Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_10-cv-01611/USCOURTS-azd-2_10-cv-01611-0/pdf.json

Nature of Suit Code: 442
Nature of Suit: Civil Rights Employment
Cause of Action: 42:2000e Job Discrimination (Employment)

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Marquise Price, 

Plaintiff, 

vs.

HotChalk, Inc., and Mark Zinselmeier, 

Defendants. 

)

)

)

)

)

)

)

)

)

)

)

)

No. CV10-1611-PHX-NVW

ORDER AND OPINION

[Re: Motions at Docket 8, 9, and 15]

Before the Court are three motions filed by Defendants HotChalk and Mark

Zinselmeier (collectively, “HotChalk”): a Motion to Compel Arbitration (Doc. 8); a “Motion

Re: Judicial Notice” (Doc. 9); and another “Motion Re: Judicial Notice” (Doc. 15). The

Court will grant the first two motions and deny the third.

I. Motions for Judicial Notice

HotChalk’s motion to compel arbitration relies in part on the American Arbitration

Association rules governing employment disputes, available on AAA’s website at

www.adr.org/sp.asp?id=32904. HotChalk’s first motion for judicial notice therefore asks this

Court to take notice of the AAA rules. (Doc. 9.) Plaintiff has not opposed the motion, nor

is the Court aware of any reason why it should not judicially notice the AAA rules. Federal

Rule of Evidence 201(b) permits the court to take judicial notice of an adjudicative fact that

“is not subject to reasonable dispute in that it is either (1) generally known within the

territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by

Case 2:10-cv-01611-NVW Document 16 Filed 12/10/10 Page 1 of 8
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 2 -

resort to sources whose accuracy cannot be reasonably questioned.” Because Plaintiff does

not oppose the motion and the AAA rules are “capable of accurate and ready determination

by resort to sources whose accuracy cannot be reasonably disputed,” the Court will grant

HotChalk’s first motion for judicial notice.

HotChalk’s reply in support of its motion to compel (Doc. 14) seeks to refute the

argument that Plaintiff cannot afford to arbitrate in Santa Clara County, California (as the

arbitration clause at issue requires, explained below). HotChalk therefore relies, in part, on

recent Southwest.com and Expedia.com searches to establish that travel to the Santa Clara

County area would be reasonably affordable in March 2011 — which, HotChalk says, is the

soonest an arbitration hearing could occur. HotChalk’s second motion for judicial notice

asks the Court to notice those search results. (Doc. 15.)

The time for Plaintiff to respond to this second motion for judicial notice has not yet

expired, but the Court will deny it anyway. Airfare and hotel price quotes obtained on an

internet search conducted in November 2010 for travel in March 2011do not qualify as facts

“generally known within the territorial jurisdiction of the trial court” or “capable of accurate

and ready determination by resort to sources whose accuracy cannot be reasonably disputed,”

Fed. R. Evid. 201. Airfare and hotel rates are variable. Thus, prices quoted on the date

defendants conducted their internet search may not be the same as prices on the actual

purchase date. Accordingly, the Court will deny HotChalk’s second motion for judicial

notice.

II. Background on the Motion to Compel Arbitration

HotChalk represents itself as “a learning environment for K-12 teachers, students and

parents that includes a learning management system (LMS), a rich library of

teacher-contributed lesson plans, premium digital content, and professional development for

teachers in a Web-based environment.” (Doc. 1 at p. 3.) In August 2009, HotChalk assumed

certain duties for Concordia University Online, specifically, soliciting students to enroll in

Concordia’s degree programs and coordinating the application process for interested

students. (Doc. 1 at p. 4.)

Case 2:10-cv-01611-NVW Document 16 Filed 12/10/10 Page 2 of 8
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 3 -

Plaintiff Marquise Price is an African-American man who worked for HotChalk as

an “admissions counselor” in HotChalk’s Concordia operations. In this capacity, Price

solicited and followed up with prospective students. Price performed most of his duties from

a home office in Maricopa County, Arizona, but at times attended meetings at a HotChalk

office in Scottsdale, Arizona. (Id.)

An employment agreement, dated September 8, 2009, governed Price’s relationship

with HotChalk. It contains the following arbitration clause:

It is hereby agreed that any and all disputes that arise under the

terms of the Agreements between you and HotChalk shall be

resolved through final and binding arbitration, as specified

herein. This shall include, without limitation (except for claims

under workers’ compensation laws/regulations), any disputes

relating to employment, or termination, claims for breach of

contract or breach of the covenant of good faith and fair dealing

and any claims of discrimination. Binding arbitration will be

conducted in Santa Clara County, California in accordance with

the rules and regulations of the American Arbitration

Association. HotChalk will pay the cost of the arbitration.

(Doc. 8-1 at 6.)

Price alleges that he faced racial discrimination throughout his employment with

HotChalk. He has now filed this lawsuit, claiming racial discrimination and retaliation in

violation of federal and state civil rights statutes. HotChalk has moved to compel arbitration.

III. Analysis of the Motion to Compel Arbitration

A. The Federal Arbitration Act and Choice of State Law

The parties agree that Price’s employment agreement involves interstate commerce.

(See Doc. 1 ¶ 12; Doc. 8 at 3.) Therefore, the Federal Arbitration Act (FAA) governs the

enforceability of the arbitration clause within the employment agreement. See 9 U.S.C. §§ 1,

2.

The FAA liberally favors arbitration. Generally, “[t]he court’s role under the [FAA]

is . . . limited to determining (1) whether a valid agreement to arbitrate exists and, if it does,

(2) whether the agreement encompasses the dispute at issue.” Chiron Corp. v. Ortho

Case 2:10-cv-01611-NVW Document 16 Filed 12/10/10 Page 3 of 8
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 4 -

Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000) (citing 9 U.S.C. § 4). However,

a party hoping to avoid arbitration may challenge the arbitration agreement “upon such

grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. This

includes “generally applicable contract defenses, such as fraud, duress, or unconscionability.”

Doctor’s Assocs., Inc. v. Casarotto, 517 U.S. 681, 687 (1996).

Price does not dispute that his claims against HotChalk fall within his employment

agreement’s arbitration clause. Price argues, however, that the arbitration clause is

unenforceable because: (1) arbitrating in Santa Clara County is more expensive than

litigating in Arizona because it will require him “to somehow pay for travel, lodging, dining

and other expenses for both himself and his attorney — or to acquire yet another attorney in

California” (Doc. 13 at 3 ¶ 6); and (2) the arbitration clause is part of an adhesive contract.

Price’s arguments all reduce to a claim of unconscionability. “[U]nconscionability

is governed by state law.” Chalk v. T-Mobile USA, Inc., 560 F.3d 1087, 1092 (9th Cir.

2009). The employment agreement does not contain a choice-of-law clause, but both parties

agree that Arizona law should apply. (See Doc. 12 at 3; Doc. 14 at 3.) The Court will

therefore analyze the unconscionability of the arbitration clause under Arizona law.

B. Unconscionability According to Arizona Law

1. The Contract’s Allegedly Adhesive Nature

Price argues that the arbitration clause is unconscionable because the employment

agreement was a “take it or leave it” contract of adhesion. “An adhesion contract is typically

a standardized form ‘offered to consumers of goods and services on essentially a take it or

leave it basis without affording the consumer a realistic opportunity to bargain and under

such conditions that the consumer cannot obtain the desired product or services except by

acquiescing in the form contract.’” Broemmer v. Abortion Servs. of Phoenix, Ltd., 173 Ariz.

148, 150 (Ariz. 1992). HotChalk counters that the employment agreement was not offered

on a “take it or leave it” basis, and in any event, there is no indication that Price tried to

negotiate it.

Case 2:10-cv-01611-NVW Document 16 Filed 12/10/10 Page 4 of 8
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 5 -

The Court does not have enough evidence to decide whether the employment

agreement was an adhesive contract. Arguments of counsel are not evidence, see, e.g.,

Barcamerica Int’l USA Trust v. Tyfield Importers, Inc., 289 F.3d 589, 593 n.4 (9th Cir.

2002), and the parties’ respective declarations do not directly address the issue. Price states

in his declaration that “the surrounding circumstances and the way the documents were

presented” led him to believe that the employment agreement was non-negotiable (Doc. 13

at 3 ¶ 4), while HotChalk’s president, Ed Fields, states in his declaration, “It is not

HotChalk’s practice to tell prospective employees that the employment agreements are nonnegotiable and we do not make any such statements to prospective employees” (Doc. 14-1

¶ 4). Neither statement is helpful.

In any event, contracts of adhesion are not per se unenforceable. Broemmer, 173

Ariz. at 151. Rather, in Arizona, an adhesive contract is enforceable according to its terms

unless the contract does not fall within the reasonable expectations of the weaker party or the

contract is unconscionable. Id. The remainder of Price’s arguments go directly toward

unconscionability, so the Court will move to that question.

2. The Santa Clara County Requirement

Price argues that being forced to arbitrate in Santa Clara County will require him “to

somehow pay for travel, lodging, dining and other expenses for both himself and his attorney

— or to acquire yet another attorney in California.” (Doc. 13 at 3 ¶ 6.) This issue —

whether an arbitration clause is unconscionable because the plaintiff cannot afford arbitration

— is controlled by Green Tree Financial Corp. v. Randolph, 531 U.S. 79 (2000), and

Harrington v. Pulte Home Corp., 211 Ariz. 241, 119 P.3d 1044 (Ct. App. 2005). In Green

Tree, the U.S. Supreme Court held that vague and conclusory assertions of a plaintiff’s

financial circumstances create only a “speculative” risk that the costs of arbitration would

prevent plaintiffs from vindicating their rights. Green Tree, 531 U.S. at 90–92. In

Harrington, the Arizona Court of Appeals incorporated Green Tree into Arizona

unconscionability law, interpreting it as “dictat[ing] that arbitration agreements are

enforceable in the absence of individualized evidence to establish that the costs of arbitration

Case 2:10-cv-01611-NVW Document 16 Filed 12/10/10 Page 5 of 8
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 6 -

are prohibitive.” Harrington, 211 Ariz. at 252, 119 P.3d at 1055. Although the plaintiffs in

Harrington had submitted affidavits stating that they lived on limited incomes, “[t]he

affidavits offer[ed] no specific facts regarding [their] financial situations, only conclusory

statements. There [was] no showing of assets or why arbitration costs would be a hardship,

let alone a prohibitive hardship as required by [Green Tree].” Id. at 253, 1056 (emphasis in

original).

The Court finds that Price, like the Harrington plaintiffs, has not sufficiently

supported his allegations that arbitration in Santa Clara County would be too expensive.

Price’s declaration gives no specifics about his financial situation. He only “avow[s] that

given [my] precarious financial circumstances, the additional cost of litigating this matter in

the forum hand selected by HotChalk will almost force me to give-up on my claims.” (Doc.

13 at 3 ¶ 7.) This is not specific enough to support a ruling that the arbitration clause is

unconscionable.

The Court notes that the arbitration clause requires HotChalk to “pay the cost of the

arbitration.” Although this is vague, HotChalk’s arguments in support of compelling

arbitration clarify that “the only costs plaintiff will incur are for travel and lodging for the

arbitration.” (Doc. 14 at 6.) The Court therefore interprets “pay the cost of the arbitration”

as HotChalk’s agreement to pay all of the fees and expenses that the parties might have

otherwise been reasonably expected to share, such as all fees and expenses owed to AAA and

to the arbitrator, the cost of hiring a stenographer for the hearing, and the cost of renting a

hearing room. Accordingly, Price faces fewer expenses than many arbitration participants.

The Court further notes that AAA rules for employment-related cases permit the

arbitrator to “allow for the presentation of evidence [at the hearing] by alternative means

including web conferencing, internet communication, telephonic conferences and means

other than an in-person presentation of evidence.” R-28, AAA Employment Arbitration

Rules and Mediation Procedures (effective Nov. 1, 2009), available at

http://www.adr.org/sp.asp?id=32904. This provision may help Price mitigate some costs of

arbitrating in Santa Clara County.

Case 2:10-cv-01611-NVW Document 16 Filed 12/10/10 Page 6 of 8
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 7 -

Because a valid arbitration agreement exists and plaintiff’s claims are within the scope

of the arbitration agreement, the court must refer the action to arbitration and determine

whether to dismiss the action or stay the action pending the results of arbitration. In Bushley

v. Credit Suisse First Boston, 360 F.3d 1149, 1153 n.1 (9th Cir. 2004), the Ninth Circuit

endorsed the advice of the Second Circuit that district courts “should be aware that a

dismissal renders an order appealable under [9 U.S.C. § 16(a)(3), while the granting of a stay

is an unappealable interlocutory order under 16(b) ... Unnecessary dely of the arbitral process

through appellate review is disfavored.” “The [FAA] represents Congress’s intent ‘to move

the parties to an arbitrable dispute out of court and into arbitration as quickly and easily as

possible.’” Id. at 1153, (quoting Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp.,

460 U.S. 1, 22 (1983)). In keeping with the Congressional intent to move arbitrable disputes

into arbitration as expeditiously as possible, the court will stay this action pending

completion of arbitration.

IV. Order

IT IS THEREFORE ORDERED that Defendants’ “Motion Re: Judicial Notice”

(Doc. 9) is GRANTED.

IT IS FURTHER ORDERED that Defendants’ “Motion Re: Judicial Notice”

(Doc. 15) is DENIED.

IT IS FURTHER ORDERED that Defendants’ Motion to Compel Arbitration (Doc. 8)

is GRANTED.

Case 2:10-cv-01611-NVW Document 16 Filed 12/10/10 Page 7 of 8
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 8 -

IT IS FURTHER ORDERED that this case is STAYED pending the outcome of

arbitration pursuant to 9 U.S.C. § 3.

DATED this 10th day of December 2010.

/s/ JOHN W. SEDWICK

UNITED STATES DISTRICT JUDGE

Case 2:10-cv-01611-NVW Document 16 Filed 12/10/10 Page 8 of 8