Washington And California State Law Unconscionability Analysis Are Different.
DeGraff v. Perkins Coie California P.C. et al., A148405 (1/1 2/21/18) (Dondero, Humes, Banke ) (unpublished) applies Washington state law to analyze the enforceability of an arbitration provision in a dispute between an attorney and his former law firm. Reversing the order denying the defendants' motion to compel arbitration, the Court holds that, except for two provisions, the arbitration provision is not unconscionable, and the two unconscionable provisions can be severed.
An interesting aspect of the opinion is that it underscores how unconscionability analysis can differ from state to state. California requires procedural and substantive unconscionability to overturn an arbitration agreement, and those two factors may be considered on a sliding scale. "Under Washington law, an agreement may be invalidated if it is either substantively or procedurally unconscionable."
The Court of Appeal agreed with the trial court that the confidentiality provision providing that the arbitration "shall be strictly confidential" was substantively unconscionable under Washington state law, but also held that it could be severed. Relying on a Washington case, Zuver v. Airtouch Communications, Inc., 153 Wn.2d 293 (2004), the Court of Appeal agreed that under Washington state law, the confidentiality provision only benefited the employer, hampered an employee's ability to prove a pattern of discrimination or take advantage of past arbitrations, and undermined an employee's confidence in the fairness and honesty of the arbitration process. That's Washington state law, and the reasoning is worthy of consideration. However, I could also see a California state court brushing such considerations aside, and instead saying that the provision applied to both parties, that the contract had been signed by a seasoned attorney, that confidentiality could benefit either side (or maybe that compelling business reasons allow for confidentiality) and holding that the confidentiality provision is not unconscionable.
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