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How not to write an arbitration clause
February 04, 2008 by Ross Runkel at LawMemo

Roberto Rodriguez sued his former employer, asserting state law claims for unpaid commissions. The employer moved to compel arbitration, but the trial court denied the motion. The Washington Court of Appeals affirmed, agreeing with the trial court that the arbitration agreement was inherently unfair and unenforceable.

Rodriguez v. Windermere Real Estate (Washington Ct App 01/28/2008).

As the court put it:

Windermere provided the contract, wrote the arbitration procedures, and selects the arbitrators. The arbitrators must be solely from current employees within the Windermere franchisee family. The arbitrators are all brokers or agents of sister franchisees, which have a continuing, mutually beneficial relationship with the franchisor. The arbitrators are expected to reflect the “Windermere Way.” The “Windermere Way” may mean that it is in the interests of Windermere Wall Street to have the commission in dispute paid to a continuing employee rather than to someone whose employment it has terminated. We conclude the potential arbitrators have a known, existing and substantial relationship with the party-franchisee. On these facts, the process does not satisfy the neutrality requirements of the arbitration statute. We affirm the trial court’s denial of the motion to compel arbitration.

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