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Circuit City Stores avoids sanctions
May 19, 2005 by Ross Runkel at LawMemo

Circuit City's latest appeal in Ingle v. Circuit City Stores (9th Cir 05/18/2005) was frivolous, but was not motivated by bad faith, so the 9th Circuit did not impose sanctions.

In the first appeal [here] the 9th Circuit ruled that the employer's arbitration agreement was unconscionable under California law, and therefore not enforceable.

Later, the 9th Circuit decided EEOC v. Luce, Forward, Hamilton & Scripps (9th Cir 2003) reversing the circuit's previous refusal to enforce agreements to arbitrate Title VII cases.

For some reason, Circuit City thought Luce, Forward changed the landscape, so they again asked for an order to arbitrate, again the trial court denied it, and again Circuit City appealed.

As the 9th Circuit pointed out, again, the underlying agreement was unconscionable under the law of California. Luce, Forward dealt solely with a federal issue which had nothing to do with the state law issue at hand. Hence, the appeal was frivolous ("wholly without merit"). But, without evidence of any bad faith motivation, the court did not impose sanctions.

My view: Yes, the appeal was without merit. I'm left wondering why anybody thought Luce, Forward had any impact on the law of unconsionability in California.

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