UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF INDIANA

SOUTH BEND DIVISION

KENNETH K. PALMER, )

)

Plaintiff, )

)

v. ) No. 3:12 CV 828

)

MENARD, INC., )

)

Defendant. ) 

OPINION AND ORDER

Plaintiff Kenneth Palmer brought this action against Defendant Menard, Inc.,

incorrectly named in the complaint as “Menards,” alleging violations of 42 U.S.C. § 1981

and Title VII of the Civil Rights Act of 1964. (DE # 1.) Defendant has now moved to

dismiss plaintiff’s suit under RULE 12(b)(3) and to compel arbitration, arguing that

plaintiff’s claims are subject to binding arbitration. (DE #11.) Plaintiff has filed a

response to this motion (DE ## 18, 19) and defendant has filed a reply (DE # 20). For the

following reasons, that motion is granted. 

I. Factual Background1

Plaintiff worked at one of defendant’s retail stores in Mishawaka, Indiana.

(DE # 1.) During his employment, plaintiff suffered discrimination due to his race and

color. Specifically, plaintiff was called names like “slave” and “boy.” (Id. at 2-3.) Plaintiff

reported these incidents to a supervisor, but no action was taken against the person

 The factual allegations in plaintiff’s pro se complaint are sparse. The court will 1

do its best to accurately summarize plaintiff’s allegations, which, for purposes of

deciding this motion, the court will accept as true. 
who made the statements to plaintiff. (Id. at 3.) Plaintiff was also accused of theft, and

asked not to return to the store. (Id.) 

On January 27, 2012, plaintiff signed a document entitled “Employee/Employer

Agreement.” (See DE # 12-2 at 2.) That agreement, which contained provisions 2

regarding issues other than arbitration, stated, in part: 

In consideration of employment, continued employment, promotion or

salary increase by Menard, Inc., or any division thereof, and in further

consideration of the compensation paid or to be paid to me, I agree as

follows: 

 . . .

I agree that all problems, claims and disputes experienced within my work

area shall first be resolved as outlined in the Team Member Relations Section

of the Grow With Menards Team Member Information Booklet which I have

received. If I am unable to resolve the dispute by these means, I agree to

submit to final and binding arbitration. Problems, claims or disputes subject

to binding arbitration include, but are not limited to: statutory claims under

42 U.S.C. §§ 1981-1988 . . . Title VII of the Civil Rights Act of 1964 . . . . 

These claims shall be resolved by binding arbitration with the American

Arbitration Association (“AAA”) located at 225 North Michigan Avenue,

Suite 252, Chicago, Illinois 60601-7601 under its current version of the

National Rules for the Resolution of Employment Disputes. Both Menard,

Inc. and I understand that the AAA National Rules for the Resolution of

Employment Disputes shall govern the fees in this matter, and that the costs

of filing a demand for arbitration will not exceed the costs of filing a civil

complaint in federal court. A copy of the National Rules for the Resolution

of Employment Disputes and fee schedule of the American Arbitration

Association may be obtained by contacting it at the address above. 

(Id.) 

 In his response, plaintiff has attached an affidavit in which he states that he 2

signed the arbitration agreement on February 7, 2012, not January 27, 2012. (DE # 19-1.)

Plaintiff does not explain how the date January 27, 2012 ended up on the arbitration

agreement.

2
Defendant argues that plaintiff is bound by this agreement and his lawsuit

should therefore be dismissed. (DE ## 11, 12.)

II. Legal Standard

Defendant has moved to dismiss plaintiff’s suit pursuant to FEDERAL RULES OF

CIVIL PROCEDURE 12(b)(3) asserting that plaintiff’s suit should be dismissed because this

court is the improper venue for this suit. Because the arbitration agreement in this case

calls for arbitration outside of the Northern District of Indiana, RULE 12(b)(3) is the 3

appropriate vehicle for seeking dismissal of plaintiff’s suit. Faulkenberg v. CB Tax

Franchise Systems, LP, 637 F.3d 801, 808 (7th Cir. 2011) (“[W]e have held that a Rule

12(b)(3) motion to dismiss for improper venue, rather than a motion to stay or to

compel arbitration, is the proper procedure to use when the arbitration clause requires

arbitration outside the confines of the district court’s district.”). When ruling on a

motion to dismiss for improper venue under RULE 12(b)(3), the court may look to

evidence outside of the pleadings. Id. at 809-10. 

III. Analysis

To determine whether dismissal is appropriate in this case, the court must

determine if the parties had an enforceable agreement to arbitrate and, if so, whether

plaintiff’s claims are covered by the agreement. Defendant argues that both of these

requirements have been met. (DE # 12.) In response, plaintiff argues that the parties

never entered into a valid arbitration agreement. (DE # 19.) 

 The agreement specifically calls for arbitration in Chicago, Illinois. (DE # 12-1 at 3

2.) 

3
A. Arbitration Agreement

Federal courts rely on state contract law to determine whether an arbitration

agreement constitutes a valid contract. See Faulkenberg, 637 F.3d at 809. “Indiana courts

apply ordinary contract principles to arbitration agreements.” Gibson v. Neighborhood

Health Clinics, Inc., 121 F.3d 1126, 1130 (7th Cir. 1997). The required elements to form a

valid contract in Indiana are an offer, an acceptance, consideration, and a manifestation

of mutual assent. In re Paternity of M.F., 938 N.E.2d 1256, 1259 (Ind. Ct. App. 2010).

“Under federal procedural law, the existence of a contract is a mixed question of law

and fact that is subject to clear error review.” Winforge, Inc. v. Coachmen Industries, Inc.,

691 F.3d 856, 868 (7th Cir. 2012).

In its order denying defendant’s previous motion to dismiss (DE # 10), the court

determined that the parties did have a valid arbitration agreement after finding that all

the elements of a valid contract under Indiana law were present. (Id. at 6-7.) Before 4

reaching the arguments plaintiff makes in his response brief, the court would like to

make note of its analysis on the issue of contract formation from its order denying

defendant’s previous motion:

Here, defendant made an offer when it provided plaintiff a copy of the

employee/employer agreement, which outlined how any potential disputes

would be resolved. Plaintiff accepted that offer by signing the agreement. See

Buschman v. ADS Corp., 782 N.E.2d 423, 428 (Ind. Ct. App. 2003) (“Assent to

the terms of a contract may be expressed by acts which manifest

acceptance.”). The agreement is supported by adequate consideration:

plaintiff agreed to resolve future disputes by arbitration, and defendant

agreed to employ plaintiff (DE # 8-1 at 2) and be bound by the arbitrator’s

decision. Ackerman v. Kimball Int’l, Inc., 652 N.E.2d 507, 509 (Ind. 1995)

 Plaintiff did not file a response to defendant’s previous motion to dismiss.

4

4
(promise of continued at-will employment is consideration for a valid

contract) (adopting and incorporating Ackerman v. Kimball Int’l, Inc., 634

N.E.2d 778, 781 (Ind. Ct. App. 1994); see also Chambliss v. Darden Restaurants,

Inc., No. 1:12–cv–485, 2012 WL 4936400, at *2 (S.D. Ind. Oct. 15, 2012) (“The

[dispute resolution contract] is also supported by adequate consideration

because both parties agreed to a limitation on the avenues available for

dispute resolution; to wit, [plaintiff] agreed to arbitrate future disputes in

exchange for continued employment and [defendant] in turn agreed to be

bound by the arbitrator’s agreement.”); Shimkus v. O’Charley’s, Inc., No.

1:11–CV–122, 2011 WL 3585996, at *4 (N.D. Ind. Aug. 16, 2011) (arbitration

agreement signed as a condition of employment supported by consideration

because defendant agreed to employ plaintiff); Kreimer v. Delta Faucet Co.,

No. IP99-1507, 2000 WL 962817, at *3 (S.D. Ind. June 2, 2000) (“In addition to

the continued eligibility for at-will employment, consideration can also be

found by way of [defendant’s] agreement to be bound by the arbitrator’s

decision, thereby waiving its right to seek judicial determination of a raised

claim.”). Finally, by signing the agreement, both parties evidenced their

assent to the contract. Janiga v. Questar Capital Corp., 615 F.3d 735, 743 (7th

Cir. 2010) (“[Plaintiff’s] signature . . . objectively demonstrated his assent to

the contract.”). In sum, the court finds that the parties entered into a valid

and enforceable contract. 

(DE # 10 at 6-7.) 

Keeping that analysis in mind, the court will now address the arguments plaintiff

makes in his response brief. First, plaintiff argues that the parties do not have a valid

arbitration agreement because the employee that ran plaintiff’s new-hire orientation did

not explain the documents plaintiff signed (including the employment agreement

containing the arbitration clause) and did not give plaintiff an opportunity to read the

documents, but instead rushed plaintiff through the entire process. (DE # 19 at 3-4.) In

response, defendant has provided evidence indicating that plaintiff’s new hire

orientation took 3.5 hours, and therefore, was not rushed, as plaintiff contends.

(DE # 20-1 at 1.) Additionally, defendant argues that under Indiana law, “a person is

5
presumed to understand and assent to the terms of the contract he signs.” (DE # 20 at

2.) 

“The party opposing arbitration must identify a triable issue of fact concerning

the existence of the agreement in order to obtain a trial on the merits of the contract.”

Tinder v. Pinkerton Security, 305 F.3d 728, 735 (7th Cir. 2002). “Just as in summary

judgment proceedings, a party cannot avoid compelled arbitration by generally

denying the facts upon which the right to arbitration rests; the party must identify

specific evidence in the record demonstrating a material factual dispute for trial.” Id. “In

deciding whether the party opposing summary judgment (and by analogy compelled

arbitration) has identified a genuine issue of material fact for trial, the evidence of the

non-movant is to be believed and all justifiable inferences are to be drawn in his favor.”

Id. (citations and quotations omitted). The question, therefore, is not whether plaintiff’s

denial of reading the arbitration agreement is sufficient to avoid arbitration, but rather,

“whether [plaintiff has] produced sufficient evidence to raise a factual issue concerning

whether []he and [defendant] are bound by a contract to arbitrate.” Tinder, 305 F.3d at

735. 

Plaintiff does not contest that he signed the arbitration agreement at issue in this

case. (DE # 19 at 2-3.) Plaintiff argues, however, that there was no arbitration agreement

between the parties because plaintiff was not given an opportunity to read the new-hire

documents (including the employment agreement containing the arbitration provision)

6
before he signed it and because the employee conducting his new hire orientation did

not give plaintiff an explanation of the documents he was signing. (Id. at 4.) 

The agreement that plaintiff signed explicitly stated: “This document contains a

binding arbitration provision which may be enforced by both Menard, Inc. and me. I

have read this entire agreement and I fully understand the limitations which it imposes upon

me . . . .” (DE # 12-1 at 2 (emphasis added).) Additionally, plaintiff had a duty to read

the contract that he signed. Heller Fin., Inc. v. Midwhey Powder Co., Inc., 883 F.2d 1286,

1292 (7th Cir. 1989) (“[B]asic contract law establishes a duty to read the contract; it is no

defense to say, ‘I did not read what I was signing.’”); see also Clanton v. United Skates of

America, 686 N.E.2d 896, 899-900 (Ind. Ct. App. 1997) (“Under Indiana law, a person is

presumed to understand the documents which he signs and cannot be released from the

terms of a contract due to his failure to read it.”). And plaintiff’s signature evidenced his

assent to the terms of the contract. Janiga v. Questar Capital Corp., 615 F.3d 735, 743 (7th

Cir. 2010) (“[Plaintiff’s] signature . . . objectively demonstrated his assent to the

contract.”); see also DeGroff v. MascoTech Forming Techs.-Fort Wayne, Inc., 179 F. Supp. 2d

896, 907 (N.D. Ind. 2001) (“By signing the application, [plaintiff] effectively concedes she

had an opportunity to review the [contract], and cannot now avoid its terms.”). Thus,

plaintiff’s contentions that he was not given an opportunity to review the agreement

before signing and that the employee running the new-hire program failed to explain

7
the terms of the agreement are not sufficient to create a genuine issue of material fact on

whether a valid arbitration agreement was formed.5

Because plaintiff has failed to create a genuine issue of material fact on the issue

of the formation of the arbitration agreement, the court concludes, for the same reasons

it did in its original order, cited above, that a valid arbitration agreement exists. (See

supra at pp. 4-5.) Additionally, the court finds that plaintiff’s claims are covered by the

agreement. In his suit, plaintiff alleges violations of 42 U.S.C. § 1981 and Title VII of the

Civil Rights Act of 1964. (DE # 1.) The arbitration provision at issue here specifically

covers both 42 U.S.C. § 1981 and Title VII of the Civil Rights Act of 1964. (DE # 12-1 at 2

(“Problems, claims or disputes subject to binding arbitration include, but are not limited

to: statutory claims under 42 U.S.C. §§ 1981-1988 . . . Title VII of the Civil Rights Act of

 This result might have been different if plaintiff had presented evidence that the 5

person running the new-hire program had specifically told plaintiff not to read the

employment agreement, or that plaintiff asked to read the employment agreement, and

the person running the new-hire program denied his request. See Heller Fin., Inc., 883

F.2d at 1292 (“There was no evidence that Heller asked Helmke not to read the lease or

otherwise prevented him from doing so.”). 

8
1964 . . . .”).). Therefore, the parties had a valid arbitration agreement, and that 6

agreement covers plaintiff’s current claims.

B. Plaintiff’s Other Arguments 

Plaintiff next argues that defendant was under a duty to explain the details of the

arbitration provision of the employment agreement because defendant was in a

significantly more powerful bargaining position than plaintiff. (DE # 19 at 7-8.) Plaintiff

points out that he was a lay person seeking employment, and argues that the disparity

in bargaining power resulted in the arbitration agreement not being freely negotiated.

(Id.) In response, defendant argues that the agreement was not unconscionable, and that

plaintiff was free to reject defendant’s offer of employment if he disagreed with any of

the terms of employment. (DE # 20 at 5.) 

To determine whether a contract has been freely negotiated, the court must

consider the relative bargaining position of each party. Horner v. Tilton, 650 N.E.2d 759,

763 (Ind. Ct. App. 1995). “This inquiry is similar to that undertaken by courts to

determine whether a contract is unconscionable because of a disparity in bargaining

 In its previous order denying defendant’s motion to dismiss, the court denied 6

the motion, in part, because defendant did not present any evidence that the events

underlying plaintiff’s claims occurred after plaintiff signed the arbitration agreement.

(DE # 10 at 7-8.) The parties dispute the date on which plaintiff was first employed with

defendant. Defendant contends that plaintiff’s first day of work was January 27, 2012,

the date listed on the employment agreement. (DE # 12-2 at 1.) Plaintiff states that he

signed the agreement on his first day of work, which he contends was February 7, 2012.

(DE # 19-1 at 1-2.) Regardless of which party’s version of events is correct, plaintiff

signed the agreement on his first day of work, and his claims are therefore covered by

the agreement. 

9
power. In such cases, a contract is unconscionable if there exists a great disparity

between the parties which leads the weaker party to sign the contract unwillingly or

without awareness of its terms.” Id.

Plaintiff’s argument – that unequal bargaining power resulted in the

employment agreement being unconscionable and not freely negotiated – is a claim of

procedural unconscionability. DiMizio v. Romo, 756 N.E.2d 1018, 1024 (Ind. Ct. App.

2001) (“Procedural unconscionability issues arise from irregularities in the bargaining

process or from characteristics peculiar to one of the parties.”). Any inequality in the

bargaining process in this case, however, is insufficient to invalidate the arbitration

provision of the employment agreement. Gilmer v. Interstate/Johnson Lane Corp., 500 U.S.

20, 33 (1991) (“Mere inequality in bargaining power, however, is not a sufficient reason

to hold that arbitration agreements are never enforceable in the employment context.”);

Abbott v. Lexford Apartment Services, Inc., IP 01–1243–C, 2002 WL 1800320, at *5 n.2 (S.D.

Ind. Aug. 2, 2002) (“If we were to find that no low-level employee can be held to an

arbitration agreement due to a supposed disparity in bargaining power between the

employer and employee, then most arbitration agreements to resolve employment

disputes would be rendered ineffective.”); see also Easterly v. Heritage Christian Schools,

Inc.. No. 1:08–cv–1714, 2009 WL 2750099, at *2 n.1 (S.D. Ind. Aug. 26, 2009) (“To the

extent that Easterly suggests that the typical unequal bargaining power between

employees and employers is a reason to find an arbitration clause unenforceable, this

argument has been rejected by the Supreme Court.” (citing Gilmer)). Additionally,

10
plaintiff has not presented any evidence or argument indicating that he would not have

signed the employment agreement absent pressure to do so due to the parties’ unequal

bargaining positions. See DeGroff, 179 F. Supp. 2d at 907. Therefore, plaintiff’s argument

on this issue fails.

7

Finally, plaintiff argues that the court should not compel arbitration because he

will be unable afford the costs associated with arbitration. (DE # 19 at 5-6.) “‘[A] party

seeking to invalidate an arbitration agreement on the ground that arbitration would be

prohibitively expensive bears the burden of showing the likelihood of incurring such

costs.’” James, 417 F.3d at 679 (quoting Green Tree Financial Corp.-Alabama v. Randolph,

531 U.S. 79, 81 (2000)); see also Baumann v. Finish Line, Inc., 421 F. App’x 632, 635 (7th Cir.

2011) (same). 

 Additionally, plaintiff’s argument that the parties had unequal bargaining 7

power and that no one explained the documents plaintiff signed during the new-hire

process to him are attacks on the employment agreement generally, and are not specific

to the arbitration clause of the employment agreement. This is not sufficient to

invalidate the arbitration provision. James v. McDonald’s Corp., 417 F.3d 672, 680 (7th Cir.

2005) (“[A] court may consider a claim that a contracting party was fraudulently

induced to include an arbitration provision in the agreement but not claims that the

entire contract was the product of fraud.” (citations and quotations omitted)); see also

Faulkenberg, 637 F.3d at 811 (“[Plaintiffs] allege instead that they were tricked into

signing the franchise agreement and were otherwise misled during contract

negotiations. This general allegation of fraud is not enough to avoid the arbitration

clause.”); Banc One Acceptance Corp. v. Hill, 367 F.3d 426, 430-31 (5th Cir. 2004) (“As this

court has held, the general assertions that Hill did not read or understand the

contractual documents or that East Ford did not explain the documents do not suffice to

allege fraud in the making of the arbitration clause, but rather address the formation of

the entire contract. [These assertions fail] to undercut the arbitration clause.”).

11
In the affidavit attached to his response to defendant’s motion, plaintiff explains

that he does not have the resources to pay the filing fee associated with arbitration

(DE # 19-1 at 2), and points out that he was allowed to proceed in forma pauperis in his

federal suit. (DE # 19 at 5-6.) Additionally, plaintiff contends that he would not be able

to pay for the costs of the arbitration itself, or the costs of traveling to and from Chicago

to arbitrate his claims. (DE # 19-1 at 2.)

In response, defendant points out that the only arbitration fee plaintiff would be

responsible for is the initial filing fee, which cannot exceed the cost of a filing fee in

federal court, and that all other costs and fees are paid by defendant. (DE # 20 at 6;

DE # 20-1 at 4; DE # 20-3 at 1; DE # 20-4 at 19-21.) Additionally, defendant presents

evidence that the arbitration rules that would control an arbitration between the parties

allow for the party initiating the arbitration to request a hearing locale, and that “it is

custom practice for the hearing locale to be the same location where the employee

worked or currently resides for the convenience of all parties and its witnesses.”

(DE # 20-3 at 1; DE # 20-4 at 12.) 

Thus, it appears that the only cost or fee that plaintiff would incur in arbitration

is the initial filing fee, which cannot exceed the cost of filing a suit in federal court.

8

(DE # 12-1 at 2.) And, while plaintiff states that he is unable to afford paying that filing

 It is also possible that plaintiff would have to pay a small fee if he causes a 8

hearing to be postponed. (DE # 20-4 at 20.)

12
fee, he does not put forth any evidence explaining why paying the arbitration filing fee

would be more cost prohibitive than litigating his suit in federal court:

[T]o invalidate an arbitration agreement based on the costs, there must be

specific evidence establishing why arbitration would be prohibitively

expensive. . . . [T]hat means [plaintiff] would have to produce some evidence

to show . . . why arbitration would be too costly but litigation in the courts

would not be. Without this information, the risk that arbitration would be

prohibitively expensive is “too speculative to justify the invalidation of an

arbitration agreement.”

Baumann, 421 F. App’x at 635 (quoting Green Tree, 531 U.S. at 91).

If this case went to arbitration, plaintiff would end up paying more with regard

to a filing fee than he did in his federal suit because he was granted leave to proceed in

forma pauperis in the federal suit. Plaintiff, however, fails to account for other costs

associated with litigating a case in federal court. For example, defendant has presented

evidence that any arbitration would likely be held where plaintiff worked or currently

resides (DE # 20-3 at 1), and therefore, would minimize any travel costs for plaintiff. If,

however, plaintiff’s suit were to proceed in federal court, there could be hearings or

even a trial held in Hammond, Indiana. Hammond is only a stone’s throw from

Chicago, Illinois, and in his affidavit, plaintiff expressed concerns about being able to

afford the travel expenses associated with arbitrating a claim in Chicago. (DE # 19-1 at

2.) 

Beyond his general assertion that he cannot pay the filing fee associated with

arbitration, plaintiff has not presented any evidence indicating that litigating his claims

in federal court would be less expensive than arbitrating his claims. Plaintiff has

13
therefore not met his burden on this issue, and his argument fails. Baumann, 421 F.

App’x at 635; see also James, 417 F.3d at 679-80.

IV. Conclusion

For the foregoing reasons, defendant’s motion to dismiss is GRANTED.

(DE # 11.) The Clerk is directed to dismiss this case without prejudice, and plaintiff is

ordered to submit his claims to arbitration as outlined in the arbitration provision of the

employment agreement. 

SO ORDERED.

Date: March 4, 2014

 s/ James T. Moody 

JUDGE JAMES T. MOODY

UNITED STATES DISTRICT COURT