Holloman v. Circuit City Stores, Inc.

894 A.2d 547 La’Tia HOLLOMAN INC., STORES, CITY et al. CIRCUIT 53, September Term, No. 2005. Maryland. Appeals

Court of March 2006. Holland, F. P. (Timothy Maloney, Jay

Brian J. Markovitz P.A., Laake, brief), Greenwald on for Joseph, petitioner. & (Susan A. of Kaufman Heather Mullen Childers North & P.C., Cañóles, VA, Norfolk, Lauri E. Cleary, Jennifer S. Thomas, Lerch, Brewer, Bethesda, Early & Chtd. of Teri C. brief, Miles, Counsel, Richmond, Director & Asst. on Gen. VA), respondents. for C.J., WILNER, BELL, RAKER,

Argued before CATHELL, HARRELL, GREENE, BATTAGLIA and JJ.

BATTAGLIA, J. delineating

This case us with the task of presents scope of application and our decision Cheek v. United Healthcare Mid-Atlantic, Inc., (2003), 378 Md. A.2d 656 to of Stores, arbitration agreement City between Circuit Inc. (“Circuit of its La’Tia City”) employees, and one former (“Holloman”), disputes all governed which Holloman relationship, which employment their during arose rescind the to alter or right reserved notice thirty-days after year of the single day on a also asks this Court Holloman change. impending of the her voluntarily” waived “knowingly she consider whether rights trial and her jury to a substantive right constitutional 1964, 42 U.S.C. Act of Rights of the Civil Title VII under (1957, Art. 2000e, Repl.Vol.), Maryland Code seq., § et and the 49B, employment, discrimination prohibits when George’s County Prince Code of the provisions pertinent we determine Because agreement. the arbitration signed she consider agreement provide that the terms enforceable ation, the arbitration hold that we Moreover, Special that the we find Court under Cheek. her that Holloman waived concluding not err in did Appeals that Holloman’s submis jury to a trial and right constitutional deprive arbitration did not claims to statutory sion of her Therefore, affirm the thereunder. we rights of her Holloman Special Appeals. of the Court of judgment

Background job for a at Circuit applied Holloman September In page The first Heights, Maryland. in Marlow City’s store “selection tools” listed several employment application her to hire. applicants uses to determine which that Circuit City’s “Dis- employment was Circuit prerequisite One such (“arbitration agreement”), which Agreement” Resolution pute “requiring] employment application on the was described related legal disputes arbitrate certain you with Cir- employment employment your application added, City will The then “Circuit City.” application cuit signed.” if only this your application consider following language contained the The arbitration case sub judice: pertinent you must read employment

If to be considered you wish be considered following agreement. You will sign signed Agreement. have applicant you as an when Included with application this is the City Circuit Dispute Resolution Rules and Procedures. You should familiarize yourself with these rules and procedures prior signing the Agreement. If the Rules and Procedures are not included this booklet you must request copy from a Circuit City representative prior signing Agreement. You will note that if you sign you this time do have three (3) days to your course, withdraw consent. You may, of take the package you with and return it signed, with if you towish continue your application process.

[*] ^{[*] [*]} [Bjoth and I agree to settle and all claims, previously unasserted disputes or controversies aris- out of ing relating to my application or candidacy for employment, employment cessation of employment and/or City, exclusively by final and binding arbitra- tion before a neutral Arbitrator....

I I understand that if do file a lawsuit regarding dispute out of or arising relating my application or candidacy for employment, employment or cessation of employment, Cir- cuit City may use this Agreement in support of its request to the court to dismiss the lawsuit and me require instead to use arbitration.

I further agree arbitration, that if I commence an it will be conducted in accordance with the “Circuit Dispute Resolution Rules and Procedures.” I understand that neither this Agreement nor Dispute Resolution Rules and Procedures form a contract of employ- ment between Circuit City and me. I further understand my signature to this Agreement in no way guarantees that Circuit City will offer me employment. If does offer employment me I become employed at Circuit City, this in no way alters the “at-will” status of my I employment. my understand that employ- ment, compensation and terms and conditions of employ- terminated, ment can be altered or cause, with or without time, notice, option at the any or at and with without City myself. or either Circuit provisions ap- on which those page

Holloman initialed Holloman page, signed At of the next which top pear. bottom, agreement provided: the arbitration Resolu- Dispute and the Dispute Agreement The Resolution legal rights. By affect your tion Rules and Procedures you acknowledge receipt this signing Agreement, may Rules and Procedures. You wish Dispute Resolution Dispute this Resolution legal signing to seek advice before Agreement. through application be enforceable Agreement

This will my respect any and thereafter with process, employment, or arising relating my application claims from or such or cessation em- candidacy employment, employment all such City. then must arbitrate ployment with Circuit We claims, file a may and we not lawsuit employment-related court. agree- the arbitration City representative signed

A Circuit company’s ment on the behalf. Dispute

The nineteen Resolution Rules Procedures twelve-page document contained within appear separate Holloman’s on City’s application packet. argument Rule at the time Holloman was appeal focuses on provided: hired1 DIS-

Rule 19. TERMINATION OR MODIFICATION OF PUTE AGREEMENT OR DISPUTE RESOLUTION RULES AND PROCEDURES. RESOLUTION change in 2003 to the annual alteration date 1. This Rule was modified with the date which notice of from December 31 March February provided changed from December 1 to modification must be change changes substantively 1. Because the made in 2003 did not case, analysis present dependent on provisions at issue in the our original a determination whether the or the judice. applies revised version from 2003 case sub City may alter terminate the Dispute these Resolution Rules and Procedures on Decem- any year upon days ber 31 of 30 calendar giving written Associates, notice to that all claims before provided arising subject alteration or termination shall be to the Agreement corresponding Dispute and Resolution Rules and Proce- in dures effect at the time the Arbitration Form Request fee, accompanying filing Request and or for Waiver of Filing by Company. Fee is received Notice be may a given by posting written notice December 1 of each at all locations year City (including Circuit locations of A companies). copy affiliated of the text of modification to the and published Rules Procedures will be Packet, in the be at Applicant which will available such locations after December 31 of each year. to her decision to terminate her

Subsequent employment 2002, in of relationship City August with Circuit Holloman filed of charges sexual harassment with the and re- EEOC a “right ceived to sue” letter. She then filed a six-count in the for complaint George’s County Circuit Court Prince discrimination, alleging December of 2003 sexual to which City responded by compel Circuit motion to arbitration of Holloman’s The granted City’s claims. Circuit Court motion, ordering judicial arbitration and staying proceed- ings.

Holloman thereafter against initiated arbitration a City appeal filed notice of and a motion to stay proceedings pending the appeal, which Circuit opposed. hearing, After the Circuit granted Court Hollo- man’s for a petition stay pending appeal. Special

The Court of in a Appeals, reported opinion, held requirement that the notice in Circuit City’s agree- materially ment the arbitration at distinguished agreement Cheek, issue from the 378 Md. agreement 835 A.2d 656 (2003), City’s because Circuit obligation give Holloman notice thirty-days prior changing terms of the arbitra- tion consideration for provided its enforcement and bound Circuit to its effectively because it days. Holloman thirty arbitrate for least Inc., 332, 338-40, 873 A.2d Md.App. Stores (2005). concluded that Special Appeals The also Court no merit in Holloman’s contention that she did there was trial or to voluntarily rights jury her knowingly and waive of Title provisions relief under the relevant VII Civil Code, George’s Act of or the Prince Rights Maryland County Code. 20, 2005, Holloman filed a for petition June writ

On following ques- this presented certiorari with Court tions our consideration: creat- Special Appeals incorrectly

1. Whether the Court of exception holding Appeals to the of the Court of ed Inc., Mid-Atlantic, Cheek v. United Healthcare of (2003)? Md. 835 A.2d 656 incorrectly

2. deter- Special Appeals Whether the Court knowing voluntary mined an can and applicant give that rights of his or her constitutional and substantive waiver employer under discrimination even when an rights statutes rules, applicant fails to the with the arbitration provide govern agreement? the arbitration 10, 2005, the and the August granted petition On we issued Inc., 404, City, writ. Holloman v. Circuit 388 Md. 879 A.2d (2005). 1086 Because we determine that consideration exists support agreement, to the arbitration we hold that the arbitra Moreover, tion is enforceable. the we find that did not err in that Special Appeals concluding Court right Holloman her constitutional to a trial and by jury waived procedure that the arbitration the case at bar did federal, state, on Holloman’s infringe rights substantive under Therefore, or local statutes. the discrimination we affirm of the judgment Special Appeals.2 Court of only judice: 2. There are two before this case the issues Court in the sub illusory application promise analysis from Cheekv. United Health- Inc., 139, Mid-Atlantic, (2003), care 378 Md. 835 A.2d 656 right through jury whether waived her Ms. Holloman to trial 588 of Review

Standard arbitration consti compel “A trial court’s order Sovereign final v. appealable judgment.” tutes a Walther (2005), Bank, 412, 422, 735, citing 872 A.2d 741 386 Md. (1993) 392, 403, 305, Md. 620 A.2d 311 Horsey Horsey, v. before the trial compelling parties that “an order (stating arbitration, dispute thereby denying court to submit their terminating in the trial court and the action sought all relief there, judgment”). a final Our focus review appealable is “ ‘extends compel only the trial court’s order to ing agree to a determination of the existence of ” 741, Walther, 422, quoting Md. at A.2d at ment.’ 631, 645, 87, v. 374 Md. 824 A.2d Stinebaugh, Allstate Ins. Co. (2003). a “particu The trial court’s decision as whether law, subject lar is to arbitration is a conclusion dispute ” Walther, at A.2d de novo. 386 Md. which we review Bank, F.S.B., 363 Md. citing Chevy Wells Chase (2001). 250, 768 A.2d 629-30

Discussion argues Holloman that the arbitration is right on its face because reserved the invalid modify terminate and its terms without the em unilaterally consent, to arbitrate illuso promise which renders ployee’s Moreover, that the concern ry. appropriate she asserts agreements employee to arbitration not whether respect changes notified of the or that the can be made change was but, a limited time rather only period, within whether became employee’s required changes consent was before City pos effective. Holloman contends because Circuit arbitration agree sessed the to alter or rescind the power ment, In supported by was not consideration. agreement at bar is argues this Holloman that the case identical respect, agreement. Despite interject the dissent’s efforts to arbitration case, unconscionability into this adhesion and issues of adhesion and unconscionability properly are us as Ms. Holloman did not not before petition point in the them in her to this Court nor at other raise litigation. this course of

589 Cheek, presented to the situation to this Court in which agreement mandates that the be found unenforceable. Holloman also asserts that because City Circuit did rules, her with a provide copy she did not make a of her knowing intelligent waiver constitutional to a trial or her substantive right jury rights under Title VII 1964, (1957, Rights of the Civil Act of 2003 Maryland Code 49B, Repl.Vol.), governs Article discrimination em- ployment, George’s the Prince County Code.

Conversely, City Circuit argues the trial court and the Special Appeals Court of correctly held that the arbitration Circuit City between and Holloman enforce was able. According City, Circuit the limited modification provision the arbitration did not render the Thus, company’s promise arbitrate non-binding. states that its obligation to arbitrate constitutes consider Furthermore, agreement.

ation for the contends that Holloman is bound agreement through document, her signature on the regardless whether she read its terms. also govern asserts that its rules ing arbitration are procedural nature and cannot be con strued as waiving any rights. substantive According Cir City, cuit Holloman’s rights remedial under Title VII of the 1964, Rights Maryland (1957, Civil Act of Code 2003 Repl. Vol), 49B, Article or the Prince George’s County Code are not infringed through binding use arbitration.

Arbitration in Maryland governed by Maryland Uni (“MAA”), (1974, form Arbitration Act Maryland Code Repl.Vol.), 3-201 through Section 3-234 of the Courts and Article, Judicial Proceedings which was “purposefully meant to mirror the language Act, Federal [the Arbitration (2000)].” Walther, 423-24, §§ U.S.C. 1-14 386 Md. at A.2d at 742. As we stated in Holmes v. Coverall North America, Inc., 534, (1994): 336 Md. 649 A.2d

The Maryland Arbitration Act has been called the “State ... to the analogue Federal Arbitration Act.” Regina See Envirmech, 662, (1989). 80 Md.App. 565 A.2d

590 agree- enforcement of arbitration policy favoring

The same acts. our and the federal in both own present ments is process as “the described arbitration previously We have a private to substitute voluntarily agree whereby parties to them.” tribunal otherwise available public for the tribunal Cheek, 743, Walther, 424, 378 quoting at 872 A.2d at 386 Md. Mall, 660, in turn 146, at Gold Coast quoting at 835 A.2d Md. (1983). 96, 103, 91, Md. 468 A.2d 95 Corp., 298 Inc. v. Larmar arbitrate an The issue of whether Walther, 386 Md. at by principles. is contract governed exists Cheek, 147, 835 A.2d 425, 743, 378 Md. at quoting A.2d at 872 569, Buck, v. 340 Md. 661; Testerman at see also Curtis G. Co. (1995) 579, 649, that is (recognizing 654 “[arbitration 667 A.2d ” “ ‘consensual; contract’ and that ‘[i]n a creature of may no be agreement, party an express absence of right of its to arbitration contravention compelled submit ”), Arbitra Stipanowich, Thomas J. legal process.’ quoting Workable The Search Multiparty Dispute: tion and the (citations (1987) Solutions, 473, omit L.Rev. 476-77 72 Iowa ted). instances, the determination of a contract’s In most consideration, is the existence enforceability decided 147, 661; Cheek, County v. Md. at 835 A.2d 378 Harford 421, (1998); Air, 363, 381, Md. 704 A.2d 430 Town Bel 348 479, 770, Chernick, 470, 327 Md. 610 A.2d 774 v. Chernick (1992); and Loan Assoc. Savings Peer v. First Federal 299, (1975); Cumberland, 610, 614, Md. 331 A.2d 301 273 Bank, 121, 309, 116, 155 A. 161 Md. v. First Nat’l Broaddus “ (1931), evidence of ‘a may through be established 311 ” to the promisee.’ detriment promisor benefit to 430, quoting Md. at 704 A.2d at County, 348 Harford 183, 191, Kandel, 517 A.2d 308 Md. v. Vogelhut (1986). may recognized binding promise that a

We have Cheek, Md. at promise. consideration for another serve as binding, howev obligation A.2d at 661. Unless er, support not exist to consideration does requisite illusory. and it is considered enforceable legally Co., 129, 134, 110 Ins. 206 Md. Indemnity Id.; Tyler Capitol so goes (1955) option (observing [an] “[i]f A.2d given party promise illusory render far as to consideration, and there- no sufficient there is indeed option, ”)(cid:127) described previously ... have We no contract fore ... not but promise, to be “illusory “appearing] promise” anything.” to promisor the obligating] or binding] actually illusory promise An 148, A.2d at 662. Cheek, at 378 Md. Id. a contract. to enforce consideration not constitute does the reserved that because Circuit argues Holloman her con- agreement without the arbitration ability modify to for of consideration. lack sent, is unenforceable agreement the Cheek, 139, in 378 Md. end, holding relies our upon this she To 835 A.2d 656. into an Cheek, entered Cheek, the employee, Ronnie

In Healthcare, employer, his with United agreement rights: reservation of following the provided alter, amend, modi- to right reserves Healthcare United at discretion at its sole and absolute Policy revoke the fy, or The senior executive notice. time with without any alter, amend, to authority has the sole Human Resources Policy. or revoke modify, 142-43, determined

Cheek, A.2d at 658. We at 378 Md. “ ‘alter, amend, to right retained that because United Policy at its [Employment Arbitration] or revoke the modify, with or without at time any sole and absolute discretion ’ consent,” not bound and as such was notice and without was promise Healthcare’s United agreement, the arbitration lack of unenforceable illusory agreement was 149, 161, (emphasis A.2d at at consideration. Id. added). from with courts aligned In we ourselves holding, so lan- that similar that also have concluded jurisdictions other Du- See for lack of consideration. unenforceable guage was (10th 299 F.3d 1219-20 Corp., mais v. American Golf ability Cir.2002) American had that because Golf (stating time, promise at provisions alter the arbitration Family Ryan’s Penn v. illusory); arbitrate was rendered Houses, Inc., (7th (con- Cir.2001) Steak 269 F.3d 759-60 struing sole, similar a party where had the rules; unilateral right to amend the holding that this rendered the promise arbitrate illusory); Floss v. Houses, Inc., (6th Ryan’s Family Steak 211 F.3d 315-16 Cir.2000) (holding that the arbitration agreement at issue was unenforceable it because permitted party one to alter the applicable rules without notification or consent of the other consideration). parties, thereby lacking Cheek, Holloman asserts that our opinion we held that “notice does not consideration in provide Maryland.” On the contrary, our reasoning Cheek indicates that the arbitration agreement at issue in that case was unenforceable because United Healthcare was not bound to arbitrate and “opt could out” of process the arbitration at anytime, even after the process Cheek, was completed. initiated-or even See 378 Md. 150-51, 835 A.2d at 663 (noting was unenforceable because United Healthcare had the right alter or agreement revoke the at any time with or without consent). notice and without United Healthcare’s purported promise to arbitrate illusory was it because no real “creat[ed] it promise” as United to allowed revoke the Employment Arbitration Policy invoked, after even arbitration is and even rendered, after a decision because United can “revoke” the “at Policy Thus, time.” Id. at 835 A.2d at 662. we concluded that promise United’s to arbitrate illusory was was not consideration to support the enforcement of the arbitration agreement. Id. Cheek,

Unlike United Healthcare in City Circuit does not have unfettered discretion to alter or rescind the arbitration agreement without Rather, notice or consent. under terms of the agreement, City Circuit is bound to the terms of the arbitration agreement for 364 days, must provide thirty- days prior notice to any modification and may only alter the agreement on a single day out of the year to become effective Holloman, during the next day. terms, under these could have the to arbitrate opportunity any “grievance” with Circuit City under the explicated terms during the 30-day window

593 by City. Circuit We find of recission or alteration fear without binding obligation to create a adequate limitations to be these arbitration, to such that Circuit to submit on Circuit agreement under the arbitration to arbitrate City’s promise consideration, is enforceable. agreement and the constitutes (“[M]utual 153-54, promises 665 Cheek, 835 A.2d at Md. at contract ... enforceable independently act arbitrate from an arising disputes to arbitrate promised has party each consideration contract, provides ‘each promise underlying ”). the other.’ for jurisdic- courts other is consistent with conclusion

Our of the same enforceability that addressed tions have In Morri- agreement. of arbitration City’s Circuit provision (6th Cir.2003), Stores, Inc., 317 F.3d son Circuit for the Sixth Appeals the United States Court City’s imposed by that the limitations determined to create an constituted consideration agreement binding promise. created a they contract because enforceable court, maintain the City’s According promise to the “Circuit thirty days, at least and until agreement ... Id. constitutes consideration.” year, end of each calendar 148 F.3d 373 City, v. Circuit Similarly, at 668. Johnson (4th Cir.1998), for the Appeals Court the United States Circuit, of the arbitration addressing application Fourth also jud/ice, at issue in the case sub determined terms of the arbitration evidenced arbitrate, provided consider- which promise Id. at 378-79. enforceability agreement. ation for the her support The Holloman cites do cases America, Phillips, Inc. v. relies on Hooters position. She (4th (D.S.C.1998), Cir. aff'd, 173 F.3d F.Supp.2d 1999), agreement provided: in arbitration parties’ the modified, or in be in whole may “These Rules and Procedures time, notice,” from time to without part, by Company the on cancel the and Procedure Company may “the ability at 617. Based on Hooters’ notice.” Id. days written notice, the Fourth time agreement any to alter the without retained to itself unfettered found that “Hooters Circuit ‘right to decide later the nature or extent of performance’ [its] by reserving Rules, the to authority modify the or terminate agreement, at its choice.” Id. at 618. The unfettered Hooters, ability modify to in agreement similar to that Cheek, in present which was from distinguishes it the present case.

Holloman also emphasizes United States Court Ap- for peals the Ninth Circuit’s in reasoning v. Ingle Circuit Stores, Inc., (9th Cir.2003). case, however, F.3d 1165 That focused on whether the arbitration agreement was substan- tively unconscionable because its employees power had no to negotiate the terms of the agreement modification made subsequent hiring. their The Ninth specifical- Circuit ly included language which stated that the opinion court’s did not address provision whether the notice and power modify the terms of the agreement in contained the arbi- tration agreement agreement rendered the unenforceable: holding

Our with to the regard provision granting Circuit City the unilateral authority modify or terminate the arbitration agreement does not collide that of the Sixth Morrison, 317 F.3d at 667-68. The court in Morrison held that City’s ability or termi- modify not, itself, nate the arbitration agreement by did render the case, contract unenforceable. In this we hold provision substantively is unconscionable. We draw no term, itself, conclusion as to whether this by renders the contract unenforceable. Therefore,

Id. at 1179 n. 23. the Ninth Circuit’s reasoning Ingle applicable.3

3. The remainder inapposite of the cases cited Holloman are USA, Inc., (4th Peoplesoft similar reasons. See Hill 412 F.3d 540 Cir.2005) (enforcing agreement party where neither had power agreement); to alter or rescind the v. Al-Safin Stores, Inc., (9th Cir.2005) (finding 394 F.3d 1254 that the arbitration Washington clause is addressing unconscionable under law and not enforceable). issue of whether the was otherwise Holloman Bros., Inc., (6th Cir.2003), also cites to v. Lehman 340 F.3d 386 Fazio Appeals which the United States Court of for the Sixth Circuit relied on reasoning its in Morrison to hold that the arbitration at issue Therefore, we conclude that the of the arbitration provisions agreement which bind Circuit to arbitrate for at least thirty days year and for the entire to the prior day upon which the agreement may be modified constitute consideration. Thus, the arbitration agreement between Holloman and Cir- cuit City is enforceable.

Holloman also that she argues did not knowingly voluntarily her constitutional a right jury waive trial or her substantive under rights Rights Title YII the Civil Act of (1957, 49B, Maryland Repl.Vol.), Code Article governing in employment discrimination and the settings, We, however, George’s Prince County disagree. Code. outset,

At law, we note that Maryland under party who a contract signs presumed to have read and understood its terms and as such will be bound by its execu Walther, (“If tion. See 386 Md. at 872 A.2d at 754 petitioners agreement] did not they [read before signed agreement, they person have no to blame but themselves. discussion, As expressed earlier in our we are loath to rescind a conspicuous agreement signed that was aby party whom now, reason, for whatever does not desire to fulfill that Benson, agreement.”); 456, 461, Binder v. 225 Md. 171 A.2d (1961) (“[T]he fraud, rule usual is that if there is no mistake, duress or mutual one who has the capacity under it, stand a written document who reads and signs without reading him, it or having it, it read to signs is bound his terms.”) (citations signature omitted); to all of its McGrath Peterson, 412, 416, (1916) (“It 127 Md. 96 A. would executes, lead to results if startling person who without coercion or persuasion, seal, undue a solemn release under can subsequently impeach it on the of his ground own care lessness, execution, at the though very time of its he might, fit, had he seen had advised himself fully as to the nature and effect legal of the act he doing”) (emphasis was in original). Thus, was enforceable. does not sustain Holloman's assertion Fazio present that the supported by in the case is not consideration. to a right that did not her Holloman’s assertion she waive merit. is without trial under the arbitration jury Walther, respect arguments addressed identical In we his employee employer. an arbitration clause between to a trial ‘attaches light jury We stated “[b]ecause after it determined that judicial proceedings the context of ... the “loss of the before a court proceed should litigation fairly and obvious conse- necessary to a trial is a right jury ’ ” Walther, 386 Md. at an to arbitrate.” agreement of quence v. Sydnor in 443, (emphasis original), quoting A.2d at 754 872 (4th 302, 252 F.3d 307 Corp., Servicing Financial Conseco Dean, Witter, Cir.2001), Reynolds, in turn Pierson v. quoting (7th Cir.1984). Thus, Inc., concluded 334, 339 we 742 F.2d jury generally implicit to a trial is right that “the loss of one’s case, In present to arbitrate.” Id. agreement in an arbitration signed agreement, initialed and Holloman her that bound to agreement stated specifically court, in that litigation to process opposed compel agreement could use the arbitration court, and, font, in bold that the if filed suit in she Moreover, had her Holloman legal rights. affected agreement her consent to arbitra- days three within which withdraw agreement of the arbitration language Because the clear tion. forecloses Holloman’s that the arbitration indicates courts, opportu- provided to the and Holloman was access consent, her we hold attorney consult an and withdraw nity to jury to a trial is effective. right of her waiver under Title rights Holloman also that her VII argues 1964, law, the Prince Maryland Act Rights of the of Civil if detrimentally be affected she is County Code will George’s jurisdictions Numerous have to arbitrate her claims. required not result claims does statutory that arbitration recognized In statutory Murray rights. in the forfeiture of substantive (4th Cir.2002), Int’l, 100, 297, F.3d 301-02 Local 289 UFCW the Fourth Circuit Appeals the United States Court stated: FAA, its policy of the provisions is settled that the

[i]t arbitration, ap- through resolution of favoring disputes

597 ply employment agreements arbitrate discrimination statutes, claims to federal brought pursuant including Title Stores, Act. Rights VII Civil See Circuit Inc. v. Adams, 105, 109, 1302, U.S. S.Ct. 149 L.Ed.2d 234 America, (2001); Hooters Inc. v. 173 F.3d Phillips, (4th Cir.1999). an be Such is enforceable “ claim, ‘[b]y agreeing statutory cause to arbitrate a a party forgo rights does not the substantive afforded the stat ute; arbitral, it to their only submits resolution rather ” Hooters, than judicial, forum.’ 173 F.3d at 937.... If “the her prospective litigant effectively may vindicate his or forum, cause of action in statutory the arbitral the claim is subjected appropriately to arbitration lieu of litigation.” Tree, Green 531 U.S. at 121 S.Ct. 148 L.Ed.2d 373. Morrison, also 317 F.3d at See that “Title VII (noting may forum”); claims be heard in an arbitral Willis v. Dean Inc., (6th Cir.1991). Reynolds, Witter 948 F.2d Holloman relies on Black’s dissenting opinion Justice Maddox, 650, Corp. 614, Steel v. Republic 379 U.S. 85 S.Ct. 13 (1965), L.Ed.2d 580 proposition for the that arbitration does not provide adequate forum for her to seek In redress. his Madxlox, dissenting opinion Justice Black decried the defi ciencies of the process arbitration as to a trial compared 664, 623, jury. Id. at 85 S.Ct. at 13 L.Ed.2d at 590. The Madxlox, however, majority held that the collective bargain ing agreement specified that that arbitration was the exclusive was remedy applicable to the action for employee’s severance 656, Id. at 85 pay. S.Ct. at 13 L.Ed.2d at 588. The majority’s holding Maddox is consistent Supreme with the recent recognition Court’s of “liberal federal policy favoring which, noted, arbitration agreements,” it that “requires we enforce rigorously agreements arbitrate.” Mitsubishi Mo Inc., tors v. Corp. Chrysler-Plymouth, Soler 473 U.S. - 625-26, 3346, 3353, (1985), 105 S.Ct. 87 L.Ed.2d quoting Moses H. Cone Memorial v. Hosp. Mercury Construction 1, 24, 927, 941, Co 103 rp., U.S. S.Ct. 74 L.Ed.2d 765 (1983); see also Corp.—Alabama, Green Tree Fin. v. Ran 79, 89, 373,- 531 U.S. dolph, S.Ct. 148 L.Ed.2d (2000) adopted Act was Federal Arbitration that the (stating to arbitration judicial hostility longstanding to “reverse on the agreements arbitration place ... and to agreements Inc. Reynolds, Dean Witter contracts”); as other footing same 1238, 1242, 213, 221, 84 L.Ed.2d Byrd, S.Ct. U.S. 158,-(1985). lists agreement specifically arbitration

The of the language Act of of the Rights under Title VII Civil claims cognizable subject to claims as statutory and local as state 1964 well written, and Holloman provision clearly This arbitration. agree- her acknowledging document initialed and signed presented Holloman has not claims. ment to arbitrate such duress, fraud, respect undue influence with evidence of Resolu- Dispute of the acknowledging receipt signature to her her and her submit agreement and Procedures tion Rules Therefore, terms because the to arbitration. statutory claims federal, state, that plainly stated subject are to arbitration statutory claims and local her to arbitrate she is bound signed agreement, Holloman as sufficient recognized has been claims as arbitration her at issue. protect rights

Conclusion City’s that the terms of Circuit Because we determine consideration, we here provide issue Moreover, agreement is enforceable. hold that the arbitration that concluding not err in find that the courts did we lower jury to a trial right her constitutional Holloman waived discrimination claims statutory Holloman’s submitting There- rights. on her substantive impinge arbitration did fore, Special Appeals. of the Court judgment affirm the we APPEALS SPECIAL THE COURT OF JUDGMENT OF THE AND IN IN THIS COURT AFFIRMED. COSTS PETI- BE PAID BY APPEALS TO OF SPECIAL COURT TIONER. GREENE, J.,

BELL, C.J., Dissent. and GREENE, J., BELL, which C.J. Dissenting Opinion joins. dissent, so. emphatically

I and Holloman, petitioner, the sure, Y. La’Tia clearly, and To be seek- Application with Circuit an Employment submitted Application Employment The position. a sales associate ing tools,” 2. of which was: number of selection “a number listed requires Agreement—This Resolution “Dispute disputes legal arbitrate certain City to and Circuit you employment or employment for your application related your application consider City will City. Circuit with Circuit signed.” only if this Agree Resolution City Dispute the also included “Circuit It signing signed. By initialed and ment,” petitioner the within withdrawing the Resolution Dispute she “be would “recognized” days, petitioner three arbitrate, in the agreement] explained [earlier required to Circuit against I have may claims which employment-related A City.” employed by not I become City, whether its President City, Senior Vice of Circuit representative con Resources, Application, Employment signed Human on its behalf.2 Agreement, Resolution Dispute taining you wish tool 2. said: "If agreement repeated what the selection 1. The sign following you employment must read and be considered for necessarily implicit, "[y]ou will be adding what agreement.” After was signed Agreement, applicant you when have as an considered provided: City Dispute Resolution application with this is the "Included yourself with these You should familiarize Rules and Procedures. Agreement. signing If the Rules procedures prior to rules and you request a In must are not included this booklet Procedures signing Agree- City representative prior copy from a Circuit you sign you three If at this time do have You will note that ment. course, (3) may, your take the days consent. You to withdraw you signed, it if wish to continue you and return with package your application process.” dissenting judge v. Circuit what the in Michalski in contrast to 2. This is J., Cir.1999) (Rovner, Inc., 637-639 (7th Stores, 177 F.3d in that case. There dissenting), determined to be the situation Dispute Employment Application, the Resolution sign the did not City’s Circuit under the undertaking agreement “to con- was sider Employment this Application to follow this Dispute Resolution Agreement Dispute and the Resolution Rules and Procedures connection with the Associate whose signature appears above.”

Substantively, the Dispute Resolution Agreement provided: below, “Except as set forth both City Circuit and I agree settle any claims, and all previously unasserted or disputes arising controversies out or relating my application or candidacy employment, for employment cessation of and/or employment with City, Circuit exclusively by final and binding arbitration before a neutral Arbitrator. By way of example federal, only, such claims include claims under law, state and local statutory or common such as the Age Act, Discrimination in Employment Title VII of the Civil amended, Rights Act of as including the amendments of the Rights Civil Act of the Americans with Disabili- Act, Act, ties the Family Medical Leave of contract law and law of tort.” this

Notwithstanding provision, paragraph last agreement stated:

“1 understand that neither this Agreement nor the Dispute Resolution Rules and form Procedures a contract of employ- ment City between Circuit and me. I further understand that my signature to Agreement this in no way guarantees that Circuit offer City employment. will me If Circuit City does offer me I employment and become employed at City, Circuit this Agreement way no alters the ‘at-will’ my status of I employment. understand that my employ- ment, compensation and terms and conditions of employ- Procedures, Agreement relying or the employee Rules on its hand book to indicate disputes. its to arbitrate In Johnson v. Stores, Inc., (4th 1998), however, 148 F.3d Cir. case, applicant employment this both the signed and Circuit dispute providing resolution agrees that "Circuit Dispute follow Dispute this Resolution and the Resolution Rules and Procedures in connection signature with the Associate whose appears above”. cause, terminated, or without or can be altered ment of either the option anytime, notice at or without and with manager that no store I understand City myself. or other than an Officer City, of Circuit representative or above, has President the level Vice City at for employment for any agreement into to enter authority contrary duration, any to make any specific Resolution Dispute City the Circuit or to alter foregoing the and Procedures.” Rules Rules and Resolution Dispute 2 of the Circuit

Rule Subject the “Claims identify and amplify Procedures further It provided: To Arbitration.” herein, all employ- and any limited as otherwise

“Except arising or claims controversies disputes, legal ment-related candidacy or to, application of, an Associate’s relating or out of employment or cessation employment employment, for settled shall be one of its affiliates City or neutral, before a binding arbitration final and exclusively by these in accordance with selected Arbitrator third-party Arbitration shall Procedures. Rules and Resolution Dispute or claims controversies disputes, all such apply against any Company the against asserted whether and/or officer, compa- or affiliate director alleged agent, employee, ny. federal, arising claims under unasserted

“All previously subject to shall be or common law statutory or local state in- these claims way example, of Merely by arbitration. to, Age arising claims under clude, not limited but are (ADEA), Title VII Act Employment Discrimination amended, the amend- including Act of as Rights Civil 1991, the Americans with Act of Rights ments of Civil Act (ADA), Labor Standards the Fair Act Disabilities amended, including (F’LSA), § U.S.C. Employee Rights Act of the Civil amendments In- Act, Retirement Employee Protection Polygraph statutes, (ERISA), state discrimination Act Security come regulating employment common law statutes state and/or tort; includ- termination, contract or law the law of to, ing, but not limited claims for prosecution, malicious wrongful discharge, wrongful arrest/wrongful imprisonment, and intentional/negligent infliction of emotional distress or defamation. Statutory or common alleging law claims retaliated or against discriminated an Associate subject shall be to arbitration.” Rule dealing with termination or modification of the dispute resolution or the rules and procedures thereto, pursuant permits to “alter or terminate Dispute these Resolution Rules and Regu- lations on March of any year 1st upon giving days written notice to” the sales associates. It provides further that the agreement and procedures rules and in effect “at the time the Request fee, Arbitration Form and Accompanying filing Request Filing Waiver Fee is received the Company” govern will that claim.

The agreement case, issue in this consisting of the Employment Agreement, the Circuit City Dispute Resolution and the Circuit Dispute Resolution Rules and Procedures, is, doubt, without any is a contract of adhesion. adhesion, A settled, contract of it one, is well is usually form, in prepared printed “drafted unilaterally by the domi nant party presented and then on a ‘take-it-or-leave-it’ basis to the weaker party who has no real opportunity to bargain (Second) about its terms.” Restatement of of Conflict Laws 187, §§ Comment b. Meyer See v. Farm State Fire and Cas. Co., 83, 89, 275, 85 Md.App. (1990); 582 A.2d 278 Armendariz Servs., v. Found. Health Psychcare 83, 24 Cal.4th 99 Cal. 745, 669, Rptr.2d (2000), 6 P.3d 689 quoting Neal v. State 690, Farm Ins. Companies, 694, 188 Cal.App.2d 10 Cal.Rptr. (1961) (contract 781 contract, adhesion is a “standardized which, imposed and by drafted the party superior bargain ing strength, relegates to the subscribing party only the opportunity to adhere reject it”); contract or Iwen v. Direct, 512, 989, U.S. West 293 Mont. (1999), 977 P.2d 995 quoting Passage Securities, Inc., v. Prudential-Bache 223 60, 1298, (1986) (“contracts Mont. 727 P.2d 1301 of adhesion ‘arise when a form agreement, standardized usually drafted

603 present- power, superior bargaining having party reject or accept choice is either whose party, ed to a ”); its negotiate terms’ opportunity contract without 388, 498 330 S.C. Corp., Financial Tree Lackey v. Green (1998). 898, 901 S.E.2d a has both “[Ujnconscionability unconscionable.

It is also element,’ focusing the former and a ‘substantive’ ‘procedural’ bargaining power, unequal due to ‘surprise’ ‘oppression’ on Armendar or ‘one-sided’results.” ‘overly harsh’ the latter on 83, Servs., Inc., 24 Cal.4th Psychcare Health iz v. Foundation 669, 690, Produce 745, A & M quoting 6 P.3d 99 r.2d Cal.Rpt 473, 486-487, Cal.Rptr. 186 Cal.App.3d 135 Corp., Co. v. FMC (1982). [procedural is that “The view 114, prevailing 121-122 present must both be unconscionability] substantive and to refuse to enforce a court to exercise its discretion order for unconscionability.” the doctrine of or clause under a contract Armendariz, quoting 6 P.3d at Stir r.2d Cal.Rpt Inc., Cal.Rptr.2d Cal.App.4th Supercuts, len v. 138. In such arbitration contract. a preemployment

This is economic cases, pressure that “the recognized it has been sought-after employ the most on all but by employers exerted acute, for the arbitration be may particularly ees necessary employment, employee stands between of an job to refuse a because position are a employees few Armendariz, Cal.Rpt r.2d requirement.” case, Thus, “when although, ordinary P.3d at 690. even than another power enjoys greater bargaining a party who contract without party the weaker party presents and, there to negotiate, ‘oppression meaningful opportunity ” fore, Ingle are Cir unconscionability, present,’ procedural (9th Cir.2003), Inc., 1165, Stores, F.3d 1172 328 City cuit Industries, Inc., 298 Countrywide Credit quoting Ferguson Bank, (9th Cir.2002); 778, v. Discover 97 784 Szetela F.3d 862, (2002), that, 1094, 1100, Cal.Rptr.2d 118 867 Cal.App.4th uncon words, procedurally of adhesion are in other contracts Stores, Adams, 889, 279 Inc. v. F.3d scionable. Circuit (9th Cir.2002) (“The is agreement] procedural- [arbitration adhesion.”); ly unconscionable because it is a contract of HomeFirst, Inc., Flores v. Transamerica 93 Cal.App.4th (2001) (“A a Cal.Rptr.2d finding of contract essentially of adhesion is finding procedural unconsciona Int’l, Inc., bility”); Acorn v. Household 211 F.Supp.2d (N.D.Cal.2002), unconscionability the is more pronounced and, therefore, more acute in such cases.

The agreement substantively also is unconscionable—the focus, of the agreement, terms on which this are inquiry must so one-sided as to shock the conscience of this member of the and, submit, I ought Court to shock the conscience of the ostensibly entire Court. While agreeing by be bound Resolution Dispute Agreement, extricated quickly itself from that agreement by subsequent provision that makes clear that petitioner’s agreement to be by bound it, Dispute Resolution had no effect on for the that, simple it, fact, reason of that provision, virtue did to be agree By bound do the last anything. paragraph City Dispute of the Circuit Resolution Agreement, no contract formed, of employment was it did not agree offer the and, applicant if it employment even offered the applicant employment and the applicant accepted, re applicant mained an employee, at-will with Circuit retaining the right alter or terminate the applicant’s employment, com pensation and terms and conditions employment, or “with cause, notice, without and with or at any without time.”3 That leaves no absolutely issue about which Circuit City has an interest or need to arbitrate. The only effect of this agreement is to require petitioner to arbitrate. The only meaningful obligation Circuit City regard has with to arbitra- sure, phrase, option City myself,” 3. To be “at the of either Circuit or suggest inserted end is at the of the sentence. It is nonsense to that this provision mutually petitioner City. for the benefit of the and Circuit petitioner may quit job, option While the her she has event term, only City may unless she into a enters contract for a alter employment compensation the terms and conditions of for that employment. appear tion is to and defend proceeding petitioner may bring.

That this is buttressed both by is so itself and the Rules and Procedures it. As implementing we have seen, the Dispute Resolution refers to “controver arising relating sies out of or to or my application candidacy employment for cessation of employment with Circuit and/or More City.” expansively, repeat Rules and Procedures that the claims covered are and all “any employment-related of, legal disputes, controversies or claims out or relat arising to, ing an Associate’s or for application candidacy employment, or employment employment” cessation and make clear that those controversies are claims arising “unasserted under fed eral, statutory state or local or common law” and exam give think, is meant. It I ples significant, what that all of the to and an examples employee, relate involve claims that not an Indeed, have or to employer, bring. would want those even arbitration, claims subject not to men tions, necessarily are those that be by would made “Associ ates.” That is not surprising, given the rights retained. (footnotes omitted),

The court in F.3d at Ingle, 328 1173-74 found, considered the identical rule as in this case and on that basis, that the arbitration agreement so as was one-sided not be enforceable. It reasoned: City’s

“Circuit arbitration agreement applies only ‘any and all employment-related legal disputes, controversies or Associate,’ claims of an thereby its limiting coverage to claims brought employees. of this by By agree- terms ment, does not agree to submit to arbitration might claims it hypothetically bring against employees. 4. employment "Claims Associates for (e.g., state insurance unem- ployment compensation, compensation, disability workers' worker com- pensation) or under the National Labor Relations Act not shall be subject Statutory alleging to arbitration. law common claims against filing retaliated or discriminated an Associate for a claim, however, employment subject state insurance shall be to arbitra- tion.” justification dispari for such glaring Without reasonable realities,’ unfairly ty based on ‘business ‘it is one-sided employer superior bargaining power impose but employee plaintiff accept arbitration on it prosecute against such limitations when seeks to a claim Armendariz, employee.’ the Cal.4th at 99 Cal. 1670.5(b). see Cal. Civ.Code 692; at Rptr.2d §§ 6 P.3d Therefore, III,[5] Adams held in this one ‘unjustified as we the the “modi deprives agreement] sidedness of [arbitration of that bilaterality” cum the California Court Supreme requires contracts to enforceable be under California III, Armendariz, law.’ Adams 894; 279 F.3d at 24 Cal.4th 692. Cal.Rptr.2d 6 P.3d at a “This case broad concern with to arbitra- presents respect agreements tion between and employers employees. Cir- the City agreement subjects cuit that arbitration argues that to City apply employees. Circuit to the same terms its But this argument disingenuous,’ is because the ‘exceedingly agreement is one-sided Because the anyway. possibility that against Circuit would initiate an action one of its remote, the employees agree- is so the lucre of arbitration ment the way: employee relinquishes rights flows one while employer the the benefits of its generally reaps arbitrating employment disputes.

“The realistically by claims affected an arbitration only an an employee between and are those employer bring against employers. claims their essen- employees By claims tially covering only employees likely bring that would this against City, agreement’s coverage arbitration substantively express would be one-sided even without the brought limitation to claims by employees.” I am the by majority’s also troubled resolution of the waiver jury trial There is a the dispute concerning issue. whether petitioner copy a Resolu- Dispute received tion Rules imagine anyone and Procedures. I do not that Adams, Stores, (9th Cir.2002) 5. Inc. 279 F.3d the petitioner the provide that a failure to could think agree her to decision govern Procedures which will Rules and the to the issue of whether to is relevant record So far as the jury right. her trial petitioner waived however, that issue was not resolved reflects, disputed City’s it was decided on Circuit testimony, rather taking arbitration, the evi- taking without compel motion to there is to tests compel A motion whether dence. in of fact dispute to arbitrate. When there dispute court that preliminary that the must resolve regard, dispute, there is a factual of the motion. When disposing respect is akin to a motion dismiss. With compel motion to motions, are complaint facts pleaded to such well That, should been done opinion true. have my taken as existence of prove the movant required this case and the rules petitioner that received agreement, including is, finding mind my critical to procedures binding agreement to arbitrate. valid Court opinion expressed by Supreme I share the California: the potential disadvantages the lack choice and

“Given system employ- a fair can that even harbor ees, particularly employ- must be attuned to claims that we one-sided, have superior power imposed ers bargaining with terms as an arbitration substantively part unconscionable faster agreement. may disputes ‘Private arbitration resolve arbitration, cheaper judicial than Private proceedings. however, may im- injustice also become an instrument of it on a “take or leave it” basis. The courts must posed latter, distinguish pri- former from the to ensure systems disputes only vate arbitration resolve ” fairness.’ economy but also with speed Armendariz, 690-91, 6 P.3d quoting Cal.Rptr.2d Inc., Group, v. Permanente Medical 15 Cal.4th Engalla, (1997) (Kennard, J., concur 938 P.2d 903 Cal.Rptr.2d ring). joins in this dissenting opinion. GREENE

Judge

Case Details

Case Name: Holloman v. Circuit City Stores, Inc.

Court Name: Court of Appeals of Maryland

Date Published: Mar 13, 2006

Citation: 894 A.2d 547

Docket Number: 53, September Term, 2005

Court Abbreviation: Md.