Mills v. ALA Management Services Incorporated

• Court: District Court, D. Arizona
• Decided: December 4, 2024
• Docket: 2:24-cv-00441
• Status: Unknown

Opinion

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA

9 Silas Mills, No. CV-24-00441-PHX-SMB

10 Plaintiff, ORDER

11 v.

12 ALA Management Services, Inc.,

13 Defendant.

14 15 Plaintiff Silas Mills (“Mills”) was a physical education teacher and basketball coach 16 at a charter school operated by Defendant ALA Management Services, Inc. (“ALA”) until 17 his termination from the coaching role and subsequent resignation from his teaching role 18 in 2022. Mills filed this lawsuit against ALA, alleging, among other claims, racial 19 discrimination (Doc. 1). ALA moves to compel arbitration for all of Mills’ legal claims 20 pursuant to their employment contracts (Doc. 19 (ALA’s Motion to Compel Arbitration)). 21 ALA also requests a stay on this action pending completion of arbitration. (Id.) The parties 22 have fully briefed the pending Motion (Docs. 21 (Mills’ Response), 22 (ALA’s Reply). 23 Having reviewed the parties’ briefs and the applicable law, the Court will grant ALA’s 24 Motion in part. 25 I. FACTUAL BACKGROUND 26 Mills is an accomplished basketball player with experience playing in college and 27 professionally overseas. (Doc. 1 at 3 ¶ 10.) After his playing career ended, Mills began 28 teaching physical education and coaching basketball at a community college in Utah. (Id. 1 ¶ 11.) Then, in late-2020, Mills moved to Arizona to become a teacher and the head coach 2 of the varsity basketball team at one of ALA’s charter schools—American Leadership 3 Academy, Queen Creek. (Id. ¶ 13.) As part of his employment his with ALA, Mills signed 4 three employment agreements (collectively, the “Teaching Agreements”) and two other 5 agreements for his part-time coaching role (collectively, the “Coaching Agreements”). 6 (Doc. 19-1 at 7, 27.) The employment agreement for the 2020–21 school year (the 7 “2020–21 Agreement”) provides in relevant part: 8 13. Alternative Dispute Resolution. 9 13.1 Should any dispute between Employee and Employer arise at any time out of any aspect of the employment relationship, including, but not limited 10 to, the hiring, terms, conditions, or termination of employment, Employee and Employer will confer in good faith in an effort to resolve promptly such 11 dispute. 12 13.2 In the event that Employer and Employee are unable to resolve their dispute, and should either desire to pursue a claim against the other 13 party, both Employer and Employee agree that all disputes arising out of or related to this Agreement or their employment relationship shall 14 be resolved by final and binding Arbitration. The Employee and Employer agree that the Arbitration shall be held in the county and state 15 where Employee currently works for Employer or most recently worked for Employer. The Employee will provide a list of up to five (5) 16 arbitration services or individual arbitrators, and Employer will choose from those provided options. If an arbitration service is selected, the 17 Arbitrator will be selected in accordance with the procedures prescribed by that service. The award of the Arbitrator(s) is final and binding and 18 may be entered as a judgment in any court of competent jurisdiction. 19 (Doc. 19-1 at 10 (emphasis in original).) The agreement for the 2021–22 school year (the 20 “2021–22 Agreement”) modified this section to read: 21 13. Alternative Dispute Resolution. With respect to any dispute between Employee and Employer that arises from or relates in any way to this 22 Agreement (including any alleged breach hereof) of the parties’ employment relationship, the Parties shall first meet and attempt in good faith to resolve 23 their dispute through direct discussion. This discussion shall take place within a reasonable time (but not to exceed six months) after the dispute 24 arises. If the dispute is not successfully resolved through this negotiation process, the aggrieved party may initiate the arbitration process if the dispute 25 involves legal claims. To be clear, arbitration is not available for matters such as interdepartmental disputes, personality conflicts, differences of opinion 26 over operational or academic decisions, and other types of disagreements that do not give rise to legal claims. 27 13.1 Claims Subject to Arbitration. With the exception of injunction 28 proceedings initiated by the Company and any claims Employee might have for workers’ compensation or unemployment compensation benefits, all 1 legal claims related to Employee’s employment with the Company, or the termination of Employee’s employment with the Company, will be subject 2 to final and binding arbitration. Such claims, include, without limitation, claims for wages or other compensation, contract claims, tort claims, 3 statutory claims, and claims for discrimination, harassment, retaliation, and wrongful termination. Employee understands that this provision applies to 4 claims Employee might make against the Company, and to claims the Company might make against Employee. EMPLOYEE UNDERSTANDS 5 THAT THIS MEANS BOTH THE COMPANY AND EMPLOYEE ARE WAIVING THEIR RIGHTS TO HAVE THEIR CLAIMS AGAINST ONE 6 ANOTHER DECIDED BY A COURT OR A JURY. 7 13.2 Arbitration Procedures and Fees. The party making the legal claim(s) will initiate proceedings through the American Arbitration Association 8 (AAA); information about how to do that is readily available on AAA’s website (adr.org). The parties will follow AAA’s arbitrator selection process 9 and other rules for employment arbitrations unless those rules conflict with this Agreement, in which case this Agreement will govern. Employee’s share 10 of the arbitration costs (other than fees charged by Employee’s own counsel) shall be equivalent to the filing fee for initiating a lawsuit in the United States 11 District Court for the District of Arizona unless Employee would be entitled to a waiver of such fee, which the arbitrator shall have the discretion to 12 determine. Otherwise, all administrative costs of arbitration and the arbitrator’s fee shall be paid by the Company. The parties will have all rights 13 to conduct discovery and file motions that they would have under the Federal Rules of Civil Procedure. The arbitration hearing will be held in the county 14 and state in which Employee works or last worked for Employer. 15 13.3 Arbitrator’s Authority and Decision. The arbitrator, and not any court, shall have the exclusive authority to decide all issues of arbitrability, 16 including whether this Agreement is enforceable and covers the claims at issue. Further, the arbitrator shall have the full authority to grant any party 17 any relief such party could recover in a judicial action brought in court, and the same broad authority to manage the arbitration proceeding as a district 18 court judge would have to manage litigation in federal court. The arbitrator will be asked to produce a written decision and award explaining the reasons 19 for the arbitrator’s disposition of the legal claims being arbitrated but will not be asked to produce findings of fact and conclusions of law. The arbitrator’s 20 award shall be final and binding. The prevailing party may seek confirmation of the award, and judgment upon the award, in any court of competent 21 jurisdiction, and may seek an award of attorneys’ fees and costs incurred in connection with such action. 22 23 (Id. at 16–17 (emphasis and capitals in original.) The employment agreement for the 24 2022–23 school year (the “2022–23 Agreement”) contains the same provisions. (See id. 25 at 23–24.) The Coaching Agreements do not contain arbitration provisions. (See id. 26 at 27–28 (2020–21 Season Agreement), 29–30 (2021–22 Season Agreement).) 27 Mills claims that throughout his employment as the head basketball coach he was 28 subjected to various discriminatory acts from senior staff, including suspicious surveillance 1 of his classroom, limiting available coaching tools, impeding planned basketball trips, and 2 subjected to discriminatory animus from parents, in which ALA failed to adequately 3 respond after he complained. (Id. at 4–8.) In January 2022, ALA removed Mills from the 4 head coach position. (Id.) Plaintiff contends that he only accepted the teaching position 5 because of his desire to coach, and after his removal from the role, he felt compelled to 6 resign for the 2022–23 school year. (Id.) 7 Mills’ lawsuit followed, alleging claims of unlawful racial discrimination under 8 Title VII of the Civil Rights Act of 1964, racial discrimination under the Arizona Civil 9 Rights Act (“ACRA”), retaliation, hostile work environment, constructive discharge, and 10 intentional infliction of emotional distress. (Doc. 1.) ALA now seeks to compel arbitration 11 on the basis that the arbitration provisions in the Teaching Agreements provided for 12 mandatory arbitration for all legal claims related to Mills’ employment, including those 13 related to his coaching role. (Doc. 19 at 1.) Mills disagrees, arguing all claims except for 14 the constructive discharge cause of action arise out of his role as a coach, not as a teacher, 15 and otherwise, the arbitrations provisions are unenforceable and unconscionable. (Doc. 21 16 at 1.) 17 II. LEGAL STANDARD 18 The Federal Arbitration Act (“FAA”) governs arbitration agreements in any contract 19 affecting interstate commerce. See Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 119, 20 (2001).1 The FAA “reflect[s] both a ‘liberal federal policy favoring arbitration’ and ‘the 21 fundamental principle that arbitration is a matter of contract.’” AT&T Mobility LLC v. 22 Concepcion, 563 U.S. 333, 339 (2011) (internal citations omitted). District courts apply 23 state law principles governing the formation of contracts to determine whether a valid 24 arbitration agreement exists. First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 25 (1995). Under the FAA, “agreements to arbitrate [may] be invalidated by generally 26 applicable contract defenses, such as fraud, duress, or unconscionability, but not by

27 1 Mills does not dispute the interstate nature of the contractual relationship between the parties. (Doc. 21.) Accordingly, and because Mills moved from Utah to Arizona for the 28 teaching and coaching positions, the Court finds the agreements at issue affect interstate commerce. See 9 U.S.C. § 2. 1 defenses that apply only to arbitration or that derive their meaning from the fact that an 2 agreement to arbitrate is at issue.” Lim v. TForce Logistics, LLC, 8 F.4th 992, 999 (9th 3 Cir. 2021) (citation and internal quotations marks omitted). “Arbitration is ‘a way to 4 resolve those [contract] disputes—but only those disputes—that the parties have agreed to 5 submit to arbitration.’” Coinbase, Inc. v. Suski, 602 U.S. 143, 148 (2024) (quoting First 6 Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943 (1995)). 7 “[T]he first question in any arbitration dispute must be: What have these parties 8 agreed to?” Id. There are often three separate but interrelated disagreements in cases 9 involving a disputed arbitration agreement. See Osterhaus Pharmacy Inc., v. CVS Health 10 Corp., No. CV-24-01539-PHX-JJT, 2024 WL 4785818, at *3 (D. Ariz. Nov. 14, 2024). 11 As the Supreme Court has explained: 12 First, [parties] disagree about . . . the merits of the dispute. Second, they disagree about whether they agreed to arbitrate the merits. That disagreement 13 is about the arbitrability of the dispute. Third, they disagree about who should have the primary power to decide the second matter. Does that power 14 belong primarily to the arbitrators (because the court reviews their arbitrability decision deferentially) or to the court (because the court makes 15 up its mind about arbitrability independently)? 16 First Options, 514 U.S. at 942; see also Coinbase, 602 U.S. at 149 (describing these three 17 disputes as layers: “(1) merits, (2) arbitrability, and (3) who decides arbitrability”). The 18 second and third type of disagreement are matters of consent. Coinbase, 602 U.S. at 149. 19 When a court decides whether parties agreed that arbitrators should decide arbitrability, the 20 court “should not assume that the parties agreed to arbitrate arbitrability unless there is 21 “clear and unmistakable” evidence that they did so.” First Options, 514 U.S. at 945 22 (citation omitted) (cleaned up); see also Lim, 8 F.4th at 1000 (explaining a contractual 23 provision delegating the issue of arbitrability to an arbitrator is known as a delegation 24 clause or provision). “Even where a delegation clause clearly and unmistakably assigns 25 the adjudication of arbitrability to an arbitrator, a party can nevertheless argue that the 26 delegation clause itself is unenforceable under the relevant law of contracts.” Osterhaus 27 Pharmacy, 2024 WL 4785818, at *3 (citing Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63, 28 71 (2010)). If the delegation provision is valid, the arbitrator must resolve all further issues 1 regarding arbitrability—including whether the agreement to arbitrate applies to the dispute 2 at issue. Brennan v. Opus Bank, 796 F.3d 1125, 1133 (9th Cir. 2015); see also Henry 3 Schein, Inc. v. Archer & White Sales, Inc., 586 U.S. 63, 68–69 (2019) (holding when parties 4 “agree to have an arbitrator decide . . . whether their agreement covers a particular 5 controversy,” the court “may not decide the arbitrability issue”). 6 Courts apply the standard governing summary judgment for the resolution of a 7 motion to compel arbitration because it is in effect a summary disposition of whether the 8 parties had a meeting of the minds to agree to arbitrate. Hansen v. LMB Mortg. Servs., 9 Inc., 1 F.4th 667, 670 (9th Cir. 2021). 10 III. DISCUSSION 11 The parties’ disputes center on whether Mills’ claims are arbitrable and whether the 12 Court or the arbitrator must decide issues of arbitrability. (See Doc. 19 at 7–9; Doc. 21 13 at 11–15.) The Court must first decide the threshold issue of whether the arbitrator or the 14 Court decides arbitrability. Only then, may the Court reach the issue whether the parties 15 agreed to arbitrate the merits of Mills’ claims. 16 A. Who Decides Arbitrability? 17 ALA argues that the AAA arbitrator, as consented to in Section 13.2–3 of the 18 2021–22 and 2022–23 Agreements, and not the Court, must decide the threshold issue of 19 arbitrability. (Doc. 19 at 7–9.) Mills disagrees and argues the Coaching Agreements do 20 not include an arbitration agreement, so nothing precludes the Court from determining the 21 arbitrability of his claims related to his coaching role. (Doc. 21 at 4–6, 11–12.) 22 Where parties have agreed to two contracts, one sending disputes to arbitration and 23 the other sending disputes to the courts, a court must decide which contract governs. 24 Coinbase, 602 U.S. at 150, 152 (noting otherwise delegation provisions would be 25 impermissibly elevated over other forms of contract). To do so, the Court must assess 26 whether the parties agreed to send the given dispute to arbitration. Id. at 150. Here, the 27 dispute is whether the parties agreed to send the issue of who decides the arbitrability of 28 the claims to an arbitrator or the courts. 1 Under Arizona law, an enforceable contract requires “an offer, acceptance, 2 consideration, and sufficient specification of terms so that the obligations involved can be 3 ascertained.” Rogus v. Lords, 804 P.2d 133, 135 (Ariz. Ct. App. 1991); see also Hayford 4 v. Santander Consumer USA Inc., No. CV-20-01808-PHX-JJT, 2021 WL 3934328, at *3 5 (D. Ariz. Aug. 11, 2021) (noting the FAA requires an arbitration agreement to be in 6 writing). “The fundamental prerequisite to arbitration is the existence of an actual 7 agreement or contract to arbitrate.” Escareno v. Kindred Nursing Centers W., L.L.C., 366 8 P.3d 1016, 1020 (Ariz. Ct. App. 2016). There is no dispute that the Coaching Agreements 9 do not contain an arbitration agreement. Instead, ALA attempts to fold Mills’ contractual 10 obligations as a coach into the Teaching Agreements to trigger the arbitration clause and 11 thereby the delegation of the decision of arbitrability to an arbitrator. On these facts, 12 however, ALA has not sufficiently done so through clear and unmistakable evidence. See 13 First Options, 514 U.S. at 945. 14 All three Teaching Agreements contain nearly identical provisions detailing Mills’ 15 duties as a teacher. (See Doc. 19-1 at 7–9, 13–15, 20–22.) First, the agreements provide 16 that “[d]uring the term of this Agreement, Employee shall provide instruction to the 17 School’s students on the courses of study assigned to the School’s authorized 18 representatives, perform other duties as indicated below, and perform such other duties as 19 customarily performed by one holding Employee’s position in same or similar schools.” 20 (Id. at 7, 13, 20.) The agreements then provide various duties. (See id. at 8–9, 14–15, 21 21–22.) Mills’ duties included requiring him to teach during working hours, teach an 22 approved curriculum, provide tutoring, work afterhours related to professional 23 development, club meetings, parent-teacher conferences, and other events designed by the 24 school, and various other reporting and communication requirements. (See id.) None of 25 these duties, however, encompass his role as the head basketball coach. And notably, the 26 Teaching Agreements also separately address pay, benefits, and indicate that they are fully 27 integrated written contracts. (Id. at 11, 17, 24.) Despite devoting most of its briefing 28 conflating these agreements with the Coaching Agreements, the Coaching Agreements 1 provide for a separate term of employment, pay, duties, and even supervisors. (See id. 2 at 27–28, 29–30.) It is evident that the parties executed these contracts separately to 3 individually govern two varied roles. Put simply, they are independent agreements. 4 Having found the teaching and coaching contracts are two separate contracts, albeit 5 with overlapping time periods, the absence of an arbitration agreement in the Coaching 6 Agreements entirely negates any possibility that Mills consented to an arbitrator deciding 7 the issue of arbitrability of claims arising out of his coaching role. See Johnson v. Walmart 8 Inc., 57 F.4th 677, 682–83 (9th Cir. 2023) (“Where two contracts are ‘separate,’ ‘the lack 9 of an arbitration clause means disputes over the agreement are not subject to arbitration.’” 10 (citation omitted)). On the other hand, the Teaching Agreements include arbitration 11 provisions, with the caveat that the 2020–21 provisions did not include a delegation clause. 12 The Court’s inquiry then, is to what extent Mills’ claims arise of his coaching role and 13 those that pertain to his teaching role. 14 B. What Claims Arise Out of Mills’ Coaching Role? 15 As noted, Mills asserts claims of discrimination under Title VII and the ACRA, 16 retaliation, hostile work environment, constructive discharge, and intentional infliction of 17 emotional distress. ALA proclaims broadly that the Teaching Agreements cover all legal 18 claims arising out of Mills’ “employment,” and are otherwise so intertwined that the 19 allegations related to coaching are legal claims within the meaning of the Teaching 20 Agreements. (Doc. 19; at 11–12; Doc. 22 at 2.) Mills contends that all but the constructive 21 discharge claim arise of this employment as a basketball coach. (Doc. 21 at 4.) ALA’s 22 argument that the Teaching Agreements providing for arbitration of disputes related to 23 Mills’ “employment” does pass muster because, as discussed, the “employment” 24 referenced in those agreements pertains to the teaching role, not coaching. ALA’s 25 argument as to the intertwined factual allegations and legal claims, however, requires 26 further analysis. 27 Mills alleges six factual circumstances giving rise to the claims. (See generally Doc. 28 1.) First, Mills alleges that a staff member expressed dreams of becoming the head coach 1 and continuously argued with another coach during a game, the staff member began 2 surveying Mills’ classroom, Mills reported the staff member’s actions towards the other 3 coach to the Dean of Students and the Dean said nothing could be done, the staff member 4 was promoted to Athletic Director, the now-Athletic Director gave him literature to 5 improve his coaching, and that Mills anticipated that the now-Athletic Director would try 6 to get him fired because of his complaints and ambitions to become head coach. (Id. at 4–5 7 ¶¶ 16–27.) Second, Mills alleges he was the only coach that did not receive access to an 8 online film platform. (Id. at 5–6 ¶¶ 28–33.) Third, Mills alleges that following the Athletic 9 Director’s resignation, his successor and the director of the school impeded a planned 10 basketball trip, but Mills was able to independently fundraise to make the trip happen. (Id. 11 at 6 ¶¶ 34–39.) Fourth, Mills alleges the new Athletic Director required him to meet with 12 a disgruntled parent, in which the parent demeaned him, later that same parent yelled 13 profanities at him during a game, and ALA failed to intervene to stop the purported 14 harassment. (Id. at 7–8 ¶¶ 40–49.) Fifth, Mills alleges that the director of the school met 15 with him and told him that based on his race, Mills could not say certain things to his 16 players. (Id. at 7–8 ¶¶ 50–56.) A week later Mills was fired from coaching in the middle 17 of the 2021–22 season for not fitting the culture. (Id.) Finally, Mills alleges that the former 18 Athletic Director replaced him as the head coach, rather than ALA promoting one of the 19 other coaches. (Id. at 8–9 ¶¶ 57–63.) Collectively, these circumstances compelled Mills 20 to resign from teaching. (Id.) 21 Mills seemingly concedes that only his constructive discharge claim arises out of 22 his teaching role. However, as alleged, all of the purportedly discriminatory acts 23 culminated into Mills’ resignation that form the factual basis for the claim. “[W]hen a 24 complaint contains both arbitrable and nonarbitrable claims, the [FAA] requires courts to 25 ‘compel arbitration of pendent arbitrable claims when one of the parties files a motion to 26 compel, even where the result would be the possibly inefficient maintenance of separate 27 proceedings in different forums.’” KPMG LLP v. Cocchi, 565 U.S. 18, 22 (2011) (quoting 28 Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 214 (1985)). Here, there is no legitimate 1 dispute that the constructive discharge claim is subject to arbitration as it arises out of 2 Mills’ teaching role. And ALA has failed to cite authority that the single arbitrable claim 3 being intertwined with the remaining claim justifies submitted all claims to arbitration. 4 Therefore, the Court now turns to Mills’ enforceability arguments. 5 C. Are the Arbitration Provisions Enforceable? 6 Mills argues the arbitration provision in the 2021–22 and 2022–23 Agreements are 7 unenforceable for four reasons: (1) the permissive language in Section 13 conflicts with 8 the mandatory language in Section 13.1; (2) the term “Company” in Section 13.1 is 9 incurably ambiguous; (3) the provisions are procedurally unconscionable; and (4) 10 compelling arbitration exceeds the parties’ expectations. (Doc. 21 at 6.) 11 As to the first reason, ALA replies by arguing Mills misreads the two provisions, 12 and read together, the permissive may permits the aggrieved party to bring a suit to 13 arbitration or abandon the claim, then Section 13.1 provides that all legal claims are subject 14 to arbitration. (Doc. 22 at 2–3.) The Court agrees with ALA on this issue. To determine 15 the parties’ intent under a contract, the Court considers the plain meaning of the words and 16 viewed in the context of the entire contract. D.Q.S.A. LLC v. Am. Dairy Queen Corp., 680 17 F. Supp. 3d 1113, 1119 (D. Ariz. 2023) (applying Arizona contract law). Viewed in 18 context, Section 13 of the 2021–22 and 2022–23 Agreements requires the parties to engage 19 in a negotiation process for any dispute arising out of the agreements, only then may the 20 aggrieved party initiate the arbitration process for “legal claims,” and does not permit 21 arbitration for non-legal claims. (See Doc. 19-1 at 16, 23 (emphasis added).)2 Section 13.1 22 then removes various types of legal claims from arbitration, e.g., injunctive relief sought 23 by ALA or Mills’ claims for workers compensation or unemployment benefits. (Id. at 16, 24 23.) Mills’ manufactured conflict neuters the parties’ agreement to submit the appropriate 25 legal claims to arbitration and would render them essentially meaningless. D.Q.S.A. LLC, 26 680 F. Supp. 3d at 1119 (“[R]eading of one contract provision must not render a related

27 2 The 2020–21 Agreement contains a functionally similar provision (Section 13.1 in that agreement), which requires the parties to meet and confer before submitting legal claims 28 to arbitration. (See id. at 10.) Therefore, the Court’s analysis on this issue covers all three agreements as functionally the same. 1 provision meaningless.”). Therefore, the Court refuses to read into the agreements a 2 conflict that does not follow the plain meaning read in context. 3 Regarding the purported ambiguity of “Company,” ALA again argues Mills reads 4 the provisions out of context, and otherwise cherry-picks a term to create ambiguity. (Doc. 5 22 at 3–4.) And, again, the Court agrees with ALA. Mills attempts to direct the Court’s 6 attention to parol evidence of various documents with varying names of ALA entities. (See 7 Doc. 21 at 7–8.) Under Arizona law, the Court “first considers the offered evidence and, 8 if [it] finds the contract language is ‘reasonably susceptible’ to the interpretation asserted 9 by its proponent, the evidence is admissible to determine the meaning intended by the 10 parties.” Taylor v. State Farm Mut. Auto. Ins., 854 P.2d 1134, 1140 (Ariz. 1993). But “the 11 [Court] need not waste much time if the asserted interpretation is unreasonable[,] or the 12 offered evidence is not persuasive.” Id. at 1141. It is true that “Company” is undefined in 13 the 2021–22 and 2022–23 Agreements. In context, however, the agreements use the term 14 to refer to ALA. For example, in addressing which claims are subject to arbitration, Section 15 13 addresses disputes arising out of “the parties’ employment relationship” and Section 16 13.1 states “all legal claims related to Employee’s employment with the Company.” (See 17 Doc. 19-1 at 16, 23.) ALA is defined as the “Employer,” i.e. the party providing the 18 employment opportunity. (See, e.g., id. at 7, 13, 20.) And as a matter of common sense, 19 “Company” refers to the “Employer,” which is ALA and includes its management of other 20 entities like the schools. Therefore, whether the Court reads the agreements on their own 21 or evaluates Mills’ evidence, “Company” is not reasonably susceptible to differing 22 interpretations and any purported ambiguity is unreasonable. 23 Next, turning to unconscionability, Mills’ contention is one of unfairness and he 24 expounds that he was hailed into the school’s office to quickly sign the 2021–22 25 Agreement, the addition of the delegation clause was not explained to him, and the clause 26 was inconspicuous because ALA did not bold the new language. (Doc. 21 at 9–10, 13–14.) 27 ALA faults Mills for mischaracterizing the inconspicuousness of the delegation clause, and 28 argues that the agreements are not adhesion contracts, that it had no obligation to explain 1 the clause to Mills, as he is not an unsophisticated party, and that he initialed near the new 2 language. (Doc. 22 at 6–7.) Although there is a delegation clause shifting determinations 3 on issues of arbitrability to an arbitrator, Mills has adequately challenged the enforceability 4 of that clause and the Court must first consider the challenge before ordering arbitration on 5 arbitrability. See Osterhaus Pharmacy, 2024 WL 4785818, at *4. 6 Procedural unconscionability addresses the fairness of the bargaining process, 7 which “is concerned with ‘unfair surprise,’ fine print clauses, mistakes or ignorance of 8 important facts or other things that mean bargaining did not proceed as it should.” Clark 9 v. Renaissance W., LLC, 307 P.3d 77, 79 (Ariz. Ct. App. 2013) (quoting Maxwell v. Fidelity 10 Financial Services, Inc., 907 P.2d 51, 57–58 (Ariz. 1995)). But mere inequality in 11 bargaining power is not sufficient. Graham v. United Servs. Auto. Ass’n, No. 12 CV-20-02210-PHX-DWL, 2021 WL 2780865, at *4 (D. Ariz. July 2, 2021). “Even if the 13 weaker party does not understand all of the terms included in an agreement, the agreement 14 may be enforceable if it is consistent with reasonable expectations and not unduly 15 oppressive.” Id. (citation omitted) (“[T]he fundamental question is whether one party to a 16 contract has unfairly or surreptitiously deprived the other of the right of access to the 17 courts.” (citation omitted)). 18 First, Mills’ complaints about inconspicuousness of the changes in the 2021–22 19 Agreement providing for the delegation clause are without merit. As quoted above, see 20 Section I, the 2021–22 Agreement sets out in capital lettering that the parties waive their 21 rights to have courts or a jury decide their claims, proceeds to list new procedural rules in 22 separately designated and numbered section, and bolds the “Arbitrator’s Authority and 23 Decision” followed by the specifics of the delegation. Mills initialed both pages at the 24 bottom signifying he independently viewed each page. (Doc. 19-1 at 16–17.) Mills claims 25 to have viewed the agreement and that it looked “just like the teaching agreement that [he] 26 signed the previous year.” (Doc. 21-1 at 2 ¶ 12.) It is simply not true that the agreements 27 looked the same, when the typeface, bolding, numbering, and length all varied. The 28 purported surprise seemingly stems from Mills’ failure to actually read what he 1 acknowledged and signed. At bottom, Mills seeks relief from a binding provision in 2 contract without making a showing of unconscionability. See, e.g. Nelson v. Rice, 12 P.3d 3 238, 243 (Ariz. Ct. App. 2000) (“Courts should not assume an overly paternalistic attitude 4 toward the parties to a contract by relieving one or another of them of the consequences of 5 what is at worst a bad bargain . . . and in declaring the contract at issue here 6 unconscionable.” (cleaned up)). Therefore, the Court declines to find the delegation clause 7 unconscionable. 8 For similar reasons, Mills’ arguments about reasonable expectations also fail. 9 Ordinarily, there is a presumption that the terms of a contract are valid and enforceable. 10 Harrington v. Pulte Home Corp., 119 P.3d 1044, 1050 (Ariz. Ct. App. 2005). The 11 reasonable expectations doctrine may rebut that presumption where one party has reason 12 to believe that the assenting party would not do so if he knew the writing contained a 13 particular term. Myers v. Racerworld LLC, No. CV-21-01244-PHX-MTL, 2022 WL 14 1569080, at *4 (D. Ariz. May 18, 2022). The “‘reason to believe’ may be shown by the 15 parties’ prior negotiations or inferred from the fact that the challenged term is bizarre or 16 oppressive, eviscerates the non-standard terms explicitly agreed to, or eliminates the 17 dominant purpose of the transaction.” Id. (quoting Darner Motor Sales, Inc. v. Universal 18 Underwriters Ins., 682 P.2d 388, 397 (Ariz. 1984)). The 2020–21 Agreement included an 19 arbitration provision, of which Mills does not take issue with generally, but rather he claims 20 the changes in the next two renewal exceeded reasonable expectations. With the benefit 21 of hindsight, Mills claims that he would not sign the same contract today and would have 22 sought counsel, (Doc. 21 at 2 ¶¶ 14–15), but has provided no reasoning as to why the 23 decision on arbitrability falling to an arbitrator or changes in the terms of the arbitration 24 provisions played a dominant purpose in his assent to the employment agreement. Nor 25 does he make a showing that the terms are oppressive or eviscerates non-standard terms. 26 If anything, the changes to the provisions clarify their meaning and further the purpose of 27 having an arbitrator decide legal disputes, including those related to arbitrability. Thus, 28 Mills’ argument fails. 1 D. Should the Court Impose a Stay Pending Arbitration? 2 The FAA “leaves no place for the exercise of discretion by a district court, but 3 instead mandates that district courts shall direct the parties to proceed to arbitration on 4 issues as to which an arbitration agreement has been signed.” Dean Witter Reynolds, 470 5 U.S. at 218. Accordingly, the FAA “require[s] that if a dispute presents multiple claims, 6 some arbitrable and some not, the former must be sent to arbitration even if this will lead 7 to piecemeal litigation.” KPMG, 565 U.S. at 19. Where a party requests a stay pending 8 arbitration, the FAA directs the Court to enter a stay to litigation after compelling 9 arbitration under a valid arbitration agreement. 9 U.S.C. § 3. 10 Here, ALA requested a stay in this action if Mills pursues employment related legal 11 claims through arbitration. (Doc. 19 at 12.) Mills did not address whether a stay was 12 appropriate. (Doc. 21.) Having concluded that only the constructive discharge claim arises 13 out of the Teaching Agreements subject to the arbitration provision and delegation clause, 14 the Court will submit that claim to arbitration. For the remaining claims, however, the 15 Court will stay proceedings pending completion of arbitration. 16 IV. ATTORNEYS’ FEES 17 ALA requests attorneys’ fees and costs incurred in connection with filing its Motion. 18 (Doc. 19 at 12.) The Court declines to award attorneys’ fees and costs at this time. 19 V. CONCLUSION 20 Accordingly, 21 IT IS ORDERED that Defendant ALA Management Services, Inc.’s Motion to 22 Compel Arbitration (Doc. 19) is granted in part. 23 IT IS FURTHER ORDERED compelling Plaintiff Silas Mills and Defendant 24 ALA Management Services, Inc. to arbitration under the terms of the applicable arbitration 25 agreement for the constructive discharge claim. 26 IT IS FURTHER ORDERED staying Plaintiff Silas Mills’ remaining claims 27 against Defendant ALA Management Services, Inc. for a limited period of time, to be 28 determined by the parties’ progress in engaging in and completing the arbitration process. 1 || These parties shall file a joint status report by June 6, 2025, or within one week of a final || arbitration decision, whichever is sooner. 3 Dated this 3rd day of December, 2024. 4 —_— >

6 Aonorable Susan M; Brnovich 5 United States District Judge 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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