In early April, the Ninth Circuit Court of Appeals reviewed a lower court’s holding that an arbitration clause in an employment agreement with JP Morgan was procedurally and substantively unconscionable. Because the arbitration agreement was adhesive in the employment agreement, the court held that it was “at least minimally procedurally unconscionable under California law.” However, the court continued to state that it was not substantively unconscionable for a variety of reasons, including where it excluded certain actions seeking only injunctive relief—where the court acknowledged that the carve out “does no more than recite the procedural protections” already afforded by California law. Additionally, where one party has the legal obligation to pay all of the costs unique to arbitration, the court held that it was not substantively unconscionable to have a non-mutual initiation provision. Next, the court determined that the employee could not challenge a confidentiality provision on the grounds that it “prevents others from observing and learning of Chase’s illegal policies and procedures” where no harm to himself was alleged. Finally, the court found that explicitly allowing an arbitrator to rule on summary judgment motions was not substantively unconscionable. As such, the Ninth Circuit reversed the lower court’s finding that the arbitration clause was unconscionable.
Ali v. J.P. Morgan Chase Bank, N.A., Case No. 14-15076 (9th Cir. Apr. 7, 2016).