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A federal district court in Oregon has reconsidered the denial of a motion to compel arbitration, and has held that the lack of mutuality and substantively unconscionable terms in the agreement still warranted invalidating the entire agreement.
In Hamrick v. Aqua Glass, Inc., Civ. No. 07-3089-CL, 2008 WL 3411303 (D. Or. Aug. 11, 2008), a dispute arose between employee Hamrick and employer Aqua Glass. Aqua Glass sought to compel arbitration of Hamrick's claims in accordance with an arbitration agreement between the parties. The Court denied the motion, holding that the agreement's discovery, time limitation, and mediation provisions were unconscionable. It also noted that the agreement was non-mutual because it applied only to claims that would likely be brought by the employee, and was exempted from those that would likely be brought by the employer. Hamrick v. Aqua Glass, Inc., Civ. No. 07-3089-CL, 2008 WL 2853881 (D. Or. July 21, 2008).
At Aqua Glass's urging, the Court reconsidered the motion, but it was again denied. Aqua Glass cited a case holding that lack of mutuality "does not necessarily invalidate" the agreement. Motsinger v. Lithia Rose-FT, Inc., 156 P.3d 156, 161 (Or. Ct. App. 2007). The Court acknowledged it as a correct statement of the law, but observed that it did not stand for the proposition that lack of mutuality was never a basis for unconscionability.
The Court distinguished the Motsinger agreement from the Aqua Glass agreement by noting that the procedural and substantive rights in the former "were essentially the same as in a judicial proceeding," while those in the latter were fundamentally different in its limitations on discovery, the time in which to bring claims, and the range of claims within the scope of the agreement.
The Court reiterated that it was most troubled by the agreement's application to only the type of claims typically brought by an employee and not to those usually brought by an employer. According to the Court, this lack of mutuality can signal an unwillingness on the part of the employer to arbitrate on the same terms, and "[w]hen the cook refuses to dine at his own restaurant, closer scrutiny is justified."
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