Quilloin v. Tenet HealthSystem Philadelphia, Inc.

PRECEDENTIAL

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
______

No. 11-1393
______

JANICE QUILLOIN, an individual,
on behalf of herself and others similarly situated

v.

TENET HEALTHSYSTEM PHILADELPHIA, INC.,
d/b/a HAHNEMANN UNIVERSITY HOSPITAL;
TENET HEALTHCARE CORPORATION;
TENET HEALTHSYSTEM HAHNEMANN, LLC,

Appellants
______

On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. No. 2-09-cv-05781)
District Judge: Honorable Anita B. Brody
______

Argued September 21, 2011
Before: FISHER, HARDIMAN and
GREENAWAY, JR., Circuit Judges.

(Filed: March 14, 2012)
James N. Boudreau (Argued)
Christina Tellado-Winston
Greenberg Traurig
2001 Market Street
Suite 2700 Two Commerce Square
Philadelphia, PA 19103

Counsel for Appellants

Gary F. Lynch (Argued)
Carlson Lynch
36 North Jefferson Street
P.O. Box 7635
New Castle, PA 16107

Gerald D. Wells, III
Faruqi & Faruqi
101 Greenwood Avenue, Suite 600
Jenkintown, PA 19046

Counsel for Appellee

______

OPINION OF THE COURT
______

FISHER, Circuit Judge.

2
 Tenet Healthcare Corporation, along with two of its
subsidiaries, appeals from the District Court’s denial without
prejudice of its motion to compel arbitration. The central
issue is whether the District Court erred in finding genuine
disputes of material fact that might render the arbitration
agreement unconscionable and unenforceable. Finding no
such disputes, we will reverse.

I.

Plaintiff and Appellee Janice Quilloin (“Quilloin”) is a
registered nurse with an associate’s degree, who began
working at Hahnemann University Hospital in October of
2006. In February 2008, Quilloin resigned to take another
job. Later that year, she reapplied for a position at
Hahnemann, and was rehired in December 2008. She
continued working at Hahnemann until November 2009.
Hahnemann University Hospital is owned by Tenet
HealthSystem Hahnemann, LLC and managed by Tenet
HealthSystem Philadelphia, both subsidiaries of Tenet
Healthcare Corporation, a health care services company with
subsidiaries operating 55 hospitals with over 14,000 beds, as
of December 31, 2008. Tenet Healthcare Corporation, Tenet
HealthSystem Hahnemann, LLC and Tenet HealthSystem
Philadelphia (collectively “Tenet”), are all Defendants and
Appellants in the present action.

On or around the time that Quilloin began her
employment, both on October 9, 2006 and on January 5,
2009, she signed the “Employee Acknowledgment” form,
which acknowledged receipt of the “Fair Treatment Process”
brochure (“FTP”). Quilloin at first claimed that she did not

3
sign a form in October 2006, but only signed in January 2009.
However, when Tenet subsequently produced an “Employee
Acknowledgement” form signed by Janice Quilloin on
October 9, 2006, Quilloin filed a supplemental submission
“‘acknowledging signing that document’ but emphasizing her
‘lack of recall’ of that act.” Quilloin v. Tenet HealthSystem
Philadelphia, Inc., 763 F. Supp. 2d 707, 712 n.4 (E.D. Pa.
2011). Quilloin does not now dispute that she signed the
Employment Acknowledgement or whether she received the
FTP.

Quilloin alleges that she was not informed that she
would have to commit to arbitration in order to be employed
by Tenet. She also alleges that when she was rehired, she did
not remember being previously required to sign the
“Employee Acknowledgement” form, and thus, was not
expecting to sign it a second time.

The “Employee Acknowledgment” forms that Quilloin
signed are only one page long. Although a few words were
altered between 2006 and 2009, the differences are minor and
not material to this case. Following three paragraphs
regarding the employee handbook and standard of conduct,
the 2009 Employee Acknowledgement reads:

“I acknowledge that I have received a copy of
the Tenet Fair Treatment Process brochure. . . .
I hereby voluntarily agree to use the Company’s
Fair Treatment Process and to submit to final
and binding arbitration any and all claims and
disputes except ‘Excluded Issues’ that are
related in any way to my employment or the

4
termination of my employment with Tenet. I
understand that final and binding arbitration
will be the sole and exclusive remedy for any
such claim or dispute against Tenet or its
parent, subsidiary or affiliated companies or
entities, and each of its and/or their employees,
officers, directors or agents, and that, by
agreeing to use arbitration to resolve my
dispute, both the Company and I agree to forego
any right we each may have had to a jury trial
on issues covered by the Fair Treatment
Process. I also agree that such arbitration will
be conducted before an experienced arbitrator
chosen by me and the Company, and will be
conducted under the Federal Arbitration Act
and the procedural rules of the American
Arbitration Association (‘AAA’).

I further acknowledge that in exchange for my
agreement to arbitrate, the Company also agrees
to submit all claims and disputes it may have
with me to final and binding arbitration, and
that the Company further agrees that if I submit
a request for binding arbitration, my maximum
out-of-pocket expenses for the arbitrator and the
administrative costs of the AAA will be an
amount equal to one day’s pay (if I am an
exempt employee) or eight times my hourly rate
of pay (if I am a non-exempt employee), and
that the Company will pay all of the remaining
fees and administrative costs of the arbitrator

5
 and the AAA. I further acknowledge that this
mutual agreement to arbitrate may not be
modified or rescinded except by a written
agreement signed by both me and the
Company.”

The FTP brochure outlines the internal grievance
process culminating in arbitration, as well as the parameters
of the arbitration agreement itself. The FTP does not state
that claims regarding the validity of the arbitration agreement
itself must be arbitrated. Under “Application and Coverage”
the brochure states that “[t]he FTP . . . covers all disputes
relating to or arising out of an employee’s employment with
the company or the termination of employment. . . . [except
for] those listed in the ‘Exclusions and Restrictions’
section[.]” Notably, neither party argues that one of the
enumerated exclusions or restrictions is applicable here.

The FTP outlines the steps employees are required to
follow to resolve disputes, and explains approximately how
long Tenet would take to respond to each step in the process:

1. “Submit Dispute to Supervisor[,]” who
will “respond . . . as soon as possible,
usually within seven calendar days from
the date you raised the issue”

2. “Appeal Supervisor’s Decision to
Department Head[,]” who will
“respon[d] . . . as soon as possible,
usually within seven calendar days of the
date the Department Head receives your

6
 completed FTP Dispute Resolution
Form”

3. “Appeal Department Head’s Decision to
Administration[,]” which will “respon[d]
. . . as soon as possible, usually within
seven calendar days of the date you
request review under Step 3”

4. “Appeal administration’s decision to FTP
Committee[,]” which will “meet as soon
as possible, usually within 30 days of
your request. . . . [and] promptly . . .
decide the issue(s)”

5. “Final and Binding Arbitration”

A limitations clause states that “[a]ny request for arbitration
under the FTP must be made within one year after the event
giving rise to the dispute. . . . [or], if a longer limitations
period is provided by a statute governing your claim, then
your claim will be subject to the longer limitations period
provided by the statute.”

The FTP also includes provisions for fees and
remedies. In one clause, the FTP states that “[y]ou and the
company will be responsible for the fees and costs of your
own respective legal counsel, if any, and any other expenses
and costs, such as costs associated with witnesses or
obtaining copies of hearing transcripts.” In another provision,
entitled “Authority of Arbitrator,” the FTP states that “[t]he
arbitrator has the authority to award any remedy that would

7
have been available to you had you litigated the dispute in
court under applicable law.” Elsewhere, the FTP states that
“no remedies that otherwise would be available to you or the
company in a court of law will be forfeited by virtue of the
agreement to use and be bound by the FTP.”

On December 4, 2009, Quilloin filed suit in the United
States District Court for the Eastern District of Pennsylvania,
asserting a collective action against Tenet under the Fair
Labor Standards Act of 1938, 29 U.S.C. §§ 201-19, as well as
several state-based class action and common law claims. 1 See
Quilloin, 763 F. Supp. 2d at 711. In its Answer filed on
February 19, 2010, Tenet asserted the existence of an
arbitration agreement as an affirmative defense.

On June 10, 2010, Tenet filed a motion to compel
compliance with the agreement to arbitrate. 2 On July 2, 2010,
Quilloin responded, claiming, among other things, that the

1
The details of this underlying action are not relevant
to the claims we are asked to examine on appeal, which solely
address the denial of a motion to compel arbitration.
2
Technically, Tenet filed a motion to dismiss, or, in
the alternative, to stay proceedings and compel compliance
with the agreement to arbitrate; however, as the District Court
noted, “a stay, rather than a dismissal, is the required course
of action when compelling arbitration.” Quilloin v. Tenet
HealthSystem Philadelphia, Inc., 763 F. Supp. 2d 707, 711
n.2 (E.D. Pa. 2011) (citing Lloyd v. HOVENSA, LLC, 369
F.3d 263, 269 (3d Cir. 2004).

8
agreement to arbitrate was unconscionable. Quilloin did not
file a motion to dismiss or for summary judgment. 3

The District Court issued an order on January 20,
2011, see id. at 735, finding that genuine disputes of material
fact remained as to whether the arbitration agreement was
enforceable, 4 and denying the motion to compel. On

3
We note this here because on appeal, Quilloin asks
that we affirm the District Court’s denial of the order, or in
the alternative, that we find the arbitration agreement
unconscionable and unenforceable as a matter of law. We
have no such alternative. Only “final decisions of the district
courts” are appealable, 28 U.S.C. § 1291, and because
Quilloin neither filed nor claims to have filed a motion to
dismiss or for summary judgment, the District Court issued
no corresponding order. Thus, we cannot now find that
Quilloin is entitled to a judgment finding the agreement
unenforceable as a matter of law. See also 9 U.S.C. § 16
(discussing the appealability of arbitration decisions). At
most, we would have the authority to affirm the district
court’s finding that a genuine dispute of material fact
remained.
4
Technically, the District Court found that genuine
“issues” of material fact remained. See Quilloin, 763 F.
Supp. 2d at 735. However, in 2010, the Federal Rules of
Civil Procedure were amended, and the wording for the
summary judgment standard was changed to require review
for genuine “dispute[s]” of material fact. Fed. R. Civ. P.
56(a).

9
February 9, 2011, Tenet filed a timely notice of appeal,
commencing the present action.

II.

The District Court had jurisdiction over this case
pursuant to 28 U.S.C. § 1331. We have jurisdiction under 9
U.S.C. § 16 to review the District Court’s order denying a
motion to compel arbitration.

Our jurisdiction is not affected by the fact that the
order was denied without prejudice. The Federal Arbitration
Act (“FAA”) clearly “provides for interlocutory appeals from
a District Court’s refusal to compel arbitration” regardless of
whether the appeal is from a final decision. Sandvik AB v.
Advent Int’l Corp., 220 F.3d 99, 102-03 (3d Cir. 2000)
(construing the FAA, as codified at 9 U.S.C. § 16). In
Sandvik, the district court denied a motion to compel
arbitration, “conclud[ing] that it could not order arbitration
until it determined the validity of the underlying contract.”
220 F.3d at 102. Sandvik challenged our jurisdiction,
claiming that the “refusal to order arbitration was not final[.]”
Id. However, we held that “[t]he language of [9 U.S.C.] § 16
provides for appeals of orders denying arbitration, and it
makes no distinction between orders denying arbitration and
‘final orders’ that accomplish the same end.” Id. The
structure of Section 16 is consistent with this interpretation,
because otherwise, “the provision providing for appeals from
denials of orders to arbitrate [under § 16(a)(1)] would become
surplusage in light of the more expansive language in §
16(a)(3) [providing for appeals from final decisions with
respect to arbitration].” Id. at 103. Finally, we found it

10
significant “that Congress decided to use the word ‘final’ in
one part of the statute, but declined to do so in the section that
declares that orders denying motions to compel arbitration are
indeed appealable.” Id. Under Sandvik, there can be no
doubt that we have the authority to review an appeal from the
District Court’s order denying a motion to compel arbitration,
irrespective of the fact that the order was denied without
prejudice.

“We exercise plenary review over questions regarding
the validity and enforceability of an agreement to arbitrate.”
Puleo v. Chase Bank USA, N.A., 605 F.3d 172, 177 (3d Cir.
2010). Specifically, motions to compel arbitration are
reviewed under the Federal Rules of Civil Procedure
summary judgment standard, Par-Knit Mills, Inc. v.
Stockbridge Fabrics Co., 636 F.2d 51, 54 & n.9 (3d Cir.
1980), permitting judgment where “there is no genuine
dispute as to any material fact and the movant is entitled to
judgment as a matter of law.” Fed. R. Civ. P. 56(a).
Furthermore, “[i]n reviewing the record, we are required to
view the facts and draw inferences in the light most favorable
to the nonmoving party.” Ray v. Twp. of Warren, 626 F.3d
170, 173 (3d Cir. 2010) (citation omitted).

III.

A.

Tenet argues as a threshold matter that the District
Court erred in considering Quilloin’s claim that the
arbitration agreement was unconscionable, because Quilloin
failed to direct her challenge at a specific clause within the

11
arbitration agreement. Essentially, Tenet claims that without
a challenge to some specific clause, the District Court may
not inquire into issues of arbitrability. We disagree.

“Because this is a question of arbitrability, it is
governed by the [FAA].” Khan v. Dell Inc., No. 10-3655,
2012 WL 163899, at *4 (3d Cir. Jan. 20, 2012) (citing Puleo,
605 F.3d at 180). The FAA manifests “a congressional
declaration of a liberal federal policy favoring arbitration
agreements . . . .” Moses H. Cone Mem’l Hosp. v. Mercury
Const. Corp., 460 U.S. 1, 24 (1983). However, questions of
arbitrability, including challenges to an arbitration
agreement’s validity, are presumed to be questions for
judicial determination. Puleo, 605 F.3d at 178 (quoting
Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83
(2002)). “Courts should not assume that the parties agreed to
arbitrate arbitrability unless there is ‘clea[r] and
unmistakabl[e]’ evidence that they did so.” First Options of
Chi., Inc. v. Kaplan, 514 U.S. 938, 944 (1995) (quoting
AT&T Techs., Inc. v. Commc’ns Workers, 475 U.S. 643, 649
(1986)). This is because the FAA places arbitration
agreements on “an equal footing with other contracts” and
thus, like any other contract, a plaintiff may bring a challenge
to court claiming that an agreement to arbitrate is
unenforceable based on any of the “generally applicable
contract defenses, such as fraud, duress, or unconscionability
. . . .” AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740,
1745-46 (2011) (construing the FAA as codified at 9 U.S.C.
§ 2) (citation and internal quotation marks omitted).

On the other hand, a challenge to “the validity of the
contract as a whole, as opposed to the arbitration clause in

12
particular, does not present a question of arbitrability.”
Puleo, 605 F.3d at 180 n.4 (citing Buckeye Check Cashing,
Inc. v. Cardegna, 546 U.S. 440, 445-46 (2006)); accord Rent-
A-Center v. Jackson, 130 S. Ct. 2772, 2778 (2010). This is
because regardless of whether a contract as a whole is valid,
agreements to arbitrate are severable from a larger contract,
and may therefore be separately enforced and their validity
separately determined. Rent-A-Center, 130 S. Ct. at 2778.
Thus, in order to qualify as a question of arbitrability that the
court may consider, the challenge must “relat[e] to the
making and performance of the agreement to arbitrate.”
Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S.
395, 404 (1967).

In Rent-A-Center, West, Inc. v. Jackson, the Supreme
Court found that the plaintiff failed to challenge the validity
of the arbitration agreement at issue. The contract containing
the general agreement to arbitrate disputes also contained a
specific agreement to arbitrate questions of arbitrability. 130
S. Ct. at 2777. To eliminate the confusion caused by an
agreement to arbitrate nested within another agreement to
arbitrate, the Rent-A-Center Court found it necessary to
distinguish between the overall arbitration agreement (the
“contract”), and the agreement to arbitrate arbitrability (the
“delegation clause”). Id. at 2778-79. The problem was that
the plaintiff “challenged only the validity of the contract as a
whole” rather than the validity of the delegation clause. Id. at
2779. Because the delegation clause was severable from the
contract, it was unaffected by the contract’s validity; thus, the
Supreme Court held that in accordance with the valid
delegation clause, questions of arbitrability (including the

13
arbitrability of the overall agreement to arbitrate) must go to
an arbitrator. Id. at 2778-79.

Tenet argues that, like the plaintiff in Rent-A-Center,
Quilloin should have challenged some specific clause within
the FTP and Employee Acknowledgement, rather than
challenging the arbitration agreement as a whole. However,
Rent-A-Center is inapposite. First, it is important to note that
unlike the agreement in Rent-A-Center, the FTP and
Employee Acknowledgement constitute an agreement to
arbitrate employment issues generally; they do not purport to
contain an agreement to arbitrate arbitrability. Cf. Rent-A-
Center, 130 S. Ct. at 2777. Because the parties have not
indicated otherwise, the question of arbitrability is one for the
court. See Puleo, 605 F.3d at 178.

Additionally, Rent-A-Center did not require Quilloin to
challenge a specific clause. In Rent-A-Center, identification
of a specific clause was necessary merely because there were
two arbitration agreements, and the one at issue (the
agreement to arbitrate arbitrability) was specifically located
within the “delegation clause.” Here, unlike the contract in
Rent-A-Center, the FTP and Employee Acknowledgement
contained only one agreement to arbitrate. There was no need
to distinguish between multiple agreements to arbitrate; all
that Quilloin needed to do was challenge the validity of the
only agreement to arbitrate. See Rent-A-Center, 130 S. Ct. at
2778; Prima Paint, 388 U.S. at 404.

Because Quilloin did not agree to arbitrate the issue of
arbitrability, and because she claims that the arbitration
agreement, specifically, is unconscionable, the District Court

14
did not err in addressing the validity of the agreement to
arbitrate. Thus, we turn to the merits of Quilloin’s claims to
determine whether the District Court properly denied Tenet’s
motion to compel arbitration.

B.

We generally apply state contract principles to
determine whether an arbitration agreement is
unconscionable. Concepcion, 131 S. Ct. at 1746 (construing
the FAA, as codified at 9 U.S.C. § 2). However, the FAA
preempts conflicting state rules that either prohibit arbitration
outright, id. at 1747, or that “stand[] as an obstacle to the
accomplishment and execution of the full purposes and
objectives of Congress . . . .” Id. at 1753 (quoting Hines v.
Davidowitz, 312 U.S. 52, 67 (1941)). Thus, in determining
unconscionability, we must use principles of Pennsylvania
law, to the extent that such law is not displaced by the FAA.

To prove unconscionability under Pennsylvania law, a
party must show that the contract was both substantively and
procedurally unconscionable. Salley v. Option One Mortg.
Corp., 925 A.2d 115, 119 (Pa. 2007). In examining these two
prongs, the Pennsylvania Supreme Court has indicated that it
might be appropriate to use a “sliding-scale approach” so that
“where the procedural unconscionability is very high, a lesser
degree of substantive unconscionability may be required” and
presumably, vice-versa. Id. at 125 & n.12. We turn first to
the District Court’s finding that the arbitration agreement
might be substantively unconscionable.

1. Substantive Unconscionability

15
 A contract or provision is substantively
unconscionable where it “unreasonably favors the party
asserting it.” Salley, 925 A.2d at 119. Put another way,
“[s]ubstantive unconscionability refers to contractual terms
that are unreasonably or grossly favorable to one side and to
which the disfavored party does not assent.” Harris v. Green
Tree Fin. Corp., 183 F.3d 173, 181 (3d Cir. 1999) (citing
Germantown Mfg. Co. v. Rawlinson, 491 A.2d 138, 145-47
(Pa. Super. Ct. 1985); Denlinger, Inc. v. Dendler, 608 A.2d
1061, 1068 (1992)). An arbitration agreement cannot be
construed as substantively unconscionable where it “does not
alter or limit the rights and remedies available to [a] party in
the arbitral forum . . . .” Edwards v. HOVENSA, LLC, 497
F.3d 355, 364 (3d Cir. 2007) (construing Gilmer v.
Interstate/Johnson Lane Corp., 500 U.S. 20 (1991)).

In denying Tenet’s motion to compel arbitration, the
District Court found three bases on which the arbitration
agreement might be substantively unconscionable: (1) a
potential prohibition against recovery of attorneys’ fees and
costs, (2) potential inclusion of a class action waiver, and (3)
the possibility that Tenet could “run out the clock” on the
statute of limitations. We disagree with the District Court’s
conclusions, and find no basis for substantive
unconscionability.

a. Attorneys’ Fees

Provisions requiring parties to be responsible for their
own expenses, including attorneys’ fees, are generally
unconscionable because restrictions on attorneys’ fees
conflict with federal statutes providing fee-shifting as a

16
remedy. See Spinetti v. Serv. Corp. Int’l, 324 F.3d 212,
216 (3d Cir. 2003) (Where called for by statute, “arbitrators
. . . must ordinarily grant attorney fees to prevailing claimants
rather than be restricted by private contractual language.”
(internal citation and quotation marks omitted)); accord Nino
v. Jewelry Exch., Inc., 609 F.3d 191, 203 (3d Cir. 2010);
Alexander v. Anthony Int’l, L.P., 341 F.3d 256, 267 (3d Cir.
2003); Parilla v. IAP Worldwide Servs., VI, Inc., 368 F.3d
269, 278-79 (3d Cir. 2004).

Tenet and Quilloin dispute whether the arbitration
agreement allows the prevailing party to recover attorneys’
fees. The agreement contains no clear prohibition against
fee-shifting; the District Court wrote that “it is unclear
whether the contract deprives employees of the right to
recover attorney’s fees and costs.” Quilloin, 763 F. Supp. 2d
at 725. In one clause, the FTP states that “[y]ou and the
company will be responsible for the fees and costs of your
own respective legal counsel, if any, and any other expenses
and costs, such as costs associated with witnesses or
obtaining copies of hearing transcripts.” However, another
provision in the FTP could be read as giving the arbitrator
authority to grant attorneys’ fees to the prevailing party:
“Authority of Arbitrator: The arbitrator has the authority to
award any remedy that would have been available to you had
you litigated the dispute in court under applicable law.” It
also states that “no remedies that otherwise would be
available to you or the company in a court of law will be
forfeited by virtue of the agreement to use and be bound by
the FTP.”

17
 We agree with the District Court that the arbitration
agreement is ambiguous regarding the award of attorneys’
fees, but find that the District Court erred in determining that
it could not compel arbitration before resolving the issue.
The Supreme Court has clearly established that ambiguities in
arbitration agreements must be interpreted by the arbitrator.
PacifiCare Health Sys., Inc. v. Book, 538 U.S. 401, 406-07
(2003); accord Puleo, 605 F.3d at 179. It explained that “we
should not, on the basis of mere speculation that an arbitrator
might interpret . . . ambiguous agreements in a manner that
casts their enforceability into doubt, take upon ourselves the
authority to decide the antecedent question of how the
ambiguity is to be resolved.” PacifiCare, 538 U.S. at 406-07
(citation and internal quotation marks omitted); see also
Alabama State Fed’n of Labor v. McAdory, 325 U.S. 450, 461
(1945) (“It has long been [our] considered practice not to
decide abstract, hypothetical or contingent questions . . . .”).

In PacifiCare Health Systems v. Book, respondents
challenged the enforceability of arbitration agreements on the
basis that the agreements could “be construed to limit the
arbitrator’s authority to award damages . . . .” 538 U.S. at
402. The United States Court of Appeals for the Eleventh
Circuit denied petitioners’ requests to compel arbitration, on
the basis that this potential limitation rendered the arbitration
agreements unenforceable. Id. at 403. The Supreme Court
reversed, noting that such a “preliminary question” is not
truly a question of arbitrability for the court to decide, id. at
407 n.2, and holding that “since we do not know how the
arbitrator will construe the remedial limitations, the questions
whether they render the parties’ agreements unenforceable

18
and whether it is for courts or arbitrators to decide
enforceability in the first instance are unusually abstract.” Id.
at 407. Rather than speculate as to whether a certain
interpretation of an ambiguity might render an arbitration
agreement unenforceable, “the proper course [in such a case]
is to compel arbitration.” Id.

The issue presented here is virtually indistinguishable
from the issue in PacifiCare. Like the PacifiCare
respondents, Quilloin challenges the enforceability of the
arbitration agreement based on speculation that the agreement
might be interpreted to limit the arbitrator’s authority to
fashion a remedy. Quilloin’s claim would require the District
Court to decide a “preliminary question” before addressing
the issue of unconscionability, and as PacifiCare noted, such
a “preliminary question” is not truly a question of
arbitrability. Id. at 407 n.2. Under PacifiCare, we are
required to find that the ambiguity regarding attorneys’ fees is
a question for the arbitrator.

b. Class Action Waiver

Under Pennsylvania law, class action waivers are
substantively unconscionable where “class action litigation is
the only effective remedy” such as when “the high cost of
arbitration compared with the minimal potential value of
individual damages denie[s] every plaintiff a meaningful
remedy.” Thibodeau v. Comcast Corp., 912 A.2d 874, 883-
84 (Pa. Super. Ct. 2006).

Here, the arbitration agreement does not contain an
express class action waiver. Silence regarding class

19
arbitration generally indicates a prohibition against class
arbitration, but the actual determination as to whether class
action is prohibited is a question of interpretation and
procedure for the arbitrator. Stolt-Nielsen, S.A. v.
AnimalFeeds Int’l Corp., 130 S. Ct. 1758, 1775 (2010). The
District Court acknowledged that the determination was for
the arbitrator, but proceeded to analyze whether a class action
waiver would render the arbitration agreement substantively
unconscionable, if the arbitrator were to determine that the
agreement contained such a waiver. Quilloin, 763 F. Supp.
2d at 727 & n.22.

As with the issue of attorneys’ fees, the District Court
erred in addressing the hypothetical situation that might or
might not arise depending on the arbitrator’s interpretation of
the arbitration agreement. See PacifiCare, 538 U.S. at 406-
07. Furthermore, even if the agreement explicitly waived
Quilloin’s right to pursue class actions, the Pennsylvania law
prohibiting class action waivers is surely preempted by the
FAA under Concepcion, 131 S. Ct. at 1740.

After the District Court denied Tenet’s motion to
compel, the Supreme Court ruled in Concepcion that a
California law deeming certain class action waivers to be
unconscionable was an “obstacle to the accomplishment and
execution” of the FAA, and was therefore “inconsistent with”
and preempted by the FAA. 131 S. Ct. at 1750-51, 1753.
Specifically, the Concepcion Court found that “[a]rbitration is
poorly suited to the higher stakes of class litigation” because:
(1) “the switch from bilateral to class arbitration sacrifices the
principal advantage of arbitration—its informality[,]” (2) it is
“at the very least odd to think that an arbitrator would be

20
entrusted with ensuring that third parties’ due process rights
are satisfied[,]” and (3) “class arbitration greatly increases
risks to defendants.” Id. at 1751-52. California’s law did not
deem class action waivers to be per se unconscionable, but
was based in part on the reasoning that “class proceedings are
necessary to prosecute small-dollar claims that might
otherwise slip through the legal system.” Id. at 1753. The
Supreme Court dismissed this reasoning, ruling that “States
cannot require a procedure that is inconsistent with the FAA,
even if it is desirable for unrelated reasons.” Id.

Following and relying on Concepcion, we found a
similar New Jersey law to be preempted. The New Jersey
law held that “a waiver of class-wide dispute resolution
would be improper in the context of either litigation or
arbitration[,]” and unconscionability thus “provide[d] a
defense against ‘all waivers of class-wide actions, not simply
those that also compel arbitration[.]’” Litman v. Cellco
P’ship, 655 F.3d 225, 229 (3d Cir. 2011) (citation and
internal quotation marks omitted) (construing Muhammad v.
County Bank of Rehoboth Beach, 912 A.2d 88 (N.J. 2006)).
Our Litman ruling is directly applicable here:

“We understand the holding of Concepcion to
be both broad and clear: a state law that seeks
to impose class arbitration despite a contractual
agreement for individualized arbitration is
inconsistent with, and therefore preempted by,
the FAA, irrespective of whether class
arbitration is desirable for unrelated reasons.”

21
Litman, 655 F.3d at 231 (internal citation and quotation marks
omitted).

The Pennsylvania law at issue here is clearly
preempted under Concepcion and Litman. 5 The Pennsylvania
law is not substantively different from the California law,
which is unquestionably preempted by the FAA. Like the
California law, Pennsylvania law does not render class action
waivers per se unconscionable. Rather, Pennsylvania finds
such waivers substantively unconscionable where “class
action litigation is the only effective remedy” such as when
“the high cost of arbitration compared with the minimal
potential value of individual damages denie[s] every plaintiff
a meaningful remedy.” Thibodeau, 912 A.2d at 883-84.

Like the law in Litman, the Pennsylvania law “seeks to
impose class arbitration despite a contractual agreement for
individualized arbitration” and is therefore preempted. See
id. at 231. In fact, the Pennsylvania law is even more
egregious than the New Jersey law. See Litman, 655 F.3d at
229 n.5. The New Jersey rule against class action waivers
applied to litigation and arbitration alike, id. at 229, while

5
On this, we agree with numerous district courts. See
Brown v. TrueBlue, Inc., No. 1:10-cv-0514, 2011 WL
5869773, at *5 (M.D. Pa. Nov. 22, 2011); King v. Advance
Am., Nos. 07-237, 07-3142, 2011 WL 3861898, at *5-6 (E.D.
Pa. Aug. 31, 2011); Black v. JP Morgan Chase & Co., No.
10-848, 2011 WL 3940236, at *70 n.25 (W.D. Pa. Aug. 25,
2011); Clerk v. Cash Central of Utah, LLC, No. 09-4964,
2011 WL 3739549, at *3-5 (E.D. Pa. Aug 25, 2011).

22
Pennsylvania law has often prohibited class action waivers
based on their arbitration-specific context. Id. at 229 n.5
(citing Gay v. CreditInform, 511 F.3d 369, 395 (3d Cir.
2007)). Thus, the Pennsylvania law presents an even greater
obstacle to the fulfillment of the FAA’s purposes than does
the New Jersey law, because it is exactly the type of law that
“single[s] out the provisions of arbitration agreements[,]”
Harris, 183 F.3d at 183, and that “derive[s] [its] meaning
from the fact that an agreement to arbitrate is at issue.”
Concepcion, 131 S. Ct. at 1746.

c. Running Out the Clock

Finally, Quilloin claims that the arbitration agreement
is unconscionable because it would permit Tenet to “run out
the clock” on the statute of limitations. The FTP requires
employees to follow several internal steps and procedures
before submitting a claim to arbitration; because the FTP only
gives Tenet approximate time limits to respond to each step in
the procedure, Quilloin argues that the FTP allows Tenet to
delay until claims have expired under the statute of
limitations.

Tenet first responds that any claim regarding the
possibility for delay has been mooted because Quilloin tolled
the statute of limitations by filing this claim. Tenet contends
that there is now no danger of delays running out the clock
because Quilloin will be able to bring her claim through
either arbitration or litigation with no danger of exceeding the
statute of limitations.

23
 Mootness implicates our jurisdiction and is thus
determined based on Article III justiciability principles. St.
Paul Fire & Marine Ins. Co. v. Barry, 438 U.S. 531, 537
(1978); Jersey Cent. Power & Light Co. v. Lacey Twp., 772
F.2d 1103, 1108 n.8 (3d Cir. 1985). Under “Article III[,]
judicial power extends only to actual cases and controversies”
and “[a]n actual controversy must be extant at all stages of
review . . . .” Turner v. Rogers, 131 S. Ct. 2507, 2514 (2011)
(internal citations and quotation marks omitted).

Here, the controversy pertains to unconscionability
under Pennsylvania law, which measures unconscionability at
the time of the contract’s making. 13 Pa. Cons. Stat. Ann.
§ 2302(a). Although Tenet claims that the arbitration
agreement’s provision for delay can no longer be
unconscionable, it mistakenly measures unconscionability in
the present moment, based on what has happened since the
contract was signed, rather than based on whether the contract
was unconscionable at the time of its formation. Thus, the
fact that Quilloin has tolled the statute of limitations in the
present instance does not abrogate or in any way moot her
claim that the contract was unconscionable at its formation.

Turning to the substance of the claim, time limitations
in arbitration agreements are substantively unconscionable if
they are “clearly unreasonable and unduly favorable” to the
employer. See Nino, 609 F.3d at 202 (quoting Alexander, 341
F.3d at 266). Quilloin contends that the time limits in Nino v.
Jewelry Exchange, Inc., presented “the mirror image of the
time limits” here. However, we find Nino to be inapposite.
In Nino, the employee was provided with only a five-day
window within which to file and preserve a complaint, a

24
window which the court found substantively unconscionable
because it was “clearly unreasonable . . . .” 609 F.3d at 202-
03 (quoting Alexander, 341 F.3d at 266); see also Alexander,
341 F.3d at 266 (finding a time limit of thirty days to be
“clearly unreasonable and unduly favorable” to the
employer). These cases involved “clearly unreasonable” time
limits placed on the employee, rather than estimated time
limits placed on the employer’s response. Quilloin fails to
explain how a process allowing an employee the full amount
of time permitted under law is unconscionable, even if the
employer is given guidelines, rather than strict parameters,
within which it may respond.

Even if Tenet tried to delay and failed to move forward
with proceedings within a reasonable time, Quilloin could
have filed a motion to compel arbitration. See, e.g., Allen v.
Apollo Group, Inc., No. Civ.A.H-04-3041, 2004 WL
3119918, at *9 (S.D. Tex. Nov. 9, 2004).

Given the existence of reasonable time guidelines for
Tenet to act, paired with the fact that Tenet could not
preclude Quilloin’s claim because she always had the option
to motion to compel arbitration, the time guidelines are not
“clearly unreasonable and unduly favorable” to Tenet. See
Nino, 609 F.3d at 202 (quoting Alexander, 341 F.3d at 266).
We fail to see how, even considering the facts in the light
most favorable to Quilloin, there is any genuine dispute of
material fact regarding this claim of substantive
unconscionability.

We find that Quilloin raised no genuine dispute of
material fact regarding substantive unconscionability;

25
therefore, the District Court erred by denying Tenet’s motion
to compel arbitration.

2. Procedural Unconscionability

Even if Quilloin had raised a genuine dispute of
material fact as to substantive unconscionability, we would
nonetheless find that the District Court erred in denying
Tenet’s motion to compel arbitration because Quilloin did not
raise a genuine dispute of material fact as to whether the
arbitration agreement was procedurally unconscionable.
Quilloin argues that procedural unconscionability arises
because she was not informed that she would have to commit
to arbitrate disputes in order to be employed by Tenet, that no
one explained to her the terms of the agreement, and that she
had little time or choice but to accept its terms and sign.

A contract is procedurally unconscionable where
“there was a lack of meaningful choice in the acceptance of
the challenged provision[.]” Salley, 925 A.2d at 119. A
contract will be deemed procedurally unconscionable when
formed through “oppression and unfair surprise.” Witmer v.
Exxon Corp., 434 A.2d 1222, 1228 n.16 (Pa. 1981) (citation
and quotation marks omitted). Courts “should remain attuned
to well-supported claims that the agreement to arbitrate
resulted from the sort of fraud or overwhelming economic
power that would provide grounds for the revocation of any
contract.” Gilmer, 500 U.S. at 32-33 (internal citation and
quotation marks omitted).

Under Pennsylvania law, a contract is generally
considered to be procedurally unconscionable if it is a

26
contract of adhesion. McNulty v. H&R Block, Inc., 843 A.2d
1267, 1273 & n.6 (Pa. Super. Ct. 2004); but cf. Salley, 925
A.2d at 125-26; id. at 128 (suggesting that not all contracts of
adhesion are procedurally unconscionable). A contract of
adhesion is a “standard-form contract prepared by one party,
to be signed by the party in a weaker position, usually a
consumer, who adheres to the contract with little choice about
the terms.” Chepkevich v. Hidden Valley Resort, L.P., 2 A.3d
1174, 1190 (Pa. 2010) (internal citation and quotation marks
omitted).

However, contracts cannot be deemed unconscionable
“simply because of a disparity in bargaining power.” Witmer,
434 A.2d at 1228; accord Gilmer, 500 U.S. at 32-33. “[T]he
Supreme Court . . . made clear in Gilmer v.
Interstate/Johnson Lane Corp. [that] more than a disparity in
bargaining power is needed in order to show that an
arbitration agreement was not entered into willingly.” Great
W. Mortg. Corp. v. Peacock, 110 F.3d 222, 229 (3d Cir.
1997). Parties frequently possess varying degrees of
bargaining power, and there is a “range of ordinary and
acceptable bargaining situations[.]” Salley, 925 A.2d at 120
n.3. Our role is to distinguish acceptable bargaining
situations from those which violate “strong public policy[.]”
Id.

Factors we must consider in determining whether the
contract rises to the level of procedural unconscionability
include: “the take-it-or-leave-it nature of the standardized
form of the document[,]” “the parties’ relative bargaining
positions,” and “the degree of economic compulsion
motivating the ‘adhering’ party[.]” Salley, 925 A.2d at 125

27
(quoting Delta Funding Corp. v. Harris, 912 A.2d 104, 111
(N.J. 2006)).

In Zimmer v. CooperNeff Advisors, Inc., we considered
the plaintiff’s educational background and “the context in
which the ‘take-it-or-leave-it’ ultimatum was issued” in
determining that the contract did not rise to the level of
procedural unconscionability. 523 F.3d 224, 229 (3d Cir.
2008). Zimmer was a highly educated economist and
willingly accepted an offer of employment, knowing that the
formal employment agreement had not yet been finalized, and
further, he did not allege that he lacked an opportunity to
negotiate. Id.; see also Gilmer, 500 U.S. at 32-33 (no
procedural unconscionability where experienced businessman
was neither coerced nor defrauded when he complied with his
employer’s requirement that he register – and sign an
included arbitration agreement – with the New York Stock
Exchange).

Similarly, in Great Western Mortg. Corp. v. Peacock,
the appellant argued that she accepted the arbitration
agreement “only because she was the weaker of the two
parties to the employment contract.” Peacock, 110 F.3d at
229. Peacock was undoubtedly the weaker party. Id.
Additionally, her employer notified her that she would be
required to sign an agreement to arbitrate upon beginning her
employment, but she did not sign the actual arbitration
agreement until several weeks after she began working. Id. at
224, 228. Nevertheless, we found that the agreement was not
procedurally unconscionable because Peacock agreed to
arbitration on three different occasions, she was a college
graduate with a Business Administration degree, and she did

28
not contend that she failed to read the document containing
the arbitration agreement, or that she was coerced into signing
it. Id. at 228-30.

At the other end of the spectrum, we found procedural
unconscionability in an employment agreement where the
employee, though college educated, was told to read and sign
an employment contract, and was dependent on the employer,
one of the world’s largest jewelry retailers, for his
immigration status and his “very capacity to work in St.
Thomas[.]” Nino, 609 F.3d at 196-97, 202. Similarly, we
held unconscionable an arbitration agreement between a
multi-national business and minimally-educated crane
operators. Alexander, 341 F.3d at 266. 6

Quilloin’s situation is nothing like that of the plaintiffs
in Nino or Alexander v. Anthony Intern., L.P. The District
Court acknowledged that Tenet had less bargaining power
than the multinational corporations in both of those cases.
More importantly, Quilloin was neither a minimally-educated
crane operator as were the plaintiffs in Alexander, nor

6
Although Great Western Mortgage Corp. v. Peacock,
Nino v. Jewelry Exchange, Inc., and Alexander v. Anthony
Intern., L.P., apply New Jersey and Virgin Islands law, the
cases provide useful reference points because the principles
of procedural unconscionability are substantially similar
under the laws of those jurisdictions. See Salley, 925 A.2d at
125 (drawing procedural unconscionability principles from
New Jersey law); Zimmer, 523 F.3d at 228-29 (analogizing to
case applying Virgin Islands law).

29
dependent on her employer for her immigration status as was
the plaintiff in Nino.

Although Quilloin did not possess the same level of
education or specialized skills as the plaintiff in Zimmer, her
situation appears to be much like the plaintiff’s situation in
Peacock. Like Peacock, Quilloin argues that she was in an
unequal bargaining position because she was just an
employee signing a form agreement. Like Peacock, Quilloin
might not have seen or signed the actual arbitration agreement
until after beginning her employment. As in Peacock, we
acknowledge that the employee is the weaker party to the
agreement, Peacock, 110 F.3d at 229; however, like Peacock,
Quilloin did not lack a meaningful choice. She had a college
degree, and chose to agree to the arbitration agreement on
more than one occasion. Even if she was not initially
informed of the agreement at either time she was hired, the
fact remains that she quit her employment at Tenet to work
for another employer, and then chose to go back and work
once again for Tenet, subject to the Employment Agreement
and the FTP. When Quilloin went back to her job at Tenet,
the question of whether she actually remembered the
arbitration agreement is of no consequence; we must presume
that she was rehired knowing about the arbitration agreement
which she had already signed, because parties are presumed
to have knowledge of contracts they have signed. See, e.g.,
Morales v. Sun Constr., Inc., 541 F.3d 218, 221-22 (3d Cir.
2008); Denlinger, 608 A.2d at 1069-70.

Under such circumstances, we reject Quilloin’s
argument that there was unfair surprise or a lack of time to
consider or learn the meaning of the terms of the agreement.

30
We find that Quilloin did not lack a meaningful choice in
agreeing to arbitrate, and she thus raised no genuine dispute
of material fact with regard to procedural unconscionability.

IV.

For the foregoing reasons, we hold that the District
Court erred in denying Tenet’s motion to compel arbitration.
We will therefore reverse the order of the District Court and
remand with instructions to stay litigation proceedings and
compel arbitration.

31