NT Lakis has filed a “friend-of-the-court” brief with the U.S. Supreme Court in an important case implicating the general enforceability of agreements to arbitrate employment disputes in the State of California.
At issue in MHN Government Services v. Zaborowski is whether a California legal doctrine known as the Armendariz rule is consistent with the Federal Arbitration Act (FAA).
In MHN, the U.S. Court of Appeals for the Ninth Circuit applied the Armendariz rule to invalidate an arbitration provision contained in an employment contract on grounds that it contained purportedly unconscionable clauses. Such a defect, according to the appeals court, gives rise to a presumption that the arbitration agreement was implemented as a means of depriving the plaintiffs of their statutory rights. The Ninth Circuit also invalidated the arbitration provision in its entirety, rather than sever the offending clauses in accordance with the agreement’s severability provision.
Our brief argues that the Armendariz rule – which in its application, if not design, results in the invalidation of employment arbitration agreements at disproportionately higher rates than contracts generally – unlawfully conflicts with the FAA, which expresses a strong federal policy favoring private arbitration, and mandates that arbitration agreements be placed on an equal footing with other types of contracts.