IN THE UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF ALABAMA

NORTHERN DIVISION

JOHN CHARLIE PEARSON and )

JEREMY COATS on behalf of )

themselves and others similarly situated, )

)

Plaintiffs ) 

)

v. ) Civil Case No.: 05-0056-BH-C

)

LINDEN LUMBER COMPANY, INC., )

)

Defendant. )

ORDER

This matter is before the Court on Defendant’s Motion (Doc. 9) to Compel Arbitration of the

claims of Plaintiffs John Charlie Pearson and Jeremy Coats. Plaintiffs Pearson and Coats submitted a

Response (Doc. 13) in Opposition to the Motion to Compel and Defendant, in turn, filed a Reply (Doc.

16) to the Response. Defendant has also filed a Motion (Doc. 17) to Strike the Affidavit (Doc. 14) of

Mary Olsen, Plaintiffs’ attorney, submitted in support of Plaintiffs’ Response (Doc. 13). The Court has

examined allofthese documents and findsthat Defendant’s Motion(Doc. 9) to Compel Arbitration is due

to be GRANTED. However, Defendant’s Motion (Doc. 17) to Strike the affidavit of Mary Olsen is due

to be DENIED.

FACTS

1. Effective January 1, 2005, Defendant Linden Lumber Company, Inc. (hereinafter, “Linden

Lumber”) instituted a Dispute Resolution Policy. (Doc. 9, Def.’s Mot. Compel Arb., p.1).

2. All employees ofLindenLumber, as ofthe effective date, executed an acknowledgment of of the

Dispute Resolution Policy providing that all employment claims would be arbitrated. (Id.)

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3. Plaintiffs John Charlie Pearson (hereinafter, “Pearson”) and Jeremy Coats (hereinafter, “Coats”)

both executed these acknowledgments. (Id. at 2)

4. Pearson and Coats were laid off by Linden Lumber on January, 13, 2005. (Compl., Doc. 1).

5. Plaintiffs claimLindenLumber hasviolatedtheWorkerAdjustment and RetrainingNotificationAct

(hereinafter, “WARN”) 29 U.S.C. §2101 et seq. by failing to give them, and others similarly

situated, written notice 60 days prior to termination. (Id.).

LEGAL ANALYSIS

 Since the enactment of the FAA in1925, the abilityofparties to arbitrate their disputes has been

wellrecognized and strongly encouraged. This Circuit notes, "questions of arbitrabilitymust be addressed

witha healthy regard for the federal policy favoring arbitration." Ivax v. B. Braun of America, Inc., 286

F.3d 1309, 1315 (11th Cir. 2002) (citing Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460

U.S. 1, 24 (1983)). However, the Court still heeds that "arbitration is a matter of contract and a party

cannot be required to submit to arbitrationany dispute which he has not agreed so to submit." Id. (citing

AT & T Techs.,Inc. v. Communications Workers of America., 475 U.S. 643, 648 (1986)). “The FAA

makes valid any written agreement to arbitrate a dispute arising out of a transaction involving interstate

commerce, save upon such grounds as exist at law or in equity for the revocation of any contract.” Bess

v. Check Express, 294 F.3d 1298, 1304 (11th Cir. 2002) (citing 9 U.S.C. § 2). Therefore, state law

contract defenses may be asserted to invalidate an arbitration agreement provided that the law at issue

governs contracts generally and not arbitration agreements specifically. Id. at 1306. 

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Burden of Production

“A motion to compel arbitration is analogous to amotion for a summary judgment.” Edward D.

Jones & Co. v. Ventura, 2005 WL 435140, *5. When a party seeks to compel arbitration, they first

have the burden of “proving the existence of a contract calling for arbitrationand proving that that contract

evidences a transactionaffecting interstatecommerce.” Id. (citations omitted). However, once the moving

party satisfies their burden, the burden then shifts onto the non-movant to present evidence that the

arbitration agreement is not valid or does not apply to the dispute in question. Id.

In the instant case, there is no dispute that an arbitration agreement, in the form of the Dispute

Resolution Policy, was entered into or that such agreement affects interstate commerce. Therefore, the

burdenis nowonthe Plaintiffsto present evidencesupportingtheir claimsthatthe DisputeResolutionPolicy

either does not apply to the current action or that it is invalid. 

I. Plaintiffs’ Claims that the Arbitration Agreement Does Not Encompass Their Claims.

Plaintiffs first assert that their claims in this actionare not covered bythe January 1, 2005 Dispute

ResolutionPolicybecause Defendant’s obligationto give notice underWARN predated the effective date

ofthe agreement. (Doc. 13, Pls. Resp., p. 3). Assuming, arguendo, that Defendant was obligated to give

notice to Plaintiffs pursuant to WARN, the date on whichsuchnotice should have been given is irrelevant

in determining whether Plaintiffs’ claims are controlled by the arbitration agreement. This Court, rather,

looks to the date on which the cause ofactionaccrued. A necessary element of a WARN claim is actual

employment loss. See 29 U.S.C. § 2104. As other courts have held, this element is not satisfied until a

claimant is actually terminated. Auto. Mechs. Local No. 701 of Int’l Assoc. of Machinists& Aerospace

Workers v. Santa Fe Terminal Servs., Inc., 830 F. Supp. 432, 434 (N.D. Ill. 1993);see also Chestnut

v. Stone Forest Indus., Inc., 817 F.Supp. 932, 934 n.10 (N.D. Fla. 1993). Therefore, the Court holds

Case 2:05-cv-00056-BH-C Document 20 Filed 04/22/05 Page 3 of 8
that the alleged violation of the WARN Act could not have occurred until Plaintiffs were actually

terminated,January13, 2005. Thus, the Dispute Resolution Policy, that became effective prior to January

13, 2005, does encompass the claims of Plaintiffs Pearson and Coats. 

II. Plaintiffs’ Claims that the Arbitration Agreement is Unenforceable because

Unconscionable and Fraudulently Induced.

A. Plaintiffs’ Claims of Unconscionability

Plaintiffs assert that the otherwise valid Dispute Resolution Policy was both procedurally and

substantively unconscionable. (Pls. Resp. at 8). As Plaintiffs have correctly cited, Alabama law defines

an unconscionable contract provisionas, “suchas no maninhissense and not under delusion would make

onthe one hand, and as no honest and fair manwould accept onthe other.” Leeman, 2004 WL2757414,

*3. The standard for determining unconscionability is a four factor test that examines: “1) whether there

was an absence of meaningful choice on one party’s part, 2) whether the contractual terms are

unreasonably favorable to one party, 3) whether there was unequal bargaining power among the parties

and 4) whetherthere were oppressive, one-sided, or patentlyunfairtermsinthe contract.” Id. Based upon

these factors, the Court finds the Dispute Resolution Policy was neither substantively nor procedurally

unconscionable. 

1. Substantive Unconscionability

As the Alabama Supreme Court has explained, substantive unconscionability “relates to the

substantive contract terms themselves and whether those terms are unreasonably favorable to the more

powerful party ... .” Id. at *4. Based uponthe language ofthe DisputeResolutionPolicypresented to us,

the Court finds that the terms contained therein are not unreasonable. The Plaintiffs simply acknowledged

that they agreed to arbitrate any disputes involving compensation, training, promotion, demotion,

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harassment, termination of employment or any other claims of discrimination of any kind. (Defs. Mot.

Compel Arb. at 2). Plaintiffs, however, argue that such language is lopsided because they relinquished

“some of the most valuable and basic rights in our legal system: the right to judicial resolution, the right to

application of procedural rules ..., and the right to a jurytrialontheir WARN claims as well as everyother

conceivable claim arising out of their employment and termination thereof.” (Pls. Resp. at 9). Such an

argument, however, is unpersuasive. 

The FAA was established in order to ensure judicial enforcement of privately made agreements

to arbitrate by putting them on equal footing with other contracts. Dean Witter Reynolds v. Byrd, 470

U.S. 213, 219 (1985). To that end, “questions of arbitrabilitymust be addressed witha healthy regard for

the federal policy favoring arbitration... .” Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc.,

473 U.S. 614, 626 (1985). “We are well past the time when judicial suspicion of the desirability of

arbitration and of the competence of arbitral tribunals inhibited the development of arbitration as an

alternative means ofdispute resolution.”Id. at 626-627. The Supreme Court further stated, “[b]y agreeing

to arbitrate a statutory claim, a party does notforego the substantive rights afforded by the statute; it only

submits to their resolution in an arbitral, rather thanjudicialforum.” Id. at 628. “It trades the procedures

and opportunity for review of the courtroom for the simplicity, informality, and expedition of arbitration.”

Id. The Dispute Resolution Policy does not affect Plaintiffs’ ability to bring an action against Linden

Lumber; it simply selects the forum in which such claims may be litigated. Contractually agreeing to

arbitrate future claims is not itself unconscionable.

2. Procedural Unconscionability

Thisis not to say, however, that courts should ignore other legitimate evidence of unconscionable

conduct or behaviorthat would invalidate agreementsto arbitrate the same as other contracts. Procedural

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unconscionabilitydeals with“deficienciesinthe contract formation process, such as deception or a refusal

to bargain over contract terms, today often analyzed in terms of whether the imposed-upon party had

meaningful choice about whether or how to enter the transaction.” Leeman, at *4. 

Plaintiffs first cite the disparity in bargaining power betweenthemselves and Linden Lumber as an

indicium of unconscionability. The Supreme Court has held, “mere inequality in bargaining power,

however, is not a sufficient reason to hold that arbitration agreements are never enforceable in the

employment context.” Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 33 (1991). Rather, the

Court indicates it should be examined on a case by case basis. Id. 

Pearson and Coats allege that the disparity was greater in the instant case than in a typical at-will

employment relationship because their bargaining power was nullifed due to their imminent termination.

(Pls.Resp. at 8). The Court finds Plaintiffs’ argument of unconscionability, on these grounds, unpersuasive.

Plaintiffs still received some measure of consideration, inthe formof continued employment,forsigningthe

Dispute Resolution Policy. This consideration, combined with the fact that the arbitration agreement does

not negate their ability to pursue statutory claims against Linden, indicates there were not unconscionably

disparate bargaining postions. 

Plaintiffs further claim that procedural unconscionability also stems from the alleged deception of

LindenLumber. They assert that they were deceived into signing away their rights to judicial remedy while

Linden Lumber knew it was going to terminate their jobs, in violation of WARN, two weeks later. (Pls.

Resp. at 8-9). As noted earlier, the burden of production, in this matter, is on the Plaintiffs to present

evidence that the arbitration agreement is not valid. Plaintiffs have offered nothing more than speculation

to support their theoryofthe allegeddeceptiononthe part ofLindenLumber. Without substantial evidence

demonstrating otherwise, the Court cannotfind that the arbitrationagreement inquestionis unconscionable.

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Bess, 294 F.3d at 1306-07.

Though Plaintiffs claim that they have not had sufficient time to uncover evidence to support their

claims, the Court willnot grant a period for discoveryonthese matters. Plaintiffs have produced little more

thansuppositionto support what theythink theymayfind withadditionaldiscovery. At this time, the Court

does notfeelthat mere conjecture onthe part ofthe Plaintiffswarrants any further discovery. Furthermore,

the longstanding federal policy supporting the use of arbitrationas a valid and legitimate means of dispute

resolution establishes that compelling Plaintiffs to arbitrate their claims in this matter will not prove an

injustice. 

B. Plaintiff’s Claims of Suppression Fraud

Similar to their contentions of procedural unconscionability, Plaintiffs rest their claims of

SuppressionFraud onthe alleged deceptive behavior ofLindenLumber. (Pls. Resp. at 6). Again, Plaintiffs

cannot carry their burden of production and, as stated above, the Court feels that a discovery period for

this matter is inappropriate. 

III. Defendant’s Motion to Strike

The Court also considers Defendant’s Motion(Doc. 17) to Strike the Affidavit (Doc. 14) ofMary

Olsen, Plaintiffs’ attorney, submitted insupport ofPlaintiffs’Response (Doc. 13) to the Motionto Compel

and Plaintiffs’Response (Doc. 18) to the Motion to Strike. Defendant claims that the subject declaration

should be stricken in its entiretybecause the declaration contains conclusory, unsupported and otherwise

inadmissible testimony which should not be considered as oppositionevidence. Plaintiffs, rather, contend

that the affidavit simply explains there has been no discovery yet, and explains the sorts of discovery that

Plaintiffs would need inorder to compile a factual record in regard to some of the issues implicated in the

motion to compel arbitration.

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The Court DENIES Defendant’s Motion(Doc. 17) to Strike and properly considers Plaintiffs’

affidavit. 

CONCLUSION

The Court findsthat the DisputeResolutionPolicyinquestiondoes encompass Plaintiffs Coats and

Pearson’s claims. The Court also finds that Plaintiffs Coats and Pearsoncannotsupport their contentions

with substantial evidence that the Dispute Resolution Policy is invalid. Therefore, Defendant’s Motion

(Doc. 9) to CompelArbitrationis hereby GRANTED. However, Defendant’s Motion (Doc. 17) to

Strike is hereby DENIED. The dispute between Plaintiffs JohnCharlie Pearsonand JeremyCoats and

Defendant Linden Lumber Company, Inc. is properly referred by this Court for arbitration.

So ORDERED, this 22nd day of April, 2005.

s/ W. B. Hand

SENIOR DISTRICT JUDGE

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