The Ninth Circuit Calls a False Start on The Finish Line’s Attempt to Compel Arbitration: Refuses to Enforce Arbitration Agreement

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11/23/2017

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The Ninth Circuit Calls a False Start on The Finish Line’s Attempt to Compel Arbitration: Refuses to Enforce Arbitration Agreement

By: Jarred Lieber 

In a recent decision, the Ninth Circuit refused to enforce an employer’s arbitration agreement, denying the employer’s request to force its former employee to arbitrate her claims against it. The plaintiff filed a lawsuit in the district court alleging that her employer, The Finish Line, violated the law by failing to provide reasonable accommodations of her pregnancy-related disabilities, and terminating her for requesting and taking pregnancy leave. The Finish Line asked the district court to order the parties to arbitrate the case pursuant to the arbitration agreement the plaintiff signed.   

Despite the existence of a signed arbitration agreement, the district court denied The Finish Line’s request.  The Employer appealed the decision to the Ninth Circuit, which upheld the district court’s order refusing to compel arbitration.

The Ninth Circuit’s decision highlighted several issues with the arbitration agreement at issue.  For instance, it contained a section requiring the employee to split the cost of arbitration with the employer and a section allowing the employer, but not the employee, to take certain claims to court.  The Ninth Circuit agreed with the district court that these sections were unfair to the employee.  The Court reasoned that it was unjust that an employee making $15 an hour could be required to pay upwards of $10,000 at the start of arbitration, not including attorney’s fees and costs, in order to pursue her claims. Also, while parties are generally allowed to carve-out certain types of claims from their arbitration agreements, the Court held that it was unfair that the agreement only allowed the employer to take certain claims to court. Lastly, the Court held that that the agreement was also unfair because it was offered on a “take it or leave it” basis.  In other words, there was no discussion of the terms of the agreement or opportunity for the employee to ask questions.  Although an insufficient basis on its own for refusing to enforce an arbitration agreement, it was yet another strike against the agreement.  As a result, the Court held that the entire agreement was unfair and upheld the district court’s refusal to enforce the arbitration agreement.

COUNSEL TO MANAGEMENT:

As this case reminds us, it is important that an arbitration agreement is carefully crafted and even-handed and that the roll-out of the agreement is handled with extreme care.  Should the agreement come under scrutiny by the courts, the method of the roll-out process will be as important as the wording of the agreement. Please contact the experts at The Saqui Law Group if you have questions about your existing arbitration agreement or if you need guidance in rolling out a new agreement.

 

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