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Seeds v. Sterling Jewelers, Inc.

United States District Court, W.D. Kentucky, Louisville Division

November 9, 2018

JIM SEEDS, Plaintiff,
v.
STERLING JEWELERS, INC., Defendant.

          MEMORANDUM OPINION AND ORDER COMPELLING ARBITRATION

          CLARIA HORN BOOM, UNITED STATES DISTRICT COURT JUDGE

         When Plaintiff Jim Seeds began working as a jeweler at a repair shop in Louisville, Kentucky operated by Defendant Sterling Jewelers, Inc. (“Sterling”), he signed many “onboarding” documents. One of these documents was an agreement to arbitrate any claims he had against Sterling that arose out of his employment there pursuant to the company's RESOLVE Program Alternative Dispute Resolution Arbitration Agreement. Seeds does not dispute that he signed this document. He argues, however, that this agreement cannot be enforced against him because it is both procedurally and substantively unconscionable. Because the Court finds that the Arbitration Agreement here was neither, the Court grants the defendant's Renewed Motion to Stay Proceedings and Compel Arbitration, but denies defendant's Renewed Motion to Dismiss without prejudice. [R. 11] The plaintiff shall pursue his claims in arbitration in a manner consistent with the terms of the parties' agreement.

         I. Background

         Defendant Sterling is an American specialty jewelry company which operates retail jewelry stores throughout the country under various brands including Jared the Galleria of Jewelry. [R. 11-2, at p. 2; Aff. J. Broadhead, at ¶ 2.] Seeds was employed as a jeweler at the repair shop in the Jared the Galleria of Jewelry in Louisville, Kentucky, from April 2014 through March 2016. Id. at ¶ 6; [R. 1, at ¶¶ 11; 20]

         Sterling requires its employees to resolve any “pre-employment, employment, or postemployment dispute, claim, or controversy” through its “RESOLVE” Program. The RESOLVE Program is a multi-step alternative dispute resolution program for Sterling employees, with the final step being binding arbitration for all employees. [R. 11-1, at p. 3] After being introduced to the RESOLVE Program, employees are also asked to sign an Arbitration Agreement (the “RESOLVE Agreement” or “Arbitration Agreement”). [R. 11-1, pp. 2-3; 11-2, at ¶ 5; Ex. B.] This RESOLVE Agreement again outlines the steps in the RESOLVE Program before asking employees to sign. Id. When Seeds began his employment, he digitally acknowledged receipt of and agreed to the RESOLVE Program as part of his hiring process. Id.

         In relevant part, Seeds agreed:

to utilize the Sterling RESOLVE Program to pursue any pre-employment, employment or postemployment dispute, claim, or controversy (collectively called “claim”) against Sterling Jewelers Inc., . . . regarding any alleged unlawful act regarding [Seeds'] application for employment, employment or the termination of [Seeds'] employment which could have otherwise been brought before an appropriate court including, but not limited to, claims under . . . the Age Discrimination in Employment Act, . . . [or] any state anti-discrimination statutes [.]

Id.; see also [R. 11-2, at ¶ 5; Ex. B] Seeds agreed to these terms the day he was hired. [R. 11-1, at pp. 3-4, R. 11-2, at p. 18]

         Despite signing the Arbitration Agreement and acknowledging its terms (including the multi-step alternative dispute resolution process), Seeds failed to pursue his claims through RESOLVE. [R. 11-1, at p. 4, R. 11-3, at ¶ 4] Instead, Seeds filed his Complaint in this Court on November 28, 2017. [R. 1] In his Complaint, Seeds alleges he was subjected to age discrimination in violation of the Age Discrimination in Employment Act (“ADEA”), 29 U.S.C. §§ 621. et. seq., and the Kentucky Civil Rights Act (“KCRA”), KRS § 344.040. Id. at ¶¶ 21-23; 26-27. Seeds' main allegations against Sterling arose when Seeds sought a managerial position within the company. According to Seeds, the company responded instead with a series of overly-harsh disciplinary actions that ultimately led to his termination. Id. at ¶¶ 10-20. According to his Complaint, younger employees were not subjected to the same disciplinary action for committing the same infractions. Id.

         Shortly after the Complaint was filed, Sterling moved to dismiss the action for failure to state a claim, or in the alternative, to stay proceedings and compel arbitration. [R. 4] A few weeks after this motion was filed, Seeds' counsel filed a Motion to Withdraw. [R. 5] The Court granted the Motion to Withdraw and denied Sterling's Motion to Dismiss without prejudice, allowing Seeds sixty (60) days to retain new counsel. [R. 7] Seeds did not hire new counsel, deciding instead to proceed in this matter pro se. Sterling re-filed its Motion to Dismiss or Compel Arbitration on April 27, 2018. [R. 11] Seeds filed a timely response.[1] [R. 12] In his response, Seeds admits to signing the Arbitration Agreement at issue, but argues that it should not be enforced because it is both substantially and procedurally unconscionable. Id. at pp. 1-3.

         II. Analysis

         A. Arbitration Standard

         In this Circuit, “[i]n order to show that the validity of the agreement is ‘in issue,' the party opposing arbitration must show a genuine issue of material fact as to the validity of the agreement to arbitrate, ” a showing that mirrors the summary judgment standard. Great Earth Cos. v. Simons, 288 F.3d 878, 889 (6th Cir. 2002). Therefore, district courts in Kentucky evaluate a motion to compel arbitration as one for summary judgment under Fed.R.Civ.P. 56(c). See Freeman v. Easy Mobile Labs, Inc., No. 1:16-CV-00018-GNS, 2016 WL 4479545, at *1 (W.D. Ky. Aug. 24, 2016) (citing Arnold v. Rent-a-Center, Inc., No. 11-18-JBC, 2011 WL 1810145, at *2 (E.D. Ky. May 12, 2011) (“This court will treat the motion to compel arbitration as one for summary judgment ....”)); Weddle Enters., Inc. v. Treviicos-Soletanche, J.V., No. 1:14CV-00061-JHM, 2014 WL 5242904, at *2 (W.D. Ky. Oct. 15, 2014) (“A motion to dismiss based on the existence of a valid arbitration agreement is not evaluated under the usual Fed.R.Civ.P. 12(b)(6) standard. Instead, courts apply the standard applicable to motions for summary judgment.”) (internal citation omitted) (citation omitted). “In order to show that the validity of the agreement is in issue, the party opposing arbitration must show a genuine issue of material fact as to the validity of the agreement to arbitrate.” Great Earth Cos., 288 F.3d at 889. (internal quotation marks omitted) (citation omitted).

         B. ...


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