Traci Turner, Appellant/cross v. Vulcan, Inc, Respondent/cross ( 2015 )

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
TRACI TURNER,
No. 71855-0-1
Appellant/Cross Respondent,
DIVISION ONE
v.
UNPUBLISHED OPINION
VULCAN, INC., PAUL ALLEN, JODY
ALLEN,
—*cr
Respondents/Cross Appellants, CD rn
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RAY COLLIVER, and LAURA X:* -'.
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MACDONALD, £5
£"".•' ^'' '
Respondents. FILED: November 2,2015 o -^
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Trickey, J. — In a motion to compel arbitration, a trial court must determine
whether there is a valid agreement to arbitrate and, if so, whether the dispute is
within the scope of that agreement. Here, the agreement to arbitrate is neither
procedurally nor substantively unconscionable. The subject of the dispute is
contained within the agreement to arbitrate. The challenge to the contract as a
whole is a question for the arbitrator. Because this arbitration provision is part of
an employment contract, the Federal Arbitration Act (FAA), 9 U.S.C. §§ 1-16,
applies.
The claims presented here are in connection with what is largely an
employment dispute based primarily on an employee's statutory claims asserted
under the Washington Law Against Discrimination Act (WLAD), chapter 49.60
RCW, and the Washington Minimum Wage Act (MWA), chapter 49.46 RCW.
Because the employer's requested attorney fees would frustrate the broad
No. 71855-0-1/2
remedial purposes of those acts, we affirm the arbitrator's award granting attorney
fees only for the employer's motion on the validity of the employee's release of
claims against the employer and for prevailing on the defamation claim.
In all respects, we affirm the trial court's order affirming the arbitrator's
award.
FACTS
Vulcan, Inc. hired Traci Turner as a senior executive protection (EP)
specialist in January 2011. At the same time, Turner signed an Employee
Intellectual Property Agreement (EIPA) providing for an award of attorney fees to
the prevailing party in any lawsuit arising out of her employment or the agreement
itself.
Vulcan promoted Turner to the lead EP detail for Paul Allen in April 2011.
In May 2011, she was assigned as the lead EP for Paul Allen's personal security
detail. Two months later, in July 2011, Turner signed a Guaranteed Bonus
Agreement (GBA), waiving and releasing any then-existing claims against Vulcan
and agreeing to confidential arbitration in exchange for a guaranteed bonus
payment in excess ofthe maximum wages she would otherwise receive. Turner's
yearly wage at the time was $140,000.00. Her minimum guaranteed bonus was
$25,156.00, subject to proration if her employment ended before the end of the
year.
On September 23, 2011, Turner submitted her resignation, which she
characterized as a constructive discharge. Shortly thereafter, Turner filed her first
employment discrimination suit against Vulcan and several of its executives
No. 71855-0-1/3
(Turner I). Vulcan immediately moved for an order compelling arbitration based
on the GBA. Judge Patrick Oishi granted Vulcan's motion, compelled arbitration,
and stayed the proceedings in King County Superior Court.
Turner moved for reconsideration and Vulcan responded. Before any
decision was made on the reconsideration motion, Turner filed a notice of voluntary
dismissal that was granted ex parte on November 1, 2011. Turner's stated reason
for dismissal was that a mediation involving other Vulcan employees was taking
place and, if successful, would resolve all of the issues. That mediation was
unsuccessful, however. None of the other employees involved in the mediation
voluntarily dismissed the cases that they had filed in superior court. One of those
employees who, like Turner, had signed a GBA, was ordered to arbitration on
February 24, 2012, by a different judge.
Meanwhile, on December 14, 2011, Vulcan initiated arbitration proceedings
asserting several claims against Turner. The next day, Turner's counsel, Jerald
Pearson, sent an e-mail informing Vulcan that Turner's current instructions to him
were to refile the court case and to not accept the arbitration process. On January
5, 2012, Pearson withdrew as Turner's counsel.
On January 26, 2012, Vulcan e-mailed Turner's new attorney, Patrick
McGuigan of the HKM law firm,1 informing him that it had filed arbitration
proceedings and intended to proceed with its claims. Vulcan asserted breach of
the EIPA, anticipatory breach of the EIPA, breach of duty of loyalty, breach of
confidential relationship, violation of Computer Fraud and Abuse Act (18 U.S.C. §
1For ease of reference, we refer to McGuigan and HKM law firm collectively as HKM.
3
No. 71855-0-1/4
1030), repayment of prorated bonuses, declaratory relief for nonliabilty for the
employment related causes of action, fraud, defamation, and any actions prior to
July 26, 2011.
On January 27, Turner filed a second lawsuit in superior court (Turner II),
which was assigned to Judge Monica Benton. Her complaint reiterated the first
five claims made in Turner I and asserted five additional claims. The first complaint
asserted claims for gender discrimination, constructive termination, retaliation,
hostile work environment, and defamation. The five additional claims asserted in
Turner II were sexual orientation discrimination, age discrimination, intentional
infliction of emotional distress, negligent infliction of emotional distress, and
withholding of wages.
After unsuccessfully trying to transfer this second suit to Judge Oishi,
Vulcan moved to dismiss the complaint because of the doctrines of res judicata
and issue preclusion, and, alternatively, to once again compel arbitration under
the GBA. On March 5, 2012, Turner filed a CR 60 motion to vacate the order
compelling arbitration in Turner I.
On March 9, 2012, HKM notified the arbitrator of Turner's counterclaims
against Vulcan and its executives. In that notification, HKM also challenged the
arbitrator's jurisdiction, noting that Turner would request a schedule to brief that
issue during a telephonic case management conference set for March 26, 2012.
The trial court heard oral argument on April 5, 2012. On April 16, the court
entered an order denying Turner's CR 60 motion, but reserved ruling on Vulcan's
No. 71855-0-1/5
motion to dismiss affording the parties an opportunity to submit additional briefing
on whether the additional claims were subject to mandatory arbitration.
On June 8, 2012, the court entered an order dismissing the first five claims
that were already subject to arbitration as a result of Judge Oishi's order in Turner
I. The court also dismissed the remaining five claims and referred them to the
arbitration that was already in progress.
During these legal proceedings in Turner II, HKM also sought to pursue
discovery. Vulcan disputed Turner's right to proceed with legal depositions,
informing HKM thatdiscovery was available in the arbitration proceedings.2 Judge
Benton granted Vulcan's motion for a protective order and quashed the
depositions.
On July 13, 2012, HKM requested a four month continuance of the
arbitration hearing scheduled for November 26, 2012, to pursue discovery. The
arbitrator denied the continuance. On July 16, Vulcan sent a notice that it intended
to depose Turner's current and past psychologists and her partner.
On July 30, 2012, HKM sent a letter stating that financial constraints on
Turner would force a discontinuance of the arbitration. Previously, in response to
2Am. Arbitration Ass'n, Employment Arbitration Rules and Mediation Procedures 9
(Nov. 1, 2009). Rule 9 provides:
The arbitrator shall have the authority to order such discovery, by way of
deposition, interrogatory, document production, or otherwise, as the arbitrator
considers necessary to a full and fair exploration of the issues in dispute,
consistent with the expedited nature of arbitration.
The [American Arbitration Association (AAA)] does not require notice ofdiscovery
related matters and communications unless a dispute arises. At that time, the
parties should notify the AAA of the dispute so that it may be presented to the
arbitrator for determination.
No. 71855-0-1/6
HKM's inquiry regarding applicable rules, the American Arbitration Association
(AAA) case manager had indicated that the employment arbitration rules applied.
The case manager subsequently billed both parties in excess of $20,000.00.
Vulcan paid its portion of the fees, and Turner paid $900.00.
After receiving HKM's notice of discontinuance, the case manager for AAA
sent a letter advising that Turner would not be pursuing the counterclaims but
noting that the matter was moving forward with Vulcan's claims. Vulcan objected
to the dismissal of Turner's claims under CR 41(a)(3) arguing, inter alia, that the
GBA was an employer promulgated plan and, under the rules of the AAA, Vulcan
was responsible for the costs of the arbitration pertaining to those employment
claims as well as the arbitrator's fees. Vulcan eventually paid all the administrative
costs of the arbitration as well as the arbitrator's fees, totaling $34,961.24.
On August 9, 2012, Turner filed a motion to dismiss claims and end the
arbitration proceedings. Turner argued that, in view of Vulcan's failure to advise
the AAA that the GBA was an employer promulgated agreement, it could not now
offer to pay all fees to continue the arbitration. On August 21, 2012, the arbitrator
issued her ruling denying Turner's motion to dismiss and end the arbitration
proceedings. The arbitrator based her ruling on the fact that Turner's pleadings
cited Rule 48 of the AAA rules,3 which permitted the parties to disagree with the
3Am. Arbitration Ass'n, Employment Arbitration Rules and Mediation Procedures 48
(Nov. 1, 2009). Rule 48 provides:
Costs of Arbitration (including AAA Administrative Fees)
This Costs of Arbitration section contains two separate and distinct sub
sections. Initially, the AAA shall make an administrative determination as
to whether the dispute arises from an employer-promulgated plan or an
individually-negotiated employment agreement or contact.
No. 71855-0-1/7
determination of fees, but that she had failed to do so earlier. Vulcan had no
obligation to assert a claim on Turner's behalf. Because Vulcan agreed that it was
responsible for the fees, there was no impediment to Turner pursuing arbitration
of her employment claims. The arbitrator gave Turner five days to reinstate her
counterclaims.
On August 27, 2012, HKM withdrew as Turner's attorney. On September
7, 2012, Turner, representing herself, requested a four month continuance. The
arbitrator denied the continuance without prejudice and set a schedule for Vulcan's
motions for summary judgment and Turner's response.
On October 16, 2012, Vulcan deposed Turner's current psychologist.
Turner was present at that deposition and asked questions. The following day,
based on her experience in the deposition, Turner sent an e-mail stating that she
was withdrawing from the arbitration.
The arbitration hearing took place as scheduled on November 26, 2012,
without Turner.4 The arbitrator entered Findings of Fact, Conclusions of Law, and
an Interim Arbitration Award on December 21, 2012. The interim award dismissed
If a party disagrees with the AAA's determination, the parties may bring the
issue to the attention of the arbitrator for a final determination. The
arbitrator's determination shall be made on documents only, unless the
arbitrator deems a hearing is necessary.
4Am. Arbitration Ass'n, Employment Arbitration Rules and Mediation Procedures 29
(Nov. 1, 2009). Rule 29 provides:
Unless the law provides to the contrary, the arbitration may proceed in the
absence of any party or representative, who, after due notice, fails to be
present or fails to obtain a postponement. An award shall not be based
solely on the default of a party. The arbitration shall require the party who
is in attendance to present such evidence as the arbitrator may require for
the making of the award.
No. 71855-0-1/8
Turner's claims with prejudice and awarded Vulcan $5,696.63 based on Turner's
breach of contract for failing to repay Vulcan a portion of the bonuses received at
the start of her employment since she left before the end of the year.
Vulcan requested $117,735.00 in fees for its efforts in securing a second
court order compelling arbitration and its success in claims outside of the statutory
discrimination claims (recovery of defamation and recovery of bonus).
On March 7, 2013, the arbitrator awarded Vulcan $113,235.00 in attorney
fees under the EIPA, which contained a fee provision. Because the dispute arose
out of Turner's employment and Vulcan was the prevailing party, the arbitrator
found that Vulcan was entitled to fees except for amounts incurred in defending
against Turner's statutory employment discrimination claims.
The arbitrator limited the fees to those incurred
in the second lawsuit in which Vulcan successfully sought to enforce
the arbitration provision contained in the Guaranteed Bonus
Agreement (Turner II). Vulcan does not seek fees incurred in the
first lawsuit in which it successfully sought to enforce the arbitration
provision (Turner I). Vulcan has further limited its request to only
those fees incurred in Turner II for partners Harry H. Schneider Jr.,
Joseph M. McMillan, and then associate Jeffrey M. Hanson, and only
as to days on which the lawyer billed at least three hours on this
matter.^
Vulcan and its executives moved to confirm the final arbitration award and
for judgment against Turner. Rebecca Roe entered a notice of appearance for
Turner causing Vulcan's motion for confirmation to be reassigned to Judge Bruce
Heller, who then entered an order confirming the award on April 5, 2013.
5 Clerk's Papers (CP) at 4072.
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No. 71855-0-1/9
Turner moved for reconsideration. Judge Heller granted Turner's motion
for reconsideration and set the matter for oral argument.
Turner sought to vacate the final award, arguing that the arbitrator's denial
of Turner's request for a continuance amounted to misconduct and that the award
of attorney fees was "irrational"6 and, further, that the arbitrator violated public
policy and exceeded her authority under the state constitution. Wash. Const, art.
IV, § 6.
At the hearing to confirm the arbitration award, Judge Heller requested
supplemental briefing on whether attorney fees for Vulcan's efforts to compel
arbitration a second time violated public policy. The court then entered an order
confirming in part and vacating in part the arbitration award. The matter was
remanded to the arbitrator to consider whether Vulcan's alternative fee request
related to non-statutory claims.
On remand the arbitrator revisited her attorney fee award and, after
receiving revised information from Vulcan, awarded $39,524.50 in attorney fees to
Vulcan as follows: $18,875.00 incurred for its successful motion for partial
summary judgment on Turner's defamation claim, and $21,449.50 for prevailing
on the partial summary judgment motion on the enforceability of the contractual
release signed by Turner. The court upheld the revised award and entered final
judgment.
6 CP at 2601.
No. 71855-0-1/10
Vulcan then moved to confirm the amended final award. Turner responded
and requested attorney fees for prevailing on the reduction of attorney fees
awarded in the first final arbitration award. The court denied her request.
Turner appeals the trial court orders compelling arbitration in Turner I and
Turner II, the final judgment and final arbitration award, and the order denying her
request for attorney fees.
Vulcan cross appeals, objecting to the reduction of attorney fees from the
original amount awarded by the arbitrator.
ANALYSIS
The party opposing arbitration has the burden of demonstrating that an
arbitration agreement is not enforceable. Zuver v. Airtouch Commc'ns, Inc.. 153
Wash. 2d 293, 302, 103 P.3d 753 (2004). This court reviews de novo a trial court's
decision to compel or deny arbitration. Gandee v. LDL Freedom Enter., Inc.. 176
Wash. 2d 598, 602, 293 P.3d 1197 (2013): Satomi Owners Ass'n v. Satomi. LLC. 167
Wash. 2d 781, 797, 225 P.3d 213 (2009).
Turner moved to vacate the final arbitration award. That motion to vacate
necessarily includes our answering the question of whether the trial court
appropriately granted the motion to compel arbitration. Tuefel Constr. Co. v. Am.
Arbitration Ass'n. 3 Wash. App. 24, 26-27, 472 P.2d 572 (1970) (order compelling
arbitration not appealable, but if arbitrator without authority, court may later refuse
to confirm award): see also ACF Prop. Mqmt.. Inc. v. Chaussee, 69 Wash. App. 913,
921, 850 P.2d 1387 (1993); Aanew v. Lacev Co-Play. 33 Wash. App. 283, 288, 654
P.2d 712 (1982) ("If a dispute is not arbitrable, the arbitrators have no power to
10
No. 71855-0-1/11
resolve it."). Failure to seek discretionary review of a motion to compel arbitration
does not waive a later challenge. Saleemi v. Doctor's Assocs.. Inc.. 176 Wash. 2d
368, 376, 292 P.3d 108 (2013) (citing with approval Division Two's rejection of the
proposition that such failure waives a later challenge in Saleemi v. Doctor's
Assocs.. Inc.. 166 Wash. App. 81, 91, 269 P.3d 350 (2012)). Here, the trial court
correctly compelled arbitration.
Under both federal and state law, a request to compel arbitration presents
two threshold questions: (1) whether there is an agreement to arbitrate and, if so,
(2) whether the dispute is within the scope of that agreement. If the answer to both
questions is affirmative, the trial court's authority is substantially constrained. See
Heights at Issaquah Ridge. Owners Ass'n v. Burton Landscape Grp.. Inc.. 148 Wn.
App. 400, 402, 200 P.3d 254 (2009). Because this is a dispute between an
employee and her employer, the FAA governs. See Zuver. 153 Wash. 2d at 301
(citing 9 U.S.C. § 2).
Turner argues that it is the court, not the arbitrator, that determines whether
an arbitration clause is valid and enforceable. While it is true that the courts
determine whether an arbitration clause is valid and enforceable, that
determination is separate and distinct from the question of the validity of the
contract as a whole. McKee v. AT&T Corp.. 164 Wash. 2d 372, 383-84, 191 P.3d
845 (2008). Here, Turner challenges the validity of the contract itself.
A challenge to the validity of the parties' contract as a whole, as opposed to
the arbitration clause contained in the contract, is for the arbitrator to decide. See
McKee. 164 Wash. 2d at 394.
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No. 71855-0-1/12
The United States Supreme Court has addressed these gateway
challenges to arbitration under the FAA, beginning with Prima Paint Corp. v. Flood
& Conklin Manufacturing Co.. 388 U.S. 395, 87 S. Ct. 1801, 18 L. Ed. 2d 1270
(1967). There, the Court held that a challenge to the validity of the entire
agreement as fraudulently induced was for the arbitrator, not the court. Prima
Paint, 388 U.S. at 404.
In Buckeve Check Cashing. Inc. v. Cardegna. 546 U.S. 440, 445-46,126 S.
Ct. 1204, 163 L. Ed. 2d 1038 (2006), the United States Supreme Court reached
the same conclusion. Analyzing its earlier decisions, including Prima Paint, the
Court restated three pertinent principles:
First, as a matter of substantive federal arbitration law, an arbitration
provision is severable from the remainder of the contract. Second
unless the challenge is to the arbitration clause itself, the issue ofthe
contract's validity is considered by the arbitrator in the first instance.
Third, this arbitration law applies in state as well as federal courts.
Buckeve. 546 U.S. at 445-46. The Court concluded "that because respondents
challenge the Agreement, but not specifically its arbitration provisions, those
provisions areenforceable apart from the remainder of thecontract. The challenge
should therefore be considered by an arbitrator, not a court." Buckeve. 546 U.S.
at 446.
Here, Turner challenges the contract as a whole, arguing that she was
forced to sign the contract for fear of losing her job and that she was not given
sufficient time to review it. Like in Prima Paint and Buckeve. these are issues that
need to be addressed by the arbitrator.
The parties' contract, here, provides that
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No. 71855-0-1/13
[a]ny and all claims, disputes, or other matters in controversy on any
subject arising out of or related to this Agreement and your
employment shall be subject to confidential arbitration.[7]
This language is a "clear and unmistakable expression of the parties' intent to
leave the question of arbitrability to an arbitrator." Fallo v. High-Tech Inst.. 559
F.3d 874, 878 (8th Cir. 2009): see also Preston v. Ferrer. 552 U.S. 346, 349, 28 S.
Ct. 978, 169 L. Ed. 2d 917 (2008) (when parties agree to arbitrate all questions
arising under the contract, the question of arbitrability is for the arbitrator).
In Preston v. Ferrer. 552 U.S. 346, 28 S. Ct. 978, 169 L. Ed. 2d 917 (2008),
the contract provided that the arbitration would be in accordance with the rules of
the AAA. One of those rules, Rule 7(b), provided that the arbitrator has the power
to determine the existence or validity of a contract of which an arbitration clause
forms a part. Preston. 552 U.S. at 362. The Court held that to be a sufficient
indicatorthat the parties intended the arbitrator and not the court to determine the
arbitrability. Similarly here, the GBA provided that "any arbitration proceedings
shall be conducted in Seattle, Washington in accordance with applicable AAA
rules."8 This requirement furthers Congress's intent "to move the parties to an
arbitrable dispute out of court and into arbitration as quickly and easily as possible."
Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp.. 460 US.1, 22, 103 S. Ct.
927, 74 L. Ed. 2d 765 (1983).
Arbitration is a matter of contract. "'[I]t is the language of the contract that
defines the scope of disputes subject to arbitration.'" NASDAQ OMX Grp.. Inc. v.
UBS Sec. LLC. 770 F.3d 1010 (2nd Cir. 2014) (quoting EEOC v. Waffle House.
7 CP at 281.
8 CP at 1570.
13
No. 71855-0-1/14
Inc., 534 U.S. 279, 289, 122 S. Ct. 754, 151 L. Ed. 2d 755 (2002)). There is a
body of substantive federal law that both state and federal courts are required to
apply. Perry v. Thomas. 482 U.S. 483, 489, 107 S. Ct. 2520, 96 L. Ed. 2d 426
(1987).
Turner also contends that the trial court erred in compelling arbitration
because the GBA she signed was procedurally and substantively unconscionable.
Washington recognizes two types of unconscionability for invalidating arbitration
agreements, procedural and substantive. McKee. 164 Wash. 2d at 396-402.
Procedural unconscionability applies to impropriety during the formation of the
contract, while substantive unconscionability applies in cases where a term in the
contract is alleged to be one-sided or overly harsh. Nelson v. McGoldrick. 127
Wash. 2d 124, 131, 896 P.2d 1258 (1995). Either is sufficient to void the agreement.
Hill v. Garda CL Nw.. Inc.. 179 Wash. 2d 47, 55, 308 P.3d 635 (2013) (citing Adler v.
Fred Lind Manor. 153 Wash. 2d 331, 347, 103 P.3d 773 (2004)).
Procedural Unconscionability
Procedural unconscionability is "the lack of meaningful choice, considering
all the circumstances surrounding the transaction including '[t]he manner in which
the contract was entered,' whether each party had 'a reasonable opportunity to
understand the terms of the contract,' and whether 'the important terms [were]
hidden in a maze of fine print." Zuver. 153 Wash. 2d at 303 (alterations in original)
(internal quotation marks omitted) (quoting Nelson. 127 Wash. 2d at 131). None of
those circumstances are present here. The GBA offered Turner a guaranteed
bonus in 2011 for a full release of claims, arbitration, and confidentially.
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No. 71855-0-1/15
In her declaration opposing arbitration in her first case, Turner indicated
that, although the agreement itselfprovided that she could seek review by counsel,
the agreement had to be signed within 24 hours. In her declaration in Turner II,
Turner said she felt she would be fired if she did not sign the agreement within 24
hours and that the arbitration agreement itself was confusing because she did not
have an opportunity to "find out" what the AAA rules said. There is no evidence
that Turner sought additional time to make her decision or that she felt she needed
to consult with counsel before signing the agreement.
The law is well settled that absent fraud or misrepresentation, a party who
voluntarily and knowingly signs a written contract is bound by its terms. Nat'l Bank
of Wash, v. Eguitv Inv'rs, 81 Wash. 2d 886, 912, 506 P.2d 20 (1973), superseded by
statute on other grounds by Laws of 1973,1st Ex. Sess., ch. 47, § 3. "[Ijgnorance
of the contents of a contract expressed in a written instrument does not ordinarily
affect the liability of one who signs it " Tiart v. Smith Barney, Inc., 107 Wn.
App. 885, 897, 28 P.3d 823 (2001). A party who has the opportunity to read a
plain and unambiguous instrument cannot claim to have either been misled by or
ignorant of its terms. Eouitv Inv'rs, 81 Wash. 2d at 913 (quoting Johnston v. Spokane
& l.E.R. Co., 104 Wash. 562, 569, 177 P. 810 (1919)). Moreover, in Turner's
motion for relief from the order compelling arbitration (Turner II), HKM argued that
Turner "did not even read the agreement, which was in the form of a letter. She
simply turned the letter to its last page and signed it."9
CP at 594.
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No. 71855-0-1/16
Turner next argues that the GBA is an adhesion contract and therefore
unconscionable. As this court recently noted, the key inquiry is whether an
employee lacked a meaningful choice. Such a choice can always include
employment elsewhere. Romnev v. Franciscan Med. Grp., 186 Wash. App. 728,
736-37, 349 P.3d 32 (2015), review denied, No. 91686-1 (Wash. Sept. 30, 2015).
Similarly in Zuverv. Airtouch Communications, Inc., 153 Wash. 2d 293,103 P.3d 753
(2004), the court concluded that an employment agreement offered to an
employee on a "take it or leave it" basis is insufficient to negate the existence of
an arbitration agreement where the employee had a reasonable opportunity to
inspect the agreement and the terms were fully disclosed. 153 Wash. 2d at 305.
Likewise here, the terms of the agreement were fully disclosed and Turner
was afforded a reasonable opportunity to inspect the agreement. Her argument
that she signed only because she thought she would lose her job does not support
a finding of procedural unconscionability under Washington law. This is
particularly true here, because the language in the GBA itself clearly stated that
Turner was entitled to seek advice before executing the agreement. Furthermore,
none of the paragraphs contained in the GBA were of small type or buried in a sea
of fine print.
Substantive Unconscionability
Substantive unconscionability focuses on the terms of the agreement and
the presence of overly harsh or one-sided results. To be substantively
unconscionable, the contract must shock the conscious, be monstrously harsh, or
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No. 71855-0-1/17
exceedingly callous. Romnev. 186 Wash. App. at 740 (quoting Alder. 153 Wash. 2d at
344-45). None of these terms apply to the contract here.
On appeal, Turner argues for the first time that the GBA contained a
unilateral litigation option, making the agreement one-sided. The clause in
question provides that
Vulcan shall have the right, upon its election, to seek emergency
injunctive relief in court in aid of arbitration to preserve the status quo
pending determination of the merits in arbitration.1101
Similarly, Turner would also have the right to seek such relief if Vulcan had pursued
its recovery in litigation rather than in arbitration. For example, if Vulcan had sued
Turner to recover the funds overpaid in court, Turner could have moved to compel
arbitration, thus seeking a stay and preserving the status quo pending the
determination. Even if this were not the case, this court has already held that
mutuality of obligation does not mandate identical requirements. Romnev. 186
Wash. App. at 742. "In short, substantive unconscionability does not concern
'whether the parties have mirror obligations under the agreement, but rather
whether the effect of the provision is so "one-sided" as to render it patently"overly
harsh.'"" Romnev. 186 Wash. App. at 742 (quoting Zuver, 153 Wash. 2d at 317 n.16).
Here, Vulcan had the initial burden of proving the existence of the
agreement to arbitrate the parties' dispute. Submission of the EIPA and the GBA
agreements, both signed in 2011, met this burden. Those documents included
provisions that all matters in dispute of the agreement and arising from
employment were subject to binding arbitration. Once the existence of that valid
10 CP at 281.
17
No. 71855-0-1/18
agreement to arbitrate was established, the burden shifted to Turner, as the party
opposing arbitration, to demonstrate that the agreement could not be interpreted
to require arbitration of her disputes. This Turner has failed to do. General
allegations concerning lack of discussion orunderstanding regarding the inclusion
of an arbitration clause are insufficient to prevent arbitration. Cadv v. A.G.
Edwards & Sons. Inc.. 648 F. Supp. 621, 623-24 (1986).
Turner argues that the provision requiring confidentiality of the arbitration
violates both McKee v. AT&T Corp.. 164 Wash. 2d 372, 191 P.3d 845 (2008), and
Zuver. But confidential agreements have been upheld as the exception tothe state
constitutional requirement for public judicial proceedings. Barnett v. Hicks, 119
Wash. 2d 151, 159, 829 P.2d 1087 (1992). Confidentiality agreements are routinely
found in collective bargaining agreements. Zuver. 153 Wash. 2d at 314 (citing Coje
v Burns Int'l Sec. Servs.. 105 F.3d 1465, 1477 (D.C. Cir. 1997)). In Zuver, the
court held the confidentially agreement unconscionable because it hampered an
employee's ability to prove a pattern of discrimination. 153 Wash. 2d at 315. Even so,
there, the Zuver court struck the provision rather than finding the entire agreement
unconscionable. 153 Wash. 2d at 322.
McKee involved a consumer dispute. The court held the policy of
confidentially to be in direct conflict with public policy, particularly because it dealt
with consumers. McKee. 164 Wash. 2d at 398-99.
The scenarios in Zuver and McKee are not present here. Furthermore, the
confidentiality clause is not particularly one-sided because it benefits both the
employee and the employer. Vulcan, Paul Allen, his family, and Vulcan's
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No. 71855-0-1/19
executives obviously desire their privacy. Any employee, such as Turner, would
desire that the particulars of his or her employment be private, particularly, as here,
when it involves Turner's personal details. Neither the litigation clause nor the
confidentiality clause is substantively unconscionable.
Constitutional Issues
Turner next argues that the arbitration agreement violates both her
constitutional right to a jury trial and the separation of powers doctrine by
improperly delegating judicial authority to arbitrators. Neither contention has any
merit. First, there is no dispute that Turner signed the agreement at issue. Once
that has been established "a party implicitly waives his [or her] right to a jury trial
by agreeing to an alternative forum, arbitration." Adler, 153 Wash. 2d at 360-61.
Second, the FAA is not an incursion on the separation of powers. The FAA
permits enforcement of agreements to arbitrate. Its primary purpose is to ensure
that private agreements to arbitrate are enforced in accordance with its terms.
Such challenges to arbitration agreements as an unconstitutional delegation of
judicial power have uniformly been rejected. Snvder v. Superior Court of Amador
County. 24 Cal. App. 2d 263, 74 P.2d 782 (1937); see also Commodity Futures
Trading Comm'n v. Schor. 478 U.S. 833, 855, 106 S. Ct. 3245, 92 L. Ed. 2d 675
(1986).
In Schor, a case discussing the limited jurisdiction of the Commodity
Futures Trading Commission, the Court stated:
In such circumstances, separation of powers concerns are
diminished, for it seems self-evident that just as Congress may
encourage parties to settle a dispute out of court or resort to
arbitration without impermissible incursions on the separation of
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powers, Congress may make available a quasi-judicial mechanism
through which willing parties may, at their option, elect to resolve
their differences.
478 U.S. at 855.
Turner relies on State ex rel. Everett Fire Fighters. Local No. 350 v.
Johnson. 46 Wash. 2d 114, 121, 278 P.2d 662 (1955), wherein the court held that the
municipal charter requiring fire fighter contract disputes to be arbitrated was
unconstitutional. As the Supreme Court noted in City of Spokane v. Spokane
Police Guild. 87 Wn.2d 457,464, 553 P.2d 1316 (1976), Everett Fire Fighters "was
decided prior to the enactment. . . of the Public Employees' Collective Bargaining
Act... and what was held unlawful in that case is now both lawful and mandatory."
Everett Fire Fighters does not apply here.
Turner's Reguest for Attorney Fees
Turner argues that she is a prevailing party because she succeeded in
substantially reducing the attorney fees awarded to Vulcan for Vulcan's prevailing
in its suit against her. The prevailing party was Vulcan. Turner did not prevail on
any of the claims submitted to arbitration. Turner cites Johnson v. Department of
Transportation. 177 Wash. App. 684, 695 n.7, 313 P.3d 1197(2013). review denied.
179 Wash. 2d 1025, 320 P.3d 718 (2014), for the "general rule [that] fees incurred
while litigating an entitlement to fees are recoverable under remedial statues such
as the WLAD." In Johnson, an employee sought an award of attorney fees after a
successful settlement of a claim against the State. Johnson was in fact the
prevailing party.
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Here, Turner is not the prevailing party. RCW 4.84.330 states, "As used in
this section 'prevailing party' means the party in whose favor final judgment is
rendered." See also Blair v. Wash. State Univ.. 108 Wash. 2d 558, 571-72, 740 P.2d
1379 (1987) ("In Washington, the prevailing party is the one who receives
judgment in that party's favor" or "succeeds on any significant issue which
achieves some benefit the party sought in bringing suit.") (citing Andersen v. Gold
Seal Vineyards. Inc.. 81 Wash. 2d 863, 505 P.2d 790 (1973); Henslev v. Eckerhart,
461 U.S. 424, 433, 103 S. Ct. 1933, 76 L. Ed. 2d 40 (1983)). Turner is not entitled
to an award of attorney fees.
Attorney Fees and Vulcan's Cross Appeal
As noted above, the arbitrator initially awarded Vulcan $113,235.00 for
attorney fees incurred in connection with the litigation in Turner II. Because the
attorney fee award violated public policy, the trial court vacated it and remanded
to the arbitrator to determine Vulcan's alternative basis for the fees.
On remand, the arbitrator awarded Vulcan $39,524.50 for reasonable
attorney fees in connection with two successful partial summary judgments
obtained by Vulcan. Those amounts include $18,875.00 awarded for Vulcan's
successful dismissal of Turner's defamation claim, and $21,449.50 for prevailing
on the enforceability of the contractual release signed by Turner in the GBA.
Turner contends that the reduced amended award is likewise against public
policy and should be reversed. Vulcan cross appeals and contends that the
superior court erred when it vacated on public policy grounds that part of the initial
arbitration award granting it attorney fees.
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It is well settled that a court may vacate an arbitration award that violates a
well-defined, explicit, and dominant public policy, such as the laws in the WLAD.
Int'l Union of Operating Eng'rs. Local 286 v. Port of Seattle. 176 Wash. 2d 712, 722-
23, 295 P.3d 736 (2013).
In its Memorandum Opinion vacating the arbitrator's attorney fee award, the
trial court recognized that Turner's claims under the WLAD and the MWA were
subject to this dominant public policy. The WLAD aims "'to enable vigorous
enforcement of modern civil rights litigation and to make it financially feasible for
individuals to litigate civil rights violations.'" Martinez v. Citv of Tacoma. 81 Wn.
App. 228, 235, 914 P.2d 86 (1996) (quoting Hume v. Am. Disposal Co., 124 Wash. 2d
656, 675, 880 P.2d 988 (1994)). Thus, prevailing plaintiffs, but not prevailing
defendants, are entitled to reasonable attorney fees. RCW 49.60.030(2); Collins
v. Clark Ctv. Fire Dist. No. 5. 155 Wash. App. 48, 104-05, 231 P.3d 1211 (2010).
Likewise, the legislature in enacting the MWA expressed a similar strong policy.
See, e.g.. Schilling v. Radio Holdings. Inc.. 136 Wash. 2d 152, 157, 961 P.2d 371
(1998) ("The Legislature has evidenced a strong policy in favor of payment of
wages due employees by enacting a comprehensive scheme to ensure payment
of wages."). Thus, an award of attorney fees to an employer who prevails as a
defendant in an action under these legislative actions violates public policy.
In Gandee v. LDL Freedom Enterprises. Inc.. 176 Wash. 2d 598,606, 293 P.3d
1197 (2013), our Supreme Court held that a "loser pays" provision in an arbitration
agreement, found in a debt adjustment contract, to be unconscionable because it
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No. 71855-0-1/23
served to benefit only LDL Freedom and chilled a consumer's ability to bring a suit
under the Consumer Protection Act (CPA), chapter 19.86 RCW.
We reached a similar conclusion in Walters v. AAA. Waterproofing. Inc..
151 Wash. App. 316, 324-25, 211 P.3d 454 (2009), where we stated:
While Walters is assured that he will recover his expenses and legal
fees if he wins decisively, he must assume the risk that if he loses,
he will have to pay Waterproofing's expenses and legal fees. This
risk is an enormous deterrent to an employee contemplating a suit to
vindicate the right to overtime pay. Under these circumstances, in
the context of an employee's suit where the governing statutes
provide that only a prevailing employee will be entitled to recover
fees and costs, a reciprocal attorney fees provision is
unconscionable and, therefore, unenforceable.
The provision in the EIPA here is similar to the "loser pays" provisions held
unconscionable in both Gandee and Walters. By limiting its initial request for fees
to those incurred in Turner II, Vulcan itself recognized the inapplicability of the
EIPA to the arbitration proceedings. The fees the arbitrator awarded were for the
second motion to compel arbitration in Turner II as well as other attorney fees
incurred during that litigation, e.g., quashing discovery.
Turner, although compelled to submit to arbitration by the court orderissued
by Judge Oishi, filed a second suit, thereby generating additional costs and
attorney fees. But the fees in the litigation of Turner II were incurred in a motion
to compel arbitration in a suit brought by Turner based in part on the WLAD and
the MWA. However, in Turner II, the court's order compelling arbitration did not
find that Turner had done anything inappropriate in bringing her five additional
claims in a second suit.
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No. 71855-0-1/24
Vulcan relies on Zuver to support the award of attorney fees in the Turner
II litigation. In Zuver. the employee asserting claims under WLAD challenged the
attorney fee provision requiring that the party who filed the judicial action must pay
attorney fees and costs to the opposing party who successfully stays and/or
compels arbitration. Because the proviso enabled either party to recover fees, the
court ruled that it did not "appear to be so one-sided and harsh as to render it
substantively unconscionable." Zuver. 153 Wash. 2d at 319.
But as noted in Gandee. Zuver merely addressed "the possibility that the
arbitrator would refuse to award a prevailing plaintiff costs and fees as required
under the CPA." Gandee. 176 Wash. 2d at 605-06 (emphasis omitted) (citing Zuver.
153 Wash. 2d at 310-12). Here, that possibility became a reality, and when applied
to Turner's claims under the WLAD and the MWA, the EIPA provision becomes
unconscionable. Thus, the trial court was correct in vacating the attorney fees
initially awarded for litigation costs in Turner II. Vulcan is not entitled to attorney
fees in its defense against claims asserted under the WLAD and the MWA. The
trial court's order vacating that portion of the arbitrator's award was correct.
Standing alone, the EIPA provision is not substantively unconscionable,
particularly when applied to claims to other than those asserted to recover monies
an employee might be entitled to under the WLAD and the MWA. Here, the
arbitrator awarded fees for two separate partial summary judgment motions
regarding the GBA. The arbitrator concluded that the unsuccessful defamation
claim and the enforceable contractual release signed by Turner were valid
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No. 71855-0-1/25
alternative grounds for the award of attorney fees unrelated to the statutory claims
under the WLAD and the MWA.
The trial court accepted the arbitrator's decision. Defamation and a
contractual release are not necessarily intertwined with statutory claims under the
WLAD and the MWA. The narrow grounds to vacate or modify an arbitrator's
decision include a facial error "on the face of the award" but such an error is rarely
demonstrated. Broom v. Morgan Stanley DW, Inc., 169 Wash. 2d 231, 236-37, 236
P.3d 182 (2010). We see no facial legal error in the arbitrator's alternative grounds
award of attorney fees.
We affirm the arbitrator's award of $18,875.00 for Vulcan's successful
dismissal of Turner's claim of defamation and $21,449.50 for prevailing on the
enforceability of the contractual release signed by Turner. That claim is outside
the purview ofeitherthe WLAD or the MWA, and, as such, is subject to the attorney
fee clause found in the EIPA.
Attorney Fees on Appeal
Finally, both parties request attorney fees on appeal. RAP 18.1. Because
Vulcan substantially prevailed on the appeal of the enforceability of the arbitration
agreement, and Turner substantially prevailed on the cross appeal ofthe reduction
ofthe attorney fee award, there is no "prevailing party" under RCW 4.84.330 or the
attorney fee provision in the EIPA. American Nursery Prods., Inc. v. Indian Wells
Orchards, 115 Wash. 2d 217, 234-35, 797 P.2d 477 (1990); Philips Bldg. Co, Inc. v.
An, 81 Wash. App. 696, 701-02, 915P.2d 1146(1996). We decline to award fees to
either party.
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No. 71855-0-1/26
The trial court is affirmed in requiring arbitration and in the award of
$5,696.63 for breach of contract. The attorney fees award is affirmed.
yv \