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Monday, February 22, 2010

Court of Appeal Upholds Arbitration Agreement

In Dotson v. Amgen, Inc. --- Cal.Rptr.3d ----, 2010 WL 189653 (January 21, 2010), an in-house attorney sued Amgen for wrongful termination. The parties' employment agreement contained an arbitration clause and arbitration procedures, including the following:
Each party shall have the right to take the deposition of one individual and any expert witness designated by another party.... Additional discovery may be had where the arbitrator selected pursuant to this agreement so orders, upon a showing of need.
The trial court denied the employer's petition to compel arbitration, finding that the arbitration clause was unconscionable, and the employer appealed. The Second District Court of Appeal reversed, holding as follows:
  1. Mr. Dotson was "a highly educated attorney, who knowingly entered into a contract containing an arbitration provision in exchange for a generous compensation and benefits package," and the agreement entailed only a small degree of procedural unconscionability, as a result.
  2. The agreement's limitation on discovery was not substantively unconscionable because it helped achieve arbitration's goal of streamlining dispute resolution and, in any case, Mr. Dotson could apply to the arbitrator for additional discovery.
  3. Even if the discovery limitation clause had been substantively unconscionable, it did not permeate the agreement with unconscionability, and the trial court should have severed it.
  4. The agreement's provision allowing the defendant to make motions for summary judgment was not substantively unconscionable and did not render the limitation on discovery substantively unconscionable.
  5. A clause giving the arbitrator "exclusive authority to resolve any dispute relating to the interpretation, applicability, enforceability, or formation of this Agreement...." did not render the agreement substantively unconscionable.
  6. The agreement's standard of review clause was not substantively unconscionable. The clause provided: "A party opposing enforcement of an award may not do so in an enforcement proceeding, but must bring a separate action in any court of competent jurisdiction to set aside the award, where the standard of review will be the same as that applied by an appellate court reviewing a decision of a trial court sitting without a jury."
It is possible that Mr. Dotson's status as an attorney changed either court's procedural unconscionability analysis and the outcome of the case. This reminds me of another case, Olinick v. BMG Entertainment 138 Cal. App. 4th 1286 (2006), another case that went poorly for an attorney plaintiff. In that case, the Court upheld a New York choice-of-law provision against an attorney employee who had counsel negotiate his employment agreement.

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