Panel Rejects Employee's Arguments That Six Provisions Are Unconscionable, Requires Severance Of "Judicial Carve-Out" Provision, And Punts On "Reaffirmation Clause" Provision.
Poublon v. C.H. Robinson Company, et al., No. 15-55143 (9th Cir. 2/3/17) (Ikuta, Callahan, Bea) is an opinion that employers will likely cite when arguing against employee claims that an arbitration clause is substantively unconscionable. Plaintiffs' employment attorneys seeking to avoid arbitration should know about the decision, though they may not find it helpful.
After Lorrie Poublon filed a class action complaint against her employer, her employer moved to compel arbitration. The district court denied C.H. Robinson's motion to compel, and the employer appealed.
As with many arbitration provisions, the Court of Appeal found that the agreement was a contract of adhesion, but that there was a low degree of procedural unconscionability.
The panel then addressed eight provisions that the employee had attacked as substantively unconscionable, with the final scorecard overwhelmingly in favor of the employer. Here is the rundown: (1) per the employer's concession, a judicial carve-out provision allowing the employer to go to court, but not the employee, was unconscionable, but could be severed; (2) the waiver of PAGA representative claims, while unenforceable under California law, was not substantively unconscionable; (3)the Minnesota venue provision requiring the employee to litigate a thousand miles away from her home in California, was valid, because the employee "had not met the burden" of showing the clause is unreasonable; (4) the confidentiality provision was not unconscionable; (5) the sanctions provision, allowing for an award of attorney's fees and costs against a party for unreasonable conduct, was not unconscionable, because as drafted it was consistent with sections 128.7 and 2023.030(a) of the California Code of Civil Procedure; (6) the provision allowing for unilateral change of the agreement was limited by the covenant of good faith and fair dealing; (7) discovery limitations were valid as an "important component of the 'simplicity, informality, and expedition of arbitration.'" (quoting Armendariz); and, (8) the court did not need to address the validity of a "reaffirmation clause" arguably requiring reaffirming an illegal noncompetition agreement, because that provision was not part of the arbitration clause.
Reversed and remanded.