Even so luminary a firm as O’Melveny has been smacked down by the courts (here, the Ninth Circuit) when trying to enforce employee arbitration agreements. California lawyers would therefore be well-advised to read the opinion covered at the California Employment Law Report this week: Arbitration Agreement Upheld Despite Employee’s Argument It Was Not Mutual And Adhesive
Here’s the clause:
I hereby agree to submit to binding arbitration all disputes and claims arising out of the submission of this application. I further agree, in the event that I am hired by the company, that all disputes that cannot be resolved by informal internal resolution which might arise out of my employment with the company, whether during or after that employment, will be submitted to binding arbitration. I agree that such arbitration shall be conducted under the rules of the American Arbitration Association. This application contains the entire agreement between the parties with regard to dispute resolution, and there are no other agreements as to dispute resolution, either oral or written.
This decision is made more interesting by the recent Parada decision (.pdf) (covered here and here) where the drafter’s failure to attach the JAMS arbitration rules cited in the agreement was one of the reasons the Court concluded the arbitration clause was substantively unconscionable. I think it’s safe to say at this point in the development of California law on these issues that it’s not malpractice for an attorney to fail to draft an enforceable arbitration clause. But as the opinions multiply, you can be sure some employer will be looking around for someone to name its legal counsel as the source of his discontent, blame its law firm for having to bear the expense of litigation, and claim damages as a result.
The best protection for drafters of arbitration clauses (particularly in California where the Courts remain suspicious of adhesion arbitration contracts) is to be familiar with all the case law on the topic in the last five years; to avoid any provision the Courts have used to tip the “sliding scale” in favor of non-enforcement and include those provisions which favorably incline the courts to enforce the clauses.
This is the complete interview by Robert Benjamin with Howard Gadlin, former Ombudsman and Director of the Center for Cooperative Resolution at the National Institutes of Health, filmed as part...By Howard Gadlin