Juergensmeyer v. Hickman's

Opinions

Opinion

IN THE

ARIZONA COURT OF APPEALS

DIVISION ONE

CINNAMON JUERGENSMEYER, Plaintiff/Appellee,

v.

HICKMAN’S EGG RANCH, INC., Defendant/Appellant.

__________________________________

VICTOR H. SANCHEZ, Plaintiff/Appellee, v.

HICKMAN’S EGG RANCH, INC., Defendant/Appellant.

Nos. 1 CA-CV 25-0462, 1 CA-CV 25-0586 (Consolidated) FILED 08-18-2026

Appeal from the Superior Court in Maricopa County Nos. CV2024-031325, CV2024-035037 The Honorable Randall H. Warner, Judge The Honorable John R. Hannah Jr., Judge Retired

REVERSED AND REMANDED

COUNSEL

Robbins Curtin Millea & Showalter, LLC, Phoenix By Joel B. Robbins, Lauren Channell Counsel for Plaintiffs/Appellees

Lewis Brisbois Bisgaard & Smith, LLP, Phoenix By Adam S. Polson, Bruce C. Smith Counsel for Defendant/Appellant

Opinion of the Court

OPINION

Vice Chief Judge David D. Weinzweig delivered the decision of the Court, in which Presiding Judge Michael J. Brown and Judge Veronika Fabian joined.

W E I N Z W E I G, Vice Chief Judge:

¶1 Procedural unconscionability protects a party to a contract against deception and compulsion—the hidden clause, the rushed signature, the concealed waiver. It does not protect a party from an agreement the party chose not to read. Two inmates were injured working at an egg farm and sued rather than pursue arbitration under their work agreements. The superior court refused to compel arbitration, concluding the arbitration clauses were procedurally unconscionable in part because the egg farm paid far more than other prison jobs, leaving inmates “highly incentivized” to sign whatever they were offered.

¶2 Hickman’s Egg Ranch, Inc. (“Hickman”) appeals the superior court’s denial of its motions to compel arbitration in this consolidated appeal. We reverse and remand.

FACTS AND PROCEDURAL BACKGROUND

¶3 Hickman operates egg farms in Arizona and two other states and sells eggs in the southwestern United States. Cinnamon Juergensmeyer and Victor H. Sanchez were both inmates at the Arizona Department of Corrections, Rehabilitation & Reentry who were injured while working at Hickman as part of a prisoner labor program.

Juergensmeyer

¶4 On her first day of work, Juergensmeyer attended an orientation where a Hickman representative reviewed information and showed videos about safety and other topics relevant to working at the facility. The orientation lasted two and a half hours. Hickman’s representative presented a packet of forms for Juergensmeyer to sign or initial in more than a dozen places.

¶5 Among the forms was a single-page Volunteer Agreement and Waiver (“Agreement”). The first paragraph of the Agreement

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described the job as “strictly voluntary” in underlined text. The fifth paragraph included an arbitration clause in bold and underlined text:

You further agree to submit all disputes related to the interpretation and enforcement of this Agreement or your participation in the Program to final and binding arbitration in Maricopa County, Arizona.

Hickman’s representative never explained how arbitration worked or what it meant.

¶6 Directly above the signature line, the Agreement warned with emphasis (all capital letters, bold and underlined text) that Juergensmeyer’s signature meant she read and understood all terms of the Agreement and waived her right to sue Hickman:

BY SIGNING BELOW, YOU ACKNOWLEDGE THAT YOU READ AND UNDERSTOOD ALL OF THE TERMS OF THIS AGREEMENT AND ARE VOLUNTARILY CHOOSING TO GIVE UP LEGAL RIGHTS, UP TO AND INCLUDING THE RIGHT TO SUE HICKMAN’S FAMILY FARMS AND ITS ENTITIES FOR THEIR ACTIONS.

¶7 Juergensmeyer was given time to read the documents and told she could ask questions. She asked no questions and signed the Agreement. Had she refused to sign, Juergensmeyer would have been returned to the prison, and not allowed to participate in Hickman’s work program.

¶8 Juergensmeyer slipped and fell while cleaning cages on her second day of work, and she sued Hickman for negligence in superior court. Based on the Agreement, Hickman moved to dismiss the lawsuit and compel arbitration under the Federal Arbitration Act (“FAA”). Juergensmeyer argued the Agreement was unenforceable because (1) the arbitration clause did not apply to her negligence claim, (2) her signature was procured through circumstances that rendered the Agreement both procedurally and substantively unconscionable and (3) the Agreement was contrary to her reasonable expectations.

¶9 After an evidentiary hearing, the superior court denied Hickman’s motion to dismiss and compel arbitration. It rejected Juergensmeyer’s other defenses, but ruled the arbitration provision was procedurally unconscionable because of a significant imbalance of power between Juergensmeyer and Hickman, and because the Agreement was

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presented as a “routine part of several must-sign documents with no explanation.” It emphasized that Hickman offered far more money and superior vocational training benefits to inmates than was available with other inmate jobs, so Juergensmeyer was “highly incentivized” to sign whatever she was given without asking questions. Hickman timely appealed.

Sanchez

¶10 On his second or third day of work, Sanchez attended an orientation in a conference room, where he received 20 pages of documents, including the one-page Agreement. Sanchez was the only person who attended the orientation. He was in the room with the documents for an hour. Hickman had a representative who staffed the orientation. That representative did not read the documents to Sanchez, explain their meaning, or discuss the advantages and disadvantages of arbitration. Sanchez did not seek more time to read the documents and asked no questions. He “glanced through” the documents before he signed the Agreement and printed his full name.

¶11 Sanchez was injured on the job when a machine crushed his right thumb, and he sued Hickman for negligence. Based on the Agreement, Hickman moved to dismiss the lawsuit and compel arbitration. Sanchez argued the Agreement was unenforceable for the same reasons offered by Juergensmeyer.

¶12 The superior court held an evidentiary hearing. Sanchez testified that he wanted the Hickman job because it paid far more than yard work and he had to wait nine months to get the position. He also testified he did not know what arbitration meant and did not remember signing any agreement to arbitrate.

¶13 After the hearing, the superior court refused to compel arbitration, ruling the Agreement was procedurally unconscionable “because of the unfairness of the bargaining process.” The court found a “radical power imbalance” between Sanchez and Hickman because Hickman paid $4.85 per hour versus roughly $.10 per hour for other prison jobs. This disparity, according to the court, gave inmates a powerful incentive to sign the Agreement and Hickman could “essentially write anything that they want into” the contract.

¶14 The court also found that Hickman “buried” the Agreement in a stack of unrelated documents, without reading or explaining the arbitration clause. It determined that Sanchez was not a sophisticated or

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educated person, and that he signed the Agreement without reading it because he needed to get back to work. The court also found that Sanchez reasonably believed that, if he refused to sign the Agreement, he would be unable to participate in the work program, and instead be limited to lowpaying jobs for some time. Hickman timely appealed.

JURISDICTION

¶15 We first address this court’s jurisdiction. Sorensen v. Farmers Ins. of Ariz., 191 Ariz. 464, 465 (App. 1997) (“[T]his court has an independent duty to determine whether it has jurisdiction to consider an appeal.”).

¶16 Sanchez, but not Juergensmeyer, argues we lack jurisdiction under A.R.S. § 12-2101.01(A)(1) because the superior court never entered “[a]n order denying an application to compel arbitration made under § 12- 1502 or 12-3007.” Even if true, however, we may accept special action jurisdiction under A.R.S. § 12-120.21(A)(4). Phillips v. Garcia, 237 Ariz. 407, 410, ¶ 6 (App. 2015). Special action jurisdiction is proper when a party has no “equally plain, speedy, and adequate” remedy by appeal, and when the petition raises a matter of first impression or statewide importance. Ariz. R.P. Spec. Act. 2(b)(2), 12(b).

¶17 We accept special action jurisdiction here because Hickman lacks an adequate remedy by appeal. Security Alarm Financial Enterprises, L.P. v. Fuller supports this result. 242 Ariz. 512, 515, ¶¶ 7–8 (App. 2017) (accepting special action jurisdiction over an order denying a motion to compel arbitration governed by the FAA). And given the number of similar lawsuits, the question is of statewide importance. Id. at ¶ 7.

DISCUSSION

¶18 Hickman challenges the superior court’s rulings that the arbitration clause was procedurally unconscionable. We review de novo the court’s denial of a motion to compel arbitration, id. at ¶ 9, but defer to its factual findings absent clear error, Est. of DeCamacho ex rel. Guthrie v. La Solana Care & Rehab, Inc., 234 Ariz. 18, 20, ¶ 8 (App. 2014).

A. The Law.

¶19 The Agreement is governed by the FAA, which directs that written arbitration agreements “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. Arizona law governs whether an arbitration clause is valid and enforceable under the FAA. Harrington v. Pulte Home

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Corp., 211 Ariz. 241, 245–46, ¶¶ 9–10 (App. 2005). The party seeking to void a contract based on unconscionability must prove it. Gullett ex rel. Est. of Gullett v. Kindred Nursing Ctrs. W., L.L.C., 241 Ariz. 532, 541, ¶ 31 (App. 2017).

¶20 Procedural unconscionability examines the bargaining process for fairness: “‘unfair surprise,’ fine print clauses, mistakes or ignorance of important facts or other things that mean bargaining did not proceed as it should.” Maxwell v. Fid. Fin. Servs., Inc., 184 Ariz. 82, 88–89 (1995) (citation omitted).

¶21 To assess whether an arbitration agreement is procedurally unconscionable, Arizona courts consider “whether the contract was separate from other paperwork, whether the contract used conspicuous typeface, and whether the contract was signed hurriedly and without explanation in emergency circumstances.” Dueñas v. Life Care Ctrs. of Am., Inc., 236 Ariz. 130, 135, ¶ 8 (App. 2014) (citation omitted).

¶22 According to the Arizona Supreme Court, procedural unconscionability “bears a strong resemblance to its ‘common-law cousins’ of fraud and duress.” Maxwell, 184 Ariz. at 89. We therefore consider whether a party lacked meaningful choice on whether to enter the transaction:

[G]ross inequality of bargaining power, together with terms unreasonably favorable to the stronger party, may confirm indications that the transaction involved elements of deception or compulsion, or may show that the weaker party had no meaningful choice, no real alternative, or did not in fact assent or appear to assent to the unfair terms.

Restatement (Second) of Contracts § 208 cmt. d (1981).

¶23 To gauge whether an agreement reflects “the real and voluntary meeting of the minds,” Arizona courts consider the “age, education, intelligence, business acumen and experience, [and] relative bargaining power” of the party, along with “who drafted the contract, whether the terms were explained to the weaker party, whether alterations in the printed terms were possible, [and] whether there were alternative sources of supply for the goods in question.” Maxwell, 184 Ariz. at 89 (citing Johnson v. Mobil Oil Corp., 415 F. Supp. 264, 268 (E.D. Mich. 1976)).

¶24 And yet, “[a] bargain is not unconscionable merely because the parties to it are unequal in bargaining position, nor even because the

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inequality results in an allocation of risks to the weaker party.” Restatement § 208 cmt. d.

B. Juergensmeyer.

¶25 The superior court held the Agreement was procedurally unconscionable because the arbitration clause waived substantial rights, and Hickman presented the clause as a non-negotiable, unexplained formality in a packet of must-sign documents that inmates were motivated to sign without question because Hickman paid far more than any other prison jobs. Accepting the superior court’s factual findings, we hold that the Agreement was not procedurally unconscionable because the record shows no unfair surprise or surreptitious conduct, and Juergensmeyer was not deprived of a meaningful choice. See Dueñas, 236 Ariz. at 135, ¶¶ 8, 9.

¶26 First, the Agreement’s terms were not buried in fine print or obscured by deceptive practices. Procedural unconscionability is about hiding the ball—burying a clause in fine print, rushing a signature in a crisis, concealing what rights are being waived. Here, the arbitration clause was displayed in plain sight on a separate one-page document in bold, underlined text. See id. at ¶ 8 (finding relevant factors include whether the contract was separate from other papers or used conspicuous typeface). The Agreement also warned: “BY SIGNING BELOW, YOU ACKNOWLEDGE THAT YOU READ AND UNDERSTOOD ALL OF THE TERMS OF THIS AGREEMENT.” Juergensmeyer chose not to read the Agreement, asked no questions and signed it.

¶27 Second, the Agreement was not presented under “high pressure” tactics that “’work[] on mental, moral, or emotional weakness’— aimed at extracting arbitration agreements.” Martinez-Gonzalez v. Elkhorn Packing Co. LLC, 25 F.4th 613, 627 (9th Cir. 2022) (quoting Keithley v. Civ. Serv. Bd., 11 Cal.App.3d 443, 451 (1970)). Hickman presented the Agreement during a lengthy orientation. Juergensmeyer had a chance to review the Agreement and was encouraged to ask questions. See Dueñas, 236 Ariz. at 135–36, ¶¶ 10–11 (holding no procedural unconscionability where plaintiff had an opportunity to review the agreement and exercise independent judgment).

¶28 Third, Juergensmeyer was educated and had life experience. She was an adult in her mid-30s when she signed the Agreement. She was fluent in English, had completed high school and attended community college. She was certified as a medical assistant and had registered a trade name with the Arizona Secretary of State.

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¶29 Fourth, Juergensmeyer had a meaningful choice—she could have refused to sign the Agreement and worked elsewhere, even if for less money. Yes, she was “highly incentivized” to sign whatever she was given, but Hickman did not create that incentive through wrongful conduct or place her in a distressed position. Juergensmeyer was in prison and that imprisonment limited her work options.

¶30 To penalize Hickman because it paid inmates the highest wage turns procedural unconscionability on its head. Procedural unconscionability seeks to protect the weaker party to a bargain. Accepting Juergensmeyer’s argument would create a perverse incentive: the more an employer pays relative to the alternatives, the more vulnerable its arbitration clauses to a claim of procedural unconscionability. A rule like that gives employers every reason to pay inmates less, harming the very people the doctrine seeks to protect.

¶31 And last, Juergensmeyer was not compelled to accept unreasonable or draconian terms. She does not challenge the gardenvariety arbitration clause as misleading or contend she relied on false statements. See id. at 136, ¶ 12 (court considered whether a contract’s misleading text rendered it procedurally unconscionable).

¶32 We are not persuaded by Juergensmeyer’s arguments to affirm. She first argues the Agreement was procedurally unconscionable because she did not know what arbitration meant, Hickman never explained it and the Agreement was not titled “arbitration.” But Arizona law does not require a drafting party to explain standardized clauses. Rizzio v. Surpass Senior Living LLC, 248 Ariz. 266, 271, ¶ 19 (2020), aff’d in part, vacated in part on other grounds, 251 Ariz. 413 (2021). Just the opposite. A party is “assumed to have read and understood the terms of a contract he or she signs.” Coup v. Scottsdale Plaza Resort, LLC, 823 F. Supp. 2d 931, 949 (D. Ariz. 2011); see also Harrington, 211 Ariz. at 249, ¶ 27.

¶33 Juergensmeyer next argues the Agreement was procedurally unconscionable because it was non-negotiable. But standardized, take-itor -leave-it contracts are routinely enforced. See Rizzio, 248 Ariz. at 271, ¶ 18. Adhesion contracts are enforceable. Restatement § 208 reporter’s note, cmt. a (“It is to be emphasized that a contract of adhesion is not unconscionable per se.”). And mere unequal bargaining power does not void an arbitration clause. Coup, 823 F. Supp. 2d at 948; see also Restatement § 208 cmt. d (“A bargain is not unconscionable merely because the parties to it are unequal in bargaining position, nor even because the inequality results in an allocation of risks to the weaker party.”).

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¶34 Juergensmeyer also argues Hickman withheld important information about Hickman’s history of workplace injuries and unsafe working conditions. But Arizona law did not require Hickman to provide all information Juergensmeyer might have found helpful before signing the Agreement. See Dueñas, 236 Ariz. at 135–36, ¶¶ 10–11. And, again, she chose to ask no questions.

¶35 We reverse because Hickman did not act unfairly or surreptitiously to deny Juergensmeyer her day in court. Hickman presented the Agreement in a standard orientation and gave Juergensmeyer time to ask questions. And despite the disparity in bargaining power, Juergensmeyer had a meaningful choice to sign or not. Having signed the Agreement, she is bound by its terms.

C. Sanchez.

¶36 Turning to Sanchez, the superior court denied Hickman’s motion to compel arbitration “because of the unfairness of the bargaining process.” Accepting its factual findings, we disagree that the arbitration clause was procedurally unconscionable.

¶37 The one-page Agreement was separate from other paperwork, regardless of its position in the stack. See id. at 135, ¶ 8 (considering whether “the contract was separate from other paperwork”). Sanchez had a high school diploma and attended some college courses. He has never claimed he cannot read English. He had one hour to review the documents, glanced at them and signed the Agreement. See id. at 135–36, ¶¶ 10–11 (rejecting unconscionability where plaintiff had opportunity to review each agreement and exercise independent judgment). Arizona law assumes he “read and understood the terms of” the contract he signed. Coup, 823 F. Supp. 2d at 949.

¶38 Sanchez’s arguments are not persuasive. Hickman was not required to read the Agreement to Sanchez or explain its provisions. See Rizzio, 248 Ariz. at 271, ¶ 19. The Agreement was not procedurally unconscionable just because it was non-negotiable, see id. at ¶¶ 18–19, or because he felt pressure and was “highly incentivized” to sign, Coup, 823 F. Supp. 2d at 948 (“Mere inequality in bargaining power is not sufficient to invalidate an arbitration agreement.”). Hickman did not create that incentive through wrongful conduct. See Maxwell, 184 Ariz. at 89 (noting procedural unconscionability “bears a strong resemblance” to fraud and duress). Sanchez was in prison. That fact (and not Hickman) limited his work options. Sanchez had a meaningful choice—refuse to sign, not be

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employed by Hickman and work for lower pay. We reverse the superior court’s order finding the Agreement was procedurally unconscionable.

CONCLUSION

¶39 We reverse the superior court’s orders denying Hickman’s motions to compel arbitration and remand with instructions to compel arbitration.

MATTHEW J. MARTIN • Clerk of the Court FILED: JR

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