Nichols v. Enlivant AID ES, LLC
2:22-cv-04408
| D.S.C. | Jul 13, 2023Background
- Plaintiff Jeremy J. Nichols worked for Enlivant AID ES, LLC and alleges he was terminated around June 1, 2021 for refusing the COVID-19 vaccine due to religious beliefs and claimed vaccine-induced seizures.
- Nichols sued asserting Title VII (religious discrimination/retaliation), ADA (failure to accommodate/retaliation), breach of contract, South Carolina Payment of Wages Act, and FLSA claims.
- Defendant moved to dismiss or, alternatively, to compel arbitration, attaching an arbitration agreement bearing Nichols’ electronic signature.
- The Magistrate Judge recommended compelling arbitration, dismissing the action without prejudice, and awarding defendant attorneys’ fees and costs.
- Nichols objected, arguing the arbitration agreement lacked consideration, was unconscionable, and was a contract of adhesion; he also objected to awarding fees.
- The district court conducted de novo review of the objections, adopted the Magistrate Judge’s Report, compelled arbitration, dismissed the case without prejudice, and awarded defendant reasonable attorneys’ fees and costs (ordering a supporting affidavit).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability / consideration for arbitration agreement | Nichols: agreement lacks consideration; thus unenforceable | Enlivant: mutual promises to arbitrate and continued employment supply consideration | Court: agreement supported by mutual promises and employment; enforceable |
| Unconscionability / contract of adhesion | Nichols: adhesive "take-it-or-leave-it" nature is strong evidence of unconscionability; terms oppressive | Enlivant: terms are mutual and even-handed (neutral arbitrator, cost allocation, local venue) | Court: even if adhesive, terms are not unreasonably oppressive; not unconscionable |
| Waiver of jury trial | Nichols: forcing waiver of jury trial is oppressive and renders agreement unconscionable | Enlivant: mutual waiver is a standard and expected consequence of arbitration | Court: mutual waiver does not make agreement unconscionable; loss of jury trial is a foreseeable effect of arbitration |
| Award of attorneys' fees for enforcing arbitration | Nichols: should not be penalized for pursuing court adjudication; fee clause unfairly deters claims | Enlivant: agreement provides for fees if plaintiff files suit and fails to timely agree to arbitrate after notice | Court: fee provision applies; defendant entitled to reasonable fees and costs; ordered submission of fee affidavit |
Key Cases Cited
- Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (1983) (doubts regarding scope of arbitrable issues resolved in favor of arbitration)
- Drews Distrib., Inc. v. Silicon Gaming, Inc., 245 F.3d 347 (4th Cir. 2001) (federal law favors arbitration scope)
- Am. Gen. Life & Acc. Ins. Co. v. Wood, 429 F.3d 83 (4th Cir. 2005) (state-law principles govern contract-formation issues for arbitration agreements)
- Diamond v. Colonial Life & Accident Ins. Co., 416 F.3d 310 (4th Cir. 2005) (standard of review: clear error when objections not timely raised)
- Damico v. Lennar Carolinas, LLC, 879 S.E.2d 746 (S.C. 2022) (contract of adhesion is not unconscionable if terms are even-handed)
- Smith v. D.R. Horton, Inc., 790 S.E.2d 1 (S.C. 2016) (discussing adhesive contracts and unconscionability)
- Sydnor v. Conseco Fin. Servs. Corp., 252 F.3d 302 (4th Cir. 2001) (loss of jury trial is a necessary consequence of agreeing to arbitrate)
- Fleishmann v. Maier Brewing Co., 386 U.S. 714 (1967) (addressing concerns about fee awards chilling litigation)