Siding with former Winston & Strawn income partner Constance Ramos, a California appellate panel has set aside an arbitration agreement that would have kept a gender bias case against the law firm out of court.
A three-judge panel at the first appellate district of the California Court of Appeal held on Friday that an arbitration pact Winston had tried to enforce as part of its partnership agreement was “unconscionable” and that the entire arbitration pact should be considered void. The decision comes more than a year after Ramos, an intellectual property specialist who now works at her own firm, Akira IP, lodged the suit, saying she faced gender discrimination and retaliation at Winston.
Ramos alleged that she was unfairly passed over for work and effectively forced out of the firm. Her suit is one of several brought in recent years by women partners at large law firms who claim they have been paid and treated unfairly compared with their male counterparts.
Previously, a trial court in San Francisco had sided with Winston on the arbitration issue, finding that Ramos had signed a partnership agreement that governed her claims against the firm. But the appeals court ruling on Friday reached the opposite result.
Among several specific issues the court had with the arbitration pact, the appeals court wrote that provisions in the agreement requiring Ramos to share in the costs of arbitration and pay her own legal fees were both unconscionable terms. The court also faulted Winston’s agreement for its confidentiality provisions, which, the panel found, would restrict Ramos’ ability to conduct informal interviews, as opposed to formal depositions, of potential witnesses in the case.
“Because it requires her to keep ‘all aspects of the arbitration’ secret, she would be in violation if she attempted to informally contact or interview any witnesses outside the formal discovery process,” the court wrote. “Such a limitation would not only increase Ramos’s costs unnecessarily by requiring her to conduct depositions rather than informal interviews, it also defeats the purpose of using arbitration as a simpler, more time-effective forum for resolving disputes.”
Another portion of the appeals court’s analysis focused on a key issue that will likely remain at the heart of the case as it moves forward: whether Ramos is effectively an employee because she was a nonequity “income” partner at Winston.
The appeals court stopped short of answering that question. But it also determined there was enough of a power imbalance with respect to the arbitration agreement that it should be analyzed under a 2000 state Supreme Court decision, Armendariz v. Foundation Health Psychcare Services, which found against arbitration agreements that limit the scope of an employee’s remedies under the employment laws relevant to the case.
Here, the appeals court wrote, the wording of Winston’s arbitration pact would “preclude the arbitrators from providing remedies that would otherwise be available in a court of law” under California’s Fair Employment and Housing Act (FEHA) and other laws invoked in Ramos’ gender bias suit.
“The record demonstrates Winston was in a superior bargaining position vis-à-vis Ramos akin to that of an employer-employee relationship, and there is no evidence in this record that Ramos had an opportunity to negotiate the arbitration provision,” the appeals court wrote. The court later concluded, “As the express language of the agreement prevents Ramos from obtaining remedies under her statutory claims, the provision is unenforceable.”
Orrick, Herrington & Sutcliffe partner Lynne Hermle, no stranger to defending high-profile gender bias cases in the Bay Area, argued the appeal for Winston. She was not immediately available for comment on Tuesday.
Ramos’ lawyer, Noah Lebowitz, who runs his own employee rights firm in Berkeley, said in an interview on Tuesday that he and his client were very happy with the appeals court’s decision.
“All my client had sought from the beginning of this case is to have the ability to bring her claims to a jury after discovery and with all remedies available to her,” Lebowitz said. “We think it is important that claims of pay equity and equal pay are brought in open court because the wage gap will never be closed and eliminated unless there is a public reckoning of the situation.”