Court Opinion

ID: 2997033
Source: CourtListenerOpinion
Date Created: 2015-09-24 19:33:12.695468+00
Date Added: 2024-06-11T12:11:22.751593
License: Public Domain

In the
 United States Court of Appeals
               For the Seventh Circuit
                         ____________

No. 03-2794
OBLIX, INC.,
                                            Plaintiff-Appellant,
                               v.

FELICIA FERGUSON WINIECKI,
                                            Defendant-Appellee.

                         ____________
       Appeal from the United States District Court for the
         Northern District of Illinois, Eastern Division.
           No. 02 C 6878—John W. Darrah, Judge.
                         ____________
     ARGUED MAY 25, 2004—DECIDED JUNE 30, 2004
                    ____________

  Before EASTERBROOK, DIANE P. WOOD, and WILLIAMS,
Circuit Judges.
  EASTERBROOK, Circuit Judge. When Felicia Winiecki
went to work for Oblix in September 2000 she signed a
contract promising to arbitrate any dispute that might arise
out of the employment relation. She was fired in April 2002
and believes not only that Oblix has not paid everything she
is due but also that the discharge (and other acts) violate
Title VII of the Civil Rights Act of 1964. Oblix sought a
declaratory judgment that she must arbitrate these dis-
putes. Winiecki responded with a counterclaim demanding
redress on the merits; this makes it unnecessary to decide
whether the employer’s suit was premature. The district
2                                                No. 03-2794

court denied Oblix’s motion to compel arbitration. 2003 U.S.
Dist. LEXIS 6976 (N.D. Ill. Apr. 23, 2003), reconsideration
denied, 2003 U.S. Dist. LEXIS 11483 (July 1, 2003). The
judge concluded that a material dispute calls for more
discovery and litigation to determine whether the arbitra-
tion clause is unconscionable under California law. (Oblix
has its principal place of business in California, and the
agreement specifies that its law governs.)
  Oblix immediately appealed, which raises jurisdictional
issues. Although 9 U.S.C. §16(a)(1) allows an interlocutory
appeal from a decision denying a party the benefit of arbi-
tration, it might be doubted whether an order putting off
decision on the validity of an arbitration clause qualifies.
But Boomer v. AT&T Corp., 309 F.3d 404 (7th Cir. 2002),
holds that an order continuing the litigation, and refusing
to direct arbitration, during discovery into issues that the
district judge believes will affect arbitrability, is immedi-
ately appealable. Neither side has asked us to revisit that
subject.
   Winiecki contends that we lack appellate jurisdiction
nonetheless. In her view the appeal was too late rather
than too early. The district court entered its order on April
23, 2003, and then invited Oblix to file a motion for recon-
sideration so that the judge could address the significance
of PacifiCare Health Systems, Inc. v. Book, 538 U.S. 401
(2003), which had been released on April 7 but had not been
addressed in the court’s opinion. Such a motion was filed on
May 19 and denied on July 1. Oblix appealed on July 3—too
late, Winiecki insists, because it had only 30 days from the
dispositive order of April 23. See Fed. R. App. P. 4(a)(1)(A).
Although Rule 4(a)(4)(A) provides that the time runs anew
from an order denying one of the listed motions, a “motion
to reconsider” is not on the rule’s list. The closest would
have been a motion to alter or amend the judgment under
Fed. R. Civ. P. 59, see Rule 4(a)(4)(A)(iv), but the motion
filed on May 19 is not one of those—first because there is no
No. 03-2794                                                    3

“judgment” to alter or amend, see Kapco Mfg. Co. v. C&O
Enterprises, Inc., 773 F.2d 151 (7th Cir. 1985), and second
because a Rule 59 motion must be filed within 10 days
(calculated according to Fed. R. Civ. P. 6), and that period
expired on May 7. We grant all of this, but the fact remains
that on July 1 the district court entered an order reiterating
its refusal to send the matter to arbitration. Winiecki
supposes that when an interlocutory appeal is allowed, the
appeal must come from the first appealable decision. Not so;
Behrens v. Pelletier, 516 U.S. 299 (1996), holds that each
order meeting the conditions for interlocutory appeal may
be appealed separately. The order of July 1 is no less
appealable under §16(a) than the order of April 23, so the
notice filed on July 3 is timely.
  Winiecki defends the decision in her favor with the
argument that the arbitration agreement does not cover
disputes about compensation or discrimination. See
Massachusetts Mutual Insurance Co. v. Ludwig, 426 U.S.
479 (1976) (a party may defend its judgment using any
properly preserved argument, without taking a cross ap-
peal). This line of argument is unavailing. One section of
the contract provides: “any dispute or controversy arising
out of or relating to Section 1 of this Agreement or the
amount of salary compensation, severance or other similar
amount owing to me, shall be resolved through the arbitra-
tion procedure set forth”. Another reads: “any dispute or
controversy arising out of or relating to any interpretation,
construction, performance or breach of this Agreement,
shall be resolved exclusively by binding arbitration . . . in
accordance with the rules then in effect of the American
Arbitration Association.” The first clause directly addresses
disputes about compensation, and the second, which deals
with controversies “arising out of or relating to” the employ-
ment agreement picks up Winiecki’s contention that her
discharge was discriminatory. This is a broad arbitration
agreement—not broad enough to compel the conclusion that
arbitrability is itself an arbitrable issue, cf. First Options of
4                                                No. 03-2794

Chicago, Inc. v. Kaplan, 514 U.S. 938, 943 (1995), but
sufficient to comprise disputes about compensation and
employment discrimination.
  The district court thought that the arbitration clause, as
part of a form contract, might be called “unconscionable”
because “adhesive”—this clause, and all the rest of the
agreement, was offered on a take-it-or-leave-it basis, and
Oblix did not promise to arbitrate all of its disputes with
Winiecki (if she had been accused of departing with trade
secrets, then Oblix could have selected a judicial forum).
That Oblix did not promise to arbitrate all of its potential
claims is neither here nor there. Winiecki does not deny
that the arbitration clause is supported by consideration—
her salary. Oblix paid her to do a number of things; one of
the things it paid her to do was agree to non-judicial
dispute resolution. It is hard to see how the arbitration
clause is any more suspect, or any less enforceable, than the
others—or, for that matter, than her salary. A person who
accepts a “non-negotiable” offer of $50,000 salary would be
laughed out of court if she filed suit for an extra $10,000,
contending that the employer’s refusal to negotiate made
the deal “unconscionable” and entitled her to better terms.
Well, arbitration was as much a part of this deal as
Winiecki’s salary and commissions, the rules about han-
dling trade secrets, and other terms. All stand or fall
together.
  We could stop here, invoke Prima Paint Corp. v. Flood &
Conklin Manufacturing Co., 388 U.S. 395 (1967), and send
the parties off to arbitration. Prima Paint holds that one
who challenges the entire contract containing an arbitration
clause nonetheless must arbitrate, and Winiecki’s dislike of
standard-form contracts is just a means of challenging the
whole bargain, root and branch. See also Sweet Dreams
Unlimited, Inc. v. Dial-A-Mattress International, Ltd., 1
F.3d 639 (7th Cir. 1993). But there is little point in telling
them to arbitrate the doomed “unconscionability” argument,
No. 03-2794                                                5

which has been rejected in this circuit as often as it has
been raised. Businesses regularly agree to arbitrate their
disputes with each other; giving employees the same terms
and forum (the AAA) that a firm deems satisfactory for
commercial dispute resolution is not suspect. Employees
fare well in arbitration with their employers— better by
some standards than employees who litigate, as the lower
total expenses of arbitration make it feasible to pursue
smaller grievances and leave more available for compensa-
tory awards. See Theodore Eisenberg & Elizabeth Hill,
Employment Arbitration and Litigation: An Empirical
Comparison, 58 Dispute Resolution J. 44 (2003-04). Perhaps
this is why unions find arbitration so attractive and insist
that employers agree to this procedure. How could one call
it unconscionable when an employer treats unrepresented
workers such as Winiecki the same as it treats its organized
labor force?
  Standard-form agreements are a fact of life, and given
§2 of the Federal Arbitration Act, 9 U.S.C. §2, arbitration
provisions in these contracts must be enforced unless states
would refuse to enforce all off-the-shelf package deals. See,
e.g., Carbajal v. H&R Block Tax Services, Inc., No. 03-3722
(7th Cir. June 24, 2004); Metro East Center for Conditioning
and Health v. Qwest Communications International, Inc.,
294 F.3d 924 (7th Cir. 2002); Koveleskie v. SBC Capital
Markets, Inc., 167 F.3d 361 (7th Cir. 1999); Hill v. Gateway
2000, Inc., 105 F.3d 1147 (7th Cir. 1997). Agreements to
arbitrate employment-related subjects, including claims of
employment discrimination, are treated the same for this
purpose as agreements to arbitrate labor- relations matters,
building leases, disputes about patent royalties, and
controversies among participants in reinsurance treaties.
See Circuit City Stores, Inc. v. Adams, 532 U.S. 105 (2001);
Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20
(1991).
6                                                No. 03-2794

  California routinely enforces limited warranties and other
terms found in form contracts. See, e.g., Marin Storage &
Trucking, Inc. v. Benco Contracting & Engineering, Inc., 89
Cal. App. 4th 1042 (2001) (indemnification); Olsen v. Breeze,
Inc., 40 Cal. App. 4th 608 (1996) (release); Allan v. Snow
Summit, Inc., 51 Cal. App. 4th 1358 (1996) (promise to
accept risk of sport injury and hold ski resort harmless). See
generally Perdue v. Crocker National Bank, 38 Cal. 3d 913,
924-25, 702 P.2d 503 (1985). If a state treats arbitration
differently, and imposes on form arbitration clauses more
or different requirements from those imposed on other
clauses, then its approach is preempted by §2 of the Federal
Arbitration Act. See Southland Corp. v. Keating, 465 U.S.
1 (1984); Allied-Bruce Terminix Cos. v. Dobson, 513 U.S.
265, 271-72 (1995). Winiecki reads Armendariz v. Founda-
tion Health Psychcare Services, Inc., 24 Cal. 4th 83, 6 P.3d
669 (2000), to create such special requirements, and it was
Armendariz on which the district judge principally relied in
concluding that more discovery is required. At least one
court of appeals reads Armendariz not to establish any
special hurdles for arbitration agreements and would
enforce without ado an agreement like the one between
Oblix and Winiecki. See EEOC v. Luce, Forward, Hamilton
& Scripps, 345 F.3d 742 (9th Cir. 2003) (en banc). It is in
the end irrelevant whether the Supreme Court of California
wants to treat arbitration less favorably than other prom-
ises in form contracts; no state can apply to arbitration
(when governed by the Federal Arbitration Act) any novel
rule. Under normal rules of contract, the promises Winiecki
made in order to be hired and paid are enforceable. Thus
she must arbitrate. The arbitral forum can entertain any
other argument she may have. See PacifiCare Health
System, supra; see also Green Tree Financial Corp. v.
Bazzle, 539 U.S. 444 (2003); Howsam v. Dean Witter
Reynolds, Inc., 537 U.S. 79 (2002).
No. 03-2794                                                 7

  The decision of the district court is reversed, and the case
is remanded with instructions to refer the parties to
arbitration and dismiss Winiecki’s counterclaim.

A true Copy:
       Teste:

                        ________________________________
                        Clerk of the United States Court of
                          Appeals for the Seventh Circuit

                   USCA-02-C-0072—6-30-04