Romney v. Franciscan Medical Group
349 P.3d 32
Wash. Ct. App.2015Background
- Three former Franciscan Medical Group (FMG) clinicians (Romney, Bauer, Childress) signed employment contracts containing an arbitration addendum and sued FMG for wage violations, retaliation, and related relief.
- Plaintiffs sought a judicial finding that the arbitration agreement was unconscionable; FMG moved to compel arbitration.
- The trial court invalidated the arbitration addendum as unconscionable and denied FMG’s motion to compel; FMG appealed.
- The arbitration addendum: governs under the FAA, incorporates AAA employment rules, includes confidentiality and fee‑sharing provisions, allows claims for statutory damages and attorney’s fees “as required by law,” and contains a severability clause.
- Plaintiffs challenged procedural unconscionability (adhesion/take‑it‑or‑leave‑it formation) and substantive unconscionability (court injunctive remedies reserved to FMG, limitation on exemplary damages, confidentiality, fee‑splitting, potential binding of nonsignatories).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Procedural unconscionability — adhesion/take‑it‑or‑leave‑it | Plaintiffs had no meaningful choice; pressured to sign; no opportunity to negotiate. | FMG: standard employment practice; clause was conspicuous, signed multiple times, employees could work elsewhere. | Not procedurally unconscionable — plaintiffs had meaningful choice; clause not hidden or confusing. |
| Substantive unconscionability — one‑sided remedies (injunctive/equitable relief reserved for FMG) | Contract lets FMG seek court injunctive relief while forcing employees to arbitrate, making arbitration one‑sided. | FMG: those clauses are severable and do not infect the arbitration clause; arbitration terms themselves are mutual. | Even if those clauses were unconscionable, they are severable; arbitration enforceable. |
| Limitation on exemplary/punitive damages and attorney fees | Arbitration clause bars punitive/exemplary damages and limits fees, undermining statutory remedies (e.g., RCW 49.52). | FMG: clause preserves damages/costs "as required by law"; "shall" in statute is mandatory. | Plaintiffs’ statutory remedies (including exemplary damages and attorney fees where required) remain available; clause does not defeat them. |
| Confidentiality and fee‑splitting | Confidentiality and shared arbitration costs deter claims and impede proof of patterns; fee‑split forces unaffordable arbitration. | FMG: AAA rule allows exceptions where law or parties require; agreement provides that FMG will advance costs pending arbitrator’s affordability determination. | Confidentiality not per se unconscionable here (exceptions and waiver possible); fee‑sharing is not per se unconscionable because costs may be borne by FMG pending arbitrator review. |
Key Cases Cited
- Perry v. Thomas, 482 U.S. 483 (1987) (FAA creates substantive federal law favoring enforcement of arbitration agreements)
- Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (1983) (strong federal policy presumes arbitration enforceability)
- Adler v. Fred Lind Manor, 153 Wn.2d 331 (2004) (Washington factors for adhesion/procedural unconscionability analysis)
- Zuver v. Airtouch Commc'ns, Inc., 153 Wn.2d 293 (2004) (mutuality/effect test for substantive unconscionability; severance favored)
- McKee v. AT&T Corp., 164 Wn.2d 372 (2008) (confidentiality in arbitration may conflict with public policy depending on context)