effect of his

signature if he has neither asked to have the instrument read nor inquired as to its contents. Id.

In short, there is an utter failure of proof to support plaintiffs’ contention that the

Agreements are void for want of mutual assent. They have failed to proffer any evidence that

they could not read the Agreements, that they could not understand the Agreements, that they

were not given the recited opportunity to consult with counsel of their own choosing, that they

ever asked anyone to read or explain the Agreements to them before executing same, or that they

ever inquired as to the Agreements’ contents. Contrary to plaintiffs’ apparent contention,

Alabama law does not automatically absolve non-native English speakers of all responsibility to

honor contracts they sign, nor does it undo the assent of a signatory whose busy schedule or

challenging personal and work situation might render it difficult for her to meet with a lawyer to

review an arbitration agreement before signing it. Accordingly, plaintiffs’ argument that the

Agreements are void for want of mutual assent is without factual or legal merit.

C. Lack of Consideration.

Next, plaintiffs pose the question of what consideration could possibly support the

Case 1:07-cv-00410-WS-B Document 34 Filed 10/19/07 Page 8 of 20
7 Rather than identifying Alabama authorities that support their position, plaintiffs

simply state in general terms that some jurisdictions allow an employer’s promise to arbitrate to

serve as consideration for the employee’s similar promise, while other jurisdictions do not. 

Without some indication from plaintiffs as to which approach Alabama has adopted or would

adopt, this argument is unhelpful.

8 In addition to the continued at-will employment furnishing the requisite

consideration, the mutuality of the arbitration obligation may itself provide consideration under

Alabama law. Indeed, as one district court applying Alabama law has explained, “there is

adequate consideration because arbitration is required for and binding on both parties.” Maddox

v. USA Healthcare-Adams, LLC, 350 F. Supp.2d 968, 974 (M.D. Ala. 2004).

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Agreements. In making this argument, plaintiffs fail to cite a single Alabama authority or to

explain the basis for their apparent contention that continued at-will employment is insufficient

to constitute consideration under Alabama law.7

 In fact, unequivocal Alabama precedents

directly foreclose this argument by holding that continued at-will employment satisfies the

consideration requirement for an arbitration agreement.

For instance, in Ameriquest Mortg. Co. v. Bentley, 851 So.2d 458 (Ala. 2002), the

plaintiff accepted at-will employment from the defendant that was conditioned on her signing an

arbitration agreement. Reversing the lower court ruling, the Alabama Supreme Court found that

the arbitration agreement set forth in the plaintiff’s employee handbook was supported by

sufficient consideration. In so concluding, the Bentley court reasoned as follows: “This Court

has consistently held ... that providing continued at-will employment is sufficient consideration

to make an employee’s promise to arbitrate binding. ... The fact that the at-will employment is or

may be terminated does not work a failure of consideration.” Id. at 464 (citations omitted); see

also Gadsden Budweiser Distributing Co. v. Holland, 807 So.2d 528 (Ala. 2001) (finding that

arbitration provision was not unenforceable for lack of mutuality of obligation where employer

provided at-will employment in exchange for employee’s promise to arbitrate employment

disputes); Baptist Health System, Inc. v. Mack, 860 So.2d 1265, 1275 (Ala. 2003) (arbitration

agreement in employment handbook deemed enforceable where employee continued her

employment with employer after receiving the handbook).8

Plaintiffs’ unsupported argument that the Agreements are invalid for want of

consideration fails as a matter of Alabama law.

Case 1:07-cv-00410-WS-B Document 34 Filed 10/19/07 Page 9 of 20
9 By identifying these contracts as being with ISE, plaintiffs’ brief departs from the

Complaint, which alleges that those contracts were entered into with The Association for Youth

Exchange Programs, and not ISE. Rather than attempting to resolve this discrepancy, the Court

will accept plaintiffs’ characterization of the contracts as presented in their brief,

notwithstanding the Complaint’s allegations otherwise.

10 Even if the two sets of contracts were inconsistent, plaintiffs’ assertion that the

earlier contract takes precedence over a later-executed agreement with inconsistent terms is

incorrect, as a matter of law. The Alabama Supreme Court has explained that “parties are free to

modify agreements, and if the terms of a subsequent agreement contradict the earlier agreement,

the terms of the later agreement prevail.” Cavalier Mfg., Inc. v. Clarke, 862 So.2d 634, 641

(Ala. 2003). “When parties execute successive agreements and the two agreements cover the

same subject matter and include inconsistent terms, the later agreement supersedes the earlier

agreement.” Hunter v. Wilshire Credit Corp., 927 So.2d 810, 814 (Ala. 2005) (quoting Cavalier,

862 So.2d at 641); see generally Restatement (First) of Contracts, § 408 (“A contract containing

a term inconsistent with a term of an earlier contract between the same parties is interpreted as

including an agreement to rescind the inconsistent term in the earlier contract.”). Thus, in no

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D. Lack of Consistency.

Scurtu and Grozav also contend that the Agreements should be struck down for “lack of

consistency.” Plaintiffs’ argument hinges on their contention that plaintiffs had previously

signed agreements with defendant ISE (which agreements are not in the record and have not

been placed before the undersigned for review) wherein they agreed that disputes would be

brought before a “court of competent jurisdiction.”9

 Plaintiffs maintain that their agreement with

ISE to litigate disputes in court is irreconcilable with their Agreements with HCMS and Wendco

to submit disputes to arbitration. The Court disagrees. There has been no allegation or

suggestion that the three defendants in this case are mere alter egos of each other; rather, all

indications are that they are distinct legal entities providing distinct services to plaintiffs in

connection with their travel to and training in the United States. That plaintiffs may have

contracted with one of those entities (ISE) to litigate any disputes between them in court is in no

way at odds with their contracting with the other two entities (HCMS and Wendco) to submit

any disputes between them to arbitration. Plaintiffs fail to explain how the differing enforcement

provisions in the ISE contracts and the HCMS/Wendco Agreements somehow operate to

invalidate the latter as a matter of law. The Court perceives no legal basis for such an argument,

and therefore overrules plaintiffs’ consistency objection.10

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event could an earlier-signed agreement providing for dispute resolution in court serve to

neutralize or invalidate a later-signed agreement by the same parties providing for dispute

resolution via arbitration. The legal premise of plaintiffs’ argument is faulty.

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E. Unconscionability.

In a further attempt to undermine the arbitration provisions to which they agreed, Scurtu

and Grozav challenge the Agreements as being unconscionable in various respects.

1. Legal Standard.

“[T]here is nothing inherently unfair or oppressive about arbitration clauses ... and

arbitration agreements are not in themselves unconscionable.” Ryan’s Family Steakhouse, Inc. v.

Kilpatric, --- So.2d ----, 2006 WL 3691554, *8 (Ala.Civ.App. Dec. 15, 2006) (internal

quotations and citations omitted); see also Sloan Southern Homes, LLC v. McQueen, 955 So.2d

401, 404 (Ala. 2006) (“[u]nder Alabama law, arbitration provisions are not per se

unconscionable”). This is equally true in employment cases, where courts have stressed that

“[m]ere inequality in bargaining power ... is not a sufficient reason to hold that arbitration

agreements are never enforceable in the employment context.” Service Corp., 883 So.2d at 633

n.15; see also Caley, 428 F.3d at 1377 (arbitration agreement is not unconscionable even though

“there is some bargaining disparity here, as often in the employment context”). An

unconscionable contractual provision is one “such as no man in his sense and not under delusion

would make on the one hand, and as no honest and fair man would accept on the other.” Ryan’s,

2006 WL 3691554, at *8 (citations omitted).

“Under Alabama law, unconscionability is an affirmative defense to the enforcement of a

contract, and the party asserting that defense bears the burden of proving it by substantial

evidence.” Bess v. Check Express, 294 F.3d 1298, 1306-07 (11th Cir. 2002); see also Rigas, 923

So.2d at 1086 (observing that “unconscionability is an affirmative defense, and the party

asserting the defense bears the burden of proving unconscionability”). The Alabama Supreme

Court has declared that the two essential elements of unconscionability are “(1) terms that are

grossly favorable to a party that has (2) overwhelming bargaining power.” American Gen. Fin.,

Case 1:07-cv-00410-WS-B Document 34 Filed 10/19/07 Page 11 of 20
11 “To satisfy the grossly favorable standard, courts look to whether the agreement

includes (a) terms that impair the integrity of the bargaining process or otherwise contravene the

public interest or public policy, (b) terms that would impermissibly alter fundamental legal

duties, (c) terms that seek to negate the reasonable expectations of the nondrafting party, and (d)

unreasonably and unexpectedly harsh terms having to do with central aspects of the transaction.” 

Patriot Mfg., Inc. v. Dixon, 399 F. Supp.2d 1298, 1311 (S.D. Ala. 2005).

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Inc. v. Branch, 793 So.2d 738, 748 (Ala. 2000); see also McQueen, 955 So.2d at 403 (same).11

More generally, Alabama courts require parties objecting to arbitration clauses on

unconscionability grounds to prove both procedural unconscionability (i.e., that the imposedupon party lacked meaningful choice about whether and how to enter into the transaction) and

substantive unconscionability (i.e., that the contract terms are unreasonably favorable to the

more powerful party by, for example, altering in an impermissible manner fundamental duties

otherwise imposed by law or negating reasonable expectations of the nondrafting party). See

Rigas, 923 So.2d at 1086-87. 

2. Application of Legal Standard.

The Court finds that plaintiffs have failed to meet their burden of showing procedural and

substantive unconscionability.

On the subject of substantive unfairness, there is no legal or factual basis for concluding

that the Agreements’ terms are grossly unfavorable to Scurtu or Grozav. Plaintiffs do not

identify any particular aspects of the Agreements that they believe to be oppressive; rather, their

position is apparently that relinquishing their right to litigate disputes in court is itself grossly

unfair. Alabama courts have steadfastly disavowed such a notion. See, e.g., Gayfer Montgomery

Fair Co. v. Austin, 870 So.2d 683, 691 (Ala. 2003) (arbitration agreement in employment

context held not grossly favorable to employer where agreement was equally binding on both

parties and did not limit the types of damages that employee could recover); Potts v. Baptist

Health System, Inc., 853 So.2d 194, 206 (Ala. 2002) (arbitration agreement in employment

context is not grossly favorable to employer where it is equally binding on both parties and does

not limit arbitrator’s ability to provide remedies under Alabama law). The Agreements at issue

in this case are markedly similar to those at issue in Gayfer and Potts, inasmuch as they were

binding on both plaintiffs and HCMS/Wendco and they did not purport to circumscribe the

Case 1:07-cv-00410-WS-B Document 34 Filed 10/19/07 Page 12 of 20
12 Indeed, plaintiffs’ counsel resorts to unabashed conjecture on this point, stating

that “it does not appear that Plaintiffs were in a position to bargain for more favorable terms on

this point.” (Plaintiffs’ Brief, at 12.) What is the evidence? An arbitration clause will not be

struck down as unconscionable merely because it “appears” to counsel, with no supporting facts

of any kind, that his clients may not have been in a position to bargain for more favorable terms.

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remedies that an arbitrator could award plaintiffs. There is nothing grossly unfavorable or onesided about a mere bilateral requirement to arbitrate employment-related disputes between

employer and employee. As the Alabama Supreme Court has pointed out, “[i]nstead of

suffering unconscionable treatment, a party, by agreeing to arbitrate, ... trades the procedures and

opportunity for review of the courtroom for the simplicity, informality, and expedition of

arbitration.” Gayfer, 870 So.2d at 691 (internal quotations and citations omitted).

The absence of a showing of substantive unconscionability is itself fatal to plaintiffs’

attempts to invalidate the Agreements on unconscionability grounds. See Rigas, 923 So.2d at

1087 (“To avoid an arbitration provision on the ground of unconscionability, the party objecting

to arbitration must show both procedural and substantive unconscionability.”). Even if Scurtu

and Grozav had shown that the terms of the Agreements were somehow grossly unfavorable to

them, which they have not, their unconscionability argument would nonetheless fail because they

have failed to make any showing of lack of meaningful choice as necessary to establish

procedural unconscionability. There is neither evidence nor argument that HCMS/Wendco

placed these Agreements before plaintiffs on a take-it-or-leave-it basis, threatened to fire them if

they refused to sign the Agreements, forced them to sign the Agreements on the spot, or forbade

them from reviewing the Agreements with counsel or anyone else they saw fit.12 To the

contrary, each plaintiff specifically acknowledged in signing the Agreement that she did so

voluntarily and that she had been afforded a full opportunity to discuss it with counsel before

executing it. That plaintiffs may now regret the choice they made does not equate to a lack of

meaningful choice, particularly in the absence of any showing that plaintiffs’ representations in

those Agreements concerning voluntariness are a lie. Where, as here, a plaintiff makes no

showing of lack of meaningful choice, Alabama courts have given decidedly short shrift to

unconscionability arguments. See Ryan’s, 2006 WL 3691554, at *9 (rejecting employee’s

argument that arbitration agreement was procedurally unconscionable where employee “offered

Case 1:07-cv-00410-WS-B Document 34 Filed 10/19/07 Page 13 of 20
13 Perhaps plaintiffs intended to argue that they might be fired unless they executed

the Agreements immediately and without questions. Even if plaintiffs had so argued, and even if

they had presented supporting evidence on that point, such a showing does not rise to the level of

procedural unconscionability. See Potts, 853 So.2d at 206 (possibility that employee will be

fired if she fails to sign arbitration agreement, and resulting financial hardship on employee, is

not in and of itself unconscionable and does not invalidate agreement). Nor would it advance

plaintiffs’ cause to maintain that they were prevented by their own impoverished status from

seeking out counsel to review the Agreements. See Green Tree Financial Corp. of Alabama v.

Wampler, 749 So.2d 409, 416 (Ala. 1999) (“Because the general principles of Alabama contract

law do not excuse performance on grounds of financial hardship, we cannot allow a party’s

poverty, standing alone ..., to constitute a defense to enforcement of an arbitration agreement.”).

14 Plaintiffs offer no evidence as to either their ability to pay or the magnitude of the

potential arbitration costs, but simply would have the Court accept on faith that the former is a

low number and that the latter is a much higher number.

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no evidence indicating that she lacked a meaningful choice in signing the arbitration agreement

or that Ryan’s exercised overwhelming bargaining power”). This Court does the same.13

In finding plaintiffs’ unconscionability showing to be inadequate under Alabama law, the

Court derives guidance from Gayfer Montgomery Fair Co. v. Austin, 870 So.2d 683 (Ala. 2003),

a case involving similar circumstances. In Austin, the employee argued that the arbitration

agreement she had executed in connection with her employment was unconscionable. The

Alabama Supreme Court disagreed, reasoning as follows: (a) the employee did not contend that

her employer had misrepresented the arbitration agreement; (b) the agreement itself was clear

and set forth in unmistakable terms the employee’s obligation to arbitrate; (c) there was no

evidence that the employee could not have understood what she was signing had she taken time

to read it; (d) there was no evidence that the employer denied her the opportunity to read the

document or tricked her into signing it; and (e) the employee failed to identify any aspect of the

agreement that was grossly favorable to her employer. Id. at 690-91. That same constellation of

considerations conclusively defeats the unconscionability defense of Scurtu and Grozav.

Before leaving the topic of unconscionability, the Court will explain why four additional

arguments proffered by plaintiffs are unavailing. First, plaintiffs assert that the failure of the

Agreements to disclose arbitration fees that plaintiffs would have to pay, and the possibility that

those fees might be exorbitant, renders the documents unconscionable.14 In Bess v. Check

Case 1:07-cv-00410-WS-B Document 34 Filed 10/19/07 Page 14 of 20
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Express, 294 F.3d 1298 (11th Cir. 2002), the Eleventh Circuit considered and rejected just such

an argument. The Bess plaintiffs maintained that their arbitration agreement was unenforceable

because it potentially gave rise to high costs to the party pursuing arbitration, inasmuch as it said

nothing about payment of filing fees, apportionment of arbitration costs, ability to waive fees and

costs due to financial hardship or the like. The court explained that because the plaintiffs were

simply speculating that their costs of pursuing arbitration might be prohibitively expensive, and

“the record reveals only that the arbitration agreement is silent on the subject, ... that fact alone is

insufficient to render the agreement unenforceable.” Bess, 294 F.3d at 1304; see also Green

Tree Financial Corp. of Alabama v. Wampler, 749 So.2d 409, 415 (Ala. 1999) (noting that,

where arbitration clause is silent about costs of arbitration, “settled principles of Alabama law”

preclude court from assuming worst case scenario); Taylor v. Citibank USA, N.A., 292 F.

Supp.2d 1333 (M.D. Ala. 2003) (party seeking to avoid arbitration on basis of high costs must

demonstrate that he faces such high costs if compelled to arbitrate his claim that he is effectively

precluded from vindicating his rights in arbitral forum). In light of these authorities, plaintiffs’

contention that the Agreements are unconscionable because the arbitration fees are not spelled

out in detail therein cannot withstand scrutiny.

Second, plaintiffs balk that an arbitration remedy is no remedy at all because “Defendants

may rely on the expiration of Plaintiffs’ visa and subsequent return to their native country as a

further bar to arbitration.” (Plaintiffs’ Brief, at 13.) But surely the same scenario could occur

even with a remedy that allowed plaintiffs to sue in court. Either way, plaintiffs’ visas could

lapse during the pendency of arbitral or court proceedings, forcing them to pursue their claims in

either an arbitral or a judicial forum from the considerable geographic distance of their mother

country. Thus, the inequity of which plaintiffs complain is not unique to their arbitration remedy

at all, but is rather an inevitable byproduct of their temporary visa status in the United States and

their expressed intent to return to Moldova upon expiration of same.

Third, plaintiffs brand the Agreements as contracts of adhesion. That is simply not

correct under Alabama law. In that respect, Alabama courts have categorically declared that “in

regard to arbitration agreements, certain defenses - including the defense that an arbitration

agreement is a contract of adhesion - are without merit.” Johnnie’s Homes, Inc. v. Holt, 790

So.2d 956, 964 (Ala. 2001).

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Fourth, plaintiffs argue that the Agreements are unconscionable because they contain

class action waivers. Specifically, the Agreements include a provision stating, “The parties also

agree that any arbitration between the parties will not be arbitrated in a collective or class-wide

basis.” But plaintiffs have not invoked the Rule 23 machinery in this action. Their Complaint

includes no class allegations. Even if it did, binding authority is clear that class relief waivers in

arbitration clauses are not per se unenforceable. Compare Caley, 428 F.3d at 1378 (determining,

under specific facts of that case, that agreement’s prohibition of class actions as to certain

employment-related claims was not unconscionable, but was instead consistent with goals of

simplicity, informality and expedition touted by Supreme Court) with Dale, 498 F.3d at 1220-24

(class action waiver deemed unenforceable because without benefit of class action mechanism,

cable subscribers would effectively be precluded from suing defendant because cost of

vindicating individual subscriber’s claim, relative to potential recovery, is simply too great). 

“[T]he enforceability of a particular class action waiver in an arbitration agreement must be

determined on a case-by-case basis, considering the totality of the facts and circumstances. 

Relevant circumstances may include, but are not limited to, the fairness of the provisions, the

cost to an individual plaintiff of vindicating the claim when compared to the plaintiff’s potential

recovery, the ability to recover attorney’s fees and other costs and thus obtain legal

representation to prosecute the underlying claim, the practical [e]ffect the waiver will have on a

company’s ability to engage in unchecked market behavior, and related public policy concerns.”

Dale, 498 F.3d at 1224.

Given the specific posture of this case, there is no need for the Court to rule on whether

the class relief waiver is or is not enforceable here. As noted, the operative Complaint is devoid

of class allegations. More importantly, even if the class relief waiver were unenforceable in this

case, that provision would not render the entire Agreement unconscionable. Alabama courts

have insisted that “it is the general duty of the court to preserve so much of a contract as may

properly survive its invalid and ineffective provisions.” McQueen, 955 So.2d at 404 (internal

quotations and citations omitted). In that regard, Alabama courts routinely “excise void or

Case 1:07-cv-00410-WS-B Document 34 Filed 10/19/07 Page 16 of 20
15 It is appropriate to look to state law concerning severability in the arbitration

agreement context. See Terminix Int’l Co., LP v. Palmer Ranch Ltd. Partnership, 432 F.3d

1327, 1331 (11th Cir. 2005) (if portion of arbitration agreement is unenforceable, court must look

to state law to determine whether offensive terms are severable and, if so, compel arbitration

according to the remaining, valid terms of the parties’ agreement).

16 In reaching this conclusion, the Court has considered plaintiffs’ public policy

arguments and has determined them to be without merit. Plaintiffs suggest that because they

have brought statutory claims under RICO and the like that the interests of public policy dictate

that such claims be litigated in court rather than before an arbitrator. Plaintiffs cite no authority

that supports this position, and the overwhelming weight of the caselaw is otherwise. See, e.g.,

Caley, 428 F.3d at 1367 (“courts have consistently found that claims arising under federal

statutes may be the subject of arbitration agreements and are enforceable under the FAA” and “it

is not an unlawful employment practice for an employer to require an employee to arbitrate,

rather than litigate, rights under various federal statutes”) (citation omitted). Nor is there any

merit to plaintiffs’ unsupported contention that public policy requires the arbitration agreement

to be declared unenforceable in this case so as to obviate the need for plaintiffs’ claims to be

presented in two fora, given that their claims against ISE are not subject to any arbitration

agreement. To construe public policy so broadly would be to create a gaping loophole whereby

a plaintiff could automatically evade compliance with an arbitration provision to which she

agreed to be bound simply by adding another defendant who was not a signatory to that

agreement. In the absence of any showing by plaintiffs that public policy forbids or disfavors

the enforcement of an arbitration clause simply because the plaintiff has also sued a person not

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illegal provisions in a contract, even in the absence of a severability clause.” Id.15 That outcome

is reinforced by the fact that the Agreements contain an unambiguous severability clause, which

states that the parties “agree that the provisions of this Agreement are severable and, should any

provision be held unenforceable, all others will remain valid, binding, and fully enforceable.” 

(Doc. 12, Exhs. A & B.) Thus, even if plaintiffs were correct that the class relief waiver

provision is unenforceable, they could not parlay that deficiency into a determination that the

Agreements are unconscionable and hence unenforceable in their entirety. Because that issue is

irrelevant to the enforceability of plaintiffs’ agreement to submit disputes to arbitration, the

Court makes no findings and expresses no opinions as to whether the class action waiver is or is

not enforceable in this case.

For all of the foregoing reasons, the Court finds that plaintiffs have failed to meet their

burden of establishing their affirmative defense that the arbitration agreements in question are

unconscionable.16

Case 1:07-cv-00410-WS-B Document 34 Filed 10/19/07 Page 17 of 20
subject to that provision, the Court declines to engraft such a sweeping exception onto the

general rules favoring enforcement of arbitration agreements under the FAA.

17 This outcome works no hardship on plaintiffs. At best, their Motion for Oral

Arguments suggests that a hearing is necessary to address “the matter of the plaintiffs [sic]

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F. Plaintiffs’ Motion for Oral Argument.

Following the close of briefing on the Motion to Dismiss or Stay, plaintiffs filed a

pleading styled “Plaintiffs’ Motion for Oral Arguments” (doc. 26). This Motion and the

accompanying memorandum read much more like an unauthorized sur-reply than a request for a

hearing, with plaintiffs devoting approximately two paragraphs of this 10-page submission to

addressing the request for a hearing and the remainder to re-arguing the merits. This is

improper. See, e.g., Kerns v. Sealy, 496 F. Supp.2d 1306, 1310 n.5 (S.D. Ala. 2007) (observing

that sur-replies should only be submitted with prior leave of court). 

Additionally, it is difficult to discern whether plaintiffs are asking for oral argument or an

evidentiary hearing, as their filing uses both terms interchangeably. To the extent that plaintiffs

seek oral argument, that request is denied. The parties’ briefs adequately set forth their

respective positions on the legal issues pertaining to HCMS/Wendco’s motion for dismissal or

stay, such that oral argument would not substantially assist the Court in understanding the

parties’ respective legal arguments. See Local Rule 7.3 (“the court may in its discretion rule on

any motion without oral argument”). To the extent that plaintiffs are actually seeking an

evidentiary hearing rather than oral argument, they have failed to make any proffer tending to

show the existence of disputed facts that must be resolved via hearing. If Scurtu and Grozav had

evidence they wished to present in support of their defenses to the arbitration agreements, it was

incumbent on them to submit such evidence now, rather than simply articulating a vague intent

to present it in the future. See Leeman v. Cook’s Pest Control, Inc., 902 So.2d 641, 644 (Ala.

2004) (explaining that “a motion to compel arbitration is analogous to a motion for summary

judgment”). They have not done so, and this Court will not afford them a second bite at the

apple by granting them an evidentiary hearing to marshal and submit evidence that could and

should have been presented earlier. On that basis, plaintiffs’ request for evidentiary hearing is

denied.

17

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educational and business acumen.” (Doc. 26, at 8.) However, the undersigned’s ruling on the

arbitration question does not turn on this factor, so it would serve no purpose to conduct an

evidentiary hearing to make factual findings concerning plaintiffs’ educational and business

acumen. Aside from this one issue, plaintiffs’ Motion and brief do not identify any other facts

that they wish to develop at a hearing, nor do they explain why they could not have submitted

such facts via affidavit or otherwise in this summary-judgment style proceeding regarding the

enforceability of the arbitration agreements.

18 Plaintiffs have requested “that the Court stay any order [compelling arbitration] to

allow Platiffs [sic] to move for a certification of a class.” (Doc. 23, at 17.) The Court declines to

do so. As mentioned, the Complaint is devoid of class allegations. Plaintiffs have identified no

reason why they have failed to bring their class allegations and motion for class certification

previously during the four and a half month history of this litigation in federal court. Nor have

plaintiffs made any showing that the Dale factors would militate in favor of striking down the

class action waiver in this case. The Court will not inject indefinite delay into these proceedings

to enable plaintiffs to amend their complaint to bring class allegations that they could have

brought before and to file a motion for class certification that they could have filed previously.

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III. Conclusion.

For all of the foregoing reasons, it is ordered as follows:

1. The Motion to Dismiss Complaint as to Defendants, Hospitality and Catering

Management Services and Wendco of Alabama, Inc., or, in the Alternative, to

Stay the Case and Compel Arbitration (doc. 11) is granted in part and denied in

part. The Court finds that the arbitration agreements executed by plaintiffs and

movants are enforceable, and orders those parties to proceed to arbitration in

accordance with the terms of such agreements. This arbitration shall encompass

all of plaintiffs’ causes of action herein against HCMS and Wendco.18

2. Notwithstanding the determination that plaintiffs’ claims against HCMS and

Wendco must be arbitrated, this Court retains jurisdiction to confirm or vacate the

resulting arbitration award under 9 U.S.C. §§ 9-10. TranSouth Financial Corp. v.

Bell, 149 F.3d 1292, 1297 (11th Cir. 1998). Accordingly, the Court denies the

Motion insofar as it seeks dismissal of plaintiffs’ claims against HCMS and

Wendco, but grants the Motion insofar as it seeks a stay of such claims pending

arbitration. The Court stays all of plaintiffs’ claims against HCMS and Wendco

pending the outcome of arbitration. Beginning in November 2007, HCMS and

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Wendco are ordered to file, on or before the third Friday of each month, a

written report reflecting the status of the arbitration proceedings.

3. This Order compelling arbitration specifically exempts plaintiffs’ causes of action

against defendant International Student Exchange. Those claims have not been

ordered to arbitration and will proceed in this forum. In that regard, Magistrate

Judge Bivins will enter forthwith a Rule 16(b) Scheduling Order governing the

litigation of those claims.

4. Plaintiffs’ Motion for Oral Arguments (doc. 26) is denied.

DONE and ORDERED this 19th day of October, 2007.

 s/ WILLIAM H. STEELE 

UNITED STATES DISTRICT JUDGE

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