Tonya Cooper v. MRM INVESTMENT COMPANY, TERRY ROGERS and LARRY MAYS

*The Honorab le Ann Aldrich, United States District Judge for the
Northern District of Ohio, sitting by designation.
1
RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
ELECTRONIC CITATION: 2004 FED App. 0126P (6th Cir.)
File Name: 04a0126p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
TONYA COOPER,
Plaintiff-Appellee,
v.
MRM INVESTMENT
COMPANY, TERRY ROGERS
and LARRY MAYS,
Defendants-Appellants.
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No. 02-5702
Appeal from the United States District Court
for the Middle District of Tennessee at Nashville.
No. 01-01596—John T. Nixon, District Judge.
Argued: October 23, 2003
Decided and Filed: May 3, 2004
Before: KENNEDY and GIBBONS, Circuit Judges;
ALDRICH, District Judge.*
2 Cooper v. MRM Investment Co., et al. No. 02-5702
_________________
COUNSEL
ARGUED: David W. Anderson, ENGLISH, LUCAS,
PRIEST & OWSLEY, Bowling Green, Kentucky, for
Appellants. William B. Ryan, DONATI LAW FIRM,
Memphis, Tennessee, for Appellee. ON BRIEF: David W.
Anderson, Regina A. Jackson, ENGLISH, LUCAS, PRIEST
& OWSLEY, Bowling Green, Kentucky, for Appellants.
William B. Ryan, DONATI LAW FIRM, Memphis,
Tennessee, for Appellee. Robert J. Gregory, OFFICE OF
THE GENERAL COUNSEL, Washington, D.C., Ann
Elizabeth Reesman, McGUINESS, NORRIS & WILLIAMS,
Washington, D.C., for Amici Curiae.
_________________
OPINION
_________________
ALDRICH, District Judge. This appeal concerns the
validity and enforceability of an arbitration provision in an
employment contract between plaintiff-appellee Tonya
Cooper and defendant-appellant MRM Investment Company
(“MRM”). Cooper alleges that while working as a manager
at MRM’s restaurant, she was sexually harassed and
constructively discharged. She brought a Title VII action, and
MRM moved to compel arbitration. The district court denied
the motion, holding the arbitration agreement invalid or
unenforceable on five grounds. The district court held that
the arbitration provision is invalid as a matter of Tennessee
law because it is an unconscionable contract of adhesion and
is insufficiently bilateral, and invalid as a matter of federal
law because it did not make clear that Cooper was waiving
her right to a jury trial. The court also opined that as a matter
of policy, Title VII claims belong in court, not in arbitration.
For the reasons that follow, we reverse those portions of the
district court’s judgment.

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No. 02-5702 Cooper v. MRM Investment Co., et al. 3
1The AAA, a non-profit public service organization, assists in the
design and administration of dispute resolution systems for corpo rations,
unions, government agencies, law firms and the courts. See McM ullen v.
Meijer, Inc., 355 F.3d 48 5, 487 n.1 (6th Cir. 2004).
The district court also held that the arbitration provision is
unenforceable, as a matter of federal common law, because it
incorporated American Arbitration Association (“AAA”)1
rules likely to impose undue costs on Cooper that she would
not incur in court, rendering arbitration an ineffective forum
to vindicate her rights. For the reasons that follow, we vacate
this portion of the district court’s judgment and remand for
proceedings consistent with this opinion.
I. BACKGROUND
Terry Rogers and Larry Mays are the sole shareholders of
MRM, which owns and operates several Kentucky Fried
Chicken/Taco Bell (“KFC”) franchises. From January 3
through August 2000, Cooper worked as an assistant manager
of MRM’s KFC store in Waverly, Tennessee, at $400-450 per
week plus possible bonuses. See J.A. 6-10, 17 and 90-91. On
January 5, 2000, MRM required her to sign a document
entitled “Arbitration of Employee Rights,” which provides:
Because of the delay and expense of the court systems,
KFC and I agree to use confidential binding arbitration
for any claims that arise between me and KFC, its related
companies, and/or their current or former employees.
Such claims would include any concerning
compensation, employment (including, but not limited to
any claims concerning sexual harassment), or termination
of employment. Before arbitration, I agree: (i) first, to
present any such claims in full written detail to KFC;
(ii) next, to complete any KFC internal review process;
and (iii) finally, to complete any external administrative
remedy (such as with the Equal Employment
Opportunity Commission). In any arbitration, the then
prevailing rules of the American Arbitration Association
4 Cooper v. MRM Investment Co., et al. No. 02-5702
(and, to the extent not inconsistent, the then prevailing
rules of the [FAA]) will apply.
J.A. 23. Compare Lee v. Red Lobster Inns of Am., No. 02-
5188, 2004 WL 187564 (6th Cir. Jan. 27, 2004) (employee
did not affirmatively agree to arbitrate her Title VII claims,
because she did not sign handbook sheet agreeing to
arbitration and none of the written materials distributed by the
employer advised her that continuing her employment
constituted assent to the arbitration policy). The parties agree
MRM did not separately advise Cooper that she was giving
up her right to a jury trial, nor did they provide her with a
copy of the AAA’s rules. See J.A. 17-18.
As a result of sexual harassment, Cooper alleges, she was
forced to quit in August 2000. She found a job at another
restaurant, where she earned $7,200 in 2001, and tended bar
part-time, earning an additional $300 to $500 per week as of
early 2002. In January 2001, Cooper filed a Charge of
Discrimination with the EEOC, which issued a Dismissal and
Notice of Rights in September 2001. Cooper filed her
complaint in December 2001. Following oral argument, the
district court denied MRM’s motion to compel arbitration on
May 1, 2002. MRM appealed on May 28, 2002.
II. ANALYSIS
A. Standard of Review
We review de novo the district court’s holding that the
arbitration agreement is invalid and unenforceable. See Great
Earth Cos. v. Simons, 288 F.3d 878, 888 (6th Cir. 2002). The
court’s factual findings, by contrast, will be set aside only if
they are clearly erroneous:
If the district court’s account of the evidence is plausible
in light of the record viewed in its entirety, the court of
appeals may not reverse it even though convinced that
had it been sitting as the trier of fact, it would have

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No. 02-5702 Cooper v. MRM Investment Co., et al. 5
weighed the evidence differently. Where there are two
permissible views of the evidence, the factfinder’s choice
between them cannot be clearly erroneous. This is so
even when the district court’s findings do not rest on
credibility determinations, but are based instead on
physical or documentary evidence or inferences from
other facts.
Harrison v. Monumental Life Ins. Co., 333 F.3d 717, 721-22
(6th Cir. 2003) (quoting Anderson v. City of Bessemer City,
470 U.S. 564, 573-75 (1985)).
B. Arbitration Agreements are Generally Enforceable
and are Strongly Favored
At common law, American courts were loathe to order
specific enforcement of an agreement to arbitrate, adopting
the “jealous notion held by the common law courts of
England that arbitration agreements were nothing less than a
drain on their own authority to settle disputes.” Raasch v.
NCR Corp., 254 F. Supp. 2d 847, 853 (S.D. Ohio 2003)
(citing Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213,
219-20 n.6 (1985)). In response, Congress enacted the
Federal Arbitration Act, 9 U.S.C. § 1 et seq. (“the FAA”), “to
place arbitration agreements upon the same footing as other
contracts.” Gilmer v. Interstate/Johnson Lane Corp., 500
U.S. 20, 24 (1991). The FAA expresses a strong public
policy favoring arbitration of a wide class of disputes. It
provides, in part:
A written provision in any maritime transaction or a
contract evidencing a transaction involving commerce to
settle by arbitration a controversy thereafter arising out of
such contract or transaction ... shall be 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 (emphasis added); see also 9 U.S.C. § 1
(excepting some disputes arising out of employment in
6 Cooper v. MRM Investment Co., et al. No. 02-5702
interstate transportation). Thus, generally applicable state-
law contract defenses like fraud, forgery, duress, mistake, lack
of consideration or mutual obligation, or unconscionability,
may invalidate arbitration agreements. See Doctor’s Assocs.
v. Casarotto, 517 U.S. 681, 687 (1996) (citations omitted);
Perry v. Thomas, 482 U.S. 483, 492 n.9 (1987); Fazio v.
Lehman Bros., Inc., 340 F.3d 386, 393-94 (6th Cir. 2003).
“The federal policy favoring arbitration, however, is taken
into consideration even in applying ordinary state law.”
Garrett v. Hooters-Toledo, 295 F. Supp. 2d 774, 779 (N.D.
Ohio 2003) (citing Inland Bulk Transfer Co. v. Cummins
Engine Co., 332 F.3d 1007, 1014 (6th Cir. 2003) (internal
citation omitted)).
The Supreme Court has roundly endorsed arbitration and
explained its benefits in the employment law context:
We have been clear in rejecting the supposition that the
advantages of the arbitration process somehow disappear
when transferred to the employment context. Arbitration
agreements allow parties to avoid the costs of litigation,
a benefit that may be of particular importance in
employment litigation, which often involves smaller
sums of money than disputes concerning commercial
contracts. These litigation costs to parties (and the
accompanying burden to the Courts) would be
compounded by the difficult choice-of-law questions that
are often presented in disputes arising from the
employment relationship ... and the necessity of
bifurcation of proceedings in those cases where state law
precludes arbitration of certain types of employment
claims but not others. The considerable complexity and
uncertainty that [a broader reading of § 1's exclusion]
would introduce into the enforceability of arbitration
agreements in employment contracts would call into
doubt the efficacy of alternative dispute resolution
procedures adopted by many of the Nation’s employers,
in the process undermining the FAA’s proarbitration
purposes and breeding litigation from a statute that seeks

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No. 02-5702 Cooper v. MRM Investment Co., et al. 7
to avoid it. The Court has been quite specific in holding
that arbitration agreements can be enforced under the
FAA without contravening the policies of congressional
enactments giving employees specific protection against
discrimination prohibited by federal law; as we noted in
Gilmer, 500 U.S. at 26, by agreeing to arbitrate a
statutory claim, a party does not forgo the substantive
rights afforded by the statute; it only submits to their
resolution in an arbitral, rather than a judicial, forum.
Circuit City Stores v. Adams, 532 U.S. 105, 122-23 (2001)
(citations and internal quotations omitted). Indeed, Title VII
claims may be subjected to binding arbitration. See Willis v.
Dean Witter Reynolds, Inc., 948 F.2d 305, 310 (6th Cir.
1991); cf. Cosgrove v. Shearson Lehman Bros., No. 95-3432,
1997 WL 4783, at *2 (6th Cir. Jan. 6, 1997) (same for ADEA
claims); Bailey v. Ameriquest Mortgage Co., 346 F.3d 821,
822 (8th Cir. 2003) (same for FLSA claims). The question
before the court, then, is whether there are “grounds ... at law
or in equity” for the revocation or non-enforcement of the
agreement. See 9 U.S.C. § 2.
C. Under Tennessee Law, the Arbitration Agreement
was not a Contract of Adhesion
1. Tennessee Law on Contracts of Adhesion
In Tennessee, “a contract is presumed to be made with
reference to the law of the place where it was entered into
unless it appears it was entered into in good faith with
reference to the law of some other state.” Ohio Cas. Ins. Co.
v. The Travelers Indem. Ins. Co., 493 S.W.2d 465, 467 (Tenn.
1973) (citations omitted). Tennessee generally applies the lex
loci contractus, but sometimes it applies the law of the place
of performance. See Nordahl v. Studer Revox America, Inc.,
No. 94-6336, 1996 WL 99782, at *4 (6th Cir. Mar. 5, 1996)
(citing Solomon v. FloWarr Mgmt., 777 S.W.2d 701, 705 n.5
(Tenn. Ct. App. 1989)). The district court correctly looked to
Tennessee law, because the agreement was executed there,
8 Cooper v. MRM Investment Co., et al. No. 02-5702
Cooper’s employment and the alleged harassment and
discharge occurred there, and neither party expected any other
state’s law to apply.
The district court held that the arbitration agreement is a
contract of adhesion under Tennessee law. Tennessee defines
a contract of adhesion as “a standardized contract form
offered to consumers of goods and services on essentially a
‘take it or leave it’ basis, without affording the consumer a
realistic opportunity to bargain and under such conditions that
the consumer cannot obtain the desired product or service
except by acquiescing to the form of the contract.”
Buraczynski v. Eyring, 919 S.W.2d 314, 320 (Tenn. 1996)
(citations omitted). The essence of adhesion is that the
parties’ bargaining positions and leverage enable one party to
“select and control risks assumed under the contract.” See id.;
see also BLACK’S LAW DICTIONARY 318 (7th ed. 1999).
In Buraczynski, the state Supreme Court held that an
arbitration agreement between a doctor and a patient was a
contract of adhesion where it was presented to the patient well
after her course of treatment had begun. Emphasizing the
special doctor-patient relationship, the court noted that if the
patient declined to sign, she would have suffered an
interruption in care and lost the opportunity to continue
treatment with the physician whom she had come to know
and trust. See Buraczynski, 919 S.W.2d at 320.
A contract is not adhesive merely because it is a
standardized form offered on a take-it-or-leave-it basis. Even
after Buraczynski, Tennessee courts decline to find arbitration
provisions adhesive where the consumer fails to prove that
refusal to sign would cause some detriment other than not
being able to buy from the particular merchant (such as not
being able to obtain the goods or services elsewhere). Pyburn
v. Bill Heard Chevrolet, 63 S.W.3d 351 (Tenn. Ct. App.
2001), held that an arbitration agreement between a car dealer
and a buyer was not adhesive, as there was no proof that the
buyer’s refusal to agree would cause some detriment other
than being unable to come to terms with the particular dealer.

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No. 02-5702 Cooper v. MRM Investment Co., et al. 9
Id. at 359. The court reasoned, “[i]f Defendant had refused to
sell Plaintiff the van, Plaintiff could have gone to another
Chevrolet dealership (or any other type of dealership for that
matter) and obtained a van elsewhere if he considered the
Agreement unacceptable.” Id. at 360.
Similarly, in Wallace v. National Bank of Commerce, 938
S.W.2d 684 (Tenn. 1997), the plaintiff contended that a
customer agreement, which imposed fees for returned checks,
was a contract of adhesion. Id. at 687. The court of appeals
disagreed. The court acknowledged that the agreements had
some adhesive characteristics because they were standardized
forms and their execution was a precondition for opening an
account. Id. at 687-88. Nonetheless, the court held, “these
factors standing alone are not sufficient .... [P]erhaps most
significantly, there is no showing in the record that the
customers had no realistic choice but to acquiesce in the
imposition of the bank’s charges. There is no showing that
the fees were the same at all the defendant banks or that
banking services could not be obtained from other
institutions.” Id.
2. Analysis of Adhesion
a. Agreement was “Take-It-Or-Leave-It” Standardized
Form Prepared by MRM
The district court found that MRM prepared the agreement,
a standardized form, with no negotiation or input from
Cooper. See Cooper v. MRM Inv. Co., 199 F. Supp. 2d 771,
778-79 (M.D. Tenn. 2002); see also C & L Enters. v. Citizen
Band, Potawatomi Indian Tribe of Okla., 532 U.S. 411, 423
(2001) (characterizing adhesion contract as one where a form
agreement is “foisted” upon a “quiescent” party which did not
prepare it). The judge also did not err in finding that Cooper
had to sign the agreement to get the job. Cooper’s affidavit
does not expressly allege that she was told she would not get
the job if she did not sign the arbitration agreement; she says
only that she “was presented with several documents and was
10 Cooper v. MRM Investment Co., et al. No. 02-5702
2The case for enforcing the agreement is strengthened by the fact that
it is brief and embodied in a separate document. This court has already
affirmed a district court’s rejection of the argument that a merchant
fraudulently induced consumers to sign an arbitration agreement, as “the
contract language was clear and una mbiguo us. The defendants presented
the arbitration agreem ents to the plaintiffs on a separate form. The
contract terms were not hidden in boilerplate language or otherw ise
disguised.” Stout v. Byrider, 50 F. Supp. 2d 733, 740 (N.D. Ohio 19 99),
aff’d, 228 F.3d 709 (6th C ir. 200 0), cert. denied, 531 U .S. 1148 (200 1).
Com pare How ell v. NHC Hea lthcare-F ort San ders, 109 S.W.3d 731, 734
(Tenn. Ct. App. 2003) (arbitration clause in nursing home admission
agreement was unenforceable where, inter alia, the clause was “buried”
inconspicuously on page ten of eleven-page agreement), app eal denied
(Tenn. June 30, 200 3).
told that [she] needed to sign the documents.” See J.A. 40.
But the packet of “several documents” which Cooper had to
sign, clearly included the arbitration agreement. Attached to
the brief MRM itself filed below, was a single-page
photocopy containing the four short2 documents MRM asked
Cooper to sign, including the arbitration agreement and the
sexual-harassment policy.
In addition, the district court recalled MRM’s counsel
conceding that MRM had presented the agreement as a “take-
it-or-leave-it.” See Cooper, 199 F. Supp. 2d at 778. MRM
disputes that recollection:
MRM’s attorney stated that she was not present when the
Arbitration Agreement was signed, had not discussed the
issue with her clients, was in no position to advise the
court exactly how the Arbitration Agreement was
presented to Cooper, and upon repeated insistence by the
court that counsel answer directly whether Cooper was
required to sign the document, stated that she could only
assume that Cooper’s signature would have been
required.
MRM’s Brief at 17 n.1. Here the “judge’s recollection does
not contradict or impeach the record, but rather supplies an

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No. 02-5702 Cooper v. MRM Investment Co., et al. 11
3“The statement must be served on the appellee, who may serve
objections or prop osed am endments within 10 days after being served.
The statement and any objections or proposed amendments must then be
submitted to the district court for settlement and approval. As settled and
approved, the statement must be included by the district clerk in the
record on appe al.” FED. R. APP . P. 10(c).
omission to its contents. Therefore, it was permissible for
him to rely on his own recollections regarding the substance”
of the exchange. Paschen Contractors, Inc. v. Illinois State
Toll Hy. Auth., 590 N.E.2d 539, 543 (Ill. App.), appeal
withdrawn, 602 N.E.2d 458 (Ill. 1992).
Moreover, no transcript was made of the hearing. Cf.
Karsch v. LaBarge, 223 F.3d 859, 863 (8th Cir. 2000)
(“Walton has provided us with no transcript or other record of
the ... hearings that might support his contention that fee
disgorgement was not discussed”). In the absence of a
transcript, the Rules of Procedure allowed MRM to substitute
a written narrative of the hearing,3 but MRM did not do so.
Absent either type of record, the Court defers to the district
court’s recollection, and its conclusion that Cooper was
required to sign the agreement if she wanted the job. See
Adair v. United States Postal Serv., No. 99-3058, 1999 WL
1253039, at *1 (6th Cir. Dec. 13, 1999) (“the district court’s
rulings regarding the testimony simply cannot be reviewed
because the record does not include a trial transcript or
narrative statement.”); accord SIL-FLO v. SFHC, 917 F.2d
1507, 1517 (10th Cir. 1990) (“without a record of the
proceedings below we have no option but to defer to the
district court’s ruling during trial that [the] deposition did not
violate its earlier order”).
b. Cooper Failed to Show She Had No Alternatives to
the KFC Job
The last element of adhesion is the absence of a meaningful
choice for the party occupying the weaker bargaining
position. The district court opined that “[e]specially in
12 Cooper v. MRM Investment Co., et al. No. 02-5702
today’s economy, the choice to ‘leave it’ often amounts to no
choice at all. Indeed, if she ‘leaves it’, she probably forgoes
the opportunity for employment.” Cooper, 199 F. Supp. 2d
at 778 (citation omitted). The judge relied in part on an
article which chronicled an increasing trend toward arbitration
clauses in employment contracts: “[P]rospective employees
often have no choice at all -- that is, even if they decide to
walk away from one mandatory arbitration contract, they will
often have no choice but to accept another employment
contract that mandates arbitration as well.” Id. at 778 n.4
(citation omitted).
There was nothing wrong with referring to authorities for
the proposition that, as a general matter, employers often
condition employment on a commitment to arbitration.
Evidence that employers around the country require such
agreements as a matter of course may provide context for an
employee’s claim that relevant employers in his locality also
do so. To find this contract adhesive, however, there must be
evidence that Cooper would be unable to find suitable
employment if she refused to sign MRM’s agreement. She
presented no such evidence. For instance, she did not allege
that she looked for comparable jobs but was unable to find
one. Generalizations about employer practices in the modern
economy cannot substitute for such evidence. See Andersons,
Inc. v. Horton Farms, 166 F.3d 308, 324 (6th Cir. 1998) (no
procedural unconscionability where grain seller “failed to
present evidence that it searched for other alternatives and
that there were none”).
Recent Tennessee decisions on the enforceability of
exculpatory clauses illustrate the need for such party-specific
evidence in an unconscionability analysis. In Russell v. Bray,
a home inspection company required home-buyers to sign a
form contract which limited its liability to the lesser of the
repair cost or refund of the inspection fee. When buyers sued
to invalidate the contract as violative of public policy, the
court considered six factors, three of which are relevant here:

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No. 02-5702 Cooper v. MRM Investment Co., et al. 13
[d.] As a result of the essential nature of the service, in the
economic setting of the transaction, the party invoking
exculpation possesses a decisive advantage of
bargaining strength against any member of the public
who seeks his services.
[e.] In exercising a superior bargaining power the party
confronts the public with a standardized adhesion
contract of exculpation, and makes no provision
whereby a purchaser may pay additional reasonable
fees and obtain protection against negligence.
[f.] Finally, as a result of the transaction, the person or
property of the purchaser is placed under the control of
the seller, subject to the risk of carelessness by the
seller or his agents.
Russell v. Bray, 116 S.W.3d 1, 5-6 (Tenn. Ct. App. 2003)
(applying Olson v. Molzen, 558 S.W.2d 429, 431-32 (Tenn.
1977)); see also Childress v. Madison Cty., 777 S.W.2d 1, 4
(Tenn. Ct. App. 1989) (applying Olson factors).
The Russell court found that hiring inspectors is a practical
necessity for many home-buyers. Russell, 116 S.W.2d at 7.
The buyers did not provide sufficient evidence, however, on
the parties’ relative bargaining power and their other
alternatives. The court surmised that the company might have
had superior bargaining power that enabled it to impose an
adhesive exculpatory clause. Id. But the record was
devoid of any evidence that would allow us to find these
criteria are satisfied. Although there is evidence
Plaintiffs were given the name of another home
inspection service, and attempted to set up an
appointment with this other inspector, there is no
evidence showing whether the other inspector would
have produced a contract with the same exculpatory
clause. As we are unable to determine from the record
whether Plaintiffs could have used another inspector
14 Cooper v. MRM Investment Co., et al. No. 02-5702
without being required to sign a contract containing a
similar exculpatory clause, we do not find Defendants
possessed a decisive advantage of bargaining strength
against any member of the public who sought their
services. * * * Based upon the record before us, we
find the fourth and fifth criteria are not satisfied in this
case.
Id. at 7-8 (emphasis added). Notably, Russell did not remand
to afford the buyers another opportunity to present evidence
on their alternatives and bargaining power. It was the buyers’
burden to establish a basis for non-enforcement of their
contracts, and they had not done so.
Likewise, it was Cooper’s burden to establish state law
grounds for non-enforcement of her agreement with MRM;
she failed to do so, leaving the record silent on whether other
local employers might have hired her without a similar
agreement. Cf. Beauchamp v. Great West Life Assurance Co.,
918 F. Supp. 1091, 1098 (E.D. Mich. 1996) (reluctant to find
arbitration agreement adhesive where plaintiff could work for
other employers without signing such agreements). On such
a record, the district court could not simply assume adhesion
and procedural unconscionability based on what job
applicants may encounter elsewhere. See, e.g., Stout, 50 F.
Supp. 2d at 740 (declining to find adhesion in contract to buy
used car, as such cars “are widely available from a huge
number of sellers if [the buyers] found the arbitration
provision unacceptable”); Atlantic Pools & Spas, Inc. v.
BellSouth Adver. & Publ’g Corp., 64 F. Supp. 2d 708, 712
(M.D. Tenn. 1999) (provision limiting liability for phonebook
misprint was not adhesive; there was no “inordinate disparity”
in bargaining power, in light of many other modes of
advertising plaintiff could use); accord Choice Hotels
Internat’l v. Chewl’s Hospitality, No. 02-1855, 2003 WL
22961190, at *4 (4th Cir. Dec. 17, 2003) (franchisee properly
compelled to arbitrate where it “has not demonstrated that it
had no viable alternatives, or that it faced the possibility of

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No. 02-5702 Cooper v. MRM Investment Co., et al. 15
being excluded from the hotel franchise business if it had
refused such an arbitration contract”).
D. Under Tennessee Law, the Arbitration Agreement
Was Not Unconscionable
Even if the MRM arbitration agreement were adhesive, the
agreement was enforceable under Tennessee law unless
Cooper showed it was also unconscionable. “The common
law ... subjects terms in contracts of adhesion to scrutiny for
reasonableness.” Carnival Cruise Lines v. Shute, 499 U.S.
585, 600 (1991) (Stevens, J., dissenting o.g.). Tennessee
recognizes two types of unconscionability:
Unconscionability may arise from a lack of a meaningful
choice on the part of one party (procedural
unconscionability) or from contract terms that are
unreasonably harsh (substantive unconscionability). In
Tennessee we have tended to lump the two together and
speak of unconscionability resulting when the inequality of
the bargain is so manifest as to shock the judgment of a
person of common sense, and where the terms are so
oppressive that no reasonable person would make them on
one hand, and no honest and fair person would accept them
on the other.
Trinity Indus., Inc. v. McKinnon Bridge Co., 77 S.W.3d 159,
170-71 (Tenn. Ct. App. 2001) (citations omitted). A contract
is substantively unconscionable, then, when its terms “are
beyond the reasonable expectations of an ordinary person, or
oppressive....” Buraczynski, 919 S.W.2d at 320.
1. No Basis for Finding the Agreement Procedurally
Unconscionable
The district court was troubled that MRM required an
applicant to sign an arbitration agreement “precisely at the
time that he or she is most willing to sign anything just to get
a job.” Cooper, 199 F. Supp. 2d at 780 and n.8. The judge
16 Cooper v. MRM Investment Co., et al. No. 02-5702
found that people seeking jobs at a fast food restaurant have,
on average, a weaker bargaining position than people seeking
white-collar jobs at, for instance, a brokerage firm: “While
this difference is not determinative, it certainly informs the
Court’s thinking.” Id. at 778 n.3. The judge contrasted
brokerages because several precedents holding that
employment disputes may be subject to binding arbitration
involved brokers. See Gilmer, 500 U.S. 20; Haskins v.
Prudential Ins. Co. of Am., 230 F.3d 231 (6th Cir. 2000), cert.
denied, 531 U.S. 1113 (2001); Willis, 948 F.2d 305.
The finding that an employee had less bargaining power is
relevant to the procedural-unconscionability analysis.
Moreover, as the district court judge implied, the disparity in
bargaining power also informs the substantive-
unconscionability analysis, because a job applicant who lacks
“leverage” may be more likely to agree to unfair terms. In a
close case, terms bordering on substantive unconscionability
may look more unfair in light of circumstances suggesting
that the stronger party pressed his advantage against the
weaker party. In determining procedural unconscionability,
however, the judge did not require the parties to present
evidence on “factors bearing on the relative bargaining
position of the contracting parties, including their age,
education, intelligence, business acumen and experience,
relative bargaining power, ... [and] whether the terms were
explained to the weaker party....” See Morrison v. Circuit
City Stores, Inc., 317 F.3d 646, 666 (6th Cir. 2003) (en banc)
(citations omitted). As the record discloses, the judge made
no findings on those factors. Absent such findings, there was
no basis for a negative answer to “[t]he crucial question ...
[of] whether each party to the contract, considering his
obvious education or lack of it, [had] a reasonable opportunity
to understand the terms of the contract....” Morrison, 317
F.3d at 666 (citation and internal quotation omitted).

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No. 02-5702 Cooper v. MRM Investment Co., et al. 17
2. No Basis for Finding the Agreement Substantively
Unconscionable
In turn, the district court’s erroneous finding of procedural
unconscionability contributed to its conclusion that the
arbitration agreement’s terms were unfair and the product of
overreaching. Aside from the lack of support for the finding
that Cooper had far inferior bargaining power, unequal
bargaining power alone does not render a contract
substantively unconscionable. The Supreme Court has
cautioned, “[m]ere inequality in bargaining power ... is not a
sufficient reason to hold that arbitration agreements are never
enforceable in the employment context.” Gilmer, 500 U.S. at
33. As one court noted, “[w]hen a party ... voluntarily agrees
to something in an attempt to obtain employment, they are not
being ‘forced’ to do anything....” EEOC v. Frank’s Nursery
& Crafts, 966 F. Supp. 500, 504 (E.D. Mich. 1997), rev’d
o.g., 177 F.3d 448 (6th Cir. 1999); accord Williams v. Parkell
Prods., No. 03-7164, 2003 WL 23022072, at *1 (2d Cir. Dec.
24, 2003) (affirming order compelling arbitration of Title VII
claims and holding that threat to terminate employment if
employee did not sign arbitration agreement did not constitute
duress).
While the district court’s compassion for job applicants is
laudable, under its approach “practically every condition of
employment would be an ‘adhesion contract’ which could not
be enforced because it would have been presented to the
employee by the employer in a situation of unequal
bargaining power on a ‘take it or leave it’ basis.” Morrison,
70 F. Supp. 2d at 823 (quoting Beauchamp, 918 F. Supp. at
1098). Such a result would contravene Congress’s intent that
employment disputes be subject to valid arbitration
agreements, unless excepted by FAA § 1 or rendered
unenforceable under state contract law. For these reasons, the
record does not support the conclusion that the arbitration
agreement was procedurally and substantively
unconscionable.
18 Cooper v. MRM Investment Co., et al. No. 02-5702
E. The District Court Erred in Finding the Agreement
Lacked Sufficient Bilaterality
The district court also held that “there is an insufficient
‘modicum of bilaterality’ present in this case.” Cooper, 199
F. Supp. 2d at 780. It reasoned that “the agreement was ...
drafted by KFC, and imposed on a prospective employee
precisely at the time that he or she is most willing to sign
anything just to get a job. Although the KFC Arbitration
Agreement binds both parties, only the Defendant is aware of
the ramifications of the agreement.” Id. (citation omitted).
The court erred. The district court acknowledged that the
MRM agreement “does contain a measure of what ... courts
have termed a ‘modicum of bilaterality,’” and, unlike the
agreement held unconscionable in Circuit City Stores, Inc. v.
Adams, 279 F.3d 889 (9th Cir.), cert. denied, 535 U.S. 1112
(2002), it requires both parties to arbitrate, not just the
employee. See Cooper, 199 F. Supp. 2d at 780. Despite this,
the judge found that the agreement lacked sufficient
bilaterality because “there is an asymmetry born out of a
difference in bargaining power that pervades the resulting
arbitration agreement.” Id. In so doing, the judge improperly
conflated the procedural unconscionability and bilaterality
analyses.
Even if Cooper had far less bargaining power, that would
not detract from bilaterality, because MRM has the same duty
to arbitrate as Cooper. See Wilks v. Pep Boys, 241 F. Supp.
2d 860, 863 (M.D. Tenn. 2003) (“the plaintiffs’ claims that
the Agreement is invalid for lack of consideration and
because it constitutes an ‘illusory promise’ are without merit.
Both parties are bound to arbitrate claims arising in their
relationship....”).
Moreover, the record does not support the supposition that
only MRM knew the agreement’s ramifications. Its defining
ramification is that the parties will submit disputes to an
arbitrator instead of a judge or jury. “[T]he loss of the right
to a jury trial is a necessary and fairly obvious consequence

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No. 02-5702 Cooper v. MRM Investment Co., et al. 19
of an agreement to arbitrate.” Burden v. Check Into Cash of
Kentucky, LLC, 267 F.3d 483, 492 (6th Cir. 2001) (citation
omitted). Absent evidence that MRM rushed Cooper or
deceived her as to the agreement’s consequences, Burden
charges her with knowledge of that central consequence.
Compare Brennan v. Bally Total Fitness, 198 F. Supp. 2d
377, 383 (S.D.N.Y. 2002) (arbitration agreement was
unenforceable where employer gave employee only fifteen
minutes to review sixteen-page document and used other
high-pressure tactics).
F. Lack of Express Waiver of Right to Jury Trial Did
Not Render Agreement Invalid
1. Burden (6th Cir. 2001)
The district court contrasted the MRM agreement, which
said nothing about waiving the right to a jury trial, with the
agreement enforced in Buraczynski. The latter alerted the
weaker party, in ten-point capitals printed in red ink directly
above the signature line, “BY SIGNING THIS CONTRACT
YOU ARE GIVING UP YOUR RIGHT TO A JURY OR
COURT TRIAL ....” The district court held that the absence
of such language in the MRM agreement rendered it
unenforceable because “the waiver of any rights (substantive
or procedural), must be both knowing and clear. * * * If the
employee is not clearly made aware of the rights she is
waiving, that waiver is not only invalid, but the entire
agreement is rendered unduly oppressive.” Cooper, 199 F.
Supp. 2d at 775, 779.
This Court, however, has flatly rejected the claim that an
arbitration agreement must contain a provision expressly
waiving the employee’s right to a jury trial. Without
discussion, we stated, “As to the failure of the arbitration
clause to include a jury waiver provision, ‘the loss of the right
to a jury trial is a necessary and fairly obvious consequence
20 Cooper v. MRM Investment Co., et al. No. 02-5702
4Wright v. Universal Maritime Servs. Corp., 525 U.S. 70 (1 998 ), is
not to the co ntrary. Wright held only that an arbitration clause’s waiver
of the right to a jury trial must be “clear and unmistakable” when the
clause is contained in a collective bargaining agre ement (“CB A”). Id. at
80. See also Am . Heritage Life Ins. Co. v. O rr, 294 F.3d 702 , 710 (5th
Cir. 200 2), cert. denied, 537 U.S. 110 6 (2003 ) (citation omitted ); see, e.g .,
Knox v. Wheeling-Pittsburgh Steel Corp., 899 F. Supp. 1529, 1537 (N.D.
W .Va. 1995). Cooper does not contend that her employment was covered
by a CBA. Nor has Cooper denied that the FAA applies to her arbitration
agreement with M RM .
5Of the Circuits to squarely address the issue, all four share the view
we expressed in Burden. See Melton v. Philip Morris Inc., No. 01-35883,
2003 WL 21774035 , at *2 (9th Cir. M ay 7, 2003 ); American Heritage,
294 F.3d at 710-11 ; Snowden v. CheckPoint Check Cashing, 290 F.3d
631, 638 (4th Cir. 2002); Koveleskie v. SB C Capita l Ma rkets, 167 F.3d
361 , 368 (7th Cir.), cert. denied, 528 U.S. 811 (1999).
of an agreement to arbitrate.’”4 Burden, 267 F.3d at 492
(quoting Sydnor v. Conseco Fin. Servs. Corp., 252 F.3d 302,
307 (4th Cir. 2001)); see also Pritchard v. Dent Wizard
Internat’l Corp., 275 F. Supp. 2d 903, 918-19 (S.D. Ohio
2003) (employee unlikely to succeed on claim that his right
to jury trial superseded arbitration clauses). The Seventh
Amendment confers not the right to a jury trial per se, but
rather “only the right to have a jury hear the case once it is
determined that the litigation should proceed before a court.
If the claims are properly before an arbitral forum pursuant to
an arbitration agreement, the jury trial right vanishes.” Bank
One, N.A. v. Coates, 125 F. Supp. 2d 819, 834 (S.D. Miss.
2001), aff’d, No. 01-60059, 2002 WL 663804 (5th Cir. Apr.
5, 2002); accord Marsh v. First USA Bank, 103 F. Supp. 2d
909, 921 (N.D. Tex. 2000) (citing Geldermann, Inc. v. CFTC,
836 F.2d 310, 323 (7th Cir. 1987)).5
2. KMC (6th Cir. 1985) is Distinguishable from Burden
(6th Cir. 2001), Which Governs
As discussed supra, Burden mandates reversal of the
holding that the agreement is invalid because it did not

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No. 02-5702 Cooper v. MRM Investment Co., et al. 21
contain an express waiver of Cooper’s right to a jury trial.
For that proposition, the district court relied on a pre-Burden
panel decision: K.M.C. Co. v. Irving Trust Co., 757 F.2d 752
(6th Cir. 1985). In KMC, the parties’ contract contained a
clause waiving the right to a jury trial. Nonetheless, when
KMC sued for breach, the judge ordered a jury trial. He
found that before the parties signed the contract, a
representative of defendant told the plaintiff’s president that
“absent fraud, which was not present ..., the waiver provision
would not be enforced.” The defendant appealed, contending
that the judge should have enforced the waiver of the right to
a jury trial. We held that the waiver was unenforceable
because it was not knowing and voluntary. See id. at 754-55.
At first blush KMC seems to conflict with our later decision
in Burden. Both were panel decisions, and we have never
addressed en banc the issue on which they seem to conflict.
Under the law-of-the-circuit doctrine, only the Court sitting
en banc may overrule published circuit precedent, absent an
intervening Supreme Court decision or a change in the
applicable law. See Walker v. Bain, 257 F.3d 660, 680 (6th
Cir. 2001) (Daughtrey, J., concurring in part and dissenting in
part o.g.); Armco Employees Indep. Fed’n v. AK Steel Corp.,
252 F.3d 854, 860 n.2 (6th Cir. 2001) (citing 6TH CIR. R.
206(c)).
A sister Circuit also allows the overruling of precedent “in
extremely rare circumstances, where non-controlling but
persuasive case law suggests such a course.” United States v.
Chhien, 266 F.3d 1, 11 (1st Cir. 2001). The Fourth Circuit
decision we relied on in Burden could be viewed as such
“non-controlling but persuasive case law.” If so, Burden
could have overruled KMC without expressly saying so.
“Precedent-making decisions may ... be overruled ... by
implication so that a later decision overrules prior decisions
which conflict with it whether such prior decisions are or are
not mentioned.” See Star Bank, N.A. v. Reveal (In re Reveal),
22 Cooper v. MRM Investment Co., et al. No. 02-5702
6Cf. Watt v. Alaska, 451 U.S. 259, 285 (1981) (Stewart, J.,
dissenting) (referring to the “e stablished rule o f statutory construction”
leges posteriores, priores contrarias abrogant, subsequent laws repeal
prior conflicting ones).
148 B.R. 288, 290 (Bankr. S.D. Ohio 1992).6 Implied
overrulings, however, are disfavored. See id. at 290-91
(citation omitted); accord United States v. Rodriguez, 311
F.3d 435, 439 (1st Cir. 2002), cert. denied, 538 U.S. 937
(2003). When possible, we will distinguish seemingly
inconsistent decisions rather than find an overruling by
implication. See, e.g., Mfrs.’ Indus. Relations Ass’n v. East
Akron Casting Co., 58 F.3d 204, 210 (6th Cir. 1995). Indeed,
Burden is distinguishable from KMC in three respects.
First, KMC’s seeming endorsement of the knowing and
voluntary standard was dictum. The panel held, “Those cases
in which the validity of a contractual waiver of jury trial has
been in issue have overwhelmingly applied the knowing and
voluntary standard. We are of the opinion that the Magistrate
[Judge] was correct in applying the knowing and voluntary
standard in this instance.” See KMC, 757 F.2d at 756
(emphasis added and citations omitted). In light of the rest of
the panel’s analysis, its careful inclusion of the phrase “in this
instance” is significant. Such language suggests a decision
limited to the peculiar facts of the case. The court went on to
explain that a determination of the standard governing
contractual waiver of the right to jury trial, was not essential
to its decision:
In any event, whether the appropriate standard is that
K.M.C.’s waiver must have been knowing and voluntary,
or merely ‘clear,’ we conclude that if in fact it was
represented to K.M.C.’s president Butler before the
signing of the financing agreement that the jury waiver
provision would not be enforced under circumstances
such as those in the instant case, neither standard is met.

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No. 02-5702 Cooper v. MRM Investment Co., et al. 23
Id. at 757 (citations omitted). Because KMC did not decide
whether a knowing and voluntary standard governs
contractual waivers of the right to jury trial, it did not
foreclose our decision in Burden.
Second, KMC based its refusal to enforce the waiver on its
finding that the defendant promised the plaintiff, before they
signed, that the waiver would not be enforced under the
circumstances. The court emphasized, “K.M.C. is not
claiming that it did not intend to waive jury trial but
inadvertently failed to object to the waiver provision in the
contract before signing it; [rather,] it claims that it objected
strenuously and was assured that the provision would only
apply in narrow circumstances.” Id. n.6. By contrast, neither
Burden nor Cooper was led to believe she would not be held
to the letter of the agreement. Third, even if KMC announced
a rule that a contractual waiver of the right to a jury trial must
be “knowing and voluntary” or “clear,” Burden is consistent
with that rule. As we held in Burden, a party who enters an
arbitration agreement necessarily consents to the clear and
obvious consequence: the surrender of his right to go to trial.
Burden, 267 F.3d at 492.
In addition to KMC, the district judge relied on Trumbull v.
Century Marketing Corp., 12 F. Supp. 2d 683 (N.D. Ohio
1998). There a woman sued her former employer for sexual
harassment in violation of Title VII, and the employer
invoked an arbitration clause contained in the employee
handbook. The court held the clause unenforceable on three
grounds: (1) there was no mutuality of obligation, because
the handbook authorized the employer to “modify, augment,
delete, or revoke any and all policies” therein at any time;
(2) the employee did not knowingly waive her right to
litigate, because the clause occupied less than two pages of a
sixty-page handbook, was not set apart from provisions which
did not affect her rights, and said nothing about arbitrating
statutory claims as opposed to contractual disputes; and
(3) the clause barred the arbitrator from awarding punitive
24 Cooper v. MRM Investment Co., et al. No. 02-5702
damages, depriving the employee of a remedy she could seek
in court. See id. at 685-88.
None of the grounds that justified non-enforcement in
Trumbull obtains here. As to mutuality of obligation, the
MRM agreement obligates both parties to arbitrate and does
not give MRM the right to change the agreement unilaterally.
As to the “clear” or “knowing and voluntary” character of the
waiver of a judicial forum, the MRM agreement is short, clear
and embodied in a separate document, not buried in a lengthy
handbook which addresses issues not affecting Cooper’s
rights. Moreover, unlike Trumbull, the MRM agreement
specifically advised Cooper that she would be required to
arbitrate sexual-harassment claims. Lastly, the MRM
agreement does not restrict the arbitrator’s authority to award
punitive damages or any other remedy Cooper might obtain
in court.
G. District Court’s Statement that Title VII Claims
Belong in Federal Court
The district court acknowledged that employers face many
non-meritorious claims and that arbitration can offer greater
efficiency and convenience than litigation. Without citing
authority, however, the district court expressed hostility to the
arbitration of employment discrimination claims:
These cases do not ‘clog’ the federal docket – they
belong in federal court. Employees must not be forced
to either forgo employment or forgo their right to a day
in court, and Courts must not use the perceived problems
associated with employment discrimination [cases] to
prevent employees, and society at large, from vindicating
the rights that Congress enshrined in the Civil Rights
Acts.
Cooper, 199 F. Supp. 2d at 779 n.7. Yet the Supreme Court
holds that “having made the bargain to arbitrate, the party
should be held to it unless Congress itself has evinced an

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No. 02-5702 Cooper v. MRM Investment Co., et al. 25
intention to preclude a waiver of judicial remedies for the
statutory rights at issue.” Gilmer, 500 U.S. at 26 (citation
omitted). The district court did not adduce evidence of a
Congressional intent to prohibit employees from waiving a
judicial forum for discrimination or harassment claims, and
we find none.
On the contrary, the 1991 Amendments to Title VII
“evince[] a clear congressional intent to make arbitration an
alternative method of dispute resolution.” Rajjak v. McFrank
& Williams, No. 01 Civ. 0493, 2001 WL 799766, at *2 n.2
(S.D.N.Y. July 13, 2001) (citation omitted). The amendment
provided, in part, “Where appropriate and to the extent
authorized by the law, the use of alternative means of dispute
resolution including ... arbitration, is encouraged to resolve
disputes arising under the Acts or provisions of Federal law
amended by this title.” DeGaetano v. Smith Barney, No. 95
Civ. 1613,1996 WL 44226, at *5 (S.D.N.Y. Feb. 5, 1996)
(quoting Civil Rights Act of 1991, § 118, Pub. L. No. 102-66,
nn. after 42 U.S.C.A. § 1981). Accordingly, we decided that
Congress did not intend to exclude Title VII claims from
arbitration. See Willis, 948 F.2d at 310. Nonetheless, the
district court indulged its belief that employers should not be
allowed to require arbitration of statutory discrimination
claims. That belief is incompatible with the strong
congressional policy favoring arbitration. As this Court has
held, “the fact that some of plaintiff’s claims are based upon
Title VII, a federal civil-rights statute, does not affect the
enforceability of the arbitration agreement. It is well-settled
that statutory claims may be the subject of an arbitration
agreement enforceable under the FAA.” Cosgrove, No. 95-
3432, 1997 WL 4783, at *2 (citing Gilmer, 500 U.S. at 26).
H. Was the Agreement Invalid Because Arbitration
Would Be Prohibitively Expensive?
Unlike the findings that the agreement was adhesive,
unconscionable, and insufficiently bilateral, the district
court’s other basis for finding the agreement unenforceable
26 Cooper v. MRM Investment Co., et al. No. 02-5702
was potentially valid: under the AAA rules incorporated in
the agreement, arbitration could be prohibitively expensive,
deterring employees like Cooper from attempting to vindicate
their rights. As a matter of public policy, the court rightly
rejected MRM’s argument that the agreement was enforceable
because it is willing to pay Cooper’s arbitration costs. An
employee should not have to “jump through hoops” to show
arbitration is too costly, only to have the employer jettison the
unduly burdensome cost-splitting provision when it is
challenged.
The AAA has since amended its rules, however, to hold
employers responsible in the first instance for all expenses
except a small filing fee and costs for the employee’s
witnesses. This may make it more difficult for Cooper to
show her likely arbitration costs are prohibitively high, as she
must to invalidate the agreement under Green Tree Finance
Corp. of Alabama v. Randolph, 531 U.S. 79 (2000) and
Morrison v. Circuit City, 317 F.3d 646 (6th Cir. 2003) (en
banc).
1. When Arbitration Costs Render an Arbitration
Agreement Unenforceable
In Green Tree Finance Corp. of Alabama v. Randolph, 531
U.S. 79 (2000), the Supreme Court adopted a case-by-case
approach to determining whether an arbitration agreement’s
cost-splitting provision denies potential litigants the
opportunity to vindicate their rights. “[W]here ... a party
seeks to invalidate an arbitration agreement on the ground that
arbitration would be prohibitively expensive, that party bears
the burden of showing the likelihood of incurring such costs.”
Id. at 92. The agreement before the Court said nothing about
arbitration costs, and the employee produced little evidence
on the costs she was likely to incur and whether she could
afford them. Accordingly, the Court found the plaintiff had
not met her burden of proving she would actually bear
prohibitive costs if required to arbitrate. The Court held,

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No. 02-5702 Cooper v. MRM Investment Co., et al. 27
It may well be that the existence of large arbitration costs
could preclude a litigant such as Randolph from
effectively vindicating her federal statutory rights in the
arbitral forum. But the record does not show that
Randolph will bear such costs if she goes to arbitration.
Indeed, [the record] contains hardly any information on
the matter. * * * The record reveals only the
arbitration agreement’s silence on the subject, and that
fact alone is plainly insufficient to render it
unenforceable. The “risk” that Randolph will be saddled
with prohibitive costs is too speculative to justify the
invalidation of an arbitration agreement.
. . .
To invalidate the agreement on that basis would
undermine the “liberal federal policy favoring arbitration
agreements.” It would also conflict with our prior
holdings that the party resisting arbitration bears the
burden of proving that the claims at issue are unsuitable
for arbitration.
Id. at 91-92 (citations omitted). Because the employee made
no showing about his likely arbitration costs, the Court
declined to specify “[h]ow detailed the showing of prohibitive
expense must be before the party seeking arbitration must
come forward with contrary evidence ....” Id. at 92. Further
guidance is available from our subsequent en banc decision
in Morrison v. Circuit City, where we declared,
We hold that potential litigants must be given an
opportunity, prior to arbitration on the merits, to
demonstrate that the potential costs of arbitration are
enough to deter them and similarly situated individuals
from seeking to vindicate their federal statutory rights in
the arbitral forum. Our approach differs from the case-
by-case approach advocated in Bradford [v. Rockwell
Semiconductor Systems, 238 F.3d 549, 556 (4th Cir.
2001)] by looking to the possible “chilling effect” of the
28 Cooper v. MRM Investment Co., et al. No. 02-5702
cost-splitting provision on similarly situated [potential]
litigants, as opposed to its effect merely on the actual
plaintiff in the given case.
* * *
A particular plaintiff may be determined to pursue his or
her claims, regardless of costs. But a court considering
whether a cost-splitting provision is enforceable should
consider similarly situated potential litigants, for whom
costs will loom as a larger concern, because it is, in large
part, their presence in the system that will deter
discriminatory practices. Nothing in Green Tree
suggests that a case-by-case analysis should not treat
similar cases similarly.
For this reason, if the reviewing court finds that the
cost-splitting provision would deter a substantial
number of similarly situated potential litigants, it
should refuse to enforce the cost-splitting provision in
order to serve the underlying functions of the federal
statute. In conducting this analysis, the reviewing court
should define the class of such similarly situated
potential litigants by job description and socioeconomic
background. It should take the actual plaintiff’s income
and resources as representative of this larger class’s
ability to shoulder the costs of arbitration.
Morrison, 317 F.3d at 663 (emphasis added); see also
DeOrnellas v. Aspen Square Mgmt., 295 F. Supp. 2d 753
(E.D. Mich. 2003) (holding arbitration agreement’s cost-
sharing provision unenforceable under Morrison).
The court must evaluate the likely cost of arbitration not in
absolute terms, but relative to the likely costs of litigation.
The up-front expense of litigation is often minimal, because
many employee-plaintiffs can secure a contingency fee
agreement where counsel advances discovery costs and defers
collection of fees until judgment. See Morrison, 317 F.3d at

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No. 02-5702 Cooper v. MRM Investment Co., et al. 29
664. Conversely, a plaintiff “forced to arbitrate a typical
$60,000 employment discrimination claim will incur costs ...
that range from three to nearly fifty times the basic costs of
litigating in a judicial, rather than arbitral, forum.” Id. at 669
(citation omitted). Furthermore, because Title VII allows
compensatory damage awards up to $300,000, the costs of
arbitrating such a claim will range “higher and higher.” Id.
Finally, the analysis of likely arbitration costs must
consider only “up-front” costs, not the lower cost that may
ultimately result if the arbitrator relieves the employee of
costs presumptively imposed by AAA rules (e.g., if the
employee prevails on the merits). See id. at 664. After all,
it is the out-of-pocket costs an employee considers when
deciding whether he can afford arbitration:
The issue is whether the terms of the arbitration
agreement itself would deter a substantial number of
similarly situated employees from bringing their claims
in the arbitral forum, and thus the court must consider the
decision-making process of these potential litigants. In
many cases, if not most, employees considering the
consequences of bringing their claims in the arbitral
forum will be inclined to err on the side of caution,
especially when the worst-case scenario would mean not
only losing on their substantive claims but also the
imposition of the costs of the arbitration.
Id. at 664-65 (emphasis added) (citations omitted).
2. The Employee’s Likely Up-Front Costs under the
Former AAA Rules
The district court found that Cooper earned $7,253.74 in
2001 and that she “and others similarly situated, often cannot
afford to pay the high costs of arbitration.” See Cooper, 199
F. Supp. 2d at 781. There is no suggestion that Cooper has
undisclosed assets or sources of income, or that her income
has increased to a meaningful extent. Accordingly, the court
30 Cooper v. MRM Investment Co., et al. No. 02-5702
did not err in determining that Cooper was likely to incur
significant up-front costs under the then prevailing AAA rules
which she would not incur in court. This comports with our
comment that “many, if not most” employment plaintiffs who
litigate their claims will be represented under contingency
agreements, paying neither fees nor costs until and unless
they secure judgment. See Morrison, 317 F.3d at 664.
Nor did the district court err in finding such costs would
deter many employees in Cooper’s circumstances from
arbitrating their claims. We predicted, after all, that courts
would regularly find arbitration costs too high to permit
enforcement of a lower- or middle-income employee’s duty
to arbitrate. The courts “will find, in many cases, that high-
level managerial employees and others with substantial means
can afford the costs of arbitration, thus making cost-splitting
provisions in such cases enforceable. In the case of other
employees, however, this standard will render cost-splitting
provisions unenforceable in many, if not most, cases.” Id. at
665 (emphasis added and citations omitted).
3. District Court Properly Rejected MRM’s Offer to Pay
Cooper’s Arbitration Costs
The Cooper-MRM agreement contained no provision
stating that an invalid or unenforceable clause could be
severed. The district court held that, in the absence of a
severability provision, it could not enforce the clause
requiring arbitration while simultaneously invalidating the
cost-splitting provision (and allowing MRM to relieve Cooper
of her contractual obligation to pay some arbitration costs
would effectively treat the arbitration cost-splitting provision
was invalid). The court’s ruling on this issue was sound
under both Tennessee law and federal common law.
Under Tennessee law, the court could not make a new
contract for the parties by adding a term, such as a
severability clause. See Central Adjustment Bureau, Inc. v.
Ingram, 678 S.W.2d 28, 37 (Tenn. 1984) (cited in Warren v.

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No. 02-5702 Cooper v. MRM Investment Co., et al. 31
7Similarly, the Supreme Court has held, “What States may not do is
decide that a co ntract is fair enough to enforce all its basic terms (price,
service, credit), but not fair enough to enforc e its arbitration clause.”
Allied-Bruce Terminix Cos., Inc. v. Dobson, 513 U.S. 265, 281 (1995)
(quoted in Pyburn v. Bill Heard Chevrolet, 63 S.W .3d 3 51, 3 57 (Tenn. Ct.
App.), appeal denied (Tenn. 2001 )).
Metropolitan Gov’t of Nashville & Davidson Cty., 955
S.W.2d 618, 623 (Tenn. Ct. App. 1997)). The Court could
not invent a severability clause in order to “red-line” the cost-
splitting provision while enforcing the clause requiring
Cooper to arbitrate in the first place.7
The district court’s decision on this issue was also sound as
a matter of federal public policy. As the Eleventh Circuit
reasoned, “To sever the costs and fees provision and force the
employee to arbitrate a Title VII claim despite the employer’s
attempt to limit the remedies available would reward the
employer for its actions and fail to deter similar conduct by
others.” Perez v. Globe Airport Sec. Servs., 253 F.3d 1280,
1287 (11th Cir. 2001), vac’d by 294 F.3d 1275 (11th Cir.
2002). But see Gannon v. Circuit City Stores, 262 F.3d 677,
683 n.8 (8th Cir. 2001) (questioning Perez). Under the
contrary approach, an employer “will not be deterred from
routinely inserting such a deliberately illegal clause into the
arbitration agreement it mandates for its employees if it
knows that the worst penalty for such illegality is the
severance of the clause after the employee has litigated the
matter.” Brief of Amicus Curiae EEOC at 14-15 (citation
omitted). Our en banc decision in Morrison made clear that
the district court’s decision to reject MRM’s offer to pay was
the proper course. See Morrison, 317 F.3d at 676-77; accord
Gourley v. Yellow Transp., 178 F. Supp. 2d 1196, 1203-1205
(D. Colo. 2001) (rejecting employer’s offer to waive a
contractual cost-splitting provision).
Moreover, MRM’s offer was an impermissible attempt to
vary the terms of a contract. There was neither a meeting of
the minds nor consideration to support such a post hoc
32 Cooper v. MRM Investment Co., et al. No. 02-5702
8Under our decision in Morrison v. Circu it City Stores, Inc., 317 F.3d
646 (6th Cir. 2003) (en banc), the relevant co sts are C oop er’s out-of-
pocket costs, without reference to the possibility that she may later recoup
some of them. Hence the district court shall consider neither the
arbitrator’s possible award of fees and expenses to Cooper pursuant to the
AAA Rules, nor M RM ’s offer to pay Coo per’s arbitration costs.
unilateral amendment of the agreement. See Popovich v.
McDonald’s Corp., 189 F. Supp. 2d 772, 779 (N.D. Ill. 2002)
(accepting defendant’s offer to pay all arbitration costs,
contrary to contract, would effectively allow it to unilaterally
modify contract).
III. CONCLUSION
For the foregoing reasons, we reverse on all issues except
one: whether the likely costs of arbitration are so high that
they will deter Cooper or similarly situated employees from
exercising their right to arbitrate. On that issue we vacate and
remand for the court to analyze the likely arbitration costs
under the AAA’s rules prevailing on the date that MRM filed
its motion in district court to compel Cooper to arbitrate.8

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