United States District Court, E.D. Tennessee, Knoxville
MEMORANDUM OPINION AND ORDER
UNITED STATE DISTRICT JUDGE.
the Court is BSH Home Appliance's motion to send this
case to arbitration. Roy Pitman was fired by BSH, and this
suit followed. Pitman alleges that BSH violated the state
Workers' Compensation Law, the Tennessee Disability Law,
and the Tennessee Human Rights Act. BSH points out that
Pitman signed an arbitration agreement when he joined the
company. Thus, BSH contends, Pitman's claims must be sent
the Human Rights Act claims must be arbitrated. Under the
Federal Arbitration Act, arbitration agreements must be
enforced unless state law provides a basis for revocation. 9
U.S.C. § 2. The question here, then, is whether there
are grounds not to enforce the arbitration agreement between
Pitman and BSH.
answer this question, the Court undertakes a two-step
process. First, the Court must determine whether the
arbitration agreement is valid. See, e.g.,
Richmond Health Facilities v. Nichols, 811 F.3d 192,
195 (6th Cir. 2016). If so, the Court must then determine
whether the specific dispute before it falls under the
agreement. Id. Because arbitration agreements are
simply contracts, state law applies. Id. At the same
time, though, all doubts are resolved in favor of
arbitration. Id. Both validity and scope are
arbitration agreement is valid. To be valid, “a
contract must result from a meeting of the minds, be based on
sufficient consideration, and be sufficiently
definite.” Cadence Bank, N.A. v. Alpha Tr.,
473 S.W.3d 756, 774 (Tenn. 2015). There is no dispute that
the Pitman-BSH arbitration agreement satisfies these
Pitman levels a defense against enforcement of the agreement.
He contends that it is invalid as both adhesive and
unconscionable. Pitman asserts that the arbitration agreement
was part of the standard forms given to all employees. Thus,
he could not work for BSH unless he signed the agreement.
Pitman also points out that he didn't even have time to
read the agreement before signing it.
this makes the arbitration agreement adhesive or
unconscionable. A contract is adhesive if it (1) is a
standardized form, (2) offered on a take-it-or-leave-it
basis, (3) without affording the employee a realistic
opportunity to bargain, (4) under such conditions that the
employee cannot find work except by agreeing to the contract.
Buraczynski v. Eyring, 919 S.W.2d 314, 320 (Tenn.
1996). Pitman has not shown that he could not find work
without signing BSH's arbitration agreement. True, he
probably could not have worked for BSH without signing it.
But there is no evidence that Pitman “looked for
comparable jobs but was unable to find one.” Cooper
v. MRM Inv. Co., 367 F.3d 493, 502 (6th Cir. 2004)
(applying Tennessee law). The arbitration agreement was not a
contract of adhesion.
it unconscionable. “Under Tennessee law, the question
of whether a given contract is unconscionable depends on all
the facts and circumstances of a particular case.”
Berent v. CMH Homes, Inc., 466 S.W.3d 740, 750
(Tenn. 2015) (cleaned up). Contracts can be either
procedurally or substantively unconscionable. Wofford v.
M.J. Edwards & Sons Funeral Home Inc., 490 S.W.3d
800, 818 (Tenn. Ct. App. 2015). Pitman claims that the BSH
arbitration agreement was both.
neither. Procedural unconscionability exists when there is
“an absence of meaningful choice on the part of one of
the parties.” Id. Essentially, what matters
here is whether the contract was adhesive. See Id.
As explained above, the arbitration agreement was not
however, provides an affidavit explaining how he was rushed
into signing the agreement and did not understand its
implications. [D. 8 Ex. 1]. For several reasons, this
affidavit is not enough to prove procedural
unconscionability. For one, “it is a bedrock principle
of contract law that an individual who signs a contract is
presumed to have read the contract and is bound by its
contents.” 84 Lumber Co. v. Smith, 356 S.W.3d
380, 383 (Tenn. 2011) (cleaned up). For another, Pitman does
not claim that he wasn't given the chance to read the
agreement. He says only that he did not know what it said and
what it would mean for future conflicts. This is not enough
to show procedural unconscionability. For still another,
inequality of bargaining power is more a matter of
substantive unconscionability, because the employee might
have been pressured into an unfair agreement.
Cooper, 367 F.3d at 504. Pitman has failed to show
that the BSH arbitration agreement was procedurally
also failed to show that the agreement was substantively
unconscionable. A contract is substantively unconscionable
when its terms are unreasonably one sided. Wofford,
490 S.W.3d at 818. Pitman contends that the arbitration
agreement forced him into an adjudication process rigged in
favor of BSH. But Pitman has offered no proof of why
arbitration would be rigged. What's more, the
agreement's terms are not unreasonably one sided. BSH can
modify the agreement's terms, but only after written
notice. [D. 4 Ex. 1 at 10-11]. BSH pays all mediation and
arbitration fees. [Id. at 9]. And while the
agreement is somewhat ambiguous, it appears that BSH is bound
to the agreement just as much as Pitman is. The agreement
says that arbitration applies to “any unresolved
dispute that a BSH employee might have.” [Id.
at 5]. It does not say whether arbitration applies to any
unresolved dispute that BSH itself might have. But any doubts
are resolved in favor of arbitration. Richmond Health
Facilities, 811 F.3d at 195. So it appears that BSH is
bound to arbitrate at least some disputes. The arbitration
agreement is not an adhesion contract, nor is it procedurally
or substantively conscionable. It is a valid agreement.
leaves the scope of the arbitration agreement. Pitman claims
that his work contract improperly denied him disability
benefits, and that BSH discriminated against him based on his
disability. Under the arbitrations agreement's plain
language, these claims are within the scope of the agreement.
[D. 4 Ex. 1 at 5-6]. At the same time, however, “the
Tennessee Human Rights Act is exempt from the provisions of
the Federal Arbitration Act.” Jacobsen v. ITT Fin.
Servs. Corp., 762 F.Supp. 752, 757 (E.D. Tenn. 1991).
Thus, a plaintiff cannot prospectively waive his right to
have his Human Rights Act claims heard in federal court.
Id. So Pitman's claims must be arbitrated,
except for his claims under the Human Rights Act.
these reasons, BSH's motion to compel arbitration is
GRANTED as to Pitman's Workers'
Compensation Law and Disability Law claims, and
DENIED as to his Human Rights Act claims.
This case is STAYED while the parties
arbitrate. The parties are ORDERED ...