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Zuver v. Airtouch Commc'ns - 153 Wash. 2d 293, 103 P.3d 753 (2004)

Rule:

Procedural unconscionability is the lack of meaningful choice, considering all the circumstances surrounding the transaction including the manner in which the contract was entered, whether each party had a reasonable opportunity to understand the terms of the contract, and whether the important terms were hidden in a maze of fine print. These three factors should not be applied mechanically without regard to whether in truth a meaningful choice existed. 

Facts:

Defendants Airtouch Communications, Inc. ("Airtouch") offered plaintiff Therese R. Zuver employment as a sales support representative at the yearly salary of $ 21,000. As part of its offer of employment, Airtouch required that Zuver accept certain conditions. One such condition was that Zuver sign an agreement to arbitrate any employment-related disputes. After she accepted Airtouch's offer of employment, her medical condition of fibromyalgia worsened. Zuver requested a work-from-home and part-time set up from Airtouch, which Airtouch granted. Zuver began her part-time work schedule in June 1999, but by July 1999, she could no longer work even part-time because of her disability. Consequently, she went on medical leave until April 6, 2000, when Airtouch terminated her employment. Zuver filed a complaint in Washington superior court alleging that Airtouch violated the Washington Law Against Discrimination by discriminating against her because of her disability and by failing to accommodate her disability. Airtouch answered Zuver's complaint denying her allegations. Airtouch also filed a motion to compel arbitration and stay proceedings based on the signed arbitration agreement. The superior court granted the motion. Zuver was granted discretionary review and alleged that the arbitration agreement was both procedurally and substantively unconscionable. 

Issue:

Was the arbitration agreement both procedurally and substantively unconscionable? 

Answer:

No, as to procedural unconscionable; Yes, as to substantively unconscionable.

Conclusion:

The state supreme court affirmed the trial court's order compelling arbitration. The court ruled that Zuver's lack of bargaining power did not suffice to make the agreement procedurally unconscionable. Also, the provisions pertaining to attorney fees were not substantively unconscionable, because Zuver merely speculated that an arbitrator might construe the provision to deny her attorney fees if she prevailed on her discrimination claim. Further, Zuver's claim that the fee-splitting provision was substantively unconscionable was moot, as Airtouch had agreed to pay the entire amount of the arbitrator's fees. However, the court agreed with Zuver that the confidentiality and remedies provisions of the agreement were substantively unconscionable. The effect of the confidentiality provision was harsh and blatantly benefited only Airtouch because it hampered Zuver's ability to prove a pattern of discrimination or to take advantage of findings in past arbitrations. The remedies limitation provision blatantly and excessively favored Airtouch in that it allowed Airtouch alone access to a significant legal recourse. The court determined that it could easily excise the confidentiality and remedies provisions and enforce the remainder of the arbitration agreement. Thus, pursuant to the severance clause in the agreement, the court severed the confidentiality and remedies provisions and affirmed the order compelling arbitration.

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