Ferguson v. Countrywide Credit Indus.

298 F.3d 778

 

RULE:

When a court has to determine whether a contract is unconscionable, the court has to consider whether the contract is both procedurally and substantively unconscionable and whether the contract can be enforced without those terms, or whether it must be struck down entirely.

FACTS:

Plaintiff had worked for defendant, and sued defendant, alleging sexual harassment, retaliation, and hostile work environment, under Title VII of the Civil Rights Act of 1964. Defendant moved to stay the proceedings, and compel arbitration, based on an arbitration agreement that was signed by the plaintiff as a pre-condition to employment with the defendant. The District Court denied the Petition to Compel Arbitration, ruling that the agreement was unconscionable. Defendant appealed.

ISSUE:

Was the arbitration agreement as a condition to employment enforceable against the plaintiff.

ANSWER:

No.

CONCLUSION:

The appellate court found that the arbitration agreement was unenforceable against the plaintiff. The Court found that the agreement was procedurally unconscionable because, considering how it was negotiated and the plaintiff's position, the agreement was far more advantageous to the defendant. The Court also saw the contract as substantively unconscionable, because the contractual terms were so one-sided that they shock the conscience in calling for the arbitration fees to be borne by plaintiff, and the discovery provision did not allow for as many depositions of directors/supervisors. Further, this was the plaintiff's only option for remedy. The Court was not persuaded by this argument and it maintained that the types of claims to be arbitrated, along with the fee and discovery provisions permeated the agreement as a whole and thus it was per se unconscionable.

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