IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF HAWAII SOUTHERN GLAZER’S WINE AND SPIRITS, LLC, Petitioner, vs. JANET DENYER, Respondent. CIV. NO. 17-00407 JMS-RLP ORDER GRANTING PETITION TO COMPEL ARBITRATION ORDER GRANTING PETITION TO COMPEL ARBITRATION I. INTRODUCTION Before the court is Petitioner Southern Glazer’s Wine and Spirits, LLC’s (“SGWS” or “Petitioner”) Petition to Compel Arbitration of Respondent Janet Denyer’s (“Denyer”) claims arising from the termination of her employment with Petitioner. ECF No. 2. For the reasons discussed below, the Petition to Compel Arbitration is GRANTED. II. BACKGROUND Denyer began working for Southern Wine & Spirits of America, Inc. (“SWSA”) 1 on or about March 7, 2016. Denyer Decl. ¶ 8; Kauther Decl. ¶ 3. That 1 As analyzed below, SGWS is the successor corporation to SWSA, following a merger on or about June 30, 2016. Declaration of Janet Denyer ¶ 8, ECF No. 14-1; Declaration of Jamie Kauther ¶ 3, ECF No. 15-1. Case 1:17-cv-00407-JMS-RLP Document 18 Filed 12/15/17 Page 1 of 26 PageID #: 241
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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
SOUTHERN GLAZER’S WINE AND SPIRITS, LLC,
Petitioner, vs. JANET DENYER,
Respondent.
CIV. NO. 17-00407 JMS-RLP ORDER GRANTING PETITION TO COMPEL ARBITRATION
ORDER GRANTING PETITION TO COMPEL ARBITRATION
I. INTRODUCTION
Before the court is Petitioner Southern Glazer’s Wine and Spirits,
LLC’s (“SGWS” or “Petitioner”) Petition to Compel Arbitration of Respondent
Janet Denyer’s (“Denyer”) claims arising from the termination of her employment
with Petitioner. ECF No. 2. For the reasons discussed below, the Petition to
Compel Arbitration is GRANTED.
II. BACKGROUND
Denyer began working for Southern Wine & Spirits of America, Inc.
(“SWSA”)1 on or about March 7, 2016. Denyer Decl. ¶ 8; Kauther Decl. ¶ 3. That
1 As analyzed below, SGWS is the successor corporation to SWSA, following a merger on or about June 30, 2016. Declaration of Janet Denyer ¶ 8, ECF No. 14-1; Declaration of Jamie Kauther ¶ 3, ECF No. 15-1.
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same day, as part of her “onboarding” process, Denyer signed a “Notice to
Prospective Employees” (“Notice”), ECF No. 15-2, and a “Mutual Agreement to
Arbitrate Claims” (“Agreement”), ECF No. 2-5. See Declaration of Lauren Mutti,
ECF No. 2-2 ¶ 12; Kauther Decl. ¶ 9.
By signing the Notice, Denyer agreed “to be bound by . . . arbitration
procedures for employer-employee disputes,” including but not limited to “claims,
demands or actions” for violation of any federal, state or local law “regarding . . .
the termination of employment[.]” Notice at 1. The Notice specified the use of the
American Arbitration Association arbitration procedures, “as modified and
expanded by the SOUTHERN Employment Arbitration Policy [(“Policy”)],” id.,
and advised Denyer that,
. . . it is your responsibility to read and understand the arbitration procedures, and your agreement to be bound by those procedures is a condition of employment. . . . . . . . We therefore ask that you read the attached Employment Arbitration Policy and then sign and return the attached [Agreement] in order to signify both your acceptance of our offer of employment and your agreement to the above. By signing below, you are attesting that you have read and understood this document, and are knowingly and voluntarily agreeing to its terms.
Id. at 1-2.
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Under the Agreement, Denyer agreed to arbitrate all disputes arising
from her employment or termination from employment, as well as disputes with
Petitioner that are unrelated to her employment. See Agreement at 1. More
specifically, the Agreement provides:
The Company and I mutually consent to the resolution by arbitration of all claims or controversies (“claims”), past, present, or future, whether or not arising out of my employment, or its termination, that the Company may have against me or that I may have against the Company or against its officers, directors, employees or agents in their capacity as such or otherwise. The claims covered by this Agreement include – but are not limited to – claims for breach of any contract or covenant (express or implied); tort claims; claims of discrimination and harassment . . . and any other federal, state or local statute, regulation, ordinance or common law doctrine, regarding employment discrimination, conditions of employment or termination of employment; claims for wages, benefits or other compensation due; and claims for violation of any federal, state, or other governmental law, statute, regulation, or ordinance or common law doctrine[.]” . . . I knowingly and willingly forego my statutory and common law remedies, whether state or federal, whether explicitly mentioned in this Agreement or not, in favor of submitting any disputes with the Company to arbitration. Except as otherwise provided in this Agreement or by law, both the Company and I agree that neither of us shall initiate or prosecute any lawsuit or administrative action . . . in any way related to any claim covered by this Agreement. . . . .
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I understand that any reference in the Agreement to the Company will also refer to all subsidiary and affiliated entities, agents, and all successors and assigns of any of them.
Id. at 1-2. And on the signature page (page 4), the Agreement provides:
I ACKNOWLEDGE THAT I HAVE CAREFULLY READ THIS AGREEMENT (AND THE POLICY INCORPORATED HEREIN) AND THAT I UNDERSTAND AND AGREE TO BE BOUND BY ITS TERMS. . . . I UNDERSTAND THAT BY SIGNING THIS AGREEMENT I AM GIVING UP MY RIGHT TO A JURY TRIAL IN REGARD TO THE TYPES OF CLAIMS COVERED BY THIS AGREEMENT. . . . I FURTHER ACKNOWLEDGE AND UNDERSTAND THAT PURSUANT TO THIS AGREEMENT, ARBITRATION OF DISPUTES COVERED BY THIS AGREEMENT IS MANDATORY AND BINDING. I FURTHER ACKNOWLEDGE THAT I HAVE BEEN GIVEN THE OPPORTUNITY TO DISCUSS THIS AGREEMENT WITH MY PRIVATE LEGAL COUNSEL AND HAVE AVAILED MYSELF OF THAT OPPORTUNITY TO THE EXTENT I WISH TO DO SO.
Id. at 4.
Notwithstanding the above, Denyer now asserts that she was unaware
“of the existence of the arbitration agreement” because at the time she signed the
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Agreement, she had not received a copy of the Policy, or the first three pages of the
before ruling on the issue of mutual assent, Hawaii courts also consider the
surrounding circumstances. Id. In Douglass, the arbitration provision at issue
consisted of two paragraphs hidden on page 20 of a 60-page employee handbook,
the signed acknowledgement form at the end of the handbook did not mention the
arbitration provision, immediately preceding the acknowledgement form was a
disclaimer section indicating in bold text that the policies are guidelines and do not
create a contract, and the acknowledgement form itself stated that the handbook
provisions did not create an employment contract. 110 Haw. at 532, 135 P.3d at
141. Under those circumstances, Douglass found that the plaintiff “was [not]
informed of the existence of the arbitration provision, let alone that he would be
bound by it.” Thus, Douglass concluded that the unambiguous intent to submit to
arbitration element was not met. Id. at 143, 135 P.3d at 534.
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In Siopes, the court found that when enrolling in an employee health-
care plan, the plaintiff-enrollee did not assent to an arbitration provision contained
in a separate service agreement between the health plan and the employer union
health benefits trust fund. 130 Haw. at 453, 312 P.3d at 885. In that case, to enroll
in the health-care plan, the plaintiff completed an enrollment form that contained
no reference to the service agreement or to an arbitration agreement. Id. at 452,
312 P.3d at 884. Nor did the enrollment form include a statement that a separate
service agreement exists, or that the enrollee has read and understood the service
agreement or any separate document affecting the enrollee’s rights. Id. Rather, the
enrollment form merely provided that the enrollee agreed to the terms and
conditions of the selected health-care plan. Id.
Here, the record includes copies of the Policy, the signed Notice, and
the signed 4-page Agreement from Denyer’s personnel file as well as Kauther’s
declaration regarding SWSA’s “uniform policy and practice” regarding the
provision and storage of such documents in connection with new employees.
Denyer’s argument — that she was not aware of the existence of the arbitration
policy, based solely on her assertion that she was not given copies of the Policy
and pages 1-3 of the Agreement on March 7, 2016 — is insufficient to negate
evidence of mutual assent on the face of the documents. See Leong v. Kaiser
Found. Hosps., 71 Haw. 240, 246, 788 P.2d 164, 168 (1990) (holding that in light
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of affidavits attesting to the usual manner of distributing a booklet to employees
containing notice and a summary of an arbitration provision in a separate health-
care contract and averring that the routine was adhered to, plaintiffs’ “averment
that they did not receive the booklet” was insufficient to negate the existence of a
binding arbitration provision in the contract).
Further, even if Denyer had only the Notice (which she signed)2 and
page 4 of the Agreement, those pages alone are sufficient to establish mutual
assent. Unlike Douglass and Siopes, not only do the signature pages of both the
Notice and the Agreement explicitly reference the arbitration agreement and
Policy, they both include language verifying that by signing, Denyer attests that
she agrees to the binding arbitration procedures. See Notice at 2, Agreement at 4.
Denyer concedes that it is her signature on both the Notice and the Agreement.
See Denyer Decl. ¶ 3. Under these circumstances, the court finds that the second
element of mutual assent is satisfied.
3. Bilateral Consideration
Under Hawaii law, bilateral consideration exists where there is mutual
assent to arbitrate — that is, where the employer and employee both agree to
“forego their respective rights to a judicial forum, given the delay and expense
which results from the use of the federal and state court systems, in order to benefit 2 During the hearing, Denyer conceded that she received and signed the two-page Notice.
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from the resulting time and cost savings” of arbitration. Brown, 82 Haw. at 159-
60, 921 P.2d at 239-40.
Here, both parties agreed to submit to binding arbitration and forego
their respective rights to a judicial forum. Specifically, the Notice provides that
“you and we agree that any employment dispute . . . will be submitted to binding
arbitration[.]” Notice at 1. And the Agreement provides that “[t]he Company and
I mutually consent to the resolution by arbitration of all claims . . . [and] both the
Company and I agree that neither of us shall initiate or prosecute any lawsuit or
administrative action . . . in any way related to any claim covered by this
Agreement.” Agreement at 1. Because both parties agreed to accept binding
arbitration and forego their respective rights to a judicial forum, the third element
of bilateral consideration is met.
Based on the foregoing, SGWS has met its initial burden of
establishing the existence of a valid arbitration agreement. The burden now shifts
to Denyer to establish defenses to enforceability.
B. Defenses to Enforceability of the Arbitration Agreement
Denyer contends that SGWS cannot enforce the arbitration agreement
because (1) it is not a party to that agreement, and (2) the arbitration agreement is
unconscionable. The court disagrees.
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1. SGWS as successor to SWSA
Denyer contends that SGWS cannot compel arbitration because she
was hired by SWSA. See Opp’n at 3 (“SGWS was not the company who hired Ms.
Denyer.”). During the hearing, Denyer clarified her position arguing that a
successor corporation cannot enforce an arbitration agreement to which it was not
a signatory. Denyer is mistaken.
The Hawaii Supreme Court has recognized that “a nonsignatory to an
arbitration agreement may invoke the arbitration agreement against a signatory to
that agreement under certain circumstances.” Luke v. Gentry Realty, Ltd., 105
Haw. 241, 247, 96 P.3d 261, 267 (2004). One such circumstance, for example, is
that “[n]onsignatory successors . . . are entitled to compel arbitration under clauses
signed by the corporations whose liability they are alleged to have assumed.” Levi
Strauss & Co. v. Aqua Dynamics Sys., Inc., 2016 WL 6082415, at *9 (N.D. Cal.
Oct. 18, 2016) (quoting Prograph Int’l Inc. v. Barhydt, 928 F. Supp. 983, 991
(N.D. Cal. 1996)); see also Jenks v. DLA Piper Rudnick Gray Cary I.S. LLP, 196
Cal. Rptr. 3d 237, 244 & n.5 (Cal. Ct. App. 2015) (recognizing that following
merger, nonsignatory corporation which assumed the rights and obligations of
acquired corporation may enforce arbitration agreement against a signatory);
Marenco v. DirecTV LLC, 183 Cal. Rptr. 3d 587, 596 (Cal. Ct. App. 2015)
(“[Plaintiff’s] continued employment with [successor employer] served as his
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implied consent to preserving the original terms of employment, including the
arbitration agreement.”).
Here, there is no dispute that following a 2016 merger, SGWS “is the
successor to [SWSA].” Kauther Decl. ¶ 3; Denyer Decl. ¶ 8. A merger generally
results in the surviving entity having assumed “[a]ll debts, liabilities, obligations
. . . rights, privileges, immunities, powers, and purposes” of “each entity that is a
party to the merger[.]” Hawaii Revised Statutes § 428-906(a)(3), (5). And the
Agreement itself provides that “any reference . . . to the Company will also refer to
. . . all successors and assigns[.]” Agreement at 2. Thus, the court finds that
SGWS assumed SWSA’s rights and obligations under the arbitration agreement.
Denyer relies on Santander v. Caris Med Surg, LLC, 2017 WL
3784619 (Haw. Ct. App. Aug. 31, 2017), which is easily distinguishable. In that
case, the court found that defendant employer Caris, with whom temporary work-
placement agency Altres placed the plaintiff employee, failed to establish the
existence of an arbitration agreement between it and the plaintiff. Id. at *2-3.
Prior to her placement at Caris, the plaintiff and Altres entered into an agreement
requiring plaintiff to “submit to binding arbitration any controversies concerning
compensation, employment, or termination of employment . . . between myself and
ALTRES, and/or between myself and the ALTRES customer . . . .” Id. at *2.
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Santander found that Caris was not a party to the arbitration
agreement between plaintiff and Altres for two reasons: (1) the agreement did not
identify Caris as plaintiff’s employer, but rather “specifically and exclusively
reference[d] Altres’s requirement for Altres employees”; and (2) the agreement’s
“reference to an Altres customer” did not unambiguously mean Caris because the
plaintiff “was not hired by Caris until months later.” Id. at *2. Santander also
found that the arbitration agreement lacked bilateral consideration — the
agreement “requires [plaintiff] to submit to binding arbitration, but does not
impose that requirement on Altres, or indicate that Altres’s customers have
mutually agreed to submit to binding arbitration.” 2017 WL 3784619, at *2.
Here, unlike Santander, SGWS established the existence of a valid
arbitration agreement, and the Agreement specifically and unambiguously provides
that it applies to SWSA’s successors. Additionally, unlike Santander, the
arbitration agreement has bilateral consideration. And Santander does not address
enforcement of a valid arbitration agreement by a successor corporation. In short,
by succeeding SWSA and assuming SWSA’s rights and obligations, SGWS is
entitled to enforce the arbitration agreement between Denyer and SWSA. See, e.g.,
Levi Strauss & Co., 2016 WL 6082415, at *9.
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2. Unconscionability
Arbitration agreements may be “invalidated by generally applicable
contract defenses.” AT&T Mobility LLC, 563 U.S. at 339. And courts look to
state-law principles governing the formation of contracts when determining the
applicability of a defense to the enforcement of an arbitration agreement. See
Doctor’s Assocs., Inc. v. Casarotto, 517 U.S. 681, 686-87 (1996); Ingle v. Circuit
City Stores, Inc., 328 F.3d 1165, 1170 (9th Cir. 2003); Siopes, 130 Haw. at 447
n.14, 312 P.3d at 879 n.14.
Hawaii courts recognize unconscionability as a defense to
enforcement of an arbitration agreement. Gabriel v. Island Pac. Acad., Inc., 140