1 UNITED STATES DISTRICT COURT 2 DISTRICT OF NEVADA 3 * * * 4 TAYLOR STUBBINS, on behalf of Case No. 2:24-cv-01672-EJY herself and all other similarly situated 5 individuals, ORDER 6 Plaintiffs, 7 v. 8 SPRING VALLEY HOSPITAL MEDICAL CENTER; VALLEY HEALTH SYSTEMS, 9 INC.; UNIVERSAL HEALTH SERVICES, INC.; and DOES 1 through 50, inclusive 10 Defendants. 11 12 Pending before the Court is Defendants’ Motion to Compel Arbitration (ECF No. 16), which 13 the Court considered along with the Opposition (ECF No. 31) and Reply (ECF No. 34). Also 14 pending is Plaintiff’s Motion for Circulation of Notice (ECF No. 10). Because the Motion to Compel 15 Arbitration is granted, the Motion for Circulation of Notice is denied as moot. 16 I. Relevant Background 17 A. The Applicant Acknowledgement and Alternative Resolution of Conflict Agreement. 18 Plaintiff is a former employee of Spring Valley Hospital, which is part of the Valley Health 19 System. Apparently, when first applying for her position, Plaintiff completed an Applicant 20 Acknowledgment (the “Acknowledgement”) form that bears her March 21, 2020 electronic 21 signature.1 ECF No. 31-1. The Acknowledgement includes several provisions pertinent to the issue 22 presented to the Court. These include paragraphs 4, 13, and 14 quoted below as follows: 23 If employed, I may terminate my employment at any time without notice or cause, and the Company may terminate or modify the employment relationship at any time 24 without prior notice or cause. In consideration of my employment, I agree to conform to the rules and regulations of the Company, and I understand that no 25 department head or representative of the Company, other than the President of the Company, has any authority to enter into any agreement, oral or written, for 26 1 The Court notes that Plaintiff refers to the Acknowledgement as an “Employment Agreement.” ECF No. 31 at 27 1, 2, and repeatedly thereafter. Plaintiff also states that she first “applied for a job … on March 21, 2020” and that the 1 employment for any specified period of time or to make any agreement or assurances contrary to this policy. [Id. ¶ 4.] 2 READ CAREFULLY BEFORE SIGNING I agree that any claim or lawsuit 3 relating to my service with the Company or any of its subsidiaries must be filed no more than six (6) months after the date of the employment action that is the subject 4 of the claim or lawsuit. I waive any statute of limitations to the contrary. [Id. ¶ 13.] 5 I will settle any and all claims, disputes or controversies arising out of or related to 6 my application or candidacy for employment, employment and/or cessation of employment, exclusively by final and binding arbitration …. Such claims include 7 but are not limited to … the Fair Labor Standards Act [the “FLSA”], …[and/or] wage or benefit laws … unless specifically prohibited by law. I understand that I 8 will not have the right in court or in an arbitration proceeding to participate in a class action, either as a class representative or class member …. The initiation and 9 conduct of any arbitration shall be in accordance with the then-in-effect National Rules for the Resolution of Employment Disputes of the American Arbitration 10 Association (“AAA”). [Id. ¶ 14.] 11 Following these paragraphs, the Acknowledgement states: “I AGREE TO THE UHS 12 CERTIFICATION AND AGREEMENT.” Plaintiff checked the “yes” box appearing immediately 13 after this statement. A “no” box also appears, which Plaintiff did not check. Id. at 5. There is no 14 integration clause (discussed below) in the Acknowledgement. Id. at 4-5. 15 On May 28, 2020, Plaintiff was offered a position with Spring Valley Hospital, which she 16 accepted that same day. ECF No. 31 at 4. On May 29, 2020, Plaintiff electronically signed the 17 Alternative Resolution for Conflicts Agreement (the “ARC Agreement” or the “Agreement”). ECF 18 No. 16-2 at 8. This is a four page document that states in the preamble: “ARC is an agreement to 19 arbitrate disputes in the workplace. ARC is a contract between you, the employee …, and SPRING 20 VALLEY HOSP MED CENTER. ARC does not change any other terms and conditions of 21 employment; it is a contract where you and SPRING VALLEY HOSP MED CENTER agree to 22 resolve any covered legal disputes through mandatory arbitration instead of by way of court or jury 23 trial. It is your responsibility to review the ARC Agreement. …” Id. at 3. Paragraph 1 of the ARC 24 Agreement is titled “How This Agreement Applies” and provides, in pertinent part, that claims under 25 the FLSA “and state statutes, … addressing the same or similar subject matters” are covered by the 26 Agreement. Id. Paragraph 2 of the ARC Agreement explains that before an arbitration “the parties 27 are encouraged” to mediate “covered claims.” Id. Paragraphs 3, 4, 5, and 6 discuss what claims are 1 not covered by the Agreement, how an arbitrator is selected, how to start an arbitration proceeding, 2 and how arbitrations are conducted. Id. at 3-5. 3 Paragraph 7 of the ARC Agreement is titled “Paying for the Arbitration” and states, in 4 pertinent part:
5 Each party will pay the fees for his, her or its own attorneys, subject to any remedies to which that party may later be entitled under applicable law. However, in all 6 cases where required by law, the Company will pay the Arbitrator’s and arbitration fees. If under applicable law the Company is not required to pay all of the 7 Arbitrator’s and/or arbitration fees, such fee(s) will be apportioned between the parties in accordance with said applicable law …. 8
9 Id. ¶ 7. 10 Paragraph 9 of the ARC Agreement is titled “An Employee’s Right to Opt Out of 11 Arbitration.” Id. ¶ 9. This title, and the title of all paragraphs in the ARC Agreement, are bolded. 12 The first sentence of paragraph 9 is also bolded and states: “Arbitration is not a mandatory 13 condition of Employee’s employment at the Company, and therefore an Employee may submit 14 a form stating that the Employee wishes to opt out and not be subject to this Agreement.” Id. 15 (emphasis in original). Paragraph 9 goes on to explain that in order to opt out of arbitration 16 employees “must submit a signed and dated statement on a[n] ‘Alternative Resolution for Conflicts 17 Agreement Opt Out Form’” that is available from local or corporate human resources “or online at 18 www.uhsinc.com/careers/ARC Program.” Id. To be effective, the signed and dated form must be 19 submitted within 30 days of the date on which the employee received the ARC Agreement. Id. 20 Paragraph 9 then continues:
21 An Employee who timely opts out as provided in this paragraph will not be subject to any adverse employment action as a consequence of that decision and may 22 pursue available legal remedies without regard to this Agreement. Should an Employee not opt out of this Agreement within 30 days of the Employee’s 23 receipt of this Agreement, continuing the Employee’s employment constitutes mutual acceptance of the terms of this Agreement by Employee and the 24 Company. An Employee has the right to consult with counsel of the Employee’s choice concerning this. 25
26 Id. 27 Paragraph 10 of the ARC Agreement contains an integration clause, which states: “This 1 related disputes. Except as stated in paragraph 6[] above, in the event any portion of this Agreement 2 is deemed unenforceable, the remainder of this Agreement will be enforceable.” Id. On the page 3 following paragraph 10, the ARC Agreement states: “AGREED: SPRING VALLEY HOSP MED 4 CENTER.” Id. at 7. The last page of the document shows Plaintiff’s electronic signature. Id. at 8. 5 B. The Parties’ Arguments. 6 Plaintiff contends she has no recollection of signing the ARC Agreement, but does appear to 7 recall the arbitration provision in the Acknowledgement. ECF No. 31 at 4-5. Importantly, Plaintiff 8 does not dispute the authenticity of her electronic signature on the ARC Agreement, which was 9 attested to by Defendants through the Declaration of Curt Shaner. Id. at 5. Plaintiff admits she did 10 not submit an opt out form contending this is because she was not aware of the ARC Agreement. 11 Id. 12 In sum, Plaintiff says the ARC Agreement (referred to by Plaintiff as “inoperable”) is 13 unenforceable because the Acknowledgement “conditioned any subsequent change of any 14 agreement between Plaintiff [and] Defendants, such as an agreement to arbitrate disputes, to only be 15 made by the President.” Id. at 7. Based on the terms in the Acknowledgment, and that the ARC 16 Agreement, supposedly, fails to comply with “the President-only authorization clause contained” in 17 the Acknowledgement, Plaintiff contends the ARC Agreement “is … inoperable on its face.” Id. at 18 8. 19 Plaintiff further argues that even if the ARC Agreement is “operable” it cannot be enforced 20 because it is procedurally and substantively unconscionable. Id. at 8-12. Intertwined in these 21 arguments, Plaintiff says the arbitration provision in the Acknowledgement is also unenforceable. 22 Unenforceability of the agreements variously arises from: (1) the electronic presentation of the 23 agreements; (2) no witness to Plaintiff’s review or signature; (3) the “red-herring” opt-out provision 24 in the ARC Agreement derived from, according to Plaintiff, her lack of recollection regarding 25 reviewing the Agreement that, in turn, renders the ARC Agreement illusory and, thus, leads back to 26 Plaintiff’s supposed continued obligation to arbitrate under the Acknowledgement; (4) the 27 Acknowledgement was one-sided; (5) Plaintiff was “forced” to sign the Acknowledgement in order 1 only to Plaintiff. Id. Plaintiff also argues the Acknowledgement and ARC Agreements require strict 2 confidentiality (id. at 10),2 and, Plaintiff takes issue with the fee shifting clause in the 3 Acknowledgement and ARC Agreement. ECF No. 31 at 11-12.3 4 Defendants argue the provision in the Acknowledgement that discusses modification 5 requiring presidential authority is limited to the subject matter of the paragraph in which that 6 language appears. ECF No. 34 at 10. That is, the modification to which paragraph 4 of the 7 Acknowledgement refers is limited to addressing at-will employment allowing termination of 8 employment with or without notice and at any time by either the employee or the employer. Id. 9 citing ECF No. 16-2 ¶ 4. Defendants’ Motion and Reply further argues the ARC Agreement is 10 applicable and enforceable based on its integration clause and that a prior Nevada Supreme Court 11 decision found the Agreement enforceable. ECF Nos. 16 at 2; 34 at 2-3. Defendants state the ARC 12 Agreement was not a condition of employment and is neither procedurally nor substantively 13 unconscionable, both of which must be present to undermine the validity of the Agreement. Id. 14 respectively at 6-7; 3-8. 15 II. Discussion 16 A. The Federal Arbitration Act and Nevada Law Favor Arbitration. 17 Nevada Supreme Court and U.S. District Court for the District of Nevada decisions recite 18 the same standard applicable to the preference for and enforceability of arbitration agreements. The 19 Federal Arbitration Act (“FAA”) states that a “written provision in … a contract evidencing a 20 transaction involving commerce to settle by arbitration … shall be valid, irrevocable, and 21 enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 22 9 U.S.C. § 2. “By its terms, the … [FAA] leaves no place for the exercise of discretion by a district 23 court, but instead mandates that district courts shall direct the parties to proceed to arbitration on 24
2 The Court found no confidentiality provision in the Acknowledgment pertaining to arbitration. ECF No. 31-1 25 at 4-5. In contrast, the ARC Agreement states “Except as may be permitted or required by law, as determined by the Arbitrator, neither a party nor an Arbitrator may disclose the existence, content, or results of any arbitration … without 26 the prior written consent of all parties.” ECF No. 16-2 at 6. 3 There is no fee shifting provision in the Acknowledgement (ECF No. 31-1); and, contrary to Plaintiff’s 27 contention, the ARC Agreement states “in all cases where required by law, the Company will pay the Arbitrator’s and 1 issues as to which an arbitration agreement has been signed.” Mallia v. Drybar Holdings, LLC, Case 2 No. 2:19-cv-00179-RFB-DJA, 2020 WL 1250817, at *2 (D. Nev. Mar. 16, 2020) citing Dean Witter 3 Reynolds, Inc. v. Byrd, 270 U.S. 213, 218 (1985). As explained, “[b]y its terms, the … [FAA] limits 4 the district court’s role to determining (1) whether the parties agreed to arbitrate, and, if so, (2) 5 whether the scope of that agreement to arbitrate encompasses the claims at issue.” Id. citing Nguyen 6 v. Barns & Noble Inc., 763 F.3d 1171, 1175 (9th Cir. 2014). Further, the FAA “establishes that, as 7 a matter of federal law, any doubts concerning the scope of arbitrable issues should be resolved in 8 favor of arbitration ….” Id. citing Moses H. Cone Mem’l Hosp. v. Mercury Cost. Corp., 460 U.S. 1, 9 24-25 (1983). The “[C]ourt has little discretion to deny an arbitration motion, since the … [FAA] 10 is phrased in mandatory terms.” Id. citing Republic of Nicar. v. Std. Fruit Co., 937 F.2d 469, 475 11 (9th Cir. 1991). 12 In Tallman v. Eighth Judicial Dist. Ct., 359 P.3d 113 (Nev. 2015), the Nevada Supreme Court 13 stated:
14 NRS 38.219(1) expresses Nevada’s fundamental policy favoring the enforceability of arbitration agreements. Similar to § 2 of the Federal Arbitration Act (FAA), 9 15 U.S.C. § 2 (2013), it provides that, “An agreement contained in a record to submit to arbitration any existing or subsequent controversy arising between the parties to 16 the agreement is valid, enforceable and irrevocable except ... upon a ground that exists at law or in equity for the revocation of a contract.” “Whether a dispute 17 arising under a contract is arbitrable is a matter of contract interpretation, which is a question of law that we review de novo.” … [State ex rel. Masto v. Second 18 Judicial Dist. Court, 199 P.3d 828, 832 (2009).] “As a matter of public policy, Nevada courts encourage arbitration and liberally construe arbitration clauses in 19 favor of granting arbitration.” Id. 20 B. The ARC Agreement is Enforceable and Applicable to this Dispute. 21 1. Plaintiff’s Lack of Memory. 22 The Court starts its analysis with consideration of whether Plaintiff’s lack of memory 23 regarding the ARC Agreement precludes its application to the present dispute. To this end, Plaintiff 24 does not dispute that she electronically signed the Acknowledgement, which preceded employment 25 by more than a month, in which arbitration is briefly discussed. ECF Nos. 31 at 4; 31-1 ¶ 14. 26 Plaintiff also does not dispute (although, she states she does not recall) that one day after accepting 27 employment she signed the ARC Agreement. ECF No. 31 at 4-5. Plaintiff admits she did not submit 1 A party’s signature on an arbitration agreement is presumptive evidence that an agreement 2 was formed given that a person who signs a contract is presumed to know its contents and assent to 3 the terms. Morales v. Rent-A-Center, Inc., 306 F.Supp.2d 175, 181 (D. Conn. 2003) citing Gruber 4 v. Louis Hornick & Co. Inc., Case No. 020 Civ. 5092, 2003 WL 21222541, at *2 (S.D.N.Y. May 23, 5 2003). As stated by the U.S. District Court for the District of Nevada, a party’s argument that she 6 “did not have specific knowledge of signing the particular arbitration agreement [at issue], and that 7 the contents of the arbitration agreement were not specifically pointed out to” her is ineffective 8 because “under Nevada law, one who signs an agreement is presumed to know the contents therein, 9 and … [when the party seeking to avoid the agreement] offers no evidence that Defendants procured 10 … [her] ‘eSign’ signature through fraud or another wrongful act,” the proper conclusion reached is 11 that the plaintiff consented to the agreement. Mallia, 2020 WL 1250817, at *3. See also Jaffey v. 12 Del Taco Rests., Inc., Case No. 2:17-CV-2600 JCM (PAL), 2018 WL 3997261, at *2 (D. Nev. Aug. 13 21, 2018) (finding lack of recall “insufficient to refute the existence of a signed arbitration 14 agreement”). When the above law is applied to the facts and circumstances presented here, the Court 15 finds Plaintiff signed the ARC Agreement, her e-signature is effective, there is no argument let alone 16 evidence of any wrongful act, Plaintiff is presumed to know the contents of the Agreement, and 17 Plaintiff consented to the terms therein.4 Given that Plaintiff does not dispute she electronically 18 signed the ARC Agreement, the lack of a witness, which is not required by any law the Court could 19 find, is of no import. 20 With respect to Plaintiff’s contention that her lack of recollection regarding the ARC 21 Agreement renders the contract illusory, she is wrong. Plainly stated Nevada law holds that a party 22 who signs (or esigns) an agreement, not shown to be procured by fraud or other wrongful act, is 23 presumed to know the contents of the contract and to be bound to the terms—even when there is no 24 recollection of signing or reviewing the agreement. Thus, a lack of recollection cannot effect a 25 finding that an agreement is “illusory.” 26
4 See Plaintiff’s Declaration (ECF No. 31-1), the uncontested Declaration of Curt Shaner (ECF No. 16-3), and 27 Plaintiff’s Opposition (ECF No. 31 at 5) stating: “Plaintiff, however, does not dispute the authenticity of the digital audit 1 Further, a promise is illusory when a contracting party’s obligation is purely optional. See 3 2 Williston on Contracts § 7:14 (4th ed. 2012). The Restatement (Second) of Contracts § 77 (Illusory 3 or Alternative Promises) states: “A promise or apparent promise is not consideration if by its terms 4 the promisor or purported promisor reserves a choice of alternative performances unless: (a) each of 5 the alternative performances would have been consideration if it alone had been bargained for; or 6 (b) one of the alternative performances would have been consideration and there is or appears to the 7 parties to be a substantial possibility that before the promisor exercises his choice events may 8 eliminate the alternatives which would not have been consideration.” (Cleaned up.) Hunting down 9 case law regarding illusory arbitration agreements, the Court found this: “a promise to arbitrate is 10 illusory and unenforceable if the contract permits one party to legitimately avoid its promise to 11 arbitrate, ‘such as by unilaterally amending or terminating the arbitration provision and completely 12 escaping arbitration.’” A-1 Freeman Moving & Storage LLC v. Ortiz Galindo, Case No. 08-23- 13 00001-CV, 2023 WL 5486236, at *3 (Tx. Ct. App. Aug. 23, 2023) quoting Royston, Rayzor, Vickery, 14 & Williams, LLP v. Lopez, 467 S.W.3d 494, 505 (Tex. 2015) (citing In re 24R, Inc., 324 S.W.3d 15 564, 567 (Tex. 2010); J.M. Davidson Inc. v. Webster, 128 S.W.3d 223, 236 (Tex. 2003). 16 The promises made in the ARC Agreement are mutual—that is, Defendants are obligated to 17 arbitrate all claims covered by the Agreement just as Plaintiff is obligated to arbitrate all covered 18 claims. ECF No. 16-2. There is no provision applicable solely to Plaintiff or Defendants except that 19 Defendants cannot opt out of the Agreement, while Plaintiff can do so. Id. ¶ 9. There is no provision 20 allowing Defendants to unilaterally change the terms of the ARC Agreement and Plaintiff does not 21 argue Defendants’ obligations are purely optional. ECF Nos. 16, 16-2 generally. Nor does Plaintiff 22 allege there was a lack of consideration for the Agreement. ECF No. 16, generally. In sum, the 23 Court finds no legal or factual basis to conclude the ARC Agreement is illusory. 24 2. Integration. 25 The Court next considers the absence of an integration clause in the Acknowledgement and 26 the presence of an integration clause in the ARC Agreement. The inclusion of an integration clause 27 in a document means the parties intended that document to be the “full and complete agreement” of 1 **2-3 (N.D. Cal. Mar. 20, 2020) (finding a mediation agreement with an integration clause 2 superseded an arbitration agreement lacking such a clause). “A written contract is considered 3 integrated when the parties intend it to constitute the complete and final expression of their 4 agreement. … When a contract lacks an express integration clause the district court must determine 5 whether the parties intended their agreement to be an integrated contract by reading the writing in 6 light of the surrounding circumstances.” Starter Corp. v. Converse, Inc., 170 F.3d 286, 295 (2nd 7 Cir. 1999) (internal citations and quote marks omitted). 8 The Court finds the presence of the integration clause in the post-employment ARC 9 Agreement, and the lack of an integration clause in the pre-employment Acknowledgement, supports 10 the conclusion that the parties intended the ARC Agreement to be the complete and final expression 11 of their agreement to arbitrate, and that the terms of the ARC Agreement are controlling. The 12 language in the ARC Agreement, entered after the Acknowledgement, makes clear that it is the full 13 and complete agreement relating to the formal resolution of employment related disputes. ECF No. 14 16-2 ¶ 10. The ARC Agreement was presented to Plaintiff the day after she accepted employment 15 again signaling the parties’ intent that the Agreement would apply to any covered claims going 16 forward especially given the far greater detail of the dispute resolution process to which the parties 17 were bound. Garcia, 2020 WL 13907337, at *2. 18 The ARC Agreement unquestionably applies to the dispute at issue (FLSA and wage-hour 19 under state law). Stating the obvious, the Acknowledgement, entered into pre-employment, contains 20 a single paragraph that fails to address the sum and substance of arbitration addressed in the ARC 21 Agreement. Compare ECF No. 31-1 and ECF No. 16-2. The integrated and thorough ARC 22 Agreement, which post-dates employment, includes an express opt-out provision, a non-retaliation 23 provision, how arbitrators are selected, how an arbitration will proceed, payment for the arbitration, 24 and the legal limitations on the applicability of the Agreement. ECF No. 16-2. In comparison, the 25 Acknowledgement is a one and one-half page document that dedicates one paragraph to arbitration. 26 ECF No. 31-1 ¶ 14. Plaintiff does not address the presence of the integration clause in the ARC 27 Agreement, the absence of such a clause in the Acknowledgement, or the depth of the ARC 1 Based on a review of the entirety of the circumstances surrounding the two agreements, the 2 Court finds the parties intended the ARC Agreement to be their integrated binding agreement 3 pertaining to alternative dispute resolution. 4 3. No Signature by the President on the ARC Agreement. 5 The Court finds the failure of the “President” to sign the ARC Agreement does not invalidate 6 the Agreement. First, the provision in which a signature by “President of the Company,” paragraph 7 4 of the Acknowledgement, is discrete and does not state or infer it is applicable to all other 8 provisions of the Acknowledgement. That is, paragraph 4 of the Acknowledgement pertains to at- 9 will employment and the parties’ mutual right to terminate the employment relationship at any time. 10 ECF No. 31-1 ¶ 4. The paragraph begins by explaining Plaintiff’s employment is at-will—she or 11 the employer may terminate her employment at any time and without notice or cause. Id. The 12 paragraph then states that Plaintiff “understand[s] that no department head or representative of the 13 Company, other than the President of the Company, has any authority to enter into any agreement, 14 oral or written, for employment for any specified period of time or to make any agreement or 15 assurances contrary to this policy.” Id. (emphasis added). Reading the plain language of the 16 Acknowledgement, it is clear and unambiguous that signature of the president is required if a term 17 of employment is offered other than one that is terminable without notice or cause. Nothing about 18 the construction of the paragraph or the Acknowledgement suggests a president’s signature is 19 required to modify any other term appearing in the Acknowledgement. Id. 20 Further, “[w]hile NRS 38.219(1) requires that the arbitration agreement be ‘contained in a 21 record,’ it does not require that the written record of the agreement to arbitrate be signed.” Tallman, 22 359 P.3d at 119 (internal citations omitted). Courts enforce arbitration agreements not signed by 23 employers when evidence establishes the employer’s intent to be bound by the agreement, which is 24 the case here. See Fiorentine v. Marvell Semiconductor Inc., Case No. 24-cv-01136-MMC, 2024 25 WL 3012805, at *3 (N.D. Cal. June 14, 2024) (applying California law, similar to NRS 38.219(1), 26 that does not require an arbitration agreement to be signed by both parties); Lara v. Onsite Health, 27 Inc., 896 F.Supp.2d 831, 844 (N.D. Cal. 2012); Hickerson v. Pool Corporation, Civil Action No. 1 in Sweeney v. Tractor Supply Co., 390 F.Supp.3d 1152, 1157 (N.D. Cal. 2019) (factors that indicate 2 employer’s intent to be bound by unsigned arbitration agreement)). Here, all facts before the Court 3 demonstrate that even if the president’s signature was for some reason required on the ARC 4 Agreement, the failure of that signature does not invalidate the Agreement as Defendants clearly 5 intended to be bound and have acted in accordance with that intent. Plaintiff’s argument that the 6 absence of the president’s signature on the ARC Agreement invalidates the ARC Agreement fails 7 under the law as applied to the facts of this case. 8 4. Substantive Unconscionability.5 9 i. The Valley Health decision. 10 Nevada law recognizes that in order for an arbitration agreement to be found unconscionable, 11 there must be a finding of procedural and substantive unconscionable. Valley Health Sys., LLC v. 12 Alexander, Case No. 84541, 2023 WL 1453227, at *1 (D. Nev. Jan. 12, 2023) (Unpub.) citing U.S. 13 Home Corp. v. Michael Ballesteros Tr., 415 P.3d 32, 40 (Nev. 2018). “The substantive element of 14 unconscionability focuses on the actual terms of the contract and assesses whether those terms are 15 overly harsh or one-sided.” Henderson v. Watson, Case No. 64545, 2015 WL 2092073, at *3 (Nev. 16 Apr. 29, 2015) (Table) (internal citation omitted). Here, the Court begins with the Nevada Supreme 17 Court decision in Valley Health because this decision, albeit unpublished, analyzed whether the same 18 ARC Agreement that is at issue in this case was substantively unconscionable. 2023 WL 1453227, 19 at *1. The Nevada Supreme Court found waiver of a jury trial, in the absence of “any other evidence 20 of substantive unconscionability … the ARC Agreement was not unconscionable ….” Id. However, 21 this does not end the Court’s analysis as other provisions are challenged in the present matter. 22 ii. Confidentiality. 23 Whether the confidentiality provision in the ARC Agreement is substantively 24 unconscionable is a close call. This provision is limited by language stating “[e]xcept as permitted 25 or required by law, as determined by the Arbitrator,” the parties and the arbitrator are to maintain 26 confidentiality of the “existence, content, … [and] results of any arbitration” engaged in by the
27 5 To the extent Plaintiff opposes Defendants’ Motion arguing the Acknowledgement is unconscionable, the Court 1 parties “without the prior written consent of all parties.” ECF No. 16-2 ¶ 8. As explained in Barnett 2 v. V.T. Motors LLC, “confidentiality provisions … are unconscionable ‘if they favor the employer, 3 if they are too broad, and if they essentially impose a gag order such that employees are ‘unable to 4 mitigate the advantages inherent in being a repeat player.’” Case No. CV-21-01195-PHX-SPL, 2021 5 WL 5759113, at *5 (D. Ariz. Dec. 3, 2021) (quoting Davis v. O’Melveny & Myers, 485 F.3d 1066, 6 1078 (9th Cir. 2007), overruled on other grounds in Ferguson v. Corinthian Colleges, Inc., 733 F.3d 7 928, 933 (9th Cir. 2013). Further, the court in Barnett noted a requirement that “anything and 8 everything pertaining to the arbitration remain confidential” was unconscionable because it was 9 “unfairly one-sided,” given that a defendant “would have knowledge of prior arbitrations in which 10 they were involved while … plaintiffs … would be kept in the dark.” Id. (internal citation omitted). 11 In Davis, the court found plaintiff showed the confidentiality “provision unfairly” benefitted 12 the employer who had “institutional knowledge of prior arbitrations” while “individual litigants … 13 are deprived from obtaining information regarding any prior arbitrations” rendering the employer 14 “the only party who would obtain any benefit from this provision without receiving any negative 15 impact in return.” Davis, 485 F.3d at 1079. However, the Court made clear that confidentiality 16 provisions (under California law) were not per se unconscionable; rather, “[t]he concern is … with 17 the scope of the language of the” dispute resolution program. Id. citing Cf. Zuver v. Airtouch 18 Commc’ns, Inc., 103 P.3d 753, 765 (Wash. 2004) (En Banc). 19 Six years later, in Kilgore v. Keybank, Nat. Ass’n, 718 F.3d 1052 (9th Cir. 2013) (en banc), 20 the Ninth Circuit was presented with an arbitration provision that impacted former students of a 21 failed flight training school who filed a putative class action against a bank that originated their 22 student loans as well as the loan servicer. Id. at 1055. The promissory note the students signed 23 contained an arbitration clause that included a confidentiality provision requiring both parties to 24 maintain the confidentiality of any claim they arbitrated. Id. at 1056; id. at 1064 (Pregerson, J., 25 dissenting). The court in Kilgore held: “Although we have found confidentiality provisions to be 26 substantively unconscionable when applied to a large class of customers, Ting v. AT&T, 319 F.3d 27 1126, 1151-52 (9th Cir. 2003), the small number of putative class members in this case 1 clause is a matter distinct from the enforceability of the arbitration clause in general. Plaintiffs are 2 free to argue during arbitration that the confidentiality clause is not enforceable.” Id. at 1059 n.9. 3 Here, of course, the number of future class members is unknown. Nonetheless, Plaintiff 4 argues the confidentiality provision effects a “total gag order” that would prevent her from 5 “discussing her arbitration with” the 17 individuals who have already opted into this matter, some 6 of whom are apparently witnesses in Plaintiff’s case. ECF No. 31 at 11. Plaintiff also argues the 7 confidentiality provision would prohibit the opt-ins from “using any arbitral decision that would 8 affect their claims for wages.” Id. 9 The number of current class members—17—is not large. More importantly, the language 10 granting the arbitrator the power to determine whether the existence, content, or results of any 11 arbitration must remain confidential also demonstrates the arbitrator has within his/her authority the 12 power to grant Plaintiff the ability to discuss the existence and contents of an arbitration with others 13 (opt ins or third parties) who will serve as witnesses. Like Kilgore, the enforceability of this 14 confidentiality provision is challengeable by Plaintiff during the arbitration. Finally, the language 15 at issue is distinguishable from other provisions where blanket, broad confidentiality provisions are 16 included in an agreement and are not subject to review by the arbitrator. 17 The Court also notes the discussion in Mikhak v. Univ. of Phoenix, Case No. C16-00901CRB, 18 2016 WL 3401763, at **12-13 (N.D. Cal. June 12, 2016). In Mikhak, the court summarized the 19 holdings in Davis, Ting, and Mohamed v. Uber Tech., Inc., 109 F. Supp. 3d 1185 (N.D. Cal. 2015), 20 affirmed in part and reversed in part on other grounds by Mohamed v. Uber Technologies, Inc., 848 21 F.3d 1201 (9th Cir. 2016)). Id. Finding the arbitration provision in Mohamed gave the arbitrator 22 “authority to determine that disclosure is permitted or required by law,” the Mikhak court found the 23 plaintiff’s argument in support of unconscionability was unpersuasive because she “did not argue 24 that the confidentiality agreement would handicap her ability to secure a fair resolution to her 25 dispute.” Id. at *13 (internal citation omitted). Like the plaintiff in Mikhak, Plaintiff in this matter 26 does not say she would be handicapped by being prohibited from using arbitral decision in her case, 27 but instead that the “opt-in plaintiffs … [would] potentially” be hindered in “their claims for wages.” 1 only to redress or otherwise to protect against injury to the complaining party, even though the 2 court’s judgment may benefit others collaterally.” Warth v. Seldin, 422 U.S. 490, 490 (1975). 3 Therefore, a litigant may invoke only his or her “own legal rights or interests, and cannot rest his [or 4 her] claim to relief on the legal rights or interests of third parties ….” Id. (internal citation omitted). 5 The Court finds this case is similar to Mikhak in which the confidentiality provision was not 6 unconscionable as applied to the case before the Court. The ARC Agreement, as applied to Plaintiff 7 based on the arguments she makes, will not prevent from discussing the existence or content of her 8 arbitration with witnesses (whether current opt-ins or third party strangers) upon the arbitrator’s 9 determination that such discussions are permissible under law. Plaintiff is free to make this argument 10 during arbitration. The Court reasonably infers that like any confidential proceeding, such as one 11 involving trade secrets, witnesses may be informed of facts and issues surrounding the dispute when 12 testifying as percipient witnesses. To the extent the outcome of other arbitrations are relevant to the 13 issues in dispute in Plaintiff’s arbitration, the arbitrator will also be free to order the disclosure of 14 such information. Nonetheless, and despite the similarities to Mikhak, the Court finds whether the 15 language of the confidentiality provision is substantively unconscionable too close call to call. 16 Importantly, however, the Court notes that even if the confidentiality provision is substantively 17 unconscionable, in the absence of procedural unconscionability, the agreement remains enforceable. 18 Henderson, 2015 WL 2092073, at *3 (the presence of the confidentiality provision alone is not 19 sufficient to establish the high degree of substantive unconscionability necessary to render the 20 arbitration article unenforceable). Further, if this provision is unconscionable, but severable, the 21 ARC Agreement remains enforceable. Cox v. Station Casinos, LLC, Case No. 2:14-cv-638-JCM- 22 VCF, 2014 WL 3747605, at *5 (D. Nev. June 24, 2014) (internal citation omitted). 23 iii. Fee/Cost Shifting. 24 The fee/cost shifting provision of the Arc Agreement is the only other basis upon which 25 Plaintiff argues this Agreement is unconscionable. ECF No. 31 at 10-12. Fee and cost shifting has 26 previously been treated by the Nevada Supreme Court as an issue of substantive unconscionability. 27 See Henderson, 2015 WL 2092073, at **1, 3 (in which the court treated a provision relating to 1 Here, the Court finds the fee and cost shifting provision does not establish substantive 2 unconscionability. The law on this issue is clear. When an employer imposes arbitration on an 3 employee as a condition of employment, the arbitration agreement cannot impose on the employee 4 any expense the employee would not bear if she brought her claim in court. Pokorny v. Quixtar, 5 Inc., 601 F.3d 987, 1004 (9th Cir. 2010). At the beginning of paragraph 9 of the ARC Agreement, 6 its states in bold: “Arbitration is not a mandatory condition of Employee’s employment ….” 7 ECF No. 16-2 ¶ 9. The Agreement thereafter provides an opt-out procedure and a non-retaliation 8 provision. Id. ¶¶ 9-10. Moreover, the Nevada Supreme Court notes the Agreement’s bolded opt- 9 out provision is written “in relatively layperson’s terms.” Valley Health, 2023 WL 1453227, at *2. 10 Thus, the ARC Agreement is not a condition of employment and Ninth Circuit case law holding an 11 employer must pay all expenses for arbitration when arbitration is a condition of employment does 12 not apply in this case. 13 Plaintiff nevertheless argues the fee and cost shifting provision of the ARC Agreement 14 renders her “responsible for paying half of the arbitration fees and costs, including the fees of the 15 arbitrator.” ECF No. 31 at 11. Plaintiff ignores language in the Agreement stating “in all cases 16 where required by law, the Company will pay the Arbitrator’s and arbitration fees.” ECF No. 16-2 17 ¶ 7. Only when law does not require Defendants to pay such fees, are they to be apportioned. Id. 18 The Agreement also makes clear that while Plaintiff will initially pay her own attorney fees, these 19 expenses are subject to any remedy the arbitrator determines Plaintiff is entitled to as a matter of 20 law. Id. The Agreement also includes notice that an employee has a right to consult an attorney 21 before signing. Id. ¶ 9. 22 The Court finds that the fee/cost shifting provisions similar to the one at bar have been held 23 not to establish substantive unconscionability. Sloan v. Ladah Law Firm PLLC, Case No. 2:19-cv- 24 01343-JAD-VCF, 2020 WL 5819771, at *2 (D. Nev. Aug. 31, 2020); Ashbey v. Archstone Property 25 Management, Inc., 612 Fed. App. 430, 431-32 (9th Cir. 2015) (applying California law). In Scott- 26 Ortiz v. CBRE Incorporated, 501 F.Supp.3d 717, 727 (D. Ariz. 2020), the Court considered a 27 provision stating “each party shall pay for its own costs and attorneys’ fees, if any, except as 1 inconsistency “with the federal civil rights statute, 42 U.S.C. § 1988(b), which provides that 2 prevailing parties may recover their fees and costs.” Id. (internal quote marks omitted). The court 3 disagreed finding: “As an initial matter, it’s not clear that the challenged clause would have any 4 impact on Scott-Ortiz’s ability, should he prevail during the arbitration proceeding, to seek recovery 5 of his fees and costs. Although the clause creates a default rule that ‘each party shall pay for its own 6 costs and attorneys’ fees,’ it also clarifies that this default rule is subject to an exception: ‘except as 7 otherwise required by law.’” Id. (an internal bracket and capitalization removed). 8 The Court reviewed D.R. Horton, Inc. v. Green, 96 P.3d 1159 (Nev. 2004), cited by both 9 parties. This case did not involve an employment relationship, but did involve an arbitration 10 provision the Nevada Supreme Court found difficult to read, written in an extremely small font, and 11 appearing on the back page of the general agreement at issue with signature lines on the front page. 12 Id. at 1164. These findings are contrary to the finding in Valley Health in which the Arc Agreement 13 at issue in this case was considered by the Nevada Supreme Court, which concluded the terms of the 14 Agreement to be “clear,” “written in relatively layperson’s terms,” provided “the right to consult 15 counsel,” and the “right not to be retaliated against for opting out” (2023 WL 1453227, at *2) 16 strongly indicating (albeit not plainly stating) the Agreement is conscionable.6 17 After considering all of the above, the Court finds the weight of the law supports the 18 conclusion that the language in paragraph 7 of the ARC Agreement is not substantively 19 unconscionable. However, because this provision and the confidentiality provisions are heavily 20 contested, the Court considers the issue of severability. 21 iv. Severability. 22 Paragraph 10 of the ARC Agreement states, in pertinent part: “Except as stated in paragraph 23 6 above, in the event any portion of this Agreement is deemed unenforceable, the remainder of this 24 Agreement will be enforceable.” ECF No. 16-2 ¶ 10. In a single, short paragraph, Plaintiff argues 25 severability is not available because the Acknowledgement does not have a severability clause and 26 the “Court [would have] to completely re-write the arbitration agreements by molding the … 27 1 [Acknowledgement] into the ARC Agreement and remov[e] … all the unconscionable provisions 2 contained within both agreements.” ECF No. 31 at 13. This makes no sense. If the ARC Agreement 3 is an integrated agreement containing a severability provision, then the Court may sever 4 unconscionable provisions leaving a fully enforceable agreement. 5 Where parties have entered into two contracts covering the same subject matter, the latter 6 contract supersedes the former as to any inconsistent provisions. See NLRB v. Int’l Union of 7 Operating Eng’rs, 323 F.2d 545, 548 (9th Cir. 1963) (“[S]ince the contracts were entered into by 8 the same parties and cover the same subject matter, it is a well settled principle of law that the later 9 contract supersedes the former contract as to inconsistent provisions.”) (internal citation omitted). 10 See Michalowski v. Second Judicial Court, ex rel. County of Washoe, 2015 WL 7341447, at *2 (Nev. 11 2015) (Table) (Unpub.)7 (where an agreement may contain an unconscionable provision, 12 severability prevents invalidity of the remainder of the agreement furthering “Nevada’s general 13 public policy favoring enforcement of arbitration agreements”) (citation omitted). 14 Here, even assuming, arguendo, the disputed provisions relating to confidentiality and fee 15 shifting are substantively unconscionable, “the severability clause preserves the parties’ agreement 16 to arbitrate because the disputed provisions are collateral to the [remaining enforceable] clause[s] 17 compelling arbitration.” Station Casinos, 2014 WL 3747605, at *5. That is, even assuming the 18 fee/cost shifting and confidentiality provisions are impermissible and must be severed, these 19 provisions do not fundamentally change the agreement to arbitrate Plaintiff’s claims that are covered 20 by the ARC Agreement. Ball v. Skillz, Inc., Case No. 2:20-cv-00888-JAD-BNW, 2020 WL 21 6685514, at *4 (D. Nev. Nov. 12, 2020) (“the provision splitting fees is collateral to the clause 22 compelling arbitration”); Barnett v. V.T. Motors LLC, Case No. CV-21-01195-PHX-SPL, 2021 WL 23 5759113, at *4 (D. Ariz. Dec. 3, 2021) (“where the arbitration provision also contain[s] … a 24 severability clause, severing the confidentiality clause and otherwise enforcing the agreement is 25 appropriate and consistent with the FAA and Arizona public policy favoring arbitration.”). 26 Under the circumstances here, the Court finds the severability clause, when employed to 27 eliminate any substantive unconscionability (as discussed below), renders the ARC Agreement the 1 full and final, enforceable agreement of the parties. Pruter v. Anthem Country Club, Inc., Case No. 2 2:13-cv-1028-GMN-PAL, 2013 WL 5954817, at *4 (D. Nev. Nov. 5, 2013). The Acknowledgment 3 need not be molded into the ARC Agreement requiring rewriting the arbitration agreement as 4 Plaintiff contends. And, in the absence of substantive unconscionability, the Court need not consider 5 procedural unconscionability as both must be present to void the arbitration agreement.
6 5. The Court Enforces the ARC Agreement, Severing the Confidentiality Provision, but not Severing the Fee/Cost Shifting Provision. 7 8 After considering all of the above, the Court finds severing the confidentiality provision in 9 paragraph 8 of the Arc Agreement (ECF No. 16-2 ¶ 8) is appropriate as the language is such that the 10 potential for substantive disadvantage to Plaintiff should not be risked. In contrast, the Court finds 11 that entering into the ARC Agreement is not a condition of employment. Id. ¶ 9 (“[a]rbitration is 12 not a mandatory condition of Employee’s employment”) (emphasis in original). With this 13 finding, supported by well settled law applied to the plain language of the Agreement, and case law 14 interpreting similar fee and cost provisions, the Court finds the fee/cost shifting provision 15 conscionable and, therefore, does not sever this provision. The ARC Agreement is enforceable as 16 stated. 17 C. An Award of Fees is Denied. 18 While the Court has the authority to award attorney’s fees under NRS 18.010, the Court finds 19 the considerations identified in subsection 2(b) are not met. 20 III. Order 21 IT IS HEREBY ORDERED that Defendants’ Motion to Compel Arbitration (ECF No. 16) 22 is GRANTED. 23 IT IS FURTHER ORDERED that Plaintiff’s Motion for Circulation of Notice (ECF No. 10) 24 is DENIED. 25 Dated this 4th day of March, 2025. 26