Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_02-cv-02026/USCOURTS-azd-2_02-cv-02026-0/pdf.json

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

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1/

D.AZ. L.R. CIV. 7.2(g).

2/

 D.AZ. L.R. Civ. 7.2(f).

3/

 The background is well known to the parties and was extensively set out in the order at

docket 41; it is recited here only to the extent necessary to understand this decision.

4/

 Docket 23.

UNITED STATES DISTRICT COURT

DISTRICT OF ARIZONA

KENNETH A. BATORY,

Plaintiff,

vs.

SEARS, ROEBUCK & CO., a New

York corporation d/b/a “The Great

Indoors,”

Defendant.

2:02-cv-02026 JWS

ORDER

[Re: Motion at Docket 44]

I. MOTION PRESENTED

At docket 44 defendant Sears, Roebuck & Co. (“Sears”) has moved for

reconsideration of the decision entered October 13, 2006, denying Sears’ motion for

summary judgment. At docket 48, pursuant to the Court’s request,1/

 plaintiff Kenneth A.

Batory (“Batory”) responded in opposition to the motion. Neither party has requested

oral argument, and it would not assist the Court in deciding the motion.2/

II. BACKGROUND3/

In March 2003 the court granted Sears’ motion to refer this matter to arbitration

and dismissed the case.4/

 Batory appealed that order to the Ninth Circuit, which in an

Case 2:02-cv-02026-JWS Document 50 Filed 12/12/06 Page 1 of 5
5/ Batory v. Sears, Roebuck & Co., 124 Fed.Appx. 530 (9th Cir.2005).

6/

 Docket No. 27.

7/ Batory, 124 Fed.Appx. at 533.

8/

 Docket No. 41.

9/ Id.

10/

D.AZ. L.R. 7.2(g).

2

unpublished decision5/ reversed the finding that the Dispute Resolution Program and

Agreement (“DRP”) do not constitute an adhesion contract and remanded for an

evidentiary hearing on unconscionability pursuant to Arizona Revised Statutes 47-

2302.6/

 Specifically, the Ninth Circuit directed this Court to consider whether the

agreement and DRP are unconscionable because:7/

(1) there exists an “overall imbalance in the obligations and rights imposed

by the bargain” in that, although Sears is obligated to arbitrate all

“Covered Claims,” these Covered Claims consist only of “claims against

the Company” to the exclusion of claims that Sears may initiate against its

employees, Maxwell, 907 P.2d at 58 [Maxwell v . Fidelity Fin. Serv., Inc.,

907 P.2d 51, 58 (Ariz.1995)]; see also Armendariz v. Found. Health

Psychcare Servs., Inc., 24 Cal.4th 83, 99 Cal.Rptr.2d 745, 6 P.3d 669

(2000); (2) although Sears “reserves the right to modify or terminate [the]

DRP upon sixty (60) days notice,” it affords no equivalent power to its

employees, see Ingle v. Circuit City Stores, Inc., 328 F.3d 1165, 1179 (9th

Cir. 2003), cert. denied, 540 U.S. 1160, 124 S.Ct. 1169, 157 L.Ed.2d 1204

(2004); and (3) the fee provision, which requires employees to pay the

lesser of $150 or the filing fee if the claim had been filed in court, does not

provide for waiver in cases of indigence, see id. at 1177.

In accordance with the Ninth Circuit mandate, Judge Carroll held an evidentiary

hearing, and took the matter under advisement. Finding that the covered claims and

termination and modification provisions were unconscionable because they created an

“overall imbalance of rights and obligations imposed by the bargain” (citing Maxwell),

Judge Carroll held that the DRP was unenforceable and denied Sears’ motion to refer

this matter to arbitration.8/

 Judge Carroll then recused himself, and this case was

randomly reassigned to the undersigned.9/ On October 23, 2006, Sears timely filed its

motion for reconsideration.10/

Case 2:02-cv-02026-JWS Document 50 Filed 12/12/06 Page 2 of 5
11/ Thomas v. Bible, 983 F.2d 152, 154 (9th Cir.1993)

12/ City of Los Angeles, Harbor Div. v. Santa Monica, 254 F.3d 882, 885 (9th Cir.2001).

13/ Leslie Salt Co. v. United States, 55 F.3d 1388, 1393 (9th Cir.1995); see also School

District No. 1J, Multnomah County, Or. v. ACandS, Inc., 5 F.3d 1255, 1263 (9th Cir.1993).

14/ See Delta Sav. Bank v. United States, 265 F.3d 1017, 1027 (9th Cir.2001).

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III. STANDARD OF REVIEW

Under the law of the case doctrine a court is generally precluded from

reconsidering an issue that has already been decided by the same court or a higher

court in the same case.11/ However, as long as a district court retains jurisdiction over a

case, it has inherent power to reconsider and modify an interlocutory order for sufficient

cause.12/

 That inherent power is not unfettered: “the court may reconsider previously

decided questions in cases in which there has been an intervening change of controlling

authority, new evidence has surfaced, or the previous disposition was clearly erroneous

and would work a manifest injustice.”13/

 The law of the case doctrine and the applicable

limitations on the court’s discretion apply in cases, such as this, in which a newly

assigned judge is called upon to reconsider a decision rendered by an earlier judge in

the same case.14/

IV. DISCUSSION

Sears does not cite any intervening change of law or new evidence. Thus, the

sole question presented by this motion is whether the order entered at docket 41 “was

clearly erroneous and would work a manifest injustice.” For the following reasons the

court holds that it does not.

On appeal, the Ninth Circuit, applying Broemmer v. Abortion Servs. of Phoenix,

Ltd., 840 P.2d 1013 (Ariz.1992), specifically found that the DRP was a contract of

adhesion. The Ninth Circuit, however, rejected Batory’s other arguments, i.e., mutuality

of obligation, the lack of signature by Sears, and lack of consideration. These rulings by

the Ninth Circuit are the law of the case binding on this court, and they were not

revisited in the order which Sears’ asks to have reconsidered.

Case 2:02-cv-02026-JWS Document 50 Filed 12/12/06 Page 3 of 5
15/

 The bargained for exchange required to constitute adequate consideration to make a

contract binding at law, i.e., a “peppercorn,” may be substantially less than that required in

equity. See, e.g., Maxwell, 907 P.2d at 58, n.3.

16/

 124 Fed.Appx. at 533-34.

17/ Broemmer, 840 P.2d at 1016.

18/

 840 P.2d at 1017. 

19/

 907 P.2d at 57 (internal quotation marks omitted).

4

 The issue remanded to this court was whether, adequate legal consideration

notwithstanding, enforcement was precluded because it was unconscionable, an

equitable principal.15/

 The Arizona authorities cited by Sears address mutuality of

obligations in the context of legal consideration for the agreement. These address the

wrong issue; that there was legal consideration for the agreement was established by

the Ninth Circuit on appeal.16/

 The cases Sears cites (none of which are Arizona cases)

for the proposition that an arbitration agreement, even though one-sided for lack of

mutuality of the obligation to arbitrate, is none-the-less enforceable are inapposite.

Under Arizona law, “[t]o determine whether this contract of adhesion is

enforceable, we look to two factors: the reasonable expectations of the adhering party

and whether the contract is unconscionable.”17/

 Broemmer held that an adhesion

agreement to arbitrate was unenforceable as beyond the reasonable expectations of the

adhering party without reaching the issue of whether it was unconscionable.18/ Maxwell

made clear that “reasonable expectations and unconscionability are two distinct grounds

for invalidating or limiting enforcement of a contract.”19/ Taken together, Broemmer and

Maxwell make clear that an adhesion agreement to arbitrate that is unconscionable is

unenforceable under Arizona law.

The Ninth Circuit determined that the arbitration agreement at bar is an adhesion

contract. This court, applying the principles laid down by the Arizona Supreme Court in

Maxwell, determined that the provisions of the DRP were unconscionable rendering the

DRP unenforceable. Sears does not argue Maxwell does not apply or that this court

misapplied Maxwell. Nor does Sears argue that the finding that the coverage and the

modification and termination provisions created “an overall imbalance of rights and

Case 2:02-cv-02026-JWS Document 50 Filed 12/12/06 Page 4 of 5
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obligations” and unconscionable was erroneous. Indeed, Sears ignores Maxwell

entirely. To grant the motion at bar, the court would also have to ignore relevant

Arizona law. That is something that the court may not do. It follows that the court

cannot say the order at docket 41 was clearly erroneous or works a manifest injustice.

V. CONCLUSION

For the reasons above, Sears’ Motion for Reconsideration at docket 44 is

DENIED.

DATED at Anchorage, Alaska, this 12th day of December 2006.

 /s/ 

JOHN W. SEDWICK

UNITED STATES DISTRICT JUDGE

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