Walters sued his employer for unpaid overtime. His case was dismissed because his employment agreement contained an arbitration clause governed by the Federal Arbitration Act (FAA), which requires evidence that the employer is engaged in interstate commerce. ?Employees can overcome such clauses and sue in court where the clauses are procedurally or substantively unconscionable under Washington law. ?Walter’s agreement contained a covenant not to compete and a confidentiality provision, both of which could be litigated in court. ?All other claims had to be handled through arbitration.?? In a harmful opinion for employees that ignored all positive Ninth Circuit holdings on the issue, Division I affirmed the trial court, stating that where the contract as a whole is supported by consideration, “most courts have not ruled the arbitration clause invalid? for? lack? of? mutuality,? even? when? the clause compelled one party to submit all disputes to arbitration but allowed the other party the choice of pursuing arbitration or litigation in the courts.”?? The court found Walter’s arrangement sufficiently? mutual ?because ?”A.A.A. ?does ?not have complete choice and Walters is not forced into arbitration exclusively,” and noted that although? the? employer? is? more? likely? to? seek relief under those provisions, the clause allows either party to do so.?? The court also ruled that “Walters? ?has? ?not? ?shown? ?that? ?the? ?costs? ?of arbitrating? his? claims ?are? prohibitive,” commenting that Mendez v. Palm Harbor Homes, 111 Wn. App. 446 (2002) — which held prohibitively high costs unconscionable — was in the context of RCW 7.04 so, “It is not clear that a similar analysis would apply” under the FAA. Finally, Division I held that “mere inequality of bargaining power,” and the use of an adhesion contract, were insufficient to establish unconscionability.?????? ?Walters v. AAA Waterproofing,? ?Inc.,?? No.?? 52294-9-I?? (3/1/04; Baker, Schindler, Coleman).
Pre-dispute Employment Arbitration Agreement Upheld
Mar 1, 2004