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Hoober v. Movement Mortgage LLC

United States District Court, W.D. Washington, Tacoma

May 23, 2019

TIFFNEY HOOBER and DAVID MORDUE, individually, and on behalf of others similarly situated, Plaintiffs,
MOVEMENT MORTGAGE, LLC, a limited liability company, and DOES 1 through 50, Inclusive, Defendants.



         This matter comes before the Court on Defendant Movement Mortgage, LLC's (“Movement”) motion to compel arbitration on an individual basis, dismiss class claims, and stay proceedings. Dkt. 7. The Court has considered the pleadings filed in support of and in opposition to the motion and the remainder of the file and hereby grants the motion for the reasons stated herein.


         Movement is a mortgage lender headquartered in Indian Land, South Carolina, which employs over 4, 000 people around the United States. Dkt. 1, ¶ 4. Movement employed Plaintiffs Tiffney Hoober (“Hoober”) in Tacoma, Washington as a mortgage loan officer from November 2016 through September 2017, and David Mordue (“Mordue”) (collectively, “Plaintiffs”) in Kennewick, Washington from March 2018 through September 2018. Id. ¶¶ 2-3.[1]Hoober and Mordue are putative class representatives seeking unpaid wages for themselves and on behalf of a putative class of all other Movement employees paid on commission in Washington between 2015 and 2018 (“Class Members”). Id. ¶ 1. Hoober and Mordue each signed a Movement Arbitration Agreement as part of their hiring process.[2]

         Plaintiffs filed their complaint on December 7, 2018, alleging Movement violated Washington law by failing to pay Plaintiffs or Class Members for time spent performing non-sales tasks or for rest breaks, failing to pay overtime, failing to pay for missed meal breaks, and failure to pay all wages due at pay periods and at termination. Id. ¶¶ 8-16. On January 28, 2019, Movement filed the instant motion to compel arbitration, dismiss class claims, and stay the proceedings. Dkt. 7. On March 4, 2019, Plaintiffs responded. Dkt. 14. On March 8, 2019, Movement replied. Dkt. 22.


         A. The Federal Arbitration Act

         The Federal Arbitration Act, 9 U.S.C. § 1 et seq. (“FAA”) makes agreements to arbitrate “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. The FAA supports a liberal policy favoring arbitration and reinforces the “fundamental principle that arbitration is a matter of contract.” AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 336 (2011). The FAA requires courts to “rigorously enforce” agreements to arbitrate, Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626 (1985), to ensure that private contractual provisions “are enforced according to their terms.” Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 559 U.S. 662, 684 (2010) (quoting Volt Info. Sciences, Inc. v. Bd. of Trs. of Leland Stanford Junior Univ., 489 U.S. 468, 479 (1989)).

         On review of a motion to compel arbitration, the court's role is limited to determining (1) whether the parties entered into a valid agreement to arbitrate and if so (2) whether the present claims fall within the scope of that agreement. Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000). The party seeking to compel arbitration bears the burden of proof on these questions. Ashbey v. Archstone Prop. Mgmt., Inc., 785 F.3d 1320, 1323 (9th Cir. 2015) (citing Cox v. Ocean View Hotel Corp., 533 F.3d 1114, 1119 (9th Cir. 2008)). The FAA requires courts to stay proceedings when an issue before the court can be referred to arbitration. 9 U.S.C. § 3.

         1. Scope of the Arbitration Agreement

         In determining whether to compel arbitration, the Court must determine whether the dispute “falls within the scope of the parties' agreement to arbitrate.” Chiron Corp., 207 F.3d at 1130. Movement argues that the agreements “specifically provide that they cover ‘any claims or controversies during or following [] employment,' and specifically cover claims for wages, other compensation due, penalties, and claims under state wage and hour laws.” Dkt. 7 at 10.[3] Section 4 of the Hoober and Mordue Agreements, titled “Claims Subject to Arbitration” refers to employment-based claims like wrongful termination, breach of contract, breach of duty, and disclosure of trade secrets. Dkts. 8-1, 8-2. Movement makes specific reference only to Plaintiffs' Washington law claims as being with the scope of the agreement. Dkt. 7 at 7. Plaintiffs do not dispute whether their claims fall within the scope of the agreements and rely on their argument that the entirety of the agreements to arbitrate are invalid because unconscionability permeates the agreements. Dkt. 14 at 21-22. Therefore, Plaintiffs appear to concede that the merits of their claims fall within the scope of the agreements to arbitrate.

         2. Valid Agreement to Arbitrate

         Once a court establishes that a claim is within the scope of an arbitration agreement, the agreement is “valid, irrevocable, and enforceable, save upon such grounds as exist in law or in equity for the revocation of any contract.” 9 U.S.C. § 2.

         To determine whether the parties agreed to arbitrate, courts apply ordinary state-law contract principles. First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995). In Washington, “[t]he role of the court is to determine the mutual intentions of the contracting parties according to the reasonable meaning of their words and acts.” Fisher Props., Inc. v. Arden-Mayfair, Inc., 106 Wn.2d 826, 837 (1986). Notwithstanding the FAA's presumption in favor of arbitrability, a court may consider generally applicable state law contract defenses-e.g., fraud, unconscionability, and duress-in determining whether an arbitration provision is valid. See 9 U.S.C. § 2; Rent-a-Center, West, Inc. v. Jackson, 561 U.S. 63, 68 (2010).

         Plaintiffs argue that the agreements to arbitrate are unenforceable because they are both procedurally and substantively unconscionable. This argument requires the Court to make a preliminary decision whether Plaintiffs' challenges to enforcing the agreements should be decided by the Court or by the arbitrator. Cox, 533 F.3d at 1119. While the Supreme Court has explained that “unless the challenge is to the arbitration clause itself, the issue of the contract's validity is considered by the arbitrator in the first instance, ” Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 446 (2006), in resisting the motion to compel, Plaintiffs do challenge the arbitration agreement itself. Dkt. 14. When the challenge is to the arbitration clause itself, the court's duty to evaluate it applies even when substantive state law requires the court to consider “the circumstances surrounding the making of the entire agreement.” Nagrampa v. MailCoups, Inc., 469 F.3d 1257, 1264 (9th Cir. 2006). “In sum, our case law makes clear that courts properly exercise jurisdiction over claims raising (1) defenses existing at law or in equity for the revocation of (2) the arbitration clause itself.” Cox, 533 F.3d at 1120.

         “In Washington, either substantive or procedural unconscionability is sufficient to void a contract.” Gandee v. LDL Freedom Enterprises, Inc., 176 Wn.2d 598, 603 (2013) (citing Alder v. Fred Lind Manor, 153 Wn.2d 331, 347 (2004) (en banc)). “Severance is the usual remedy for substantively unconscionable terms, but where such terms ‘pervade' an arbitration agreement, [Washington courts] ‘refuse to sever those provisions and declare the entire agreement void.'” Gandee, 176 Wn.2d at 603 (quoting Alder, 153 Wn.2d at 358). When a court finds unconscionable provisions within an arbitration provision, “[s]uch unenforceable provisions may . . . be severed from any valid and enforceable provisions, even those also contained within the arbitration provision.” Nagrampa, 469 F.3d at 1265. Therefore, if the Court finds unconscionable provisions pervade the agreements to arbitrate, it will declare the agreements to arbitrate void. Conversely, if the Court finds unenforceable provisions may be severed from the agreements to arbitrate, it will do so and uphold the remainder of the agreements.

         a. Procedural Unconscionability

         Procedural unconscionability refers to “impropriety during the formation of the contract.” Nelson v. McGoldrick, 127 Wn.2d 124, 131 (1995). Washington courts evaluating the circumstances surrounding an agreement to arbitrate to determine whether the signer lacked meaningful choice consider (1) the way in which the contract was entered, (2) whether the signer had a reasonable opportunity to understand the terms of the contract, and (3) determine whether the important terms were “‘hidden in a maze of fine print.'” Alder, 153 Wn.2d at 347 (quoting Schroeder v. Fageol Motors, Inc., 86 Wn.2d 256, 260 (1975)). “The burden of demonstrating that an arbitration agreement is not enforceable is on the party opposing the arbitration.” Romney v. Franciscan Med. Grp., 186 Wn.App. 728, 735 (2015), review denied, 184 Wn.2d 1004.

At minimum, an employee who asserts an arbitration agreement is procedurally unconscionable must show some evidence that the employer refused to respond to her questions or concerns, placed undue pressure on her to sign the agreement without providing her with a reasonable opportunity to consider its terms, and/or that the terms of the agreement ...

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