Court Upholds Restrictive Arbitration Agreement in High Level Employment Dispute

Darrell Dotson, a patent attorney hired by Amgen, Inc., was required to sign an arbitration agreement as part of his employment contract. The arbitration agreement provided that the parties were limited to “one deposition each,” unless the arbitrator ordered otherwise.

After Dotson was terminated, he sued Amgen, claiming wrongful termination. He contended in part that he was fired for being a whistleblower. In response to Dotson’s suit, Amgen moved to compel arbitration. The trial court rejected Amgen’s motion on the ground that the deposition restriction was unconscionable. The trial court had no problem enforcing the rest of the arbitration arrangement, but it refused to sever the restrictive clause on the ground that to do so would have required the court to “rewrite” the parties’ agreement. With the arbitration agreement thus “infected” by the objectionable provision, the trial court refused to order the case to arbitration. The court of appeal reversed and remanded the case with an order requiring the trail judge to enter an order compelling the matter to proceed to arbitration under the disputed clause. The court of appeal concluded that while the arbitration agreement was presented on a “take it or leave it” basis and was therefore procedurally unconscionable, that did not end the matter. The agreement did, however, provide that the lawyer-employee had the opportunity to review the proposed terms with counsel of his own choosing and was entering into the arrangement voluntarily. The court of appeal observed that “because the degree of procedural unconscionability is minimal, the agreement is unenforceable only if the degree of substantive unconscionability is high.” The court did not find that the discovery restriction to be unconscionable. “Arbitration is meant to be a streamlined procedure,” said the court. “Limitations on discovery, including the number of depositions, is one of the ways streamlining is achieved.” The court held it was permissible to defer discovery decisions to the arbitrator who would act pursuant to the broad mandate of the AAA rules. “Although the Amgen agreement purports to limit discovery to one deposition of a natural person, the agreement gives the arbitrator the broad discretion contemplated by the AAA rules to order the discovery needed to sufficiently litigate the parties’ claims.” The court refused to assume that a neutral arbitrator would not be fair to the employee. “We will not presume,” emphasized the court, “that the arbitrator will act in a way that is unfair to the employee.” A copy of this decision, Dotson v. Amgen, Inc., is attached for your convenience.

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