United States District Court, E.D. Michigan, Southern Division
ORDER GRANTING DEFENDANT'S MOTION TO DISMISS
Victoria A. Roberts United States District Judge
Crystal Hermiz (“Hermiz”) began her employment
with Credit Acceptance Corporation (“CAC”), she
signed an Agreement to arbitrate all employment-related
does not dispute that she signed the Agreement, and she
acknowledges that she read the Alternative Dispute Resolution
Policies and Procedures. The Policies and Procedures - not
challenged by Hermiz - contain a clause that delegates to the
jurisdiction to hear and resolve any and all claims covered
by this ADR Policy and Procedure, including … disputes
relating to the interpretation, applicability, or formation
of this Agreement … no court or agency - whether
federal, state, local or otherwise - shall have any
jurisdiction to hear or resolve any claims.” Hermiz was
fired a month after she requested Family Medical Leave due to
her pregnancy. She filed a lawsuit; CAC seeks its dismissal
and demands arbitration.
contends that the Agreement in its entirety is unconscionable
because it limits discovery to one deposition and requires
the parties to equally split arbitrator fees. Because the law
is clear that “attacks on the validity of an entire
contract, as distinct from attacks aimed at the arbitration
clause, are within the arbitrator's ken, ”
Preston v. Ferrer, 552 U.S. 346, 353 (2008), the
Court GRANTS CAC's motion. II.
ANALYSIS The Federal Arbitration Act
(“FAA”), 9 U.S. § 1 et seq., establishes a
fundamental principle to encourage arbitration as an
alternative to litigation. Under § 2 of the FAA,
arbitration agreements are contracts which may be invalidated
for fraud, duress, or unconscionability.
is no question that the parties agreed to arbitrate. However,
Hermiz says the Agreement is unconscionable because of the
limited discovery allowed and the fee-splitting provision.
Supreme Court resolved this very dispute in Rent-A-Ctr.,
W., Inc. v. Jackson, 561 U.S. 63 (2010). In
Rent-A-Ctr, an arbitration agreement required the
parties to arbitrate all employment disputes. The agreement
also contained a delegation clause that gave “the
arbitrator, and not any federal, state, or local court
… exclusive authority to resolve any dispute relating
to the interpretation, applicability, enforceability or
formation” of the arbitration agreement. Id.
561 U.S. at 66. This clause is almost identical to the
delegation clause in the Agreement.
Rent-A-Ctr Court held that “unless the
employee challenges the delegation provision specifically,
[the Court] must enforce [the provision] - leaving any
challenges to the validity of the agreement as a whole for
the arbitrator.” Id. at 72.
argues that limiting discovery makes it difficult to litigate
her discrimination claim. She also says the fee splitting
provision makes it too expensive for her to litigate. She
makes no claim that either provision hinders her ability to
prove the Agreement is void and unenforceable; she does not
challenge the delegation clause.
the clear holding of Rent-A-Ctr, Hermiz relies on
Walker v. Ryan's Family Steak Houses, Inc., 400
F.3d 370, 387-99 (6th Cir. 2005) to argue that in Michigan,
an arbitration agreement that unreasonably limits discovery
to one deposition is unconscionable.
reliance is misplaced; Walker addressed the
unconscionability of discovery limitations when an arbitrator
with a clear bias for the employer - makes discovery
also involved an arbitrable employment dispute. The
Plaintiffs signed an arbitration agreement that limited
discovery to one deposition. The Agreement said additional
depositions were “not encouraged and shall be granted
[at the discretion of the arbitrator] in extraordinary fact
situations only for good cause shown.” The arbitrator
in that case was Employment Dispute Services, Inc. - which
the Court found to be biased in favor of the employer.
Id. 400 F.3d at 387.
Court held that “the limited discovery, controlled by a
potentially biased arbitration panel, … creates the
unfairness to claimants.” The potential for bias made
the agreement ...