Pinnacle Property Management v. Kirandeep Czerwinski

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
KIRANDEEP CZERWINSKI, ) No. 79665-8-I
)
Respondent, ) DIVISION ONE
)
v.
)
PINNACLE PROPERTY )
MANAGEMENT SERVICES, LLC, a ) UNPUBLISHED OPINION
Delaware LLC; and HEATHER LAGAT, )
individually and the marital community )
comprised thereof, )
)
Appellants. ) FILED: July 1,2019
SCHINDLER, J. — Kirandeep Czerwinski filed a lawsuit against Pinnacle Property
Management Services LLC. Pinnacle filed a motion to compel arbitration. The court
denied the motion to compel arbitration on the grounds of lack of mutual assent. We
reverse and remand to enter an order to compel arbitration.
Employment with Pinnacle
On May 3, 2016, Kirandeep Czerwinski applied for an assistant property
manager position with Pinnacle Property Management Services LLC. Applicants submit
the employment application to Pinnacle electronically. The employment application
requires an applicant to sign an agreement to arbitrate “employment-related legal
No. 79665-8-1/2
claims,” the Issue Resolution Agreement.” The employment application states, in
pertinent part:
Dear Pinnacle Property Management Services, LLC Applicant:
Thank you for considering employment with Pinnacle Property
Management Services, LLC.
We appreciate your interest in Pinnacle Property Management
Services, LLC and hope you decide to start the application process by
signing the Issue Resolution Agreement and completing the
employment application.
If you wish to be considered for employment you must read and sign
the following Issue Resolution Agreement. This Agreement requires
you to arbitrate any legal dispute related to your application for
employment, employment with, or termination from Pinnacle
Property Management Services, LLC. You will not be considered as
an applicant until you have signed the Agreement. By signing this
Issue Resolution Agreement, you acknowledge receipt of this ISSUE
RESOLUTION RULES You will note that if you sign at this time,
you do have three (3) days to withdraw your consent. You may, of
course, take the package with you and return with it signed, if you
wish to continue your application processJ1]
Czerwinski completed and submitted the application electronically. Czerwinski
accepted the assistant property manager job and worked for Pinnacle from May 23,
2016 until February 24, 2017.
Motion To Compel Arbitration
On November 1, 2017, Czerwinski filed a lawsuit against Pinnacle. Czerwinski
alleged she suffered an on-the-job head injury. Czerwinski alleged violations of the
Washington law against discrimination, chapter 49.60 RCW; the Washington Minimum
Wage Act, chapter 49.46 RCW; and the Washington industrial welfare act, chapter
49.12 RCW.
1 Boldface in original.
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No. 79665-8-1/3
Pinnacle filed a motion to stay the lawsuit and compel arbitration. Pinnacle
argued the agreement required submitting the claims to binding arbitration. Pinnacle
submitted the declaration of Pinnacle Human Resources Vice President Erinn Cassidy
and the 15-page Issue Resolution Agreement (Arbitration Agreement) that Czerwinski
signed on April 8, 2016. The signature page of the Arbitration Agreement shows the
name “Kirandeep Czerwinski” typed in the signature line and the last four digits of her
Social Security number. The box to check “Agreed” is blank. The signature line for a
Pinnacle representative is blank.
Czerwinski argued the Arbitration Agreement was not enforceable because she
did not sign or agree to it. Czerwinski also argued the agreement is procedurally and
substantively unconscionable. Czerwinski filed a declaration. Czerwinski’s attorney
asserted the personnel file produced by Pinnacle does not contain a copy of the
Arbitration Agreement. The personnel file contains “[s]creening answers” for the online
application. For the “Universal Application — Arbitration Clause” section, the online
questions are in quotation marks and the applicant’s answers follow. The notation
states:
“By checking the box, I agree to the statements on the previous
page.” I Agree
“Signature:” Kirandeep Czerwinski
“Date:” 03/1 3/20 16.
In reply, Pinnacle argued that the record established Czerwinski signed the
Arbitration Agreement and accepted the job and that not checking the “Agreed” box on
the employment application did not show a failure of mutual assent. Pinnacle also
argued the Arbitration Agreement was not procedurally or substantively unconscionable.
Cassidy submitted a copy of an Arbitration Agreement Czerwinski signed and dated
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No. 79665-8-1/4
March 13, 2016 and again on April 8, 2016. The March 13 Arbitration Agreement
shows Czerwinski’s name typed in the signature line and the last four digits of her
Social Security number. The ‘Agreed’ box is unchecked and the signature line for a
Pinnacle representative is blank.
The court denied the motion to compel arbitration. The court concluded the
Arbitration Agreement was unenforceable because Pinnacle did not sign and agree to
be bound by its terms.
Mutual Assent
Pinnacle appeals, asserting the court erred by denying the motion to compel
arbitration for lack of mutual assent because Pinnacle did not sign the Arbitration
Agreement.
We review a trial court’s decision to compel or deny arbitration de novo. Satomi
Owners Ass’n v. Satomi, LLC, 167 Wash. 2d 781, 797, 225 P.3d 213 (2009).
“‘[A]rbitration is a matter of contract and a party cannot be required to submit to
arbitration any dispute which he has not agreed to so submit.’ “ Hill v. Garda CL Nw.,
lnc~ 179 Wash. 2d 47, 53, 308 P.3d 635 (2013)2 (quoting Satomi, 167 Wash. 2d at 810).
“These types of disputes go to the validity of the contract and are preserved for judicial
determination, as opposed to arbitrator determination, unless the parties’ agreement
clearly and unmistakably provides otherwise.” Hill, 179 Wash. 2d at 53.
A valid contract requires mutual assent. Yakima County (W. Valley) Fire Prot.
Dist. No. 12 v. City of Yakima, 122 Wash. 2d 371, 388, 858 P.2d 245 (1993). “‘It is
essential to the formation of a contract that the parties manifest to each other their
2 Internal quotation marks omitted.
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No. 79665-8-1/5
mutual assent to the same bargain at the same time. Mutual assent generally takes the
form of an offer and an acceptance.’ “ Fire Prot. Dist. No. 12, 122 Wash. 2d at 388
(quoting Pac. Cascade Corp. v. Nimmer, 25 Wash. App. 552, 555-56, 608 P.2d 266
(1980)).
We conclude the court erred by concluding the Arbitration Agreement was not
enforceable without Pinnacle’s signature. Washington courts have consistently rejected
the argument that a written agreement lacked mutual assent if the agreement is not
signed by the party seeking to enforce it. ~, ~ Shelcon Constr. Grp., LLC v.
Haymond, 187 Wash. App. 878, 894, 351 P.3d 895 (2015) (holding that a “valid written
agreement can exist without one party’s signature”); Marcus & Millichap Real Estate mv.
Servs. of Seattle, Inc. v. Yates, Wood & MacDonald, Inc., 192 Wash. App. 465, 474, 369
P.3d 503 (2016) (a party may consent to arbitration without signing an arbitration
clause).
Czerwinski’s Electronic Signature
We also conclude Czerwinski did not meet her burden to present evidence
showing she did not sign and enter into the agreement to arbitrate.
If the parties to a lawsuit dispute the validity of an agreement to arbitrate, “the
court shall proceed to summarily decide the issue.” RCW 7.04A.070(1); Marcus &
Millichap, 192 Wash. App. at 472. In summarily deciding the validity of an agreement, the
trial court applies the summary judgment standard and views the evidence in the light
most favorable to the nonmoving party. Marcus & Millichap, 192 Wash. App. at 473. We
review a motion to compel arbitration and summary judgment de novo. Marcus &
Millichap, 192 Wash. App. at 473.
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No. 79665-8-1/6
Summary judgment is proper if “the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any, show that
there is no genuine issue as to any material fact and that the moving party is entitled to
judgment as a matter of law.” CR 56(c); see ~ Owen v. Burlington N. & Santa Fe
R.R., 153 Wash. 2d 780, 787, 108 P.3d 1220 (2005). The moving party has the burden of
proving there is no genuine issue of material fact. Balise v. Underwood, 62 Wash. 2d 195,
199, 381 P.2d 966 (1963). If the moving party meets this burden, the nonmoving party
must set forth specific facts showing there is a genuine issue for trial. Young v. Key
Pharm., Inc., 112 Wash. 2d 216, 225, 770 P.2d 182 (1989). Summary judgment is
appropriate where there is no genuine issue of material fact and reasonable minds
could reach but one conclusion. Barrie v. Hosts of Am., Inc., 94 Wash. 2d 640, 642, 618
P.2d 96 (1980). “ ‘[M]ere allegations, denials, opinions, or conclusory statements’ do
not establish a genuine issue of material fact.” Strauss v. Premera Blue Cross, 1 Wn.
App. 2d 661, 681, 408 P.3d 699 (2017)~ (quoting Int’l Ultimate, Inc. v. St. Paul Fire &
Marine Ins. Co., 122 Wash. App. 736, 744, 87 P.3d 774 (2004)), review granted, 190
Wash. 2d 1025, 419 P.3d 409 (2018). “Lack of recall is not sufficient to controvert clear
opposing evidence on a summary judgment motion.” Overton v. Consol. Ins. Co., 145
Wash. 2d 417, 431, 38 P.3d 322 (2002).
As the party seeking to enforce the contract, Pinnacle must prove the existence
of a contract and the objective manifestation of the intent of the other party to be bound
by the contract. Retail Clerks Health & Welfare Trust Funds v. Shopland Supermarket,
lnc~ 96 Wash. 2d 939, 944, 640 P.2d 1051 (1982). If Pinnacle meets its burden, the
~ Alteration in original.
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No. 79665-8-1/7
burden then shifts to “the party seeking to avoid the contract to prove a defense to the
contract’s enforcement.” Shopland Supermarket, 96 Wash. 2d at 944.
In support of the motion to compel arbitration, Pinnacle Human Resources Vice
President Cassidy testified that to “be considered for hire” and “as a condition of
employment,” “all applicants to Pinnacle are asked to review and sign the [Arbitration]
Agreement.” Cassidy testified:
In 2016, when Ms. Czerwinski applied for employment at Pinnacle, all
Pinnacle applicants accessed application documents, including the
[Arbitration] Agreement, on an electronic application tracking system
called PeopleAnswers, which is operated by a vendor named Infor.
Applicants do not physically sign the [Arbitration] Agreement and other
application documents. Instead, applicants type in their names to
acknowledge acceptance of the document. They also type in the last four
digits of their Social Security Number to authenticate their electronic
signature. Pinnacle does not require applicants to check a box to agree to
the [Arbitration] Agreement. Signing the document is sufficient for them to
agree to the Agreement and proceed with the application process.
Cassidy testified that “the personnel file of Kirandeep Czerwinski . . . contains a 15-page
[Arbitration] Agreement that is dated and signed on April 8, 2016” with Czerwinski’s
typed name and the last four digits of her Social Security number. Cassidy submitted
the Arbitration Agreement showing Czerwinski ‘authenticate[d] her electronic signature”
by typing “the last four digits of her Social Security Number.”
Czerwinski admitted she “completed my employment application with Pinnacle
electronically.” Czerwinski testified, “I recall logging onto Pinnacle’s website from home,
looking through job posts, clicking on the position I was interested in, and completing an
on-line application, which included attaching my resume.” Czerwinski said she received
an e-mail “thanking me for my application, and providing me a link to PeopleAnswers.
When I went to the PeopleAnswers site, I was required to complete a few tests,”
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No. 79665-8-1/8
including ‘what appeared to be some kind of personality test, a math test, and a series
of questions about how I would handle certain situations.”
Czerwinski testified she did not recall seeing the Arbitration Agreement:
I do not recall ever seeing those materials — the Agreement nor the Rules
— prior to or while applying to work for Pinnacle, or at any time during my
employment with Pinnacle. I do not recall seeing those materials before
my attorney showed them to me, well after my employment with Pinnacle
ended. Nor do I recall completing the “signature” page to the Agreement,
or otherwise agreeing to be bound by the Agreement.
Cassidy submitted a reply declaration, stating, “Due to an administrative error,
Ms. Czerwinski’s 15-page [Arbitration] Agreement signed on April 8, 2016, was
inadvertently omitted when her personnel file was originally collected for transmittal to
her attorney.” Cassidy testified Czerwinski signed the Arbitration Agreement two
times—first on March 13, 2016 and again on April 8, 2016.
I understand that Ms. Czerwinski’s counsel has questioned why her
[Arbitration] Agreement shows an execution date of April 8, 2016, while
another page of her personnel file (PNCL000002 in Exhibit 1 to
[Czerwinski’s attorney]’s declaration) states a different date, March 13,
2016. That is because she electronically signed the arbitration agreement
twice. Attached hereto as Exhibit 2 is a true and correct copy of Ms.
Czerwinski’s [Arbitration] Agreement signed on March 13, 2016. I believe
this happened because Ms. Czerwinski actually created two application
profiles in the PeopleAnswers application tracking system, which have
some slight variations, including a different spelling of her first name,
source of referral, and desired work location. We discovered the second
arbitration agreement in the course of reviewing Ms. Czerwinski’s
opposition brief and in preparing to reply to her arguments. I have
provided these newly discovered documents to counsel, and I understand
they will be produced to Ms. Czerwinski’s lawyer today.[4]
The record establishes Pinnacle met its burden to prove the existence of the
contract and Czerwinski’s objective manifestation to be bound by the contract. Pinnacle
submitted a copy of the Arbitration Agreement. Czerwinski signed the Arbitration
~ Boldface omitted.
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No. 79665-8-1/9
Agreement electronically with her full name and the last four digits of her Social Security
number. Shopland Supermarket, 96 Wash. 2d at 944 (a voluntary signature on a contract
establishes an objective manifestation of the intent to be bound).
“The party opposing arbitration bears the burden of showing that the agreement
is not enforceable.” Zuverv. Airtouch Commc’ns, Inc., 153 Wash. 2d 293, 302, 103 P.3d
753 (2004). A party may assert standard contract defenses to challenge enforceability
of an arbitration agreement. McKee v. AT&T Corp., 164 Wash. 2d 372, 383, 191 P.3d 845
(2008).
Czerwinski did not meet her burden to prove a defense to enforcement of the
Arbitration Agreement. Czerwinski asserts she “has no recollection of reviewing the
Agreement or completing its signature block.” But her lack of recall is not sufficient to
controvert the evidence that she signed the Arbitration Agreement during the application
process. Overton, 145 Wash. 2d at 431. Czerwinski also did not present any evidence of
fraud. Shopland Supermarket, 96 Wash. 2d at 944 (“A party to a contract which [s]he has
voluntarily signed cannot, in the absence of fraud, deceit, or coercion be heard to
repudiate h[er] own signature.”).
Czerwinski claims that because she did not check the box marked “Agreed,” she
did not “agree to be bound by the Agreement.” But Cassidy testified that Pinnacle “does
not require applicants to check a box to agree” and “[s]igning the document is sufficient
for them to agree to the Agreement and proceed with the application process.” Further,
the signature page unequivocally states:
I recognize that if I sign the Agreement and do not withdraw within three
(3) days of signing, I will be required to arbitrate any and all employment
related claims I may have against Pinnacle Property Management
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No. 79665-8-1/10
Services, LLC, whether or not I become employed by Pinnacle Property
Management Services, LLC.[5~
Because we conclude the parties agreed to arbitrate, we address whether the
Arbitration Agreement is procedurally or substantively unconscionable.
Procedural and Substantive Unconscionability
The Pinnacle Arbitration Agreement states the Federal Arbitration Act (FAA), 9
U.S.C. §~ 1 through 16, governs. Section 2 of the FAA provides that written arbitration
agreements “shall be valid, irrevocable, and enforceable, save upon such grounds as
exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. Courts must
indulge every presumption in favor of arbitration under the FAA. Moses H. Cone Mem’l
Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25, 103 S. Ct. 927, 74 L. Ed. 2d 765
(1983), superseded on other grounds by 9 U.S.C. § 16(b)(1). Washington also has a
strong public policy favoring arbitration. Adler v. Fred Lind Manor, 153 Wash. 2d 331, 341
n.4, 103 P.3d 773 (2004).
The existence of an unconscionable agreement is a question of law. Zuver, 153
Wash. 2d at 302-03. Washington recognizes two categories of unconscionability—
procedural and substantive. Zuver, 153 Wash. 2d at 303. Procedural unconscionability is
“‘the lack of [a] meaningful choice, considering all the circumstances surrounding the
transaction.’ “ Zuver, 153 Wash. 2d at 303 (quoting Nelson v. McGoldrick, 127 Wash. 2d 124,
131, 896 P.2d 1258 (1995)). Substantive unconscionability”’involves those cases
where a clause or term in the contract is alleged to be one-sided or overly harsh.’
Zuver, 153 Wash. 2d at 303 (quoting Schroeder v. Fageol Motors, Inc., 86 Wash. 2d 256, 260,
544 P.2d 20(1975)).
~ Emphasis added.
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No. 79665-8-111 1
Procedural Unconscionability
Czerwinski contends the Arbitration Agreement is procedurally unconscionable
because she did not have a reasonable opportunity to understand the terms and the
terms are unclear. To determine whether an agreement is procedurally
unconscionable, we examine the following circumstances surrounding the parties’
transaction to determine whether the party claiming unconscionability lacked a
meaningful choice: (1) The manner in which the contract was entered, (2) whether the
party claiming procedural unconscionability had a reasonable opportunity to understand
the terms of the contract, and (3) whether the important terms were hidden in a maze of
fine print. Zuver, 153 Wash. 2d at 303. “ ‘[T]hese three factors [should] not be applied
mechanically without regard to whether in truth a meaningful choice existed.’ “ Zuver,
153 Wash. 2d at 3036 (quoting Nelson, 127 Wash. 2d at 131).
Czerwinski contends she did not have a reasonable opportunity to understand
the terms of the Arbitration Agreement because it is “fifteen pages long” and “does not
provide applicants with contact information for a Pinnacle representative to whom they
may direct questions about the Agreement.”
The record shows Pinnacle provided the Arbitration Agreement to Czerwinski in
an online portal for her to read and sign before she was hired. Pinnacle did not require
Czerwinski to return the Arbitration Agreement immediately. See Zuver, 153 Wash. 2d at
306 (applicant who signed agreement 1 5 days after offer of employment had “ample
opportunity” to address “any concerns or questions she might have had about the terms
of the agreement”). The Arbitration Agreement includes the address of Pinnacle’s
6 Alteration in original.
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No. 79665-8-1/12
human resources department. The Arbitration Agreement states, in bold print, “You will
note that if you sign at this time, you do have three (3) days to withdraw your
consent. You may, of course, take the package with you and return with it
signed, if you wish to continue your application process.” The Arbitration
Agreement also states, in bold print, “The Issue Resolution Agreement and the Issue
Resolution Rules affect your legal rights. You may wish to seek legal advice
before signing this Issue Resolution Agreement.”
Czerwinski contends the Arbitration Agreement is unconscionable because it has
“unclear terms” and the average person could not understand them. We disagree. The
first 4 pages of the Arbitration Agreement explain Pinnacle’s arbitration procedure and
states that by signing the agreement, the applicant “further agree[sJ that if I commence
arbitration, it will be conducted in accordance with the ‘Issue Resolution Rules.’” The
Arbitration Agreement includes 10 pages of Issue Resolution Rules in regular font for
the applicant to review.
Czerwinski argues an average person would not understand that by signing the
Arbitration Agreement, the applicant was agreeing to the terms of the Arbitration
Agreement or the Issue Resolution Rules. But the agreement gives the applicant a
meaningful choice to decide whether to sign. The Arbitration Agreement clearly states
that by signing, the applicant agrees she “will be required to arbitrate any and all
employment-related claims.” Further, the agreement makes clear that an applicant who
does not agree to arbitrate “no longer will be eligible for employment at Pinnacle.”
When read as a whole, the terms of the Arbitration Agreement are clear and not “set
forth in such a way that an average person could not understand them.” Zuver, 153
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No. 79665-8-1/13
Wn.2d at 306-07. We conclude the Arbitration Agreement is not procedurally
unconscionable.
Substantive Unconscionability
Czerwinski contends the terms of the Arbitration Agreement are substantively
unconscionable. ‘ ‘Substantive unconscionability involves those cases where a clause
or term in the contract is alleged to be one-sided or overly harsh.’ “ Zuver, 153 Wash. 2d
at 303 (quoting Schroeder, 86 Wash. 2d at 260). “‘Shocking to the conscience’,
‘monstrously harsh’, and ‘exceedingly calloused’ are terms sometimes used to define
substantive unconscionability.” Nelson, 127 Wash. 2d at 131 (quoting Montgomery Ward
& Co. v. Annuity Bd. of S. Baptist Convention, 16 Wash. App. 439, 444, 556 P.2d 552
(1976)).
(1) Time Limit To File Claim
Czerwinski contends the one-year time limitation to file a claim is substantively
unconscionable. The Arbitration Agreement states:
The “Arbitration Request Form” shall be submitted not later than one year
after the date on which the Employee knew, or through reasonable
diligence should have known, of the facts giving rise to the Employee’s
claim(s). The failure of an Employee to initiate an arbitration within the
one-year time limit shall constitute a waiver with respect to that dispute
relative to that Employee. Notwithstanding anything stated herein to the
contrary, this clause will not affect tolling doctrines under applicable state
laws or the employee’s ability to arbitrate continuing violations.[7]
“Generally, a private statute of limitations will control over general statutes of limitation,
‘unless prohibited by statute or public policy, or unless [it is] unreasonable.’ “ Gandee v.
~ Boldface in original.
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No. 79665-8-1/14
LDL Freedom Enters., Inc., 176 Wash. 2d 598, 606, 293 P.3d 1197 (2013)8 (quoting Adler,
153 Wash. 2d at 356).
Pinnacle argues that because Czerwinski filed her lawsuit within the one-year
limitation and Pinnacle agreed to waive the limitation on “any of her claims [that] may
fall outside of that period,” her challenge to the one-year limitation is moot. We agree.
‘An appeal is moot where it presents purely academic issues and where it is not
possible for the court to provide effective relief.” Klickitat County Citizens Against
Imported Waste v. Klickitat County, 122 Wash. 2d 619, 631, 860 P.2d 390, 866 P.2d 1256
(1993).
(2) Confidentiality
Czerwinski contends the provision requiring confidentiality is substantively
unconscionable. The Arbitration Agreement states:
Unless otherwise disallowed by statute, all aspects of an arbitration
pursuant to these Issue Resolution Rules, including the hearing and
record of the proceeding, shall be confidential and shall not be open to the
public, except (i) to the extent both Parties agree otherwise in writing; (ii)
as may be appropriate in any subsequent proceeding between the parties,
or (iii) as may otherwise be appropriate in response to a governmental
agency or legal process.
All settlement negotiations, mediations, and the results thereof shall be
confidential.
In Zuver, the Washington Supreme Court held that a provision in an employee
arbitration agreement that required ‘[ajIl arbitration proceedings, including settlements
“
and awards, under the Agreement will be confidential’ “is substantively unconscionable.
Zuver, 153 Wash. 2d at 312 n.9, 315. The court stated, “‘[l]n the context of individual
8 Alteration in original; internal quotations omitted.
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No. 79665-8-1/15
statutory claims, a lack of public disclosure may systematically favor companies over
individuals.’ “ Zuver, 153 Wash. 2d at 314-15 (quoting Cole v. Burns Int’l Sec. Servs., 105
F.3d 1465, 1477 (D.C. Cir. 1997)). The court concluded the confidentiality provision in
the employee arbitration agreement “benefits only” the employer, “hampers an
employee’s ability to prove a pattern of discrimination or to take advantage of findings in
past arbitrations,” and “undermines an employee’s confidence in the fairness and
honesty of the arbitration process.” Zuver, 153 Wash. 2d at 315.
Pinnacle contends that unlike Zuver, the confidentiality provision here contains
“meaningful exceptions to confidentiality,” including that the parties may agree to
release information from the arbitration. But Pinnacle does not explain how the
exceptions resolve the concerns articulated in Zuver. We conclude that under Zuver,
the confidentiality provision is substantively unconscionable.
(3) Discovery Limitations
Czerwinski argues that the provisions limiting discovery are substantively
unconscionable. “It is well recognized that discovery generally is more limited in
arbitration than in litigation.” Schuster v. Prestige Senior Mgmt., LLC, 193 Wash. App.
616, 644, 376 P.3d 412 (2016). Here, the Arbitration Agreement limits the number of
interrogatories, document requests, and depositions. Issue Resolution Rule 7,
“Discovery,” states, in pertinent part:
a. INTERROGATORIES/DOCUMENT REQUESTS
Each Party may propound one set of 20 interrogatories (including
subparts) to the opposing Party. Interrogatories are written
questions asked by one party to the other, who must answer under
oath. Such interrogatories may include a request for all documents
upon which the responding party relies in support of its answers to
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No. 79665-8-1/16
the interrogatories. Answers to interrogatories must be served
within 21 calendar days of receipt of the interrogatories.
b. DEPOSITIONS
A deposition is a statement under oath that is given by one party in
response to specific questions from the other party, and usually is
recorded or transcribed by a court reporter. Each Party shall be
entitled to take the deposition of up to three (3) individuals of the
Party’s choosing. The Party taking the deposition shall be
responsible for all costs associated therewith, such as the cost of a
court reporter and the cost of a transcript.
However, the Arbitration Agreement also allows the arbitrator to permit additional
discovery upon “a showing of substantial need”:
Upon the request of any Party and a showing of substantial need, the
Arbitrator may permit additional discovery, but only if the Arbitrator finds
that such additional discovery is not overly burdensome, and will not
unduly delay conclusion of the arbitration.~9~
Czerwinski cites Woodward v. Emeritus Corp., 192 Wash. App. 584, 368 P.3d 487
(2016), to argue the discovery limitation “presents an overwhelming advantage to the
employer.” In Woodward, the estate filed a lawsuit against their mother’s assisted living
facility alleging negligence, elder abuse, and wrongful death. Woodward, 192 Wash. App.
589-90. We affirmed denial of the motion to compel arbitration and held that the
arbitration agreement was “substantively unconscionable given the nature of the
claims.” Woodward, 192 Wash. App. at 589, 607. We concluded the arbitration rules in
the arbitration agreement were “inherently unsuited to the nature and complexity of the
estate’s claims.” Woodward, 192 Wash. App. at 607. Here, unlike in Woodward, the
discovery provisions are not unsuited to the nature and complexity of the employment
claims.
~ Boldface omitted.
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No. 79665-8-1/17
(4) Sanctions
Czerwinski contends that the provision allowing the arbitrator to award sanctions
is substantively unconscionable. The Arbitration Agreement provides:
The Arbitrator shall have the power to award sanctions against a Party for
the Party’s failure to comply with these Issue Resolution Rules or with an
order of the Arbitrator. These sanctions may include assessment of costs,
prohibitions of evidence, or, if justified by a Party’s wanton or willful
disregard of these Issue Resolution Rules, an adverse ruling in the
arbitration against the Party who has failed to comply.
Czerwinski contends the sanctions provision is similar to the unconscionable
“loser pays” provision in Gandee. In Gandee, the arbitration agreement provided that
the “‘prevailing party in any action or proceeding related to this Agreement shall be
entitled to recover reasonable legal fees and costs, including attorney’s fees which may
be incurred.’ “ Gandee, 176 Wash. 2d at 602. The Washington Supreme Court concluded
the “loser pays” provision was “one sided and overly harsh” because it “serves to benefit
only [the lender] and, contrary to the legislature’s intent, effectively chills [the borrower]’s
ability to bring suit under the CPA.”1° Gandee, 176 Wash. 2d at 606.
We conclude the sanctions provision in the Arbitration Agreement is not
substantively unconscionable. Unlike in Gandee, the sanctions provision is not one-
sided or overly harsh. The sanctions provision does not favor one party over the other
or allow the arbitrator to “sanction a party for filing a lawsuit in the first instance.” The
provision states the arbitrator may award sanctions against either party for “failure to
comply with these Issue Resolution Rules or with an order of the Arbitrator.” The
provision does not benefit only Pinnacle but serves to ensure both parties engage in the
arbitration process in accordance with the rules.
10 Consumer Protection Act, chapter 19.86 RCW.
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No. 79665-8-1/18
Czerwinski argues the arbitrator could sanction her for challenging the
“enforceability of the Agreement” in court. But the effect of the sanctions provision is “at
this point, purely speculative.” Zuver 153 Wash. 2d at 312.
(5) Termination or Modification by Pinnacle
Czerwinski contends that the provision allowing Pinnacle to terminate or modify
the Arbitration Agreement is substantively unconscionable. Issue Resolution Rule 19,
“Termination or Modification of Issue Resolution Agreement or Issue Resolution Rules,”
states:
In general, the parties agree that the Company may alter or terminate the
Agreement and these Issue Resolution Rules on December 31st of any
year upon giving 30 calendar days written notice to Employees, provided
that all claims arising shall be subject to the Agreement and corresponding
Issue Resolution Rules in effect at the time the Arbitration Request Form
is submitted and filing fee paid. In addition, any party may elect to waive
enforcement of any of these Rules, so long as that waiver works to benefit
the other party or parties in the arbitration.
“A unilateral provision in an arbitration agreement is substantively
unconscionable only if it is shown that ‘the disputed provision is so ‘one-sided’ and
‘overly harsh’ as to render it unconscionable.’ “ Satomi, 167 Wash. 2d at 815 (quoting
Zuver, 153 Wash. 2d at 319 n.18). Here, the provision is unilateral, giving Pinnacle the
sole ability to modify or terminate the Arbitration Agreement. However, Czerwinski has
not shown that the clause is so “one-sided” and “overly harsh” as to render it
substantively unconscionable. The provision requires Pinnacle to give 30 days’ written
notice to employees if it decides to alter or terminate the Arbitration Agreement.
Critically, the agreement provides that any claim be subject to the terms of the
Arbitration Agreement and Issue Resolution Rules “in effect at the time the Arbitration
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No. 79665-8-1/19
Request Form is submitted.” We conclude the modification and termination provision is
not substantively unconscionable.
Severance
Pinnacle argues that if the provision to terminate or modify the Arbitration
Agreement and the confidentiality provision are substantively unconscionable, they do
not pervade the Arbitration Agreement and are severable. Pinnacle asserts the court
may strike unconscionable provisions under the severability clause of the Arbitration
Agreement. Czerwinski contends the unconscionable provisions render the Arbitration
Agreement unenforceable.
“‘Severance is the usual remedy for substantively unconscionable terms’”
unless “‘such terms pervade an arbitration agreement.’ “ Woodward, 192 Wash. App. at
60211 (quoting Gandee, 176 Wash. 2d at 603). “Courts are generally loath to upset the
terms of an agreement and strive to give effect to the intent of the parties.” Zuver, 153
Wash. 2d at 320. Where parties have agreed to a severability clause, “courts often strike
the offending unconscionable provisions to preserve the contract’s essential term of
arbitration.” Zuver, 1 53 Wash. 2d at 320. We conclude the confidentiality provision does
not pervade the Arbitration Agreement. We strike the provision of the Arbitration
Agreement on confidentiality but conclude the Arbitration Agreement is enforceable,
~ Internal quotation marks omitted.
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No. 79665-8-1/20
reverse denial of the motion to compel arbitration, and remand to enter an order to
compel arbitration.
~ Li``
WE CONCUR:
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