Newbill v. CVS Caremark LLC

• Court: District Court, D. Arizona
• Decided: July 25, 2023
• Docket: 2:22-cv-01001
• Status: Unknown

Opinion

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

9 Jeffrey W. Newbill, II, No. CV-22-01001-PHX-GMS

10 Plaintiff, ORDER

11 v.

12 CVS Caremark, LLC,

13 Defendant. 14 15 16 Before the Court is Defendant CVS Caremark, LLC’s, Motion to Dismiss and 17 Compel Arbitration (Doc. 14). Also pending is Plaintiff’s Motion to Strike Unauthorized 18 Filings (Doc. 18). For the following reasons, the Motion to Strike is denied and the Motion 19 to Compel Arbitration is granted. 20 BACKGROUND 21 In September 2016, Plaintiff Jeffrey Newbill began working for Caremark, LLC. 22 Prior to starting work, he received an email directing him to complete his onboarding 23 paperwork before the first day. (Doc. 15-1 at 1.) Plaintiff logged into an online portal to 24 complete the documents. Id. At the outset, he created an electronic signature, which he 25 could use on all documents. (Doc. 16-1 at 2.) As Plaintiff clicked through the documents 26 in the portal, he signed each document by clicking and applying his pre-made electronic 27 signature. (Id. at 3-4.) 28 One of the documents Plaintiff added his electronic signature is titled “CVS Health 1 Arbitration Agreement.” (Doc. 14-1 at 6.) The Arbitration Agreement states that the 2 employee and CVS agree that any dispute covered by the agreement “will be decided by a 3 single arbitrator through final and binding arbitration only and will not be decided by a 4 court or jury or any other forum.” (Id.) It explains that “[c]overed [c]laims include but are 5 not limited to disputes regarding . . . discrimination, retaliation and termination arising 6 under the Civil Rights Act of 1964.” (Id.) The Arbitration Agreement then details the 7 steps to initiate an arbitration proceeding, as well as the relevant rules and procedures and 8 costs and fees. Next, it explains that the employee has the right to opt out of arbitration by 9 notifying CVS within 30 days because “[a]rbitration is not a mandatory condition of [the 10 employee’s] employment at CVS.” (Id. at 7.) The conclusion of the Arbitration Agreement 11 states, “You understand that by agreeing to this Agreement and not opting out, You and 12 CVS are giving up the right to go to court to resolve Covered Claims.” (Id.) 13 Plaintiff states that he did not have the ability to print the document at the time of 14 signing, and after he signed the documents, his login credentials expired, preventing him 15 from retrieving a copy of the document online. Defendants attach a screenshot of the online 16 portal in which Plaintiff signed the agreement, that states “[i]f you would like a copy of the 17 agreement at any time in the future, please contact the CVS Health Human Resources 18 Department.” (Doc. 16-1 at 6.) Nevertheless, the parties do not appear to dispute that the 19 Plaintiff signed the document using his electronic signature and did not opt out of the 20 Arbitration Agreement at any time after signing. 21 Thereafter, on June 8, 2022, Plaintiff filed this action alleging four counts of race- 22 based discrimination and retaliation under Title VII and 42 U.S.C. § 1981. On August 23, 23 2022, Defendants filed the instant Motion to Compel Arbitration, asserting that Plaintiff’s 24 claim must, in accordance with the Arbitration Agreement, be submitted to an arbitrator 25 for resolution. 26 DISCUSSION 27 I. Motion to Compel Arbitration 28 A. Legal Standard and Motion to Strike 1 The parties dispute, to some degree, what legal standard should apply on a motion 2 to compel arbitration. While in some instances it may be appropriate to consider the motion 3 under a Rule 12(b)(6) motion to dismiss standard, the summary judgment standard is most 4 appropriate in this case. 5 Courts have held that “where the affirmative defense of arbitrability of claims is 6 apparent on the face of a complaint (or . . . documents relied upon in the complaint),” “the 7 FAA would favor resolving a motion to compel arbitration under a motion to dismiss 8 standard without the inherent delay of discovery.” Scudieri v. Chapman Chevrolet 9 Chandler, LLC, No. 16-cv-09188, 2016 WL 6997164, at *1 (D. Ariz. Oct. 25, 2016) 10 (finding that there is no Ninth Circuit caselaw on point and quoting Guidotti v. Legal 11 Helpers Debt Resol., L.L.C., 716 F.3d 764, 773-74 (3d Cir. 2013)). However, “if 12 arbitrability is unapparent on the pleadings or the party opposing arbitration comes forth 13 with sufficient ‘reliable evidence’ to raise a fact question going to the validity of the 14 arbitration agreement, the Rule 12(b)(6) standard is no longer appropriate.” Id. The 15 conversion of the standard for reviewing a motion to compel arbitration “mirrors the 16 process provided by Rule 12(d) for converting a motion to dismiss to a motion for summary 17 judgment.” Id. at 1 n.15; Fed. R. Civ. P. 12(d) (“If, on a motion under Rule 12(b)(6) or 18 12(c), matters outside the pleadings are presented to and not excluded by the court, the 19 motion must be treated as one for summary judgment under Rule 56.”). 20 Both parties present matters outside the pleadings to the Court on this motion, 21 including declarations and exhibits. Because the Court considers these matters in ruling 22 on the motion, it is properly considered under a summary judgment standard. Nevertheless, 23 Plaintiff’s Motion to Strike is denied because attaching an exhibit to a reply on a motion to 24 compel arbitration is not necessarily precluded under the local rules. While Plaintiff argues 25 that parties are not permitted to file exhibits attached to a reply brief for a summary 26 judgment motion, application of the summary judgment standard does not automatically 27 require application of the Local Rule 56.1 procedure for filing motions for summary 28 judgment. Indeed, the parties clearly deviate from the local rules governing summary 1 judgment proceedings on motions to compel arbitration by failing to submit a separate 2 statement of facts and/or a controverting statement of facts. Thus, the Court is not 3 persuaded that the procedures under Local Rule 56.1 foreclose Defendants’ ability to attach 4 an exhibit to a response memorandum in a motion to compel arbitration. Because the filing 5 is not prohibited by statute, rule, or court order, L.R.Civ. 7.2(m)(1), and because, as was 6 explained at oral argument, none of the material was of particular significance to the Court 7 in its ruling, especially in light of the facts that the Plaintiff does not contest, the motion is 8 denied. 9 B. Parties to the Agreement 10 Caremark, LLC, Plaintiff’s employer, is a party to the agreement. Defendants 11 provide, in their declaration, that Caremark, LLC, is a wholly owned subsidiary of CVS 12 Pharmacy, Inc. (Doc. 16-1 at 2.) The Arbitration Agreement states that the employee and 13 CVS agree to arbitrate any dispute covered by the agreement. It explicitly states that the 14 company referred to as “CVS” in the agreement includes CVS Pharmacy, Inc., and its 15 affiliates, successors, subsidiaries, and/or parent companies. Therefore, Plaintiff and 16 Caremark, LLC, are both parties to the agreement. 17 C. Knowing Waiver of Title VII Claims 18 Plaintiff knowingly agreed to arbitrate Title VII claims. In Ashbey v. Archstone 19 Property Management, the Ninth Circuit evaluated whether an employee’s agreement to 20 arbitrate his Title VII claims was valid. 785 F.3d 1320, 1323 (9th Cir. 2015). The Ninth 21 Circuit made clear that while courts had previously held that parties could not waive their 22 rights to a jury trial in favor of arbitration on Title VII claims, Congress approved the 23 possibility of such a waiver with amendments to Title VII in the Civil Rights Act of 1991. 24 Id. However, waiver of statutory remedies in favor of arbitration under Title VII requires 25 a valid agreement to arbitrate and the agreement must be “knowing.” Id. at 1323-24. In 26 Ashbey, several facts made the employee’s waiver of Title VII remedies knowing: “(1) he 27 was provided with an acknowledgement form that ‘explicitly notified’ him the employee 28 manual contained a dispute resolution policy; (2) he signed the acknowledgement form; 1 (3) the underlying policy was made available to him; and (4) the policy expressly stated 2 that it covered employment-related disputes, including claims of harassment and 3 discrimination under the Civil Rights Act of 1964.” Graham v. United Servs. Auto. Ass’n, 4 No. CV-20-02210, 2021 WL 2780865, at *3 (D. Ariz. July 2, 2021) (citing Ashbey, 785 5 F.3d at 1325-26). 6 The facts here are largely the same. As compared to Ashbey, Plaintiff was notified 7 even more explicitly because he was provided with a form titled “Arbitration Agreement,” 8 which clearly informed him of an agreement to arbitrate. Plaintiff signed the form. 9 Plaintiff’s motion suggests that his signature is somehow invalid or unknowing because he 10 created one signature in the online portal that he then applied to all documents. Plaintiff’s 11 declaration, however, states that he clicked through each document, applying his signature 12 to each. (Doc. 15-1, ¶ 6.) His motion does not provide any reason why clicking to sign 13 with a personalized but pre-made signature on a document operates any differently than 14 manually forming the signature on each document. 15 Additionally, in Ashbey, a plaintiff knowingly waived his Title VII remedies when 16 he signed an acknowledgement that notified him that the employee manual contained an 17 arbitration policy, and the underlying policy was made available to him. Here, the Plaintiff 18 signed the Arbitration Agreement itself, so it was clearly made available to him. Plaintiff’s 19 argument that he was unable to print or later access the Agreement because his online 20 credentials expired is unavailing for several reasons. First, it is not clear that knowing 21 waiver requires that the employer provide continuing access to the agreement; the facts of 22 Ashbey suggest that the relevant inquiry is whether the party had access to the text of the 23 underlying arbitration agreement at the time of signing it. 785 F.3d at 1325-26. Moreover, 24 the webpage for the portal where the agreement was signed states “[i]f you would like a 25 copy of the agreement at any time in the future, please contact the CVS Health Human 26 Resources Department.” (Doc. 16-1 at 6.) And at oral argument, Plaintiff confirmed that 27 he did not contact the Human Resources Department to obtain a copy of the document. 28 Lastly, as in Ashbey, here, the Arbitration Agreement expressly states that it covers disputes 1 regarding harassment or discrimination, including disputes arising under Title VII. 2 The fact that Plaintiff did not understand or desire to consent to arbitration is not 3 sufficient to constitute an unknowing waiver. The question is not whether Plaintiff 4 subjectively knew or desired to waive the rights, but rather whether the Agreement’s 5 language gave Plaintiff adequate notice for him to have “knowingly” waived his right to a 6 jury trial. Ashbey, 785 F.3d at 1324. The language of the agreement is plain; it states that 7 “You and CVS are giving up the right to go to court to resolve Covered Claims.” (Doc. 8 14-1 at 7.) Thus, as in Ashbey, “[a]nyone who reviewed the [Arbitration Agreement] would 9 immediately realize he was ‘entering into an agreement to waive a specific statutory 10 remedy afforded him by a civil rights statute.’” 785 F.3d at 1325 (quoting Nelson v. Cyprus 11 Bagdad Copper Corp., 119 F.3d 756, 762 (9th Cir. 1997)). 12 By signing the Arbitration Agreement, Plaintiff knowingly waived the remedies 13 afforded under Title VII, including litigation in this Court. 14 D. Procedural Unconscionability 15 The Arbitration Agreement is not procedurally unconscionable. “[I]n assessing 16 whether an arbitration agreement or clause is enforceable, the [Court] should apply 17 ordinary state-law principles that govern the formation of contracts.” Davis v. O’Melveny 18 & Myers, 485 F.3d 1066, 1072 (9th Cir. 2007) (internal quotations omitted). The parties 19 both indicate that Arizona’s law governs. Plaintiff, however, relies primarily on California 20 cases or cases interpreting California law, stating “[i]n determining whether an arbitration 21 agreement is substantively or procedurally unconscionable, the District of Arizona and the 22 Supreme Court of Arizona have looked approvingly to the law of California.” (Doc. 15 at 23 5 n.1 (citing Cooper v. QC Fin. Servs., Inc., 503 F. Supp. 2d 1266, 1285 (D. Ariz. 2007)). 24 Plaintiff misstates this principle, which is more accurately stated as: “if Arizona law has 25 not addressed an issue, we look approvingly to the laws of California, especially when 26 interpreting a similar or identical statute.” Cooper, 503 F. Supp. 2d at 1285 (emphasis 27 added) (internal quotations omitted); Moore v. Browning, 203 Ariz. 102, 109 (2002). 28 Therefore, “it does not appear appropriate to turn to California law when Arizona courts 1 have already addressed procedural unconscionability.” R & L Ltd. Invs., Inc. v. Cabot Inv. 2 Props., LLC, 729 F. Supp. 2d 1110 (D. Ariz. 2010). Under Arizona law, procedural 3 unconscionability is concerned with “unfair surprise,” and courts focus on “those factors 4 bearing upon . . . the real and voluntary meeting of the minds of the contracting part[ies]: 5 age, education, intelligence, business acumen and experience, relative bargaining power, 6 who drafted the contract, whether the terms were explained to the weaker party, [and] 7 whether alterations in the printed terms were possible.” Maxwell v. Fidelity Fin. Servs., 8 Inc., 184 Ariz. 82, 89 (1995). Plaintiffs raise two reasons for procedural unconscionability, 9 neither of which demonstrate that this contract is procedurally unconscionable. 10 Adhesion Contract: In Arizona, the “conclusion that [the] contract [is] one of 11 adhesion is not, of itself, determinative of enforceability.” Jones v. Gen. Motors Corp., 12 640 F. Supp. 2d 1124, 1130 (D. Ariz. 2009). “A contract of adhesion is fully enforceable, 13 . . . unless the contract is also unduly oppressive or unconscionable.” Brady v. Universal 14 Tech. Inst. of Ariz., Inc., No. CV-09-1044, 2009 WL 5128577, at *2 (D. Ariz. Dec. 17, 15 2009) (citing Broemmer v. Abortion Servs. of Phoenix, Ltd., 173 Ariz. 148, 150 (1992)). 16 Plaintiff provides no basis to suggest that under these standards the contract is procedurally 17 unconscionable. 18 To start, the Arbitration Agreement contained a clear and conspicuous “opt-out” 19 provision, describing how Plaintiff could opt out of arbitration and explaining that 20 consenting to the agreement was not a condition of his employment. This undermines 21 Plaintiff’s argument that the contract was a “take it or leave it” adhesion contract. The fact 22 that Plaintiff’s employer required him to sign the paperwork before starting his job does 23 not undermine this determination. The opt-out provision extended for thirty days after 24 signing, and as the terms clearly state, Plaintiff could sign the Arbitration Agreement prior 25 to beginning his employment and subsequently opt out of arbitration within thirty days. 26 (Doc. 14-1 at 7.) 27 Even if this was an adhesion contract, Plaintiff provides no argument explaining 28 why it is unduly oppressive or unconscionable. The only argument Plaintiff advances is 1 that one signature was used to sign all documents, and therefore, there was no separation 2 nor highlighting of the arbitration agreement or the opt-out clause. This argument is 3 unpersuasive on two fronts. First, as Plaintiff’s declaration demonstrates, although he used 4 one pre-made signature to sign each document within his new-hire portal, he was required 5 to click through and sign each document individually. This means he was specifically 6 made aware of the existence of the Arbitration Agreement and signed it as a separate 7 document. Second, Plaintiff’s argument that there was no “highlighting of the . . . opt-out 8 clause” and “no warning that he would lose the right to a jury trial” is plainly contradicted 9 by the text of the Arbitration Agreement and the screen on which Plaintiff signed the 10 agreement. (Doc. 14-1 at 7; Doc. 16-1 at 6 (“The Arbitration Agreement . . . requires that 11 certain claims must be brought and decided in arbitration and not in court. . . . We 12 encourage you to read the Agreement very carefully.”)). In light of the notice provided to 13 Plaintiff about the existence of and provisions within the Arbitration Agreement, his ability 14 to opt out, and its applicability to both parties, it is not procedurally unconscionable. See 15 Graham, 2021 WL 2780865, at *4 (citing several Arizona cases that have “upheld the 16 enforceability of arbitration clauses within employment contracts, even if the employee 17 was relatively unsophisticated and was unable to negotiate the contractual terms”). 18 Lack of Access to the Document: Plaintiff’s lack of immediate access to the 19 Arbitration Agreement after signing it does not make it procedurally unconscionable. The 20 fact that Plaintiff needed to request access to the document from HR rather than having 21 immediate access through his online portal does not relate to the core concerns of 22 procedural unconscionability—unfair surprise or “ignorance of important facts . . . that 23 mean bargaining did not proceed as it should.” Brady, 2009 WL 5128577, at *2. The cases 24 cited by Plaintiff do not suggest as much.1 Instead, those cases concern a lack of 25 availability of the document, rules, or procedures prior to or at the time of signing. Here, 26 Plaintiff only alleges that he was unable to access the agreement in his portal after signing

27 1 Moreover, Plaintiff cites only California cases for the proposition that “an agreement may also be procedurally unconscionable if the employee is not provided with a copy of, or 28 direct access to, the arbitration rules or procedures.” (Doc. 15 at 5.) 1 it. This does not make the bargaining process oppressive or unfair because he had a fair 2 opportunity to read the agreement (and was strongly encouraged to do so on the webpage) 3 before signing it, and he had other means of accessing the document after signing. This 4 argument thus does not support a finding of procedural unconscionability. 5 E. Staying the Action 6 If a court finds that an agreement to arbitrate exists, it “may either stay the action or 7 dismiss it outright when . . . the court determines that all of the claims raised in the action 8 are subject to arbitration.” Johnmohammadi v. Bloomingdale’s, Inc., 755 F.3d 1072, 1074 9 (9th Cir. 2014); Forrest v. Spizzirri, 62 F.4th 1201, 1205-06 (9th Cir. 2023). The decision 10 to stay or dismiss the case is a matter of the Court’s discretion. Forrest, 62 F.4th at 1205. 11 Plaintiff does not appear to dispute the fact that all claims in his Complaint are covered by 12 the Arbitration Agreement. He requests that the Court stay the matter nonetheless so that 13 he may avoid paying an additional filing fee to reduce any award to a judgment and to 14 prevent later arguments that he did not properly file suit within the applicable statute of 15 limitations. In light of the rational reasons Plaintiff has advanced for a stay, rather than 16 dismissal, a stay is clearly contemplated by the statute and well within the Court’s 17 discretion. As such, this case is stayed pending the outcome of arbitration. 18 CONCLUSION 19 For the above reasons, a valid agreement to arbitrate exists between the parties. 20 Accordingly, 21 IT IS THEREFORE ORDERED that Defendant’s Motion to Dismiss and Compel 22 Arbitration (Doc. 14) is GRANTED. 23 IT IS FURTHER ORDERED that this case is STAYED pending the outcome of 24 arbitration. 25 IT IS FURTHER ORDERED that the parties file a joint status report on 26 September 1, 2023, and every 90 days thereafter concerning the status of this case. 27 / / / 28 1 IT IS FURTHER ORDERED that Plaintiffs Motion to Strike Unauthorized 2|| Filings (Doc. 18) is DENIED. 3 Dated this 25th day of July, 2023. Wars ) ; A Whacrsay Fotos 6 Chief United States District Judge 7 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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