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On the section of its Web site describing its labor and employment practice, O’Melveny & Myers says that “much of our work and advice is preventive in nature, conducted with the goal of minimizing or eliminating the employer’s exposure to liability and costly litigation.” But with a Monday ruling, a three-judge panel of the Ninth Circuit U.S. Court of Appeals said that the firm didn’t live up to its marketing when it tried to impose an aggressive arbitration agreement on its employees. The ruling came in an overtime case brought by former paralegal Jacquelin Davis, who left the firm in 2003. In striking down the agreement � which applied to all of the 1,044-lawyer firm’s employees, including its associates � the panel found that several distinct areas of the agreement violated California law, beginning with the fact that it was foisted upon employees with a 2002 e-mail that said it “applies to and is binding on all employees (including associates) hired by � or who continue to work for � the firm on or after November 1, 2002.” Hawaii Senior U.S. District Judge Samuel King � sitting on the Ninth Circuit panel by designation � said that this notice gave employees an illegal “take it or leave it” choice by saying that employees unwilling to sign the agreement must leave the firm within three months. “Where � as is the case with Davis as a paralegal in an international law firm � the employee is facing an employer with ‘overwhelming bargaining power’ that drafted the contract, and presented it to [Davis] on a take-it-or-leave-it basis, the clause is procedurally unconscionable,” King wrote. He also said the agreement imposed improper confidentiality restrictions on employees; allowed the firm an overly broad opportunity to opt out of arbitration in cases involving attorney-client issues; illegally curtailed employees’ ability to bring administrative actions with public agencies; and illegally restricted employees’ time frame to bring claims against the firm to one year. King was joined by Ninth Circuit Judges Margaret McKeown and Marsha Berzon. The opinion was welcomed by attorneys who represent employees, particularly for its ruling on the “take it or leave it” issue. “I was happy with the clarity of the opinion in rejecting the argument that if you just give people enough time, finding a new job is an option,” said Scott Kronland, a partner at plaintiff and union-side firm Altshuler Berzon. Cliff Palefsky, a partner at McGuinn, Hillsman & Palefsky and an outspoken critic of mandatory arbitration, was more pointed. “I don’t know what O’Melveny was thinking,” he said. “Sending an employee an e-mail or a memo saying by continuing to work, you waive your constitutional and statutory rights, is not appropriate.” But Alan Kaplinsky, a partner at Ballard Spahr Andrews & Ingersoll in Philadelphia and a longtime proponent of mandatory arbitration, panned the decision. “It is not surprising,” he wrote in a Monday e-mail.”The Ninth Circuit and the California appellate courts have been extremely hostile to consumer and employee arbitration agreements, and this opinion is just one more opinion to add to the litany of hostile opinions which are probably preempted by the Federal Arbitration Act.” He added that the panel “gave short shrift” to O’Melveny’s argument that problematic portions of the agreement could be struck down while leaving the rest of it in place. Several O’Melveny partners, including firm chairman Arthur Culvahouse, did not respond to e-mails and phone calls seeking comment, though in an e-mail a spokesman said the firm is “studying the decision, with which we respectfully disagree, and evaluating our options.” The spokesman, Alexi Estrella, did not know whether O’Melveny prepared the plan in-house or had outside counsel do the work.

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