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In upholding an employee arbitration agreement, a federal district court in New Jersey rejected the employee’s argument that discovery limitations rendered the agreement unconscionable and therefore unenforceable.
In Yagoda v. Strang Corp., Civ. No. 08-1901, 2008 WL 4606306 (D. N.J. Oct. 16, 2008), Yagoda sued her former employer, Strang, for gender discrimination. In response, Strang moved to compel arbitration of Yagoda’s claims based on a standardized arbitration agreement. In opposing the motion, Yagoda argued that discovery limitations rendered the arbitration agreement unconscionable and therefore unenforceable.
In addressing the unconscionability challenge, the Court found the agreement “lack[ed] the indicia of procedural unconscionability necessary to invalidate an adhesion contract,” because the terms were neither “hidden [n]or unduly complex.” The Court also found no substantive unconscionability, noting that the agreement was fully mutual and provided for streamlined discovery that could be expanded at the discretion of the arbitrator.
According to the Court, these provisions fell far short of the substantive unconscionability that arose from the complete ban on written discovery or depositions in Lucey v. FedEx Ground Package Sys., Inc., 2007 WL 3052997, at *5 (D. N.J. Oct. 18, 2007).
The Court concluded that Yagoda’s real objection was to arbitration itself, not the agreement’s terms, stating that “the very purpose of arbitration is to avert the extraordinary expense of time, money, and other resources that often accompanies litigating a case in court. The arbitration process therefore must constrain the disputing parties; they will necessarily lack the flexibility – particularly in obtaining discovery – that a trial affords.”
Accordingly, the Court upheld the arbitration agreement and granted Strang’s motion to compel arbitration.
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