Tuesday, 22 July 2003

Employers Wanting To Require Arbitration in California Still Face A Formidable Foe in Federal Courts

Circuit City which has become the poster child of arbitration enforcement litigation has suffered another hit in today's decision by the 9th Circuit. Circuit City Stores v. Mantor (9th Cir. 7/23/03) [pdf]. Deciding strictly under California state law, thus avoiding the question of whether or not Duffield would preclude the plaintiff's Title VII claims, the Court found even the revised arbitration agreement of Circuit City was both procedurally and substantively unconscionable and thus could not be enforced.

Although some of the items could be cured by revised drafting and the involvement of a neutral third party at an earlier stage, it seems that some of the conditions the court would impose for a valid agreement will be almost impossible to meet in the typical "arbitration as a condition of employment" case. It appears that the issue of arbitration of employment law disputes will remain a muddle in California for some time to come.

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