United States District Court, E.D. Pennsylvania
February 6, 2004.
ABRAHAM DIAZ, et al.
RENT-A-CENTER, INC., et al
The opinion of the court was delivered by: JACOB HART, Magistrate Judge
MEMORANDUM AND ORDER
The current flurry of motions in this Title VII employment
discrimination case revolve around arbitration agreements signed by many
of the Plaintiffs and proposed Plaintiffs.*fn1 Currently pending are the
Plaintiffs' Motion for Leave to Amend the Complaint, the response, in
which the Defendants oppose inclusion of several of the proposed
Plaintiffs, Defendants' Motion to Dismiss certain original Plaintiffs,
and several Supplemental and Reply Memoranda. On December 11, 2003, the
Court directed the parties to conduct discovery on the relevant issues
and we are now in receipt of the parties' findings.
The Defendants contend that the Plaintiffs and proposed Plaintiffs who
signed arbitration agreements (hereinafter "the Arbitration Plaintiffs")
should be compelled to seek redress through the processes outlined in the
Mutual Agreements to Arbitrate.*fn2 Although the Plaintiffs
acknowledge the "liberal federal policy favoring arbitration agreements,"
see Plaintiffs' Memorandum in Response, at 3 (quoting Moses H. Cone Mem'l
Hosp. v. Mercury Const. Corp., 460 U.S. 1, 24 (1983)), the Plaintiffs
argue that the arbitration agreements are not enforceable because they
were the result of fraud and/or duress. Plaintiffs' Memorandum in
Response, at 4.
As both sides acknowledge, there is a strong presumption in favor of
arbitration agreements. Section 2 of the Federal Arbitration Act,
("FAA"), provides that an arbitration agreement subject to the FAA "shall
be valid, irrevocable, and enforceable, save upon such grounds as exist
at law or in equity for the revocation of any contract." 9 U.S.C. § 2. In
considering a motion to compel arbitration, which is essentially the
issue here, the federal court must determine if a valid agreement to
arbitrate exists and if the specific dispute falls within the scope of
that agreement. Paine Webber Inc. v. Hartmann, 921 F.2d 507, 511 (3d
Cir. 1990). Since there is no dispute that the ultimate issue of alleged
discrimination falls within the arbitration agreement,*fn3 we need only
focus on the validity of the arbitration agreement, itself.
The Arbitration Plaintiffs contend that the arbitration agreements are
not valid because the agreements were the products of fraud or duress.
Relying on the deposition testimony, the Plaintiffs first claim that the
arbitration agreements were the product of fraud. Fraud requires some
sort of misrepresentation. See Dilworth Paxson. LLP v. Asensio,
2003 WL 21076984 *4 (E.D. Pa. May 5, 2003)(fraudulent inducement requires
showing that the other party to the contract made factual
misrepresentations that were material to the transaction); 1726 Cherry
Street Partnership v. Bell Atlantic Properties. Inc., 439 Pa.Super. 141,
147 (1995)(fraud in the execution occurs when a party is defrauded into
believing that terms are contained in the agreement when they are not).
Here, many of the Arbitration Plaintiffs admit that no representations
were made concerning the papers they were signing. With respect to those
that received some sort of explanation about the agreement, although
incomplete, the explanations did not misrepresent the terms of the
Several of the Arbitration Plaintiffs (Jesse Tracy, Valentin Rivera,
Luis Perez, Rickey Brown) stated that they had read and understood the
arbitration agreements. Clearly, no fraud has been alleged by these
Plaintiffs, nor could it be proven. See Deposition of Tracy, at 14-15;
Rivera, at 16-17; Perez, at 33; Brown, at 21-22.*fn4 The next group of
Arbitration Plaintiffs (Edward Jackson, Javier Cordero, Bobby Maldonado,
Victor Lewis-El, Christian Fernandez) stated that they did not read the
Arbitration Agreement. However, they also admitted that they did not
request, nor did they receive, any information about the agreement. See
Deposition of Jackson, at 19; Cordero, at 38; Maldonado, at 16; Lewis-El, at
17; Fernandez, at 16-17. These Plaintiffs cannot establish any fraud
because the defendants made no representations, fraudulent or otherwise,
regarding the arbitration agreement. Timothy White testified that he did
not have a clear memory about signing the arbitration agreement.
However, he did state that he did not ask any questions about it and no
one offered any explanations. See White Deposition, at 27. Again,
since no representations were made by the Defendants, this Plaintiff
cannot establish fraud.
Four of the Arbitration Plaintiffs testified that they were offered
explanations of the Arbitration Agreement before signing it. Samuel
Cantres stated that his store manager told him that the agreement meant
that he could not sue Rent-a-Center for any time that might be owed him.
See Cantres Deposition, at 28. Miguel Justiano testified that he was told
he needed to sign the paperwork, including the Arbitration Agreement, to
get his job back. He didn't ask any questions about it. See Justiano
Deposition, at 11. Timothy Goode testified that Rodney James gave him the
paperwork to sign. He did not explain anything about the Arbitration
Agreement. He just said to sign it if he wanted his check. See Goode
Deposition, at 19. William Bristol stated that his store manager gave him
a group of documents to sign on his first day of work. According to Mr.
Bristol, he was told "everything that [you are] signing, it's just
standard just to make sure that [you] can work and drive and basically
move stuff around and basically touch anything that belongs to
Rent-A-Center." Bristol Deposition, at 38.
The explanations offered by the Defendants cannot be considered
misrepresentations. The agreement did limit the Plaintiffs' ability to
sue as Mr. Cantres was informed. The explanation offered to Mr. Bristol
was more general. However, he was referring to all the employment
paperwork that he was given to sign on his first day of work, not just the
arbitration agreement. See Brisol Deposition, at 37-38. None of these
Plaintiffs questioned the Defendants about the language or their
understanding of the agreement. No misrepresentations were made upon
which the Plaintiffs relied. Hence, the Plaintiffs have not established
any justification for the court to void the arbitration agreements. In
short, the Plaintiffs have failed to explain their failure to exercise
"the most basic protection against fraud available: reading the
before signing it." Briskin v. Midtown Realty Corp., 1994 WL 1251162
(Pa.Com.Pl. 1988)(citing Bardwell v. The Willis Co., 375 Pa. 503
The Plaintiffs next argue that the Plaintiffs and Defendant, as
employee and employer were in a confidential relationship, excusing the
Plaintiffs from reading the documents they were signing. Although the
state courts have recognized a "confidential relationship," requiring one
party to act with the utmost good faith for the benefit of the other party
in the areas of fiduciaries and estates, see Rebidas v. Murasko, 450
Pa.Super. 546 (1996), we find no precedent to extend this protection to
With respect to Victor Lewis-El, the Plaintiffs argue that the court
should void the Arbitration Agreement because he reserved his rights
under Section 1-207 of the Uniform Commercial Code. During his
deposition, Mr. Lewis-El explained that he wrote "UCC 1-207" next to his
signature in order to secure his rights.*fn5 The Plaintiffs argue that
this was sufficient to void the arbitration agreement. We disagree. The
contract at issue in this case is the arbitration agreement in an
employment contract. Such a contract is not covered by the UCC. See
DiMario v. Coppola, 10 F. Supp.2d 213, 223 (E.D.N.Y. 1998)(the UCC has no
bearing on an employment contract).
Finally, although not discussed in the Supplemental Filing, the
Plaintiffs had also alleged that the arbitration agreements should be
voided because they were signed under duress. Duress is defined as "that
degree of restraint or danger, [whether] actually inflicted or threatened
impending, which is sufficient in severity or apprehension to overcome
the mind of a person of ordinary firmness." Hamilton v. Hamilton, 404
Pa.Super. 533, 536 (1991)(citing Carrier v. William Penn Broadcasting
Co., 426 Pa. 427, 431 (1967)). Although the Plaintiffs might claim that
the allure of having a job somehow put them under duress, there is no
evidence that any of them even asked not to sign the arbitration
agreement, let alone were threatened with termination if they did not.
Moreover, even if the Plaintiffs had been denied employment, they were
free to seek employment elsewhere. See Dentsply International. Inc. v.
Benton, 965 F. Supp. 574, 579 (M.D. Pa. 1997)(court enforced the
provisions of an employment contract finding that where signing the
agreement was a condition of employment, the plaintiffs were free to seek
employment elsewhere). The facts alleged by the Arbitration Plaintiffs
simply do not amount to duress.
An appropriate Order follows.
AND NOW, this 6th day of February, 2004, upon consideration of the
Plaintiffs' Motion to Amend the Complaint, the Defendants' response, the
Motion to Strike certain original Plaintiffs and proposed Plaintiffs' in
the Amendment, and the plethora of supplemental filings by both sides, IT
IS HEREBY ORDERED that the Plaintiff's Motion to Amend is GRANTED IN PART
and DENIED IN PART. The Defendants' Motion to Strike the Plaintiffs and
Proposed Plaintiffs who signed Arbitration Agreements is GRANTED. The
Arbitration Plaintiffs must submit their claims to arbitration. The
claims of Abraham Diaz, Luis Antonio Colon, Carlos Ortiz, Samuel Rivera,
and Rodney Howard shall proceed in this forum pursuant to the Court's
scheduling order of September 25, 2003.