Court Opinion

ID: 39647
Source: CourtListenerOpinion
Date Created: 2010-04-25 20:32:21+00
Date Added: 2024-06-11T17:16:19.797620
License: Public Domain

United States Court of Appeals
                                                                Fifth Circuit
                                                             F I L E D
               IN THE UNITED STATES COURT OF APPEALS
                        FOR THE FIFTH CIRCUIT              September 30, 2005

                      ))))))))))))))))))))))))))         Charles R. Fulbruge III
                                                                 Clerk
                            No. 04-60572

                      ))))))))))))))))))))))))))

                          VERA P. CARSON,

                        Plaintiff–Appellee,

                                 v.

                   HIGBEE COMPANY; WILLIAM CARR,

                       Defendants–Appellants.

           Appeal from the United States District Court
             for the Southern District of Mississippi

Before SMITH, DENNIS, and PRADO, Circuit Judges.

PER CURIAM:*

     Higbee Company d/b/a Dillard’s (“the Company” or

“Dillard’s”) and William Carr (collectively, “Defendants”) appeal

the district court’s denial of their motion to compel

arbitration.   We reverse and remand.

                                  I.

     Vera Carson began working at Dillard’s as a sales associate

in 1993 and was eventually promoted to the position of assistant

     *
       Pursuant to 5TH CIRCUIT RULE 47.5, the court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5TH CIRCUIT
RULE 47.5.4.

                                  1
sales manager.   She was still working in that position when in

2001, the Company adopted an arbitration policy for employment-

related disputes.   That year, the Company held a management

meeting to discuss the policy.    Carson attended.

     During the 2001 meeting, the store manager, William Carr,

showed the attendees two documents related to the Company’s new

arbitration policy: the Rules of Arbitration and an

acknowledgment form.    The acknowledgment form was labeled

“Acknowledgment of Receipt of Rules of Arbitration.”    It

described the purposes of the arbitration policy and contained

the following notice provision:

     Effective immediately, all employees (as hereinafter
     defined) of Dillard’s, Inc., its affiliates, subsidiaries
     and Limited Liability Partnerships (the “Company”) shall
     be subject to the RULES OF ARBITRATION (the “Rules”)
     described below. Employees are deemed to have agreed to
     the provisions of the Rules by virtue of accepting
     employment with the company and/or continuing employment
     therewith.

(Emphasis added).   Below the notice provision was a space for

both the Company employee’s signature as well as that of a

Company representative.    The notice provision was printed in the

same font size, but different font style, as the rest of the

acknowledgment form.1

     Carson continued her employment with Dillard’s after the

Rules of Arbitration were implemented.    During this time, she

     1
      The notice provision was in roman type; the rest of the
acknowledgment form was italicized.

                                  2
dealt with the acknowledgment form on a daily basis.   A copy of

the form was on display in the Company’s personnel office.     In

addition, Carson assisted Dillard’s in obtaining signatures on

the acknowledgment form from other employees and signed several

forms herself as a witness to other signatures.

     Nevertheless, Carson testified that she could not remember

whether she signed the acknowledgment form.   However, she did not

refuse to sign the form either verbally or in writing.2    Carson

also claims she was told that the arbitration policy would be

optional for employees in management positions.

     In March 2002, Carson applied for and was denied the

position of assistant store manager.   The following month, she

brought suit against the Company and Carr, alleging claims of sex

and race discrimination.

     The Defendants filed a motion to compel arbitration, which

the district court denied.   The Defendants timely appealed.

                                II.

     We review the denial of a motion to compel arbitration de

novo.    Freudensprung v. Offshore Technical Servs., Inc., 379 F.3d
327, 337 (5th Cir. 2004).    Where, as here, the issue is whether

the parties have a valid and enforceable agreement to arbitrate,

courts apply the contract law of the state governing the

     2
      Some employees did refuse to sign the acknowledgment form.
Those employees were not terminated, nor is there any evidence
that they suffered adverse employment-related consequences for
their failure to sign.

                                  3
agreement.     Wash. Mut. Fin. Group, LLC v. Bailey, 364 F.3d 260,

264 (5th Cir. 2004).3    Mississippi contract law applies here.4

     Carson raises three issues on appeal: First, she claims that

she did not assent to arbitration.     Second, she claims that if an

agreement to arbitrate does exist, that agreement is

unconscionable.    Finally, Carson claims that any agreement to

arbitrate was procured by fraudulent inducement.    We will address

each argument in turn.

                                  A.

     Arbitration must proceed by agreement: “[A]rbitration is a

matter of contract and a party cannot be required to submit to

arbitration any dispute which he has not agreed so to submit.”

May v. Higbee Co., 372 F.3d 757, 763 (5th Cir. 2004) (quoting

AT&T Techs., Inc. v. Communications Workers of Am., 475 U.S. 643,

648 (1986)).    Carson’s first argument is that no agreement to

arbitrate exists in this case.    Specifically, she makes two

claims: First, Carson argues that “there are no actions which

     3
      See also 9 U.S.C. § 2 (stating that arbitration agreements
are enforceable “save upon such grounds as exist at law or in
equity for the revocation of any contract”); Doctor’s Assocs.,
Inc. v. Casarotto, 517 U.S. 681, 687 (1996) (“[G]enerally
applicable [state-law] contract defenses, such as fraud, duress,
or unconscionability, may be applied to invalidate arbitration
agreements without contravening § 2.”).
     4
      Both Carson and Carr are citizens of Mississippi, and
Mississippi is the site of the controversy. See Boardman v.
United Servs. Auto. Ass’n, 470 So. 2d 1024, 1031 (Miss. 1985)
(explaining that Mississippi follows the “center of gravity”
approach to choice-of-law issues).

                                   4
indicate that [she] intended to be bound by the arbitration

agreement”; that is, there was no written acceptance of the

arbitration policy, nor was her continued employment with

Dillard’s enough to manifest assent.   Second, Carson argues that

even if she had signed the acknowledgment form, it is an

ambiguous document, and thus parol evidence may be introduced to

clarify its meaning.   According to Carson, she was told that the

arbitration policy would be optional for management employees.

Thus, she argues, her continued employment did not constitute

acceptance of the contract.

     We must reject both of these claims in light of May v.

Higbee Company, 372 F.3d 757 (5th Cir. 2004), issued shortly

before the district court ruled in this case.5    That case is

indistinguishable: it involved the same defendants, the same

arbitration policy and acknowledgment form, and a plaintiff

similarly situated to Carson.

     In May, a panel of this court rejected the same argument

that Carson makes here.   May, 372 F.3d at 764.   First, the court

held that the acknowledgment form was not ambiguous, explaining,

     Properly construed, . . . the Acknowledgment Form and
     May’s signature thereon did not by themselves constitute
     May’s   assent  to   arbitration.      By  signing   the
     Acknowledgment Form, May indicated that she had received

     5
      See also Marino v. Dillard’s, Inc., 413 F.3d 530, 533 (5th
Cir. 2005) (“As in May, the Acknowledgment Form here is clear in
advising Marino . . . of the means of consent, i.e., Marino’s
continued employment with Dillard’s.”).

                                 5
       the Rules, but the signature did not all by itself bind
       May to the arbitration program. Rather, May became bound
       through her subsequent conduct, for the Acknowledgment
       Form unambiguously notified May that “[e]mployees are
       deemed to have agreed to the provisions of the Rules by
       virtue of . . . continuing employment [with Dillard’s].”

Id. (second ellipsis in original).        Thus, the court explained,

the acknowledgment form “notified May of how she would manifest

her assent to be bound”——by her continued employment.        Id.

Furthermore, May undisputedly continued her employment with

Dillard’s, manifesting her assent to be bound by the Rules of

Arbitration.       Id.   Therefore, the court held, the district court

had erred in looking to parol evidence “to vary the terms of the

unambiguous writings that were before it.”        Id.

       The May court also noted that “Mississippi courts have long

held that a party’s conduct may manifest assent to an agreement.”6

And even though there was no Mississippi case specifically

addressing continued employment in the context of arbitration

agreements,7 the May court “[saw] no reason to think that the

Mississippi courts would reject the general rule when it comes to

this particular species of assent-manifesting conduct.”        Id. at

765.       To buttress that conclusion, the May court pointed out that

       6
      May, 372 F.3d at 764 (citing Edwards v. Wurster Oil Co.,
688 So. 2d 772, 775 (Miss. 1997); Misso v. Nat’l Bank of
Commerce, 95 So. 2d 124 (Miss. 1957)).
       7
      Our more recent research continues to reveal no
Mississippi case addressing continued employment in the context
of arbitration agreements.

                                      6
many other courts had “held under the law of various states that

a party may manifest assent through continued employment.”8

Because the acknowledgment form was not ambiguous and May

assented to the Rules of Arbitration through her continued

employment, this court reversed the district court’s denial of

the Company’s motion to compel arbitration.         Id. at 765.

     Carson attempts to distinguish May by pointing out that the

plaintiff in that case admitted to having signed the

acknowledgment form.   That fact, however was irrelevant to the

court’s decision in May: it was May’s continued employment——not

her signature——that manifested her assent to be bound by the

arbitration policy.    Id. at 764.       Thus, the factual difference

between this case and May changes nothing.        Carson, like May,

manifested her assent to arbitration by continuing her employment

with Dillard’s.   Her first argument is rejected.

                                 B.

     Carson next argues that the arbitration agreement is

unconscionable and therefore invalid.        Mississippi courts

recognize two types of unconscionability: procedural and

substantive.   East Ford, Inc. v. Taylor, 826 So. 2d 709, 714

     8
      May, 372 F.3d at 765 (citing Gutman v. Baldwin Corp., No.
Civ. A 02-CV-7971, 2002 WL 32107938, at *4 (E.D. Pa. Nov. 22,
2002); Lang v. Burlington N. R.R. Co., 835 F. Supp. 1104, 1105–06
(D. Minn. 1993); Baptist Health Sys., Inc. v. Mack, 860 So. 2d
1265, 1273–74 (Ala. 2003); In re Haliburton Co., 80 S.W.3d 566,
568–69 (Tex. 2002); Asmus v. Pac. Bell, 999 P.2d 71, 79 (Cal.
2002)).

                                     7
(Miss. 2002).   Carson argues both types of unconscionability

here.

                                  1.

     Carson may prove that the agreement to arbitrate is

procedurally unconscionable by showing “a lack of knowledge, lack

of voluntariness, inconspicuous print, the use of complex

legalistic language, disparity in sophistication or bargaining

power of the parties and/or a lack of opportunity to study the

contract and inquire about the contract terms.”     East Ford, 826
So. 2d at 714 (internal quotation marks omitted).    She has not

done so.

     Carson’s procedural unconscionability arguments can be

summarized as follows: Carson did not voluntarily enter into the

arbitration agreement because it was a contract of adhesion,

unilaterally imposed on her by the Company; the provision of the

acknowledgment form notifying the employee that continued

employment would constitute acceptance of the arbitration

contract was “an inconspicuous statement within the document[] in

legalistic language”; there was a “lack of knowledge” by Carson

of the contract terms because she did not have “the least

opportunity to discuss or negotiate the . . . policy’s

provisions”; and there was a disparity in bargaining power

between Carson and the Company.

     Carson principally relies on East Ford, Inc. v. Taylor, 826

                                  8
So. 2d 709 (Miss. 2002), to support these arguments.     In that

case, Taylor filed suit against East Ford, alleging that East

Ford had sold him a used truck that was represented to him as

new.    Id. at 711.   When he bought the vehicle, Taylor signed a

purchase agreement that contained an arbitration clause.      Id.

After Taylor filed suit, East Ford moved to compel arbitration

based on the contract clause.     Id.   The trial court found the

arbitration agreement to be unconscionable, and the Mississippi

Supreme Court affirmed.     Id.

       The East Ford court held that the arbitration clause at

issue in that case was procedurally unconscionable because Taylor

was not told of the arbitration provision before signing the

contract; the font size of the provision was one-third the size

of other terms of the contract; and the arbitration provision was

not underlined or emphasized and did not otherwise alert the

reader to its importance.     Id. at 714–17.   The facts of this case

are not comparable.

       Here, Carson undoubtedly knew of the arbitration policy: she

attended the 2001 meeting where Carr introduced the policy to

Company employees; a copy of the acknowledgment form was on

display in the Company personnel office; and Carson assisted

Dillard’s in obtaining signed acknowledgment forms from other

employees, even signing several forms herself as a witness.

Moreover, the arbitration agreement in the acknowledgment form is

                                   9
the entire contract.   In East Ford, by contrast, the arbitration

agreement was just one provision of a contract for the sale of an

automobile.    Here, the notice provision was in the same font size

as the rest of the acknowledgment form and in a different font

type; there, the arbitration provision was obscured.       Finally, as

the East Ford court recognized, this court has previously held

that contracts of adhesion are not automatically void.        Id. at

716 (citing Hughes Training, Inc. v. Cook, 254 F.3d 588, 593 (5th

Cir. 2001)).    East Ford is distinguishable.    The arbitration

agreement is not procedurally unconscionable.

                                 2.

     Carson also argues that the arbitration agreement is

substantively unconscionable.   Substantive unconscionability may

be proven by showing that the terms of the arbitration agreement

are oppressive.    East Ford, 826 So. 2d at 714.      “Substantively

unconscionable clauses have been held to include waiver of choice

of forum and waiver of certain remedies.”       Id.

     Carson again relies on East Ford to make her substantive

unconscionability argument.   The court did not reach the issue of

substantive unconscionability in that case, id. at 717, but

suggested in a later case that the terms of the East Ford

provision might have indeed been substantively unconscionable,

see Russell v. Performance Toyota, Inc., 826 So. 2d 719, 726 n.1

(Miss. 2002) (distinguishing East Ford from the case before the

                                 10
court).

     The contract provision at issue in East Ford allowed East

Ford to unilaterally rescind the arbitration agreement, while

Taylor could only rescind the agreement if his Lemon Law rights

were implicated.    East Ford, 826 So. 2d at 715; Russell, 826 So.
2d at 726 n.1.    Carson argues that the Company’s arbitration

agreement is substantively unconscionable because it suffers from

the same defect as the provision in East Ford.    Specifically, she

claims that under the Rules of Arbitration, “nearly all

conceivable employee rights to a judicial forum are waived,”

while the Company is permitted to seek judicial relief in cases

involving unfair competition, the use or disclosure of trade

secrets or confidential information, and potential criminal

claims.

     This argument ignores the record evidence showing that many

employee claims are, in fact, not covered by the agreement.      For

example, claims under ERISA, wage claims not brought under a

statute or ordinance, and claims precluded from arbitration under

the National Labor Relations Act may be brought in a judicial

forum.    Under the agreement at issue here, both the Company and

the employee retain the right to a judicial forum in certain

instances; thus, this agreement is wholly unlike that in East

Ford, where East Ford could unilaterally rescind the agreement in

any circumstance.    The agreement here is not substantively

                                 11
unconscionable.

                                C.

     Finally, Carson argues that she was fraudulently induced to

enter into the arbitration agreement.   Carson failed to raise

this argument before the district court; therefore, we will not

consider it here.   See, e.g., Alford v. Dean Witter Reynolds,

Inc., 975 F.2d 1161, 1163 (5th Cir. 1992) (refusing the consider

a fraudulent inducement claim raised for the first time on

appeal).

                              III.

     For the foregoing reasons, the district court erred in

denying the Company’s motion to compel arbitration.   The judgment

is reversed.

     REVERSED and REMANDED.

                                12