Kanbar v. O'Melveny & Myers

849 F. Supp. 2d 902, 2011 WL 2940690, 2011 U.S. Dist. LEXIS 79447, 112 Fair Empl. Prac. Cas. (BNA) 1599
CourtDistrict Court, N.D. California
DecidedJuly 21, 2011
DocketNo. C-11-0892 EMC
StatusPublished
Cited by10 cases

This text of 849 F. Supp. 2d 902 (Kanbar v. O'Melveny & Myers) is published on Counsel Stack Legal Research, covering District Court, N.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kanbar v. O'Melveny & Myers, 849 F. Supp. 2d 902, 2011 WL 2940690, 2011 U.S. Dist. LEXIS 79447, 112 Fair Empl. Prac. Cas. (BNA) 1599 (N.D. Cal. 2011).

Opinion

ORDER GRANTING DEFENDANT’S MOTION TO COMPEL ARBITRATION

EDWARD M. CHEN, District Judge.

Plaintiff Paulina Kanbar has filed suit against Defendant O’Melveny & Myers (“OMM”), asserting claims for, inter alia, fraud, retaliation, sex discrimination, and failure to prevent discrimination. Ms. Kanbar brings- both class claims as well as individual claims. The class claims are predicated on OMM’s alleged failure to inform its. employees that, in Davis v. O’Melveny & Myers, 485 F.3d 1066 (9th Cir.2007), the Ninth Circuit deemed OMM’s arbitration agreement (known as the Dispute Resolution Program (“DRP”)) unenforceable due to unconscionability. The individual claims are the retaliation and discrimination claims. Currently pending before the Court is OMM’s motion to compel arbitration. OMM’s basic argument is that, even though the Ninth Circuit found its DRP unconscionable in Davis, Davis is no longer good law in light of the Supreme Court’s recent decision in AT & T v. Concepcion, — U.S.-, 131 S.Ct. 1740, 179 L.Ed.2d 742 (2011), and therefore Ms. Kanbar should be compelled to arbitration consistent with the DRP.

Having considered the parties’ briefs and accompanying submissions, as well as the oral argument of counsel, the Court hereby GRANTS the motion to compel. While the Court disagrees with OMM that [905]*905Concepcion overrules Davis, it agrees that Ms. Kanbar waived her right to a judicial forum.

I. DISCUSSION

A. Davis and Concepcion

Because Davis and Concepcion are the critical cases here, the Court begins its analysis by providing a brief overview of each case.

1. Davis

In Davis, the plaintiff filed a class action against OMM for violations of the Fair Labor Standards Act (“FLSA”) and other state and federal labor statutes. The plaintiff claimed that OMM had failed to pay for overtime and denied rest and meal periods. See Davis, 485 F.3d at 1070. OMM moved to compel arbitration based on the DRP (the same arbitration agreement at issue in the case at bar). The Ninth Circuit concluded that the DRP was unenforceable:

Under California law, a contractual clause is unenforceable if it is both proeedurally and substantively unconscionable. Courts apply a sliding scale: “the more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa..” Still, “both [must] be present in order for a court to exercise its discretion to refuse to enforce a contract or clause under the doctrine of unconscionability.”

Id. at 1072.

The court first found that the DRP was procedurally unconscionable because— even though there were no facts of adhesion such as surprise or concealment — it was, in essence, a “take it or leave it” condition of employment, i.e., if an employee did not agree to arbitrate, then his or her only option was to leave and work somewhere else. See id. at 1073.

Second, the court found that DRP had four problematic provisions that were substantively unconscionable.

(a) The Notice Provision. This provision gave an employee only one year within which to give notice from when any claim was known to him or her or with reasonable effort should have been known to him or her. The court noted that this amounted to a one-year statute of limitations and that it had previously found such shortened limitations periods to be substantively unconscionable in other cases. The court further noted that shortened limitations periods were especially troubling with respect to employment-related statutory claims because they would effectively bar an employee from relying on a continuing violations theory. See id. at 1076-77.

(b) The Confidentiality Provision. This provision barred an employee from mentioning to anyone not directly involved in the mediation or arbitration what took place during the arbitration or even the fact that the arbitration existed in the first place. The Ninth Circuit pointed out that

these restrictions would prevent an employee from contacting other employees to assist in litigating (or arbitrating) an employee’s case. An inability to mention even the existence of a claim to current or former [OMM] employees would handicap if not stifle an employee’s ability to investigate and engage in discovery. The restrictions would also place [OMM] “in a far superior legal posture” by preventing plaintiffs from accessing precedent while allowing [OMM] to learn how to negotiate and litigate its contracts in the future. Strict confidentiality ... could also prevent others from building cases. It might even chill enforcement of Cal. Labor § 232.5, which forbids employers from keeping employees from disclosing [906]*906certain ‘working conditions’ and from retaliating against employees who do so.

Id. at 1078-79. The court acknowledged that confidentiality provisions in an arbitration agreement are not per se unconscionable but, here, the DRP’s confidentiality provision was “written too broadly.” Id. at 1079.

(c) The Provision Exempting OMM from Arbitration. Under the DRP, OMM was exempted from arbitration — ie., could seek judicial relief — for claims by the firm for injunctive or other equitable relief based on violations of the attorney-client privilege or the work product doctrine or based on the disclosure of other confidential information. The Ninth Circuit noted that, under California law, it was permissible for an employer to preserve a judicial remedy for itself based upon a legitimate commercial need or business reality. See id. at 1080. While “a provision allowing a law firm immediate access to a court for a limited purpose of seeking injunctive relief to protect confidential attorney-client information could constitute a legitimate business justification,” here, the provision was far broader — allowing OMM to seek other equitable relief for simply the disclosure of other confidential information. Id. at 1081. “ ‘California courts have routinely rejected [protecting proprietary information] as a legitimate basis for allowing only one party to an agreement access to the courts for provisional relief.’ ” Id.

(d) Ban on Administrative Actions. Finally, the DRP had a provision that precluded claims to an administrative agency (other than claims to the Equal Employment Opportunity Commission (“EEOC”) or a comparable state agency for discrimination). The Ninth Circuit noted first that the provision was void because, under California law, certain “public injunctions” are incompatible with arbitration and therefore actions seeking such injunctions cannot be subject to arbitration even under a valid arbitration clause. See id. at 1080, 1082. The court went on to explain that the provision was also void because the “all-inclusive bar to administrative actions (even given the listed exceptions ...) is contrary to U.S. Supreme Court and California Supreme Court precedent.” Id. at 1082. More specifically, under this precedent, claims to the EEOC or, e.g.,

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849 F. Supp. 2d 902, 2011 WL 2940690, 2011 U.S. Dist. LEXIS 79447, 112 Fair Empl. Prac. Cas. (BNA) 1599, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kanbar-v-omelveny-myers-cand-2011.