Nonmutual arbitration clause is OK
April 06, 2007 by Ross Runkel at LawMemo
An arbitration clause requires an employee to arbitrate her claims, but does not require the employer to arbitrate its claims. Does this make the agreement unconscionable?
The Oregon Court of Appeals took on this question in Motsinger v. Lithia Rose-FT (Oregon Ct App 04/04/2007), and decided that the agreement was not unconscionable. Motsinger will have to arbitrate her sex harassment claim.
Motsinger argued that the arbitration clause was substantively unconscionable because it required her to submit all of her potential claims to arbitration while imposing no similar requirement on the employer.
Courts around the country have been divided on this question. Most notably, the California Supreme Court has said that such an arrangement is presumptively unconscionable because arbitration agreements must have a "modicum of mutuality."
The Oregon court concluded that "an approach that focuses on the one-sided effect of an arbitration clause - rather than on its one-sided application - to evaluate substantive unconscionability is most consistent with the common law in Oregon regarding unconscionability of other kinds of contractual provisions and with state and federal policies regarding arbitration."
The court thus declined to dwell on the non-mutuality of the arbitration agreement - opting instead to focus on the effects of its provisions on the parties. Applying that analysis, the court declined to invalidate the arbitration agreement as unconscionable.
My view: This case treats arbitration agreements the same way other agreements are treated. "Mutuality" is a ghost from the past under the heading of consideration, and every sensible court has rejected the idea that a contract must have "mutuality of obligation." Look at any contract and you'll see that almost every clause favors one side or the other. It makes little sense to resurrect "mutuality" and put it under the heading of unconscionability. The Oregon court did not, although many courts do.
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