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The Ninth Circuit Strikes Again: Unconscionability and Arbitration Agreements on the West Coast

By C. Griffith Towle

In a recent decision, the Ninth Circuit revisited the thorny issues involving the doctrine of unconscionability and its application to arbitration agreements. In Davis v. O'Melveny & Myers, 485 F.3d 1066 (9th. Cir. 2007), the court relied on a number of relatively recent, and by now well-known, cases in finding that a mandatory arbitration provision in O'Melveny's employee dispute resolution materials was unconscionable and, therefore, unenforceable.

The dispute resolution materials were distributed by O'Melveny to its employees by interoffice mail and posted on the office intranet site, and by their terms became effective three months later. In considering whether the agreement was unconscionable, the court focused on the various exceptions ('carve-outs') to the arbitration requirement, as well as the provision requiring notice and a demand for mediation within one year from when the basis of the claim was known, and a confidentiality clause.

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