Kanbar v. O'Melveny & Myers
849 F. Supp. 2d 902
N.D. Cal.2011Background
- Plaintiff Kanbar sues O’Melveny & Myers (OMM) for fraud, retaliation, sex discrimination, and failure to prevent discrimination, including class and individual claims.
- Class claims rely on OMM’s DRP arbitration agreement being unconscionable per Davis v. OMM (9th Cir. 2007).
- OMM moves to compel arbitration, arguing Davis is superseded by AT&T v. Concepción (2011) and the DRP should be enforced.
- Court finds Kanbar waived her right to a judicial forum by signing a stipulation to arbitration in July 2010 while represented by counsel.
- Collateral estoppel from Davis is analyzed and found inapplicable due to Concepción and material factual differences.
- Court analyzes unconscionability of DRP provisions and concludes three provisions are substantively and procedurally unconscionable; one provision is inapplicable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Preemption and unconscionability conflict with Concepción | Kanbar argues Davis controls; Concepción does not preempt unconscionability claims. | OMM contends Concepción erodes Davis and mandates arbitration per DRP. | Unconscionability still governs; FAA preemption not applying to state-law unconscionability. |
| Collateral estoppel applicability on Davis | Davis should bar relitigation of DRP validity. | Concepción and factual differences permit relitigation; estoppel does not apply. | Collateral estoppel does not apply; change in law and material facts permit relitigation. |
| Whether DRP provisions are unconscionable | Davis grounds show DRP has unconscionable provisions; waiver is separate. | Concepción limits challenges to arbitration terms as unconscionable. | DRP provisions—notice, confidentiality, and arbitration exemption—conscionable; unenforceable. |
| Severability and waiver of judicial forum | Severance could allow arbitration with remaining terms. | Severance appropriate to avoid unenforceable provisions. | Waiver of judicial forum established; severance not necessary given waiver and unconscionability analysis. |
Key Cases Cited
- Davis v. O’Melveny & Myers LLP, 485 F.3d 1066 (9th Cir. 2007) (DRP unconscionable under California law)
- AT&T Mobility LLC v. Concepción, 563 U.S. 333 (2011) (FAA preemption of Discover Bank rule; class arbitration concerns)
- Syverson v. IBM Corp., 472 F.3d 1072 (9th Cir. 2007) (differences in facts can defeat offensive collateral estoppel)
- Blanton v. Womancare, Inc., 38 Cal.3d 396 (Cal. 1985) (waiver of judicial rights is client decision; attorney cannot bind without consent)
- Prudential Ins. Co. of Am. v. Lai, 42 F.3d 1299 (9th Cir. 1994) (knowingly waived rights to arbitration required for employment statutory claims)
- Walker v. Ryan’s Family Steak Houses, Inc., 400 F.3d 370 (6th Cir. 2005) (factors for knowing waiver in arbitration)
- Riley v. American Family Mutual Insurance Co., 881 F.2d 368 (7th Cir. 1989) (consent and knowing waiver; attorney advice not dispositive)
- Armendariz v. Foundation Health Psychcare Serv., Inc., 24 Cal.4th 83 (Cal. 2000) (severability and multiple defects in arbitration agreement; context for unconscionability)
- Discover Bank v. Superior Court, 36 Cal.4th 148 (Cal. 2005) (California rule on class-action waivers in adhesion contracts)