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Workers’ advocates rejoiced Tuesday when the 9th U.S. Circuit Court of Appeals once again showed its distaste for one-sided mandatory pre-dispute arbitration contracts and gave employers who use such contracts the burden of proving their fairness. In a unanimous opinion authored by Judge Harry Pregerson, the 9th Circuit struck down the arbitration contract proffered by Circuit City Stores Inc., calling it “oppressive.” According to the court, in Ingle v. Circuit City, 03 C.D.O.S. 3986, the fact that Circuit City’s contract barred class actions and imposed a statute of limitations made it substantively and procedurally unconscionable. And the mere fact that certain employees must submit to arbitration is one-sided since it’s unlikely that the employer would need to bring a claim against a clerical worker. “Because the possibility that Circuit City would initiate an action against one of its employees is so remote, the lucre of the arbitration agreement flows one way: The employee relinquishes rights while the employer generally reaps the benefits of arbitrating its employment disputes,” Pregerson wrote. Plaintiff Catherine Ingle was a San Diego Circuit City employee who sued the company for sexual harassment and sex discrimination in 1999. Tuesday’s opinion elaborates upon previously established doctrine, said San Francisco plaintiffs’ attorney Michael Rubin, of Altshuler, Berzon, Nussbaum, Rubin & Demain, and is good news for lawyers who represent workers. In 2002, the 9th Circuit struck down Circuit City’s arbitration contract in another case, Circuit City Stores v. Adams, 279 F.3d 889. As in its previous ruling on Circuit City’s contracts, the court followed the reasoning of the 2000 California Supreme Court ruling, Armendariz v. Foundation Health Psychare Services Inc., 24 Cal.4th 83, which held that such contracts must demonstrated a “modicum of bilaterality.” But the court indicated that the onus of proving this bilaterality is the employers’ burden, noting that arbitration contracts such as Circuit City’s raise a “rebuttable presumption of substantive unconscionability.” “Unless the employer can demonstrate that the effect of a contract to arbitrate is bilateral — as is required under California law — with respect to a particular employee, courts should presume such contracts substantively unconscionable,” wrote Judge Pregerson. In a footnote, Pregerson stressed that this is not a blanket rule outlawing workplace arbitration agreements. “I think they’re saying if your agreement looks like this one, it isn’t going to work,” said Thomas Klein, an Oakland, Calif. employment attorney.

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