Al-Safin v. Circuit City Stores ( 2005 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
MOHAMMED AL-SAFIN, 
Plaintiff-Appellee, No. 03-35297
v.
 D.C. No.
CV 99-1953 MJP
CIRCUIT CITY STORES, INC., a
Virginia corporation, OPINION
Defendant-Appellant.

Appeal from the United States District Court
for the Western District of Washington
Marsha J. Pechman, District Judge, Presiding
Argued and Submitted
May 5, 2004—Seattle, Washington
Filed January 14, 2005
Before: A. Wallace Tashima, Richard A. Paez, and
Carlos T. Bea, Circuit Judges.
Opinion by Judge Tashima;
Dissent by Judge Bea
649
652 AL-SAFIN v. CIRCUIT CITY STORES
COUNSEL
Red Darrell Berry, Livingston & Mattesich, Sacramento, Cali-
fornia, for the defendant-appellant.
Michael C. Subit, Frank Freed Subit & Thomas, LLP, Seattle,
Washington, for the plaintiff-appellee.
AL-SAFIN v. CIRCUIT CITY STORES 653
OPINION
TASHIMA, Circuit Judge:
Circuit City Stores, Inc. (“Circuit City”), appeals the dis-
trict court’s denial of its motion to dismiss and compel arbi-
tration of Mohammed Al-Safin’s employment discrimination
claims. The district court held that the arbitration agreement
between Circuit City and Al-Safin is unconscionable under
Washington state law, and thus unenforceable. We have juris-
diction pursuant to 9 U.S.C. § 16(a)(1)(B), see Ferguson v.
Countrywide Credit Indus., Inc., 298 F.3d 778, 780 (9th Cir.
2002), and we affirm.
BACKGROUND
In June 1997, Al-Safin applied for a job at a Circuit City
store in the state of Washington. Before Circuit City would
consider his application, Al-Safin was required to sign an
arbitration agreement entitled “Circuit City Dispute Resolu-
tion Agreement” (“DRA”). By signing the DRA, Al-Safin
agreed to resolve all disputes arising out of his employment
relationship with Circuit City through arbitration in accor-
dance with the “Circuit City Dispute Resolution Rules and
Procedures” (“DRRP”).
Rule 19 of the DRRP in effect in 1997 (the “1997 DRRP”)
stated that both the DRA and the DRRP could be amended
“on December 31st of any year upon giving 30 calendar days
written notice to Associates, provided that all claims arising
before alteration or termination shall be subject to the [DRA]
and corresponding [DRRP] in effect at the time the claim
arose.”1 (Emphasis added.)
1
“Circuit City refers to all job applicants and to current and former
employees as ‘Associates.’ ” Ingle v. Circuit City Stores, Inc., 328 F.3d
1165, 1169 n.1 (9th Cir. 2003).
654 AL-SAFIN v. CIRCUIT CITY STORES
While Al-Safin was still employed by Circuit City, the
DRRP was amended, effective December 31, 1997 (the “1998
DRRP”). The 1998 DRRP was essentially the same as the
1997 DRRP, except that Rule 19 was amended to state that
“all claims arising before alteration or termination shall be
subject to the [DRA] and corresponding [DRRP] in effect at
the time the Arbitration Request Form and accompanying fil-
ing fee is received by the Company.” (Emphasis added.) The
result of this modification would be that any arbitration filed
in 2003 would be governed by the DRRP in effect in 2003,
as opposed to the DRRP in effect when the claim arose.
Al-Safin continued to work for Circuit City after the 1998
modification until his employment was terminated in Novem-
ber 1998.
On December 2, 1999, Al-Safin filed a complaint against
Circuit City in the United States District Court for the West-
ern District of Washington alleging violations of both federal
and state anti-discrimination laws. Circuit City filed a motion
to compel arbitration, which was denied, and Circuit City
appealed.
In an unpublished disposition, we reversed the district
court’s decision and held that: (1) the district court improperly
relied on Duffield v. Robertson Stephens & Co., 144 F.3d
1182 (9th Cir. 1998), “to hold that the compulsory arbitration
contract was unenforceable;” (2) “to the extent that the district
court relied on the ‘knowing waiver’ requirement of Pruden-
tial Ins. Co. v. Lai, 42 F.3d 1299 (9th Cir. 1994), our exami-
nation of the relevant contract reveals that the requirement
was met as a matter of law;” and (3) “although we express no
opinion as to the enforceability of particular provisions, we
are unable to agree with the suggestion that illegal provisions
so infected the contract as to render it invalid as a matter of
federal law.” Al-Safin v. Circuit City Stores, Inc., 46 Fed.
Appx. 446 (9th Cir. 2002) (emphasis added) (“Al-Safin I”).
We explicitly remanded the case for the district court to con-
AL-SAFIN v. CIRCUIT CITY STORES 655
sider “the validity of these contracts under state law.” Id. at
447.
Effective December 31, 2002, long after Al-Safin was ter-
minated by Circuit City, and over three years into this litiga-
tion, the DRRP was again amended (the “2003 DRRP”). The
2003 DRRP modified many of the provisions that have been
deemed unconscionable or unenforceable in other proceed-
ings. See Circuit City Stores, Inc. v. Mantor, 335 F.3d 1101
(9th Cir. 2003); Ingle, 328 F.3d 1165; Circuit City Stores, Inc.
v. Adams, 279 F.3d 889 (9th Cir.), cert. denied, 535 U.S. 1112
(2002); Gannon v. Circuit City Stores, Inc., 262 F.3d 677 (8th
Cir. 2001); see also Morrison v. Circuit City Stores, Inc., 317
F.3d 646, 666 (6th Cir. 2003) (expressing “serious doubts
about the fairness and reasonableness” of the DRRP’s terms
“concerning remedies, the payment of arbitration fees, discov-
ery, and the limitations period for requesting arbitration”).
One week after adopting the 2003 DRRP, Circuit City
renewed its motion to compel arbitration and argued that
under the new DRRP the arbitration agreement is enforceable.
The district court held that the 1997 DRRP, and not the 1998
or 2003 DRRP, applies, and that the arbitration agreement is
unenforceable because it is unconscionable under Washington
law. After its motion for reconsideration was denied, Circuit
City appealed.
STANDARD OF REVIEW
The district court’s denial of a motion to compel arbitration
is reviewed de novo. Ingle, 328 F.3d at 1169.
DISCUSSION
[1] The Federal Arbitration Act (“FAA”) was enacted “to
reverse the longstanding judicial hostility to arbitration agree-
ments . . . and to place arbitration agreements upon the same
footing as other contracts.” Gilmer v. Interstate/Johnson Lane
656 AL-SAFIN v. CIRCUIT CITY STORES
Corp., 500 U.S. 20, 24 (1991). The FAA applies to arbitration
agreements, like the one here, that cover employment-related
claims. See Circuit City Stores, Inc. v. Adams, 532 U.S. 105
(2001). The FAA provides that arbitration agreements gener-
ally “shall be valid, irrevocable, and enforceable,” but courts
may decline to enforce them when grounds “exist at law or in
equity for the revocation of any contract.” 9 U.S.C. § 2.
“Thus, generally applicable contract defenses, such as fraud,
duress, or unconscionability, may be applied to invalidate
arbitration agreements without contravening” federal law.
Doctor’s Assocs., Inc. v. Casarotto, 517 U.S. 681, 687 (1996).
Accordingly, we review Al-Safin’s arbitration agreement
with Circuit City in light of the “liberal federal policy favor-
ing arbitration agreements,” Moses H. Cone Mem’l Hosp. v.
Mercury Constr. Corp., 460 U.S. 1, 24 (1983), and consider
its enforceability according to the laws of the state of contract
formation, see First Options of Chicago, Inc. v. Kaplan, 514
U.S. 938, 944 (1995); Ingle, 328 F.3d at 1170.
The parties dispute whether: (1) we previously decided that
the arbitration agreement is enforceable; (2) the agreement is
unconscionable under Washington law; and (3) any unen-
forceable contract provisions are severable.2
I. Law of the Case
Circuit City contends that our prior decision instructed the
district court to determine if any particular contract terms are
unenforceable under Washington law, while enforcing the
core contractual obligation to arbitrate. See Al-Safin I, 46 Fed.
Appx. 446. We disagree.
2
Our decision in EEOC v. Luce, Forward, Hamilton & Scripps, 345
F.3d 742 (9th Cir. 2003) (en banc) forecloses Al-Safin’s arguments that
Duffield prohibits enforcement of the arbitration agreement. See id. at 745
(overruling Duffield).
AL-SAFIN v. CIRCUIT CITY STORES 657
“The law of the case doctrine requires a district court to fol-
low the appellate court’s resolution of an issue of law in all
subsequent proceedings in the same case.” United States ex
rel. Lujan v. Hughes Aircraft Co., 243 F.3d 1181, 1186 (9th
Cir. 2001). The doctrine applies to both the appellate court’s
“explicit decisions as well as those issues decided by neces-
sary implication.” United States v. Cote, 51 F.3d 178, 181
(9th Cir. 1995) (quoting Eichman v. Fotomat Corp., 880 F.2d
149, 157 (9th Cir. 1989)). However, “[t]he doctrine does not
apply to issues not addressed by the appellate court.” Lujan,
243 F.3d at 1186.
Our prior disposition consists of two paragraphs. The first
addresses the validity of the arbitration agreement under fed-
eral law. By citing Duffield, 144 F.3d 1182, and Prudential
Ins. Co. v. Lai, 42 F.3d 1299, we determined that Circuit City
could compel arbitration of Al-Safin’s federal employment
discrimination claims, and that Al-Safin knowingly agreed to
arbitrate his federal claims. Al-Safin I, 46 Fed. Appx. at 446.
Although we expressed “no opinion as to the enforceability of
particular provisions,” we concluded that we were “unable to
agree with the suggestion that illegal provisions so infected
the contract as to render it invalid as a matter of federal law.”
Id. (emphasis added).
The second paragraph discusses what we did not decide.
We began with the general proposition that to be enforceable,
an arbitration contract “must meet the requirements of gener-
ally applicable state [contract] law.” Id. We then remanded
the case for the district court to determine the “validity of [the
agreement] under [Washington] state law.” Id. at 446-47.
[2] The plain meaning of our decision is that: (1) the arbi-
tration agreement is valid under federal law; but (2) the dis-
trict court was to determine in the first instance whether it is
valid under state contract law. We did not address whether the
arbitration agreement is enforceable under state law and the
658 AL-SAFIN v. CIRCUIT CITY STORES
district court followed our mandate by determining uncons-
cionability under Washington law.
II. Washington Law of Unconscionability
[3] “Unconscionability is a doctrine under which courts
may deny enforcement of all or part of an unfair or oppressive
contract based on abuses during the process of forming a con-
tract or within the actual terms of the contract itself.” David
K. DeWolf, et al., 25 Wash. Practice Series, Contract Law &
Practice § 9.5 (2003). Washington recognizes two classifica-
tions of unconscionability, substantive and procedural. See
Zuver v. Airtouch Communications, Inc., 2004 WL 3016484,
at *3 (Wash. Dec. 23, 2004) (citing Nelson v. McGoldrick,
896 P.2d 1258, 1262 (Wash. 1995), and Schroeder v. Fageol
Motors, Inc., 544 P.2d 20, 23 (Wash. 1975)).
“Substantive unconscionablity involves those cases
where a clause or term in the contract is alleged to
be one-sided or overly harsh. . . .” “ ‘Shocking to the
conscience’, ‘monstrously harsh’, and ‘exceedingly
calloused’ are terms sometimes used to define sub-
stantive unconscionability.” Procedural unconsciona-
bility is the “lack of a meaningful choice,
considering all the circumstances surrounding the
transaction including “ ‘[t]he manner in which the
contract was entered,” whether the party had “a rea-
sonable opportunity to understand the terms of the
contract,” and whether “the important terms [were]
hidden in a maze of fine print.’ ”
Zuver 2004 WL 3016484, at *3 (quoting Schroeder, 544 P.2d
at 23, and Nelson, 896 P.2d at 1262) (emendations in the orig-
inal). See also Adler v. Fred Lind Manor, 2004 WL 3016302,
at *4 (Wash. Dec. 23, 2004).
[4] In Washington, a contract generally may be invalid
based on either substantive or procedural unconscionability.
AL-SAFIN v. CIRCUIT CITY STORES 659
See M.A. Mortenson Co. v. Timberline Software Corp., 998
P.2d 305, 314-16 (Wash. 2000) (en banc); Tjart v. Smith Bar-
ney, Inc., 28 P.3d 823, 830 (Wash. Ct. App. 2001) (recogniz-
ing that a contract may be unenforceable based on procedural
unconscionability only); see also Zuver, 2004 WL 3016484,
at *3 n.4. In the employment context, the Washington
Supreme Court, while “hold[ing] that substantive uncons-
cionability alone can support a finding of unconscionability,”
has recently “decline[d] to consider whether [procedural
unconscionability] alone will support a claim of unconsciona-
bility.” Adler, 2004 WL 3016302, at *5.
III. Substantive Unconscionability
Whether a contract is substantively unconscionable is a
question of law determined as of the time the contract was
made, as opposed to the time when the contract is enforced.
Schroeder, 544 P.2d at 24.
A. Which DRRP Controls
As a threshold issue, Circuit City contends that Rule 19 of
the DRRPs permitted it to amend the arbitration agreement
each year, and that under the 1998 DRRP, Al-Safin’s dispute
is governed by the rules in effect when he files for arbitration.
Because Al-Safin has not yet filed for arbitration, Circuit City
contends that his dispute is governed by the most recent rules
and procedures and that we should analyze the 2003 DRRP to
determine whether the agreement is enforceable.
We are not persuaded. Even if we assume that Circuit City
validly amended the 1997 DRRP and is seeking to enforce
Rule 19 of the 1998 DRRP, we could not conclude that the
2003 DRRP applies to Al-Safin.3
3
Al-Safin does not dispute that Circuit City effectively implemented the
1998 DRRP. Therefore, we assume that the 1997 DRRP was properly
amended and that Circuit City can enforce the 1998 DRRP.
660 AL-SAFIN v. CIRCUIT CITY STORES
[5] First, we have held that the modification provision of
Rule 19 of the 1998 DRRP is unenforceable under California
law. See Mantor, 335 F.3d at 1107; Ingle, 328 F.3d at 1179.
The modification provision allows Circuit City to alter the
rules and procedures governing arbitration almost at will. For
example, here, Circuit City has attempted to implement new
rules and procedures over three years after the onset of this
litigation, and over four years after terminating Al-Safin’s
employment. We conclude that Rule 19, which permits this
conduct, is substantively unconscionable under Washington
law and that the modification provision is therefore unen-
forceable.
Second, even if we were to accept that the 1998 DRRP
requires us to look at the DRRP in effect when Al-Safin files
for arbitration, we would conclude that the 2003 DRRP is not
effective as to Al-Safin.
[6] Under Washington law, contract modifications are sub-
ject to the general “requisites of contract formation, offer,
acceptance and consideration.” Thompson v. St. Regis Paper
Co., 685 P.2d 1081, 1087 (Wash. 1984). Employers in Wash-
ington have been permitted to “unilaterally amend or revoke
policies and procedures established in an employee hand-
book.” Gaglidari v. Denny’s Rests., Inc., 815 P.2d 1362, 1367
(Wash. 1991) (en banc).
[T]he handbook language constitutes the offer; the
offer is communicated by the dissemination of the
handbook to the employee; the employee’s retention
of employment constitutes acceptance; and by con-
tinuing to stay on the job, although free to leave, the
employee supplies the necessary consideration.
Id. (citing Pine River State Bank v. Mettille, 333 N.W.2d 622
(Minn. 1983)). “However, an employer’s unilateral change in
policy will not be effective until employees receive reason-
able notice of the change” and accept the change. Id.
AL-SAFIN v. CIRCUIT CITY STORES 661
[7] Applying the principles set forth in Gaglidari, we con-
clude that Circuit City did not properly amend the 1998
DRRP, at least as to Al-Safin. Circuit City’s offer to amend
the 1998 DRRP consisted of posting a written notice at Cir-
cuit City locations and by including a copy of the modifica-
tion in its Applicant Packet. Even if this provided “reasonable
notice” to current and prospective employees, it was not “rea-
sonable notice” to former employees like Al-Safin. That is, it
is not reasonable to expect former employees of Circuit City
to check the postings at a Circuit City store every December,
nor is it reasonable to expect that a terminated employee
would review an Applicant Packet, to determine if Circuit
City decided to amend its arbitration rules and procedures.
Thus, as to former employees like Al-Safin, there was no
valid offer to amend the 1998 DRRP. Moreover, Al-Safin did
not continue his employment with Circuit City, sign an accep-
tance, or accept the modification of the 1998 DRRP in any
other way.4
[8] Therefore, because no contract was formed between
Circuit City and Al-Safin regarding the 2003 DRRP, the 2003
DRRP never went into effect as to Al-Safin and the 1998
DRRP controls the parties’ dispute.5
4
The dissent asserts that “[n]othing in Gagliardi varied the well-settled
common-law principles of at-will employment: the terms of employment
and of its termination are set by the employer.” Dissent, slip op. at 671.
That assertion, however, does not address what happened in this case.
Here, Circuit City attempted to change “the terms of employment and of
its termination” after Al-Safin’s employment had been terminated.
5
Circuit City has not cited any case, and our research has revealed none,
where a party was permitted unilaterally to amend a contract midway
through litigation concerning that contract. Rather, courts addressing
whether an arbitration agreement can be amended after it has been chal-
lenged during litigation have declined to permit the amendment. See e.g.,
Armendariz v. Found. Health Psychcare Servs., Inc., 6 P.3d 669, 697 (Cal.
2000) (“No existing rule of contract law permits a party to resuscitate a
legally defective contract merely by offering to change it.”).
662 AL-SAFIN v. CIRCUIT CITY STORES
B. Substantive Unconscionability of the 1998 DRRP
[9] In Mantor, Ingle, and Adams, we held that Circuit
City’s arbitration agreement is substantively unconscionable
under California law and rejected contract provisions: (1)
forcing employees to arbitrate claims against Circuit City, but
not requiring Circuit City to arbitrate claims against employ-
ees, Ingle, 328 F.3d at 1173; Adams, 279 F.3d at 893-94; (2)
limiting remedies, Ingle, 328 F.3d at 1178-79; Adams, 279
F.3d at 894; (3) splitting costs and fees, Mantor, 335 F.3d at
1107; Ingle, 328 F.3d at 1177-78; Adams, 279 F.3d at 894; (4)
imposing a one-year statute of limitations, Mantor, 335 F.3d
at 1107; Ingle, 328 F.3d at 1175; Adams, 279 F.3d at 894; (5)
prohibiting class actions, Mantor, 335 F.3d at 1107; Ingle,
328 F.3d at 1175-76; (6) regarding the filing fee and waiver
of the fee, Mantor, 335 F.3d at 1107-08; Ingle, 328 F.3d at
1177; and (7) giving Circuit City the unilateral right to termi-
nate or modify the agreement, Mantor, 335 F.3d at 1107;
Ingle, 328 F.3d at 1179.
[10] California applies virtually the same definition of sub-
stantive unconscionability as Washington. Compare Ingle,
328 F.3d at 1172 (stating that under California law, substan-
tive unconscionability refers to whether terms of the agree-
ment “are so one-sided as to shock the conscience” (quoting
Kinney v. United Healthcare Servs., Inc., 83 Cal. Rptr. 2d
348, 353 (Ct. App. 1999)) with Nelson, 896 P.2d at 1262 (stat-
ing that under Washington law, substantive unconscionability
refers to contract terms that are “one-sided or overly harsh”
and “shocking to the conscience” (quoting Schroeder, 544
P.2d at 23)). Each of the provisions we held unconscionable
under California law is present in the 1998 DRRP at issue
here. Thus, we conclude that Mantor, Ingle, and Adams are
persuasive authority that the arbitration agreement is substan-
tively unconscionable under Washington law. And, in fact,
the Washington Supreme Court recently cited Ingle, 328 F.3d
at 1175, and Adams, 279 F.3d 894-95, with approval, in hold-
ing that a 180-day limitations provision in an employment
AL-SAFIN v. CIRCUIT CITY STORES 663
arbitration agreement was substantively unconscionable. See
Adler, 2004 WL 3016302, at 11 (stating that “[w]e agree with
the Ninth Circuit”).6
Moreover, the United States Supreme Court has explained
that “[b]y agreeing to arbitrate a statutory claim, a party does
not forgo the substantive rights afforded by the statute; it only
submits to their resolution in an arbitral, rather than a judicial,
forum.” Gilmer, 500 U.S. at 26 (quoting Mitsubishi Motors
Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628
(1985)). Gilmer requires arbitration agreements to embody
“basic procedural and remedial protections so that claimants
can effectively pursue their statutory rights.” Adams, 279 F.3d
at 895. In Adams, we explained that Circuit City’s arbitration
agreement does not meet these minimum requirements
because it limits the remedies that would otherwise be avail-
able in a judicial forum, and fails to ensure that employees do
not have to pay unreasonable fees, costs, or expenses “as a
condition of access to the arbitration forum.” Id. Here, we
again conclude that Circuit City’s arbitration agreement
requires employees to forgo essential substantive and proce-
dural rights and that the clauses regarding coverage of claims,
remedies, arbitration fees, cost-splitting, the statute of limita-
tions, class actions, and modifications, render the arbitration
agreement excessively one-sided and unconscionable.
6
The dissent is critical of our reliance on “Ninth Circuit cases that pur-
port to interpret California law.” Dissent, slip op. at 675. In addition to the
Washington Supreme Court’s agreement with Ingle and Adams, as shown
in the text, above, in Zuver, the Washington Supreme Court cited with
approval Ting v. AT&T, 319 F.3d 1126, 1151-52 (9th Cir.) (construing
California law), cert. denied, 540 U.S. 811 (2003), in holding a confidenti-
ality provision substantively unconscionable, Zuver, 2004 WL 3016484, at
*8-*10, and a California case, Armendariz, 6 P.3d at 694, in holding a
remedies limitation provision substantively unconscionable, Zuver, 2004
WL 3016484, at *10-*11.
664 AL-SAFIN v. CIRCUIT CITY STORES
IV. Severability
[11] Like California law, Washington law grants courts dis-
cretion to sever unconscionable contract provisions or refuse
to enforce the entire contract. Compare Ingle, 328 F.3d at
1180 (explaining that under California law the court may “re-
fuse to enforce the contract in its entirety”) with Schroeder,
544 P.2d at 262 (stating that under Washington law “the court
may refuse to enforce the contract” (quoting Wash. Rev. Code
§ 62A.2-302)).
[12] In each of the California cases — Mantor, Ingle, and
Adams — we held that the unconscionable terms rendered the
arbitration agreement unenforceable. In Ingle, we specifically
determined that the 1998 arbitration agreement was “perme-
ated with unconscionable provisions” and was unenforceable
in its entirety because “[a]ny earnest attempt to ameliorate the
unconscionable aspects of Circuit City’s arbitration agreement
would require this court to assume the role of contract author
rather than interpreter.” Ingle, 328 F.3d at 1180; see also
Adams, 279 F.3d at 895-96 (reaching the same result regard-
ing an earlier version of the arbitration agreement). Applying
Washington law, we also conclude that the unconscionable
provisions of the 1998 DRRP pervade the entire arbitration
agreement and any attempt to sever those provisions would
render the procedure unworkable.
[13] The recent cases of Zuver and Adler are not to the con-
trary. Although in those cases the Washington Supreme Court
severed the unconscionable provisions and enforced the
remainder of the arbitration agreements, that was because
only two discrete provisions of the respective agreements
were held to be unconscionable. See Zuver, 2004 WL
3016484, at *11 (“We can easily excise the confidentiality
and remedies provisions but enforce the remainder.); Adler,
2004 WL 3016302, at *12 (“In this case, however, [the] arbi-
tration agreement contains just two substantively unconscio-
nable provisions.”). The Washington Supreme Court,
AL-SAFIN v. CIRCUIT CITY STORES 665
however, “acknowledge[d] that in instances where an
employer engages in an ‘insidious pattern’ of seeking to tip
the scales in its favor in employment dispites by inserting
numerous unconscionable provisions in an arbitration agree-
ment, courts may decline to sever the unconscionable provi-
sions.” Id. (citing Ingle, 328 F.3d at 1180).7 Because this
agreement is “permeated with unconscionable provisions,”
Ingle, 328 F.3d at 1180, we hold that the entire arbitration
agreement is unenforceable.
CONCLUSION
For the foregoing reasons, we conclude that the arbitration
agreement between Circuit City and Al-Safin is substantively
unconscionable. Although we have serious doubts about
whether the agreement is procedurally unconscionable as
well, we do not decide this issue because the agreement’s sub-
stantive unconscionability alone renders it invalid under
Washington law. See Adler, 2004 WL 3016302, at *5. There-
fore, the judgement of the district court is
AFFIRMED.
BEA, Circuit Judge, dissenting:
Circuit City Stores, Inc. (“Circuit City”) appeals the district
court’s denial of its motion to dismiss and compel arbitration
of Mohammed Al-Safin’s employment discrimination claims.
The majority opinion affirms, holding that certain provisions
of Circuit City’s Dispute Resolution Rules and Procedures
(“DRRP”) in effect in 1998 are substantively unconscionable
7
The Washington Supreme Court’s recent decisions in Zuver and Adler
have erased any “doubt about the relevance of Ingle and Mantor,” dissent,
slip op. at 677, so that, if it ever was warranted, certifying the question to
the Washington Supreme Court is no longer warranted.
666 AL-SAFIN v. CIRCUIT CITY STORES
under Washington law and that these unconscionable provi-
sions pervade the entire arbitration agreement such that any
attempt to sever those provisions would render the resulting
procedure unworkable. Slip op. at 662-65.
I believe that the majority opinion errs in its initial premise
— that is, that it is the DRRP in effect in 1998 that are at
issue. Rather, I believe that the modification provision in Rule
19 of the DRRP in effect in 1998 is enforceable under Wash-
ington law (or, at the very least, that there is sufficient doubt
as to certify that question to the Washington Supreme Court)
and, thus, that it is the DRRP in effect at the time Al-Safin
ultimately files his Arbitration Request Form and accompany-
ing filing fee that govern the arbitration here. Further, the
DRRP in effect in 2003 are not substantively unconscionable
under Washington law. Accordingly, I would reverse (or, at
the very least, certify the relevant questions to the Washington
Supreme Court) and, thus, respectfully dissent.
I.
As the majority opinion sets forth, Al-Safin applied for a
job at Circuit City in June 1997. Before he submitted his
application, he signed an arbitration agreement that bound Al-
Safin to resolve all disputes arising out of his employment
relationship with Circuit City in accordance with the DRRP.
Rule 19 of the DRRP in effect at the time Al-Safin applied for
his job stated:
Circuit City may alter or terminate the Agreement
and these Dispute Resolution Rules and Procedures
on December 31st of any year upon giving 30 calen-
dar days written notice to Associates, provided that
all claims arising before alteration or termination
shall be subject to the Agreement and corresponding
Dispute Resolution Rules and Procedures in effect at
the time the claim arose. An associate shall be
deemed to have accepted a modification or termina-
AL-SAFIN v. CIRCUIT CITY STORES 667
tion of the Dispute Resolution Agreement or the
Rules and Procedures by accepting or continuing
employment with Circuit City after receiving notice
of such modification or termination.
(Emphasis added).
At year end 1997, Circuit City amended Rule 19.1 Al-Safin
continued working at Circuit City until his employment was
terminated in November 1998. There is no issue raised by Al-
Safin that he did not receive reasonable notice of the Decem-
ber 31, 1997 change to Rule 19. Indeed, as the majority opin-
ion correctly notes, “Al-Safin does not dispute that Circuit
City effectively implemented the 1998 DRRP.” Slip op. at
659 n.3.
The December 31, 1997 amendment to Rule 19 — and,
thus, Rule 19 of the DRRP in effect in 1998 — provided in
relevant part:
Circuit City may alter or terminate the Agreement
and these Dispute Resolution Rules and Procedures
on December 31st of any year upon giving 30 calen-
dar days written notice to Associates, provided that
all claims arising before alteration or termination
shall be subject to the Agreement and corresponding
Dispute Resolution Rules and Procedures in effect at
the time the Arbitration Request Form and accompa-
nying filing fee is received by the Company.
(Emphasis added). As the majority opinion correctly con-
cludes, “[t]he result of this modification would be that any
arbitration filed in 2003 would be governed by the DRRP in
1
Although the DRRP in effect in 1998 are dated as of January 1998, the
DRRP in effect in 1997 permitted Circuit City to alter or terminate the
DRRP only on December 31 of any year. Thus, the DRRP in effect in
1998 must have resulted from amendments on December 31, 1997.
668 AL-SAFIN v. CIRCUIT CITY STORES
effect in 2003, as opposed to the DRRP in effect when the
claim arose.” Slip op. at 654.
The threshold and determinative question, then, is whether
the DRRP in effect in 1998, when Al-Safin’s employment
was terminated and his employment discrimination claim
arose, govern the arbitration, rather than the DRRP in effect
at the time Al-Safin ultimately files with Circuit City the
Arbitration Request Form and accompanying fee. The plain
meaning of the modification provision in Rule 19 of the
DRRP in effect at the time Al-Safin’s employment was termi-
nated in 1998 admits of no doubt: If he sought arbitration and
paid the arbitration fee immediately upon termination or at
any time before December 31, 1998, his arbitration would be
governed by the DRRP in effect in 1998. If he tarried, he ran
the risk that newer arbitration rules would be adopted which
would be less beneficial to him. On the other hand, delay
could bring rules that would comparatively benefit him,
which, in the event, is what happened.
Nevertheless, the majority opinion concludes that the
DRRP in effect in 1998 are applicable for two reasons. First,
according to the majority opinion, “ ‘an employer’s unilateral
change in policy will not be effective [under Washington law]
until employees receive reasonable notice of the change’ and
accept the change” and that Circuit City did not provide
“ ‘reasonable notice’ to former employees like Al-Safin” nor
did Al-Safin “continue his employment with Circuit City, sign
an acceptance, or accept the modification of the [substantive
arbitration rules of the] 1998 DRRP in any other way.” Slip
op. at 661. Second, according to the majority opinion, “[t]he
modification provision allows Circuit City to alter the rules
and procedures governing arbitration almost at will” and,
thus, “Rule 19, which permits this conduct, is substantively
unconscionable under Washington law and . . . the modifica-
tion provision is therefore unenforceable.” Slip op. at 660.
I believe that the majority opinion errs in both regards and,
thus, believe that the DRRP in effect at the time Al-Safin ulti-
AL-SAFIN v. CIRCUIT CITY STORES 669
mately files with Circuit City the Arbitration Request Form
and accompanying fee, rather than the DRRP in effect in
1998, govern the arbitration.
A.
In concluding that “ ‘an employer’s unilateral change in
policy will not be effective [under Washington law] until
employees receive reasonable notice of the change’ and
accept the change,” Slip op. at 660, the majority opinion relies
solely on Gaglidari v. Denny’s Restaurants, Inc., 815 P.2d
1362 (Wash. 1991) (en banc). There, Denny’s hired Gaglidari
to work as a bartender and, on her first day of work, provided
her with a copy of the 1979 employee handbook. Id. at 1364.
The 1979 employee handbook contained a provision stating
that fighting while on duty was grounds for immediate dis-
missal, but provided for “counseling review and review by a
certain level manager” for rule infractions not covered by the
immediate dismissal provision. Id. In 1986, Denny’s gave
Gaglidari an “alcoholic beverage handbook,” which contained
a provision stating that fighting while on company premises,
whether or not while on duty, was grounds for immediate dis-
missal. Id. In 1987, while off duty, Gaglidari was involved in
a fight at a Denny’s and was fired shortly thereafter. Id. at
1364-65. Gaglidari sued Denny’s for breach of the employ-
ment contract as set forth in the 1979 employee handbook,
and the jury returned a verdict for Gaglidari. Id. at 1365.
On appeal, the Washington Supreme Court reversed the
judgment entered upon such verdict and remanded for a new
trial, holding that the 1979 employee handbook gave rise to
a contract but that its terms were modified by the alcoholic
beverage handbook that Gaglidari received in 1986. Id. at
1365-66. Although acknowledging that “[a]n employer may
unilaterally amend or revoke policies and procedures estab-
lished in an employee handbook,” the court cited to Bankey
v. Storer Broadcasting Co., 443 N.W.2d 112, 113 (Mich.
1989), for the proposition that “an employer’s unilateral
670 AL-SAFIN v. CIRCUIT CITY STORES
change in policy will not be effective until employees receive
reasonable notice of the change.” Gaglidari, 815 P.2d at
1367. Quoting Bankey, the court continued: “ ‘An employer
may, without an express reservation of the right to do so, uni-
laterally change its written policy from one of discharge for
cause to one of termination at will, provided that the employer
gives affected employees reasonable notice of the policy
change.’ ” Id. (emphasis added). The court reasoned: “The
reasonable notice rule of Bankey is persuasive because it is
unfair to place the burden of discovering policy changes on
the employee. While the employee is bound by unilateral acts
of the employer, it is incumbent upon the employer to inform
employees of its actions.” Id. The court then concluded that
the 1986 alcoholic beverage handbook did achieve a modifi-
cation of the employment contract:
Plaintiff’s receipt of the handbook satisfied the req-
uisites of contract formation. Defendant extended an
offer by providing the handbook and training plain-
tiff on alcoholic beverage service in accordance with
the requirements contained in the handbook. Plaintiff
accepted the offer by signing for the handbook and
participating in the training. The consideration was
plaintiff’s continuation of her employment.
The handbook also achieved a unilateral modifica-
tion of defendant’s policies. Plaintiff had notice of
the provisions of the handbook because she signed a
form saying she read it and understood it.
Id. at 1367-68 (internal citation omitted; emphasis added).
With that background, it is clear that Gaglidari is inappo-
site and that the reasonable-notice requirement it announced
is not nearly so broad as the majority opinion suggests.
First, contrary to what the majority opinion asserts, Slip op.
at 659-61, the reasonable-notice requirement is satisfied by
AL-SAFIN v. CIRCUIT CITY STORES 671
notice alone, regardless whether the employee accepts the
change in policy. Again contrary to what the majority opinion
assumes, Slip op. at 650-61, the sole articulated purpose of
the reasonable-notice requirement is not to afford the at-will
employee an opportunity to accept, reject or negotiate an offer
from the employer. Rather, as the court in Gaglidari stated:
“The reasonable notice rule of Bankey is persuasive because
it is unfair to place the burden of discovering policy changes
on the employee.” 815 P.2d at 1367 (emphasis added). In
other words, it would be unfair to allow an employee — even
an employee at will — to be fired for a rule violation, if the
rule had not been made known to her. Thus, the court in
Gaglidari held alternatively that the “[p]laintiff’s receipt of
the [1986 alcoholic beverage] handbook satisfied the requi-
sites of contract formation” and that, because the “[p]laintiff
had notice of the provisions of the handbook,” “[t]he hand-
book also achieved a unilateral modification of defendant’s
policies.” Id. at 1367-68. Nothing in Gaglidari varied the
well-settled common-law principles of at-will employment:
the terms of employment and of its termination are set by the
employer.
This interpretation of the scope and purpose served by
Gaglidari’s reasonable-notice requirement was confirmed in
Govier v. North Sound Bank, 957 P.2d 811, 813-14 (Wash.
Ct. App. 1998), wherein a bank presented Govier with an
employment agreement that changed the terms of her employ-
ment. Govier refused to sign the agreement, was fired, and
then sued for breach of contract under the prior terms of
employment. Id. at 814. The trial court granted the bank’s
motion for summary judgment. Id. On appeal to the Washing-
ton Court of Appeals, Govier contended that although the
bank had presented her with the new terms, she did not have
“reasonable notice” because she had not been notified of the
changes a reasonable length of time before their effective
date. Id. at 816. She reasoned that “the reasonable notice
requirement is necessary ‘to give the employee an opportunity
to make a reasoned decision about whether to stay or leave.’ ”
672 AL-SAFIN v. CIRCUIT CITY STORES
Id. The court rejected this argument, holding that the purpose
of the reasonable notice requirement is merely to inform
employees of policy changes because “ ‘it is unfair to place
the burden of discovering policy changes on the employee.’ ”
Id. at 817 (emphasis in original).2
2
This interpretation also finds support in Thompson v. St. Regis Paper
Co., 685 P.2d 1081 (Wash. 1984) (en banc), wherein the Washington
Supreme Court first enunciated the principle that an at-will employment
relationship could be modified by an employee handbook. There, Thomp-
son was asked to resign because he “ ‘stepped on somebody’s toes.’ ” Id.
at 1083. No other reason was given. Id. Thompson sued for breach of con-
tract, and the company moved for summary judgment, arguing that the
employment relationship was terminable at will. Id. Thompson responded
with the company’s “Policy and Procedural Guide,” which he argued pro-
vided that he could be fired only for cause. Id. at 1084. The trial court
granted the company’s motion. Id.
On appeal, the Washington Supreme Court reversed and remanded,
holding first that “the employer’s right to terminate an at will employee
can be contractually modified and, thus, qualified by statements contained
in employee policy manuals or handbooks issued by employers to their
employees.” Id. at 1087. Under this “contractual analysis,” “the requisites
of contract formation, offer, acceptance and consideration are necessary
predicates to establishing that policies in an employment manual are part
of the employees’ original employment contract or part of the employment
contract as modified by the parties.” Id.
Continuing, the court held: “Independent of this contractual analysis,
however, . . . employers may be obligated to act in accordance with poli-
cies as announced in handbooks issued to their employees.” Id. (emphasis
added). Relying on a promissory estoppel theory, the court reasoned:
[T]he principal, though not exclusive, reason employers issue
such manuals is to create an atmosphere of fair treatment and job
security for their employees.
* * *
This may create an atmosphere where employees justifiably rely
on the expressed policies and, thus, justifiably expect that the
employers will do the same. Once an employer announces a spe-
cific policy or practice, especially in light of the fact that he
expects employees to abide by the same, the employer may not
treat its promises as illusory.
Id. at 1087-88 (emphasis in original).
AL-SAFIN v. CIRCUIT CITY STORES 673
Thus, the fact that “Al-Safin did not continue his employ-
ment with Circuit City, sign an acceptance, or accept the mod-
ification of the [substantive arbitration rules of the] 1998
DRRP in any other way,” Slip op. at 661, would have been
irrelevant under Gaglidari had Al-Safin been employed with
Circuit City at the time the modifications were made and,
contrary to the majority opinion’s assertion otherwise, Slip
op. at 661 n.4, can be no less irrelevant under the circum-
stances here. As explained above, Gaglidari’s reasonable-
notice requirement neither requires nor is premised upon the
employee having an opportunity to accept, reject or negotiate
changes in employment policies — regardless when those
changes occur. Further, it bears repeating, by virtue of contin-
uing his employment with Circuit City after the December 31,
1997 amendment to Rule 19 went into effect, Al-Safin
assented to the modification provision itself.
Second, the fact that Al-Safin may not have received rea-
sonable notice of the modifications made to the substantive
provisions in the DRRP from 1998 to 2003 is likewise irrele-
vant under Gaglidari. As explained above, the purpose of the
reasonable-notice requirement is to inform employees of pol-
icy changes because “it is unfair to place the burden of dis-
covering policy changes on the employee.” Gaglidari, 815
P.2d at 1367; accord Govier, 957 P.2d at 817. This prevents
situations in which employees are fired or suffer other adverse
employment action on the basis of conduct that had been per-
missible but later was made impermissible by an unpublicized
policy. See Thompson, 685 P.2d at 1087.
Thus, the reasonable-notice requirement serves no purpose
once the employment relationship has ended. Why give notice
of new rules to former employees who can no longer be fired
for their violations? To insist on the necessity of “reasonable
notice” in such circumstances is to venerate an abstraction.
See United States v. Griefen, 200 F.3d 1256, 1263 (9th Cir.
2000) (“Cessante ratione legis, cessat et ipsa lex[.] (The rea-
son of the law ceasing, the law itself also ceases).”); ATU
674 AL-SAFIN v. CIRCUIT CITY STORES
Legislative Council of Washington v. Washington, 40 P.3d
656, 661 (Wash. 2002) (en banc) (same); State ex rel. King
County v. Superior Court of Pierce County, 176 P. 352, 355
(Wash. 1918) (“The law being founded in reason boasts as its
first cardinal principle that, when the reason for the law
ceases, the law itself ceases.”). Indeed, there appear to be no
Washington cases — including Gaglidari — in which the
reasonable-notice requirement was invoked when the change
in employee policies occurred after the employment relation-
ship had terminated.
Here, there is no claim that Al-Safin’s employment was ter-
minated because of a violation of the modification provision
in Rule 19 of the DRRP in effect in 1998. Likewise, the modi-
fications made to the substantive provisions in the DRRP
from 1998 to 2003 — all of which occurred after Al-Safin’s
employment was terminated — had no bearing on why Al-
Safin’s employment was terminated; rather, they concern only
the manner in which the arbitration is to occur. In brief: As
the reason for the reasonable-notice requirement does not
exist, neither does the rule.
Third, unlike Circuit City, the employer in Gaglidari did
not reserve its right to make changes to the employee hand-
book. The Michigan case on which Gaglidari relies in setting
forth the reasonable-notice requirement suggests that the
requirement is limited to situations in which the employer
does not make such a reservation:
“An employer may, without an express reservation
of the right to do so, unilaterally change its written
policy from one of discharging for cause to one of
termination at will, provided that the employer gives
affected employees reasonable notice of the policy
change.”
Gaglidari, 815 P.2d at 1367 (quoting Bankey, 443 N.W.2d at
113) (emphasis added). Such reservations or disclaimers are
AL-SAFIN v. CIRCUIT CITY STORES 675
well-recognized under Washington law. Thompson, 685 P.2d
at 1088 (“[T]he employer may specifically reserve a right to
modify [employment] policies or write them in a manner that
retains discretion to the employer.”).
This distinction is not without substance given the discus-
sion above explaining that the reasonable-notice requirement
is required not to permit for an acceptance or rejection of an
employer’s offer by the employee, but rather because it pro-
vides the basis for the justifiable reliance on which a promis-
sory estoppel theory might be based. Where the employer has
made a disclaimer — that is, has reserved the right to make
changes — employees cannot justifiably rely on the previ-
ously outlined policies.
Neither Gaglidari nor its reasonable-notice requirement are
applicable here.
B.
The majority opinion correctly concludes that whether the
provisions of the DRRP are unconscionable is a question of
Washington law. Slip op. at 656. But in concluding that modi-
fication provision in Rule 19 of the DRRP in effect in 1998
“is substantively unconscionable under Washington law and
that the modification provision is therefore unenforceable,”
the majority opinion cites no Washington law at all. Slip op.
at 660. Instead, the majority opinion relies on two Ninth Cir-
cuit cases that purport to interpret California law, Slip op. at
660, and presumably on its later conclusion that “California
applies virtually the same definition of substantive uncons-
cionability as Washington.” Slip op. at 662.
To begin, the two Ninth Circuit cases on which the major-
ity opinion relies — Ingle v. Circuit City Stores, Inc., 328
F.3d 1165, 1179 (9th Cir. 2003), and Circuit City Stores, Inc.
v. Mantor, 335 F.3d 1101, 1107(9th Cir. 2003) — themselves
cite no state cases that discuss whether, let alone hold that, the
676 AL-SAFIN v. CIRCUIT CITY STORES
modification provisions at issue or even similar modification
provisions are substantively unconscionable. Thus, their anal-
yses of California law on this point are not so thorough that
we should reflexively import their holdings to Washington
law.
Moreover, there is good reason not to do so here, even
though the Washington Supreme Court has cited with
approval Ninth Circuit cases interpreting California law in
adjudicating the unconscionability of terms quite different
from the modification provision at issue here, Slip op. at 663
n.6, and even if it is correct that as a general matter California
law and Washington law on unconscionability are similar.
Specifically, although there appear to be no Washington cases
addressing whether the provision at issue or one similar to it
is substantively unconscionable, the Washington Supreme
Court has long held in no uncertain terms that an employer
may reserve the right unilaterally to change the terms of an
employment relationship: “[T]he employer may specifically
reserve a right to modify [employment] policies or write them
in a manner that retains discretion to the employer.” Thomp-
son, 685 P.2d at 1088. Gaglidari affirmed this principle, and
its reasonable-notice requirement in no way undercut the
employer’s ability to make unilateral changes: “An employer
may unilaterally amend or revoke policies and procedures
established in an employee handbook. However, an employ-
er’s unilateral change in policy will not be effective until
employees receive reasonable notice of the change.” 815 P.2d
at 1367 (emphasis added; internal citations omitted).
Further, the majority opinion overlooks the salient fact that
under Rule 19 of the DRRP in effect at the time Al-Safin’s
employment was terminated, Circuit City could not have
acted “unilaterally” in changing the DRRP until the end of the
year. Thus, Al-Safin, whose employment was terminated in
November 1998, had over a full month in which he could
have insured himself of arbitration under the then-current
DRRP by taking action: requesting arbitration and tendering
AL-SAFIN v. CIRCUIT CITY STORES 677
the filing fee before December 31, 1998. Under Washington
law, voluntarily refusing to invoke rights in a timely manner
may in some contexts constitute a waiver of those rights. See,
e.g., International Association of Firefighters, Local No. 469
v. Public Employment Relations Commission of Washington,
686 P.2d 1122, 1125-27 (Wash. Ct. App. 1984) (holding that
although a union’s waiver of statutorily protected bargaining
rights and its concomitant assent to unilateral employer action
in lieu of collective bargaining must be “intentional and vol-
untary,” a failure timely to request negotiations following
actual knowledge of the employer’s intentions where there is
sufficient time to “meaningfully” do so constitutes waiver).
Whether Al-Safin’s inactivity amounted to a waiver or con-
sent, and whether that waiver or consent could change the
character of any subsequent modifications to the DRRP from
“unilateral” to “consented to” or “mutual” is a question of
Washington law. It was not a question raised in either of our
cases involving the enforceability of Circuit City’s arbitration
agreements under California law.
Thus, I am not nearly so confident as are my colleagues
that the modification provision in Rule 19 of the DRRP in
effect in 1998 is substantively unconscionable under Wash-
ington law.3 At the very least, the absence of Washington law
directly on point, coupled with the Thompson and Gaglidari
line of cases and Al-Safin’s ability to have invoked the sub-
stantive provisions of the DRRP in effect in 1998, create suf-
ficient doubt about the relevance of Ingle and Mantor to
warrant our certifying the question to the Washington
Supreme Court.4
3
Why the DRRP in effect in 2003, made applicable to the arbitration
here by the plain text of the modification provision in Rule 19 of the
DRRP in effect in 1998, are themselves not unconscionable is discussed
in Part II below.
4
Washington provides for certification pursuant to Revised Code of
Washington § 2.60.020 and Washington Rule of Appellate Procedure
16.16(a) where there is a question of state law that has not been “clearly
determined” and its resolution is necessary to the disposition of the pro-
ceeding in federal court.
678 AL-SAFIN v. CIRCUIT CITY STORES
II.
Because I believe that the modification provision in Rule
19 of the DRRP in effect in 1998 is enforceable under Wash-
ington law, I would find that the DRRP in effect at the time
Al-Safin files his Arbitration Request Form and accompany-
ing filing fee govern the arbitration. Although Al-Safin did
not file his Arbitration Request Form and accompanying fil-
ing fee prior to 2003, the record does not indicate whether he
has since filed the appropriate form and fee or whether Circuit
City has promulgated DRRP beyond those in 2003. Thus, it
is not evident whether the DRRP in effect in 2003 or some
later DRRP are applicable.
Assuming, however, that the DRRP in effect in 2003 are
applicable, Al-Safin concedes that these rules were substan-
tially revised such that many of the substantively unconscio-
nable provisions in the earlier rules were removed. In fact, he
argues that only two provisions beyond the modification pro-
vision discussed above are substantively unconscionable.
First, Al-Safin argues that the DRRP in effect in 2003
include a provision that requires arbitration decisions to be
confidential and, thus, is substantively unconscionable both
because it places Circuit City in “ ‘a far superior legal posture
by ensuring that none of its opponents have access to prece-
dent’ ” and because “ ‘the unavailability of arbital decisions
may prevent potential plaintiffs from obtaining the informa-
tion needed to build a case of intentional misconduct or
unlawful discrimination.’ ” However, Rule 12 of the DRRP in
effect in 2003 states: “Associates who have agreed to arbitra-
tion may request copies of arbitration decisions in a given
case.” Thus, the confidentiality provision is not so “ ‘one-
sided or overly harsh’ ” so as to be “ ‘[s]hocking to the con-
science,’ ” “ ‘monstrously harsh,’ ” or “ ‘exceedingly cal-
loused’ ” and, thus, substantively unconscionable. See Nelson
v. McGoldrick, 896 P.2d 1258, 1262 (Wash. 1995) (en banc).
AL-SAFIN v. CIRCUIT CITY STORES 679
Second, Al-Safin argues that the DRRP in effect in 2003
prohibit class or consolidated arbitrations and that this is sub-
stantively unconscionable. Again, there appears to be no
Washington law addressing whether such provisions are sub-
stantively unconscionable. See Stein v. Geonerco, Inc., 17
P.3d 1266, 1271 & n.2 (Wash. Ct. App. 2001) (noting that
“Washington courts have not specifically addressed class
arbitration,” and holding that the court “cannot compel class
arbitration” in the absence of “relevant statutory provisions
that authorize class arbitration,” but not reaching whether
“due process and policy grounds” may otherwise “permit[ ]
class arbitration”). However, an analogous line of cases sug-
gests that the Washington courts would not find the provision
substantively unconscionable on the facts here.
In Mendez v. Palm Harbor Homes, Inc., 45 P.3d 594, 597,
601, 603 (Wash. Ct. App. 2002), the trial court denied a
motion to compel arbitration pursuant to an arbitration agree-
ment, holding that the agreement was unconscionable because
the “prohibitive entry costs of arbitration compared to the
entry costs of trial” “effectively preclude[d] [Mendez] from
pursuing his claims against Palm Harbor.” Importantly, costs
so prohibitive as to deter arbitration is the implicit concern
that led the Ninth Circuit to conclude on the basis of Califor-
nia law that the provision in Circuit City’s arbitration agree-
ments that preclude class or consolidated arbitration is
substantively unconscionable. See Ingle, 328 F.3d at 1176
(“Circuit City, through its bar on class-wide arbitration, seeks
to insulate itself from class proceedings while conferring no
corresponding benefit to its employees in return.”); see also
Mantor, 335 F.3d at 1107 & n.14 (citing Ingle, 328 F.3d at
1175-76). The Washington Court of Appeals affirmed, “ap-
prov[ing] a new rule for this State allowing an equitable and
legal prohibitive cost defense to contractually agreed arbitra-
tion,” Mendez, 45 P.3d at 597, but limiting the defense to
“when the party opposing arbitration reasonably shows in
law or equity that prohibitive costs are likely to render the
arbitral forum inaccessible.” Id. at 605 (emphasis added);
680 AL-SAFIN v. CIRCUIT CITY STORES
accord Heaphy v. State Farm Mutual Automobile Insurance
Co., 72 P.3d 220, 224-25 (Wash. Ct. App. 2003) (rejecting
prohibitive cost defense in the absence of any evidence of
prohibitive costs). The Washington Supreme Court has
recently approved this approach. Zuver v. Airtouch Communi-
cations, Inc., No. 74156-5, 2004 WL 3016484, at *6-7 (Wash.
Dec. 23, 2004) (en banc); Adler v. Fred Lind Manor, No.
74701-6, 2004 WL 3016302, at *9 (Wash. Dec. 23, 2004) (en
banc). Al-Safin has made no claim nor showing of prohibitive
costs which would render the arbital forum inaccessible. Nei-
ther has he evinced any interest in initiating a class or consoli-
dated arbitration. Absent such predicate showing, Washington
law would not hold the relevant provision of the DRRP
unconscionable.
Further, even if the provision that there be no class or con-
solidated arbitration were unconscionable, it could be severed
pursuant to the severance provision in Rule 18 of the DRRP
in effect in 2003. Zuver, 2004 WL 3016484, at *11 (noting
that “when parties have agreed to a severability clause in an
arbitration agreement, courts often strike the offending uncon-
scionable provisions to preserve the contract’s essential term
of arbitration,” and doing so when “faced with only two
unconscionable provisions”); Adler, 2004 WL 3016302, at
*12 (holding that where the “arbitration agreement contains
just two substantively unconscionable provisions” and where
“[t]he primary thrust of [the] agreement is the agreement to
arbitrate,” the court can sever those terms “without disturbing
the primary intent of the parties to arbitrate their disputes”).
III.
The kernel of truth in this case is that Al-Safin is so desir-
ous to litigate in federal district court rather than to arbitrate,
that he refuses to accept the substantial concessions that Cir-
cuit City made when it promulgated its new DRRP in 2003
relative to the DRRP that obtained and which were within Al-
Safin’s reach when his employment was terminated in 1998.
AL-SAFIN v. CIRCUIT CITY STORES 681
Instead, he lashes himself to the DRRP in effect in 1998
(except for the modification provision in Rule 19) in the
apparently well-founded hope that this court would find the
substantive provisions in those DRRP so unconscionable the
arbitration agreement as a whole must founder. By holding
that the modification provision in Rule 19 of the DRRP in
effect in 1998 is unenforceable and that various other provi-
sions in the same DRRP are substantively unconscionable, the
majority opinion accedes to Al-Safin and, in so doing, contra-
venes Washington law.
I believe that the modification provision in Rule 19 of the
DRRP in effect in 1998 is enforceable under Washington law
or, at the very least, that there is sufficient doubt as to certify
that question, and the further question whether Al-Safin’s
inaction in late 1998 rendered the modification provision
“mutual” rather than “unilateral,” to the Washington Supreme
Court. I believe further that the provisions in the DRRP in
effect in 2003 to which Al-Safin objects are not substantively
unconscionable under Washington law. Accordingly, I would
reverse the district court’s denial of Circuit City’s motion to
dismiss and compel arbitration (or, at the very least, certify
the relevant questions to the Washington Supreme Court) and,
thus, respectfully dissent.