Pinto v. USAA Insurance Agency Inc. of Texas (FN)
275 F. Supp. 3d 1165
D. Ariz.2017Background
- Guy Pinto was employed by USAA from 2004 until his termination in December 2014 and worked as a Financial Foundations Relationship Specialist.
- Pinto filed a third amended complaint asserting (1) willful misconduct under A.R.S. § 23-1022(B) and (2) FMLA violations; USAA moved to compel arbitration and dismiss the action.
- USAA implemented the Dialogue Dispute Resolution Program in 2004, posted materials on its intranet (Connect), and maintains electronic acknowledgement records of employees who reviewed and agreed to policies.
- Pinto had multiple electronic acknowledgements (2005, 2009) acknowledging responsibility to read USAA policies on Connect; USAA produced an October 5, 2007 electronic acknowledgement (from Pinto’s employee ID) agreeing to be bound by Dialogue and arbitration.
- Pinto argued he never agreed to Dialogue (no handwritten signature), that the program is procedurally and substantively unconscionable, and that USAA waived arbitration by its conduct; USAA submitted business records and declaration showing routine creation of electronic acknowledgement records.
- The Court found Pinto had actual notice and agreed to Dialogue, rejected unconscionability and waiver arguments, and granted USAA’s motion to compel arbitration and dismissed the action.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Existence of a valid arbitration agreement | Pinto says he never agreed; no signature; Arizona requires electronic signature | USAA says Dialogue was posted, Pinto electronically acknowledged handbook/policies and specifically agreed to Dialogue in 2007 | Court found sufficient electronic acknowledgements and business records to show assent; arbitration agreement exists |
| Electronic-signature/formal-requirement | Pinto: Arizona law requires electronic signature to assent | USAA: electronic records/signed acknowledgements suffice; FAA requires writing but not signature | Court: A.R.S. § 44-7007 allows electronic signatures; signature not required for arbitration if aware of provision; assent found |
| Unconscionability (procedural and substantive) | Pinto: contract of adhesion; amendment/termination rights favor USAA; arbitration terms one-sided | USAA: Dialogue is typical employment arbitration program; amendment provision valid under at-will employment; prior decisions found no unconscionability | Court: plaintiff failed to meet burden; not procedurally or substantively unconscionable under Arizona law |
| Waiver of arbitration by USAA | Pinto: USAA’s conduct (not invoking Dialogue for complaints, HR statements) shows waiver and caused prejudice | USAA: moved promptly to compel arbitration after removal; no refusal to arbitrate or active litigation inconsistent with right | Court: Pinto failed to show knowing acts inconsistent with arbitration or prejudice; no waiver |
Key Cases Cited
- Chalk v. T-Mobile USA, Inc., 560 F.3d 1087 (9th Cir. 2009) (FAA enforces arbitration agreements subject to generally applicable defenses)
- Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213 (U.S. 1985) (district courts must direct parties to arbitration when a valid agreement exists)
- Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126 (9th Cir. 2000) (court determines existence and scope of arbitration agreement)
- Kam-Ko Bio-Pharm Trading Co. Ltd.-Australasia v. Mayne Pharma, 560 F.3d 935 (9th Cir. 2009) (if arbitration clause valid, court should stay or dismiss to permit arbitration)
- Doctor’s Associates, Inc. v. Casarotto, 517 U.S. 681 (U.S. 1996) (state-law contract defenses to arbitration must be generally applicable)
- Martin v. Yasuda, 829 F.3d 1118 (9th Cir. 2016) (elements and heavy burden for proving waiver of arbitration by conduct)
- Brown v. Dillard’s, Inc., 430 F.3d 1004 (9th Cir. 2005) (refusal to arbitrate or active litigation can constitute waiver)
- Ingle v. Circuit City Stores, 328 F.3d 1165 (9th Cir. 2003) (modification provisions may be unconscionable under some state laws)
- Maxwell v. Fidelity Financial Servs., Inc., 907 P.2d 51 (Ariz. 1995) (doctrine and analysis of procedural and substantive unconscionability under Arizona law)