Arbitration Provision Failed Armendariz Tests.
Nelson v. Tucker Ellis, LLP is somewhat atypical, because it was the former attorney, rather than his former law firm, who “seized the bull by the horns”, initiating suit, and contending that the law firm released attorney Nelson’s privileged work product to other counsel, thereby interfering with his employment and relationships with his clients. Defendant Tucker Ellis, LLP appealed from the superior court’s order denying the law firm’s motion to compel arbitration. Nelson v. Tucker Ellis, LLP, Case No. A141121 (1/3 Dec. 15, 2014) (Jenkins, McGuiness, Siggins) (unpublished).
The Court of Appeal had little difficulty finding that the first prong of unconscionability, procedural unconscionability, was satisfied by the take-it-or-leave-it nature of the attorney-employee contract.
Nor did the Court have difficulty finding the second prong of unconscionability, substantive unconscionability, based on the failure of the arbitration provision to satisfy two of five requirements established by Armendariz v. Foundation Health Psychcare Services, Inc., 24 Cal.4th 83 (2000). First, the Conflict Prevention and Resolution rules impermissibly allowed for shifting costs and fees to Nelson, potentially putting him in a situation worse than he would have been under a litigation scenario, and creating uncertainty and risk. Second, the arbitrator was impermissibly precluded from granting certain monetary damages, thereby limiting the availability of relief available in court proceedings. Thus, the order below was affirmed.
One aspect of the case that caught our attention was that Nelson was a “non-capital partner”, but the trial court treated him as an employee. This was probably a pragmatic recognition that non-capital employees and employees may be factually indistinguishable. Treating him as an employee allowed for ready application of the Armendariz standards.
BLOG BONUS: Whatever the merits of the law firm’s argument, we note that the website of Tucker Ellis exhibits a sense of humor, describing its attorneys as “outstanding in our field,” and showing them standing in a corn field. Along the lines of a famous Twilight Zone episode, Mr. Nelson may have wished his former employers “into the cornfield.”
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