Ninth Circuit strikes down law firm's dispute resolution program for employees
In Davis v. O’Melveny & Myers, the Ninth Circuit ruled a mandatory arbitration clause imposed by a law firm upon employees unconscionable under California law. The firm’s dispute resolution program, which created deadlines for bringing claims, imposed confidentiality requirements, compelled mediation and culminated in binding arbitration, was imposed on a take it or leave it basis. The only way to opt out of the program would be to leave the employment entirely. The fact that employees had three days notice of what would be imposed upon them was not sufficient to salvage the “agreement” from procedural unconscionability.
The agreement’s one year claims filing deadline, potential waiver of statutory rights, and confidentiality requirements rendered it substantively unconscionable. The latter, for example, would have greatly hampered any discovery, as a claimant could not contact current or former employees regarding the claim.
