Nesbitt v. FCNH, Inc., 74 F. Supp. 3d 1366

Ms. Nesbitt filed a class wage-and-hour action under FLSA and state laws on April 7, 2014, against Steiner Education Group entities.
Plaintiff alleges students performed massages for paying public without compensation, creating an employment relationship under FLSA and state laws.
Nesbitt signed an Enrollment Agreement containing a broad Arbitration Agreement for all disputes arising with SEG and affiliates, including formation and enforcement of the arbitration clause.
Arbitration provisions include AAA Commercial Rules, FAA governing, cost-shifting provisions, and a bold warning about rights waived by arbitration.
Arbitration also contains a right-to-reject provision allowing opt-out within 30 days of enrollment, but Nesbitt did not opt out within that period.
Defendants moved to compel arbitration and stay proceedings; Nesbitt opposed, arguing the agreement is unenforceable on unconscionability, statutory-vindication, and NLRA grounds.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Is the Arbitration Agreement unconscionable under Colorado law?	Nesbitt argues procedural and substantive unconscionability under the Davis factors.	Defendants contend the agreement is a standard adhesion contract with fair notice and options, not unconscionable.	Arbitration Agreement is not procedurally unconscionable; thus not unconscionable overall.
Do the Commercial Rules costs and unilateral costs to Nesbitt prevent effective vindication of statutory rights under the FAA and FLSA?	Commercial Rules costs and each-party bearing own counsel costs preclude Nesbitt from pursuing her statutory rights; no savings clause.	Costs may be recoverable under arbitration rules; savings clause not explicit.	Provisions requiring Nesbitt to bear arbitration costs and fee-shifting are unenforceable and cannot be severed to save the agreement.
Does the arbitration clause violate the NLRA by foreclosing access to a judicial forum for statutory rights?	Clause broadly restricts rights and could deter filing under NLRA; argues the clause is moot after other grounds.	Not addressed separately if other grounds render the agreement unenforceable; otherwise not necessarily NLRA-violative.	NLRA argument moot because other grounds render the arbitration clause unenforceable.

Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (Supreme Court 2006) (FAA validity and enforceability; questions of contract defenses to arbitration)
Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (Supreme Court 1983) (liberal policy favoring arbitration)
Rent-A-Center, W. Inc. v. Jackson, 561 U.S. 63 (Supreme Court 2010) (arbitration as matter of contract; no discretion by court on arbitrability when agreement exists)
Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213 (Supreme Court 1985) (statutory issues to be arbitrated per FAA)
Shankle v. B-G Maint. Mgmt. of Colorado, Inc., 163 F.3d 1230 (10th Cir. 1999) (arbitration costs can render forum inaccessible; affects statutory rights)
Am. Express Co. v. Italian Restaurateur, 570 U.S. 460 (Supreme Court 2013) (arbitration clauses cannot prospectively waive statutory remedies)
Concepcion, 563 U.S. 333 (Supreme Court 2011) (limits of arbitration under saving clause; general policy in favor of arbitration)
Gourley v. Yellow Transp., 178 F. Supp. 2d 1196 (D. Colo. 2001) (unconscionability and fee provisions in arbitration agreements; severability discussed)
Davis v. M.L.G. Corp., 712 P.3d 985 (Colo. 1986) (Colorado Davis factors for unconscionability)
Bernal v. Burnett, 793 F. Supp. 2d 1280 (D. Colo. 2011) (Davis factors; unconscionability analysis in Colorado context)
Awbrey v. Pennzoil Co., 961 F.2d 928 (10th Cir. 1992) (binding authority on severability and unconscionable provisions in arbitration)