Lorrie Poublon v. C.H. Robinson Co.
2017 U.S. App. LEXIS 1969
| 9th Cir. | 2017Background
- Poublon, a former C.H. Robinson account manager, signed annual one-page Incentive Bonus Agreements (IBAs) to receive yearly bonuses; the agreements included a four‑paragraph "Dispute Resolution" arbitration clause incorporating the company’s Arbitration Procedure (on the intranet) and AAA rules.
- The arbitration clause required mediation then final and binding arbitration, limited discovery (exchange of relevant documents and three depositions per side absent good cause), allowed dispositive motions, and barred collective/representative/class claims except by mutual agreement.
- The clause carved out the employer’s right to pursue injunctive/equitable relief (e.g., enforcement of restrictive covenants, IP claims) in court.
- After leaving employment, Poublon brought wage/overtime misclassification claims and a representative PAGA claim; the district court denied C.H. Robinson’s motion to compel arbitration as unconscionable (procedurally and substantively).
- On appeal the Ninth Circuit reviewed unconscionability under California law and the FAA, resolving whether specific provisions were procedurally or substantively unconscionable and whether unlawful portions required voiding the entire arbitration agreement or could be severed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Procedural unconscionability (adhesion / oppression) | The IBA was adhesive and Poublon was pressured to sign to get bonus and remain employed, producing high procedural unconscionability. | The IBA was a typical adhesion employment form creating at most a low degree of procedural unconscionability; no evidence of duress, misrepresentation, or extraordinary surprise. | Adhesion conceded; but procedural unconscionability is low — no additional oppression or surprise shown. |
| Judicial‑carve‑out permitting employer to litigate equitable claims in court | Carve-out unbalanced and renders arbitration clause one‑sided and unconscionable. | Employer conceded the carve‑out for equitable relief is substantively unconscionable but argued severance is proper. | Employer conceded; carve‑out is substantively unconscionable and must be extirpated. |
| Waiver of representative/PAGA claims | The waiver of representative/class claims makes the clause unconscionable because it eliminates PAGA enforcement. | Waiver of representative claims (other than PAGA) is generally permissible under FAA; PAGA waiver is unenforceable under Iskanian but that does not automatically render clause unconscionable. | Waiver bars PAGA representative claims and is unenforceable as state public policy (Iskanian); but unenforceability of PAGA waiver does not by itself make the clause substantively unconscionable; limit the waiver to allow PAGA claims to proceed. |
| Other procedural/substantive terms (venue, confidentiality, sanctions, discovery, unilateral modification) | These terms (Minnesota venue, confidentiality, sanctions, discovery limits, intranet incorporation) are unfair and chill employees’ ability to vindicate rights. | Terms are within permissible bounds of arbitration: forum selection not unreasonable; confidentiality consistent with CarMax; sanctions apply only to frivolous/abusive conduct; discovery limits and incorporated Arbitration Procedure allow additional discovery on good cause; incorporation used existing rules at signing. | Venue, confidentiality, sanctions, discovery limits, and incorporation are not substantively unconscionable under California law and precedent; unilateral modification argument fails because the IBA incorporated the existing procedure at signing and contained no open unilateral amendment power. |
| Severability / permeation | Because multiple clauses are invalid, the entire arbitration agreement is permeated and should be void. | Invalid provisions are collateral and severable; remaining arbitration terms can be enforced after extirpation/limitation. | The court rejects a per se "two‑strikes" rule; under California severability principles the unlawful provisions (judicial carve‑out; PAGA waiver) are collateral and can be severed/limited. The remainder of the arbitration agreement is enforceable. |
Key Cases Cited
- AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011) (FAA preemption of state rules that forbid class‑action waivers in arbitration)
- Sanchez v. Valencia Holding Co., LLC, 61 Cal. 4th 899 (2015) (California unconscionability framework and parity of arbitration contracts)
- Armendariz v. Found. Health Psychcare Servs., Inc., 24 Cal. 4th 83 (2000) (severability analysis and limits on arbitration clauses in employment contracts)
- Iskanian v. CLS Transp. Los Angeles, LLC, 59 Cal. 4th 348 (2014) (PAGA representative‑claim waivers are unenforceable as a matter of state public policy)
- Tompkins v. 23andMe, Inc., 840 F.3d 1016 (9th Cir. 2016) (apply California unconscionability standards; doubts resolved for arbitration)
- Baltazar v. Forever 21, Inc., 62 Cal. 4th 1237 (2016) (incorporation‑by‑reference does not by itself increase procedural unconscionability; analyze "surprise")
- Sakkab v. Luxottica Retail N. Am., Inc., 803 F.3d 425 (9th Cir. 2015) (Iskanian rule and FAA interaction)
- CarMax Auto Superstores Cal. LLC v. Sanchez, 224 Cal. App. 4th 398 (2014) (confidentiality and discovery limits in arbitration not per se unconscionable)