Schwalm v. TCF Nat'l Bank

226 F.Supp.3d 937

LaVae SCHWALM, Plaintiff,

v.TCF NATIONAL BANK, Defendant.

CIV. 16–4074–KES

United States District Court, D. South Dakota, Southern Division.

Signed December 28, 2016

Stephanie E. Pochop, Johnson Pochop & Bartling Law Office, Gregory, SD, for Plaintiff.

Melissa Raphan, Dorsey & Whitney LLP, Minneapolis, MN, Stephen D. Bell, Dorsey & Whitney LLP, Missoula, MT, for Defendant.

ORDER GRANTING MOTION TO COMPEL ARBITRATION

KAREN E. SCHREIER, UNITED STATES DISTRICT JUDGE

Plaintiff, LaVae Schwalm, brought this lawsuit against defendant, TCF National Bank (TCF). TCF moves to compel arbitration and to dismiss the complaint. Docket 7. Schwalm objects to defendant's motions. Docket 9. For the reasons stated below, the court grants defendant's motion to compel arbitration.

FACTUAL BACKGROUND

The facts, viewed in the light most favorable to Schwalm, the non-moving party, are:

In 2013, LaVae Schwalm began using Indeed.com to search for accounting positions in eastern South Dakota. Indeed.com is an online service that utilizes an algorithm to match applicants to potential employment opportunities and recommends certain employment opportunities to applicants. Indeed.com recommended several positions to Schwalm based on her geographical location and interests. After looking through Indeed.com's recommendations, Schwalm picked jobs that interested her. Then, using information from Schwalm's previously uploaded resume, Indeed.com would populate the job applications and Schwalm would correct any errors and answer the prescreening questions before approving and submitting the application.

In November 2013, Schwalm states that she recalls Indeed.com recommending an account services position at TCF to her. Schwalm admits that she indicated to Indeed.com that she was interested in the position, but she denies that she ever submitted an application. In November of 2013, Schwalm had an in-person interview at TCF where she presented a physical copy of her resume. She was not hired. In January of 2014, Schwalm had another in-person interview at TCF. Schwalm avers that during the interview one of the interviewers indicated that TCF did not have an application for her. But TCF determined that her resume was sufficient and offered her a job. Schwalm began working at TCF on February 3, 2014.

TCF's Dispute Resolution Policy (DRP) allows employees to opt out of the agreement within 60 calendar days of their start date. Schwalm states that she did not opt out of the policy because she did not know about or understand the policy. She claims that TCF never gave her a copy of the DRP and never explained the DRP to her. TCF, however, submitted a copy of its "Employee Acknowledgement Receipt" dated February 6, 2014, that was signed by LaVae Schwalm. Docket 8–1 at 16. The Acknowledgment Receipt indicates that Schwalm received a copy of the "Employee Highlights" and "Dispute Resolution Policy." Id.

During Schwalm's employment, she made three discrimination and harassment complaints against her supervisor to TCF supervisors and its Human Resources representatives. The complaints were dated February 16, 2015, March 13, 2015, and March 14, 2015. On March 20, 2015, Schwalm met with TCF supervisors about her complaints. Afterwards, TCF informed Schwalm that her supervisor had been disciplined for his behavior. In May 2015, Schwalm again reported to TCF's Human Resources that she remained in a hostile work environment and required medical leave because of ongoing discriminatory treatment. Human Resources granted the medical leave. On June 1, 2015, TCF terminated Schwalm's employment.

Schwalm then filed this action against TCF alleging age discrimination and retaliation. TCF asserts that these claims must be resolved under its arbitration agreement. Schwalm denies that she entered into the arbitration agreement.

STANDARD OF REVIEW

Whether or not parties entered into an arbitration agreement falls to judicial determination. Neb. Mach. Co. v. Cargotec Solutions, LLC , 762 F.3d 737, 741 (8th Cir. 2014). The Federal Arbitration Act does not specify what evidentiary standard parties seeking to avoid arbitration must meet. Id. at 742. But courts have analyzed the issue using a summary judgment standard—viewing the evidence in the light most favorable to the non-moving party. Id.

DISCUSSION

This case deals with a question of law as to whether the controversy between Schwalm and TCF is covered by a valid arbitration agreement and should therefore be dismissed and directed to proceed to arbitration. Through the Federal Arbitration Act (FAA), Congress established a policy in favor of arbitration. Shearson/Am. Exp., Inc. v. McMahon , 482 U.S. 220, 226, 107 S.Ct. 2332, 96 L.Ed.2d 185 (1987). The FAA "provides that written agreements to arbitrate controversies arising out of an existing contract ‘shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.’ " Dean Witter Reynolds, Inc. v. Byrd , 470 U.S. 213, 218, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985) (quoting 9 U.S.C. § 2 ). The FAA "mandates that district courts shall direct the parties to proceed to arbitration on issues as to which an arbitration agreement has been signed." Id. (citing 9 U.S.C. §§ 3, 4 ). The "court's role under the FAA is therefore limited to determining (1) whether a valid agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute." Pro Tech Indus., Inc. v. URS Corp. , 377 F.3d 868, 871 (8th Cir. 2004). "However, a party who has not agreed to arbitrate a dispute cannot be forced to do so." Lyster v. Ryan's Family Steak Houses, Inc. , 239 F.3d 943, 945 (8th Cir. 2001) (citing AT & T Tech., Inc. v. Commc'ns Workers of Am. , 475 U.S. 643, 650, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986) ).

I. LaVae Schwalm and TCF entered into a valid arbitration agreement.

The first issue for this court to decide is whether there is a valid arbitration agreement between the parties. Under the FAA, state law contract principles govern the formation of an arbitration agreement. Patterson v. Tenet Healthcare, Inc. , 113 F.3d 832, 834 (8th Cir. 1997) ; First Options of Chi., Inc. v. Kaplan , 514 U.S. 938, 944, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995). In South Dakota, the "elements essential to the existence of a contract are: (1) parties capable of contracting; (2) their consent; (3) a lawful object; and (4) sufficient cause or consideration." SDCL § 53–1–2.

TCF's employment application, when filled out and signed, creates a binding arbitration agreement. When a potential applicant applies for a position with TCF, the applicant is provided with an explanation of the DRP. The first sentence of the DRP states that "[b]y applying for employment or accepting employment, you agree with TCF and TCF agrees with you to resolve all Covered Claims pursuant to TCF's Dispute Resolution Policy (DRP)." Docket 8–1 at 12. The online application further explains that an eSignature on the application binds a person to this agreement. Id. Thus, if a person applies to a position at TCF, they are consenting to be bound by the DRP in consideration for TCF accepting their application.

Here, Schwalm denies that she is bound by the DRP for several reasons. First, she denies that she ever filled out or submitted the November 26 application. Docket 9 at 9. Instead, she argues that Indeed.com filled out and submitted the application on her behalf and without her permission. Id. Second, Schwalm states that she was not ultimately hired for the job described in the November 26 application, so any agreement she made in that application is void. Id. at 6. Third, Schwalm denies that she ever received a copy of the DRP and did not understand what the DRP meant, and thus, did not voluntarily consent to be bound by the DRP. Id. And finally, Schwalm argues that, even if the court finds she agreed to the DRP, that the DRP is unconscionable. Id. at 13.

A. Schwalm's electronic signature on the November 26 application is attributable to her.

The court first responds to Schwalm's argument that the electronic signature on the November 26 application cannot be attributed to her. "An electronic record or electronic signature is attributable to a person if it was the act of the person. The act of the person may be shown in any manner ... to determine the person to which the electronic record or electronic signature was attributable." SDCL § 53–12–21. "The effect of an electronic record or electronic signature attributed to a person under § 53–12–21 is determined from the context and surrounding circumstances at the time of its creation, execution, or adoption, including the parties' agreement, if any, and otherwise as provided by law." SDCL § 53–12–22.

First, the fact that Indeed.com populates the fields for Schwalm does not make the application less attributable to her under South Dakota law. See SDCL § 53–12–32 (stating that a contract can be formed when a person initiates an electronic agent to take an action that the person knows or should know will form a contract). The fact that Schwalm would review the application and then approve it to be submitted is a sufficient action to bind her to the application. Second, Schwalm avers in her affidavit that generally, Indeed.com would suggest job openings to her and she would indicate whether or not she was interested in the job. Once she indicated interest in a job opening, Indeed.com would populate the fields of the application for her, and she would check the application, answer the prescreening questions, and approve the application. Docket 9–1 ¶ 3. Thus, Schwalm's own description of Indeed.com's services indicates that Indeed.com would not apply to a position on behalf of a job seeker without the job seeker's approval.¹

Schwalm's argument that the job described in the November 26 application is not the same job she eventually received² is irrelevant to the question of whether she is bound by the DRP. The language...