Pimsner v. Greystar Property Management

1 WO [5] 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA [8] Jeffery Pimsner, ) No. CV-24-02359-PHX-SPL ) [9] ) 10 Plaintiff, ) ORDER vs. ) ) [11] ) Greystar Management Services, LLC, ) [12] ) 13 Defendant. ) ) 14 ) 15 Before the Court is Defendant Greystar Management Services, LLC’s 16 (“Greystar’s”) Motion to Dismiss and Compel Arbitration (Doc. 7), Plaintiff’s Response 17 in Opposition (Doc. 16), and Defendant’s Reply (Doc. 17). For the following reasons, 18 Defendant’s Motion to Dismiss shall be granted. 19 I. BACKGROUND 20 Defendant Greystar is a real estate company. (Doc. 7 at 5). Greystar hired the 21 plaintiff, Jeffery Pimsner (“Plaintiff”), in December 2022. (Id.). On August 2, 2024, 22 Plaintiff filed a complaint in the Maricopa County Superior Court asserting claims of 23 harassment, retaliation, and wrongful termination in violation of the Fair Labor Standards 24 Act (“FLSA”) and possibly Title VII of the Civil Rights Act of 1964. (Id. at 2; Doc. 1 at 25 3). On September 6, 2024, Defendant filed its Notice of Removal in this Court based on 26 federal question jurisdiction. (Doc. 1 at 3). Although Plaintiff filed a “First Amended 27 Complaint” in this Court on September 23, 2024 (Doc. 11), both parties agreed that the 28 Amended Complaint “asserts essentially the same claims that were asserted in the original 1 complaint” and therefore fails to cure the defects alleged in Greystar’s Motion to Dismiss. 2 (Doc. 15 at 1). Plaintiff alleges that he “has endured a range of unethical and illegal 3 behaviors, from racial slurs and age discrimination to being unjustly denied access to 4 essential work tools and training opportunities.” (Doc. 11 at 5). 5 When Greystar first hired Plaintiff, Plaintiff was required to sign, and did 6 electronically sign, a “Mutual Agreement to Arbitrate Claims” (Id. at 1–2; Doc. 7-1). The 7 agreement states in pertinent part: 8 [B]oth you and [Greystar] agree to arbitrate any and all disputes, claims, or controversies . . . that you may have against 9 [Greystar] . . . including, but not limited to, all claims arising out of or relating to your employment . . . and/or the end of 10 your employment. This Agreement includes, but is not limited to, claims under . . . Title VII of the Civil Rights Act of 1964; 11 . . . the Fair Labor Standards Act of 1938; . . . harassment of any kind, and/or retaliation . . . . [12] 13 (Doc. 7-1 at 2–3). 14 Plaintiff contends that this arbitration agreement “is unenforceable under Arizona 15 law” (Doc. 16 at 1) and seeks denial of the Motion to Compel Arbitration (Id. at 4), whereas 16 Greystar seeks to enforce it (Doc. 17 at 8). 17 II. LEGAL STANDARD 18 “The standard the court applies in making the arbitrability determination is similar 19 to the summary judgment standard, and the court should review the record to determine if 20 the party opposing arbitration has raised any triable issue of fact.” The O.N. Equity Sales 21 Co. v. Thiers, 590 F. Supp. 2d 1208, 1211 (D. Ariz. 2008). “The court does not require an 22 evidentiary hearing when the underlying factual circumstances which are relevant to the 23 court’s determination of arbitrability are undisputed.” (Id.). “An order to arbitrate . . . 24 should not be denied unless it may be said with positive assurance that the arbitration clause 25 is not susceptible of an interpretation that covers the asserted dispute. Doubts should be 26 resolved in favor of coverage.” United Steelworkers of America v. Warrior & Gulf 27 Navigation Co., 363 U.S. 574 , 582–83 (1960). 28 /// 1 III. ANALYSIS 2 In determining whether a motion to compel arbitration should be granted, the Court 3 generally “ask[s] only (1) whether there is a valid arbitration agreement and (2) whether 4 the particular dispute falls within the terms of that agreement.” Faber v. Menard, Inc., 367 5 F.3d 1048, 1052 (8th Cir. 2004); Martin v. TEKsystems Mgmt. Inc. (Fn), 2021 WL 6 2334389, at *1 (D. Ariz. June 8, 2021). Here, Plaintiff does not dispute that he entered into 7 an arbitration agreement with Greystar, nor that his asserted claims fall within the 8 arbitration clause (see generally Doc. 16); the only issue is whether the agreement is valid. 9 A. Enforceability of Arbitration Agreement 10 “The Court’s initial task is to determine whether a valid arbitration agreement exists 11 between the parties. Ordinary contract law principles guide this inquiry.” Myers v. 12 Racerworld LLC, 2022 WL 1569080 , at *3 (D. Ariz., May 18, 2022). Here, Plaintiff argues 13 that the arbitration agreement is unenforceable for four primary reasons: (1) the Arizona 14 Arbitration Act excludes all arbitration agreements between employers and employees, 15 “thus providing a key legal basis for challenging the enforceability of the arbitration 16 agreement in this context” (Doc. 16 at 1); (2) Arizona public policy “favors transparent 17 judicial processes for adjudicating statutory rights and protections against discrimination 18 and retaliation” over arbitration (Id. at 2); (3) the agreement is both procedurally and 19 substantively unconscionable (Id.); and (4) the Federal Arbitration Act (“FAA”) does not 20 preempt state law in this case “unless the agreement is part of a transaction involving 21 interstate commerce, which requires further examination in this case” (Id. at 3). 22 1. Federal Preemption 23 Plaintiff first argues that the arbitration agreement is unenforceable under Arizona 24 statutory and case law, citing to a provision of the Arizona Revised Uniform Arbitration 25 Act (the “RUAA”), A.R.S. § 12-1517, and the Arizona Supreme Court’s decision in North 26 Valley Emergency Specialists, L.L.C. v. Santana, 93 P.3d 501 (Ariz. 2004), which held that 27 arbitration agreements between employers and employees are exempt from the RUAA. 28 (Doc. 16 at 1–2). The RUAA “differs from the FAA which, aside from a few narrow 1 exceptions, applies to arbitration agreements in employment contracts.” Myers, 2022 WL 2 1569080, at *5. Plaintiff therefore seems to be asking the Court to apply Arizona state law, 3 rather than the FAA, to find that the arbitration agreement in question here is 4 unenforceable. 5 The Santana court declined to address whether the FAA preempts Arizona law, 6 because in that case, the party seeking to enforce the arbitration agreement waived any 7 preemption argument under the FAA. Santana, 93 P.3d at 503 n.3. Greystar argues that in 8 the present case, “waiver is not an issue because Greystar properly raised the preemption 9 argument in its Motion.” (Doc. 17 at 3). Furthermore, Greystar argues that the FAA is 10 clearly applicable to the instant case because “[t]he FAA mandates enforcement of 11 arbitration agreements where such agreements: 1) are a part of a contract or transaction 12 involving commerce; and 2) are valid under general principles of contract law.” (Id.). This 13 Court agrees, but it needn’t analyze the contours of FAA preemption too deeply— 14 ultimately, the RUAA is irrelevant here, because the arbitration agreement between 15 Plaintiff and Greystar explicitly states that it “is governed by the Federal Arbitration Act.” 16 (Doc. 7-1 at 2). See Myers, 2022 WL 1569080 , at *5 (finding that “the FAA governs in this 17 case because the parties specifically agreed that it would”). 18 2. Unconscionability 19 Plaintiff’s other main argument for this Court to set aside the arbitration agreement 20 is that the agreement is both procedurally and substantively unconscionable. (Doc. 16 at 21 2). Plaintiff argues that it is procedurally unconscionable because it was “presented without 22 the opportunity for negotiation, characterizing it as an adhesion contact,” and it is 23 substantively unconscionable because the “terms imposed by the arbitration agreement 24 place disproportionate burdens on the employee.” (Id.). 25 “A contract, including an arbitration agreement, that is unconscionable is 26 unenforceable.” Barnett v. V.T. Motors LLC, 2021 WL 5759113 , at *3 (D. Ariz. Dec. 3, 27 2021). Under Arizona law, “[p]rocedural unconscionability addresses the fairness of the 28 bargaining process, which is concerned with unfair surprise, fine print clauses, mistakes or 1 ignorance of important facts or other things that mean bargaining did not proceed as it 2 should.” Clark v. Renaissance West, L.L.C., 307 P.3d 77, 79 (Ariz. Ct. App. 2013) (internal 3 quotations and citation omitted). “Nothing in applicable Arizona law requires a drafter to 4 explain the provisions of standardized contracts, nor does the post-hoc regret of a party to 5 such a contract suffice to demonstrate unconscionability.” Rizzio v. Surpass Senior Living 6 LLC, 459 P.3d 1201 , 1206 (Ariz. Ct. App. 2020). The mere fact that Plaintiff’s assent to 7 the arbitration agreement was a condition of his employment “does not suffice to establish 8 procedural unconscionability.” De Jesus v. UnitedHealth Grp., Inc., 2024 WL 4601583 , at 9 *2 (9th Cir. Oct. 29, 2024). 10 In assessing procedural unconscionability, courts consider “whether the contract 11 was separate from other paperwork, whether the contract used conspicuous typeface, and 12 whether the contract was signed hurriedly and without explanation in emergency 13 circumstances.” Duenas v. Life Care Centers of Am., Inc., 336 P.3d 763, 768 (Ariz. Ct. 14 App. 2014 ) (internal citations omitted). Here, as Greystar has pointed out, Plaintiff has not 15 argued “that he was unaware of the Agreement, that he did not understand the terms, that 16 he did not have the opportunity to inquire about its meaning, or that Greystar attempted to 17 hide certain terms.” (Doc. 17 at 5). The agreement, which Plaintiff signed, is set forth in 18 clear language with conspicuous headings and key provisions bolded or underlined. (Doc. 19 7-1). See Perry v. NorthCentral Univ., Inc., 2011 WL 4356499 , at *5 (D. Ariz. Sept. 19, 20 2011) (concluding as a matter of law that arbitration provisions were not procedurally 21 unconscionable where they were located in plain sight and written in easily understood 22 language, and where the plaintiff clearly had both the capacity and the opportunity to 23 review the provisions). Plaintiff has therefore provided this Court with no reason to believe 24 that the agreement was procedurally unconscionable as a matter of law. 25 Plaintiff also argues in passing that the “terms imposed by the arbitration agreement 26 place disproportionate burdens on the employee, indicative of substantive 27 unconscionability.” (Doc. 16 at 2). “Substantive unconscionability concerns the actual 28 terms of the contract and examines the relative fairness of the obligations assumed. 1 Indicative of substantive unconscionability are contract terms so one-sided as to oppress or 2 unfairly surprise an innocent party, an overall imbalance in the obligations and rights 3 imposed by the bargain, and significant cost-price disparity.” Maxwell v. Fid. Fin. Servs., 4 Inc., 907 P.2d 51, 58 (Ariz. 1995) (citation omitted). Greystar correctly notes that “Plaintiff 5 does not present any facts showing that the Agreement was substantively unconscionable,” 6 as he “alleges no unfair contract terms or an imbalance of rights.” (Doc. 17 at 6). Reviewing 7 the terms of the arbitration agreement, the Court notes that the agreement burdens both 8 parties with the requirement to arbitrate claims (Doc. 7-1 at 2); that it does not prohibit 9 Plaintiff from pursuing any administrative claims he is entitled to (Id. at 3); that it entitles 10 both parties to conduct discovery to the extent available in federal court (Id. at 5); that it 11 entitles both parties to all types of relief otherwise available in court (Id.); and that any fees 12 or expenses “in excess of those that [Plaintiff] would have been required to pay if the matter 13 was in court,” as well as any travel or lodging costs charged by the arbitrator, are to be paid 14 by Greystar (Id. at 5, 7). The Court therefore finds that the agreement fairly balances the 15 obligations and rights of both parties and does not impose any significant cost-price 16 disparity. As a matter of law, Plaintiff cannot establish that this arbitration agreement is 17 substantively unconscionable. 18 3. Public Policy 19 Finally, Plaintiff cannot establish that the arbitration agreement is unenforceable as 20 a matter of public policy. Plaintiff argues that “statutory rights, especially those related to 21 discrimination and retaliation, are of public concern and should not be arbitrarily subjected 22 to private arbitration,” citing to the Supreme Court’s decision in Alexander v. Gardner23 Denver Co., 415 U.S. 36 (1974). (Doc. 16 at 3). However, as Greystar rightly points out, 24 this case has been superseded by more recent precedent favoring the enforcement of 25 arbitration provisions. (Doc. 17 at 7). See, e.g., Cir. City Stores, Inc. v. Adams, 532 U.S. 26 105, 123 (2001) (“We have been clear in rejecting the supposition that the advantages of 27 the arbitration process somehow disappear when transferred to the employment context.”). 28 As such, Plaintiff’s policy argument must fail. 1 B. Dismissal 2 “When neither party requests a stay in the event a motion to compel arbitration is 3 granted and all claims are subject to arbitration, a court has discretion to dismiss the action.” Barnett, 2021 WL 5759113 , at *6; cf: Smith v. Spizzirri, 601 U.S. 472, 478 (2024) 5 | (‘When a district court finds that a lawsuit involves an arbitrable dispute, and a party 6| requests a stay pending arbitration, § 3 of the FAA compels the court to stay the 7 | proceeding.) (emphasis added). Greystar requests that this Court “dismiss □□□□□□□□□□□ 8 | lawsuit and compel Plaintiff to pursue his claims through arbitration under the terms and 9| conditions of the Agreement.” (Doc. 17 at 8). The arbitration agreement here is broad 10 | enough to cover all of Plaintiffs claims against Greystar. See Hopkins & Carley, ALC v. Thomson Elite, 2011 WL 1327359 , at *7—-8 (N.D. Cal. Apr. 6, 2011) (“Where an arbitration 12 | clause is broad enough to cover all of a plaintiff’s claims, the court may compel arbitration 13 | and dismiss the action.”). Accordingly, the Court concludes that dismissal is appropriate here. 15 While Plaintiff urges this Court to promptly resolve his complaint on the merits 16| (Doc. 11 at 5), this Court is not at liberty to adjudicate Plaintiffs claims, whether 17 | meritorious or not. For better or for worse, Plaintiff signed an agreement to arbitrate, and 18 | that agreement is valid and enforceable. (Doc. 7-1 at 8). This Court may not contravene 19 | established contract law merely because Plaintiff insists that federal court is now his 20 | preferred venue for resolving such disputes. (Doc. 9 at 3). IT IS THEREFORE ORDERED that Defendant Greystar Management Services, 22 | LLC’s Motion to Dismiss and Compel Arbitration (Doc. 7) is granted. 23 IT IS FURTHER ORDERED that this case is dismissed without prejudice. The 24 | Clerk of Court shall terminate this action accordingly. 25 Dated this 14th day of November, 2024. 26 kG 27 United States District Madge