Stephen Mayne v. Monaco Enterprises, Inc.
361 P.3d 264
Wash. Ct. App.2015Background
- Stephen Mayne worked for Monaco from 1997 until his termination in late 2013; he relocated to Spokane in 2010.
- Mayne signed a two-page arbitration agreement in May 2011 (which allowed a 30-day opt-out) and a revised arbitration agreement in March 2013 (which removed opt-out, required equal split of arbitrator costs, and stated employment would not continue without signing).
- Monaco terminated Mayne at the end of 2013; Mayne sued in Spokane County Superior Court for negligent misrepresentation and promissory estoppel.
- Monaco moved to compel arbitration; the trial court granted the motion and dismissed the suit. Mayne appealed.
- The court reviewed procedural and substantive unconscionability; it concluded the 2013 agreement was procedurally unconscionable and held the 2011 agreement governs arbitration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the 2013 arbitration agreement was procedurally unconscionable | Mayne: signing was coerced — clause said employment would not continue without signing, so no meaningful choice | Monaco: arbitration is enforceable; employee had notice and could have refused | Court: 2013 agreement was procedurally unconscionable because it presented a take-it-or-leave-it choice (threat of immediate termination) |
| Effect of finding 2013 agreement void | Mayne: voiding restores jury-rights; arbitration should not be compelled | Monaco: if 2013 invalid, the prior 2011 agreement should govern | Court: affirmed arbitration but modified to require arbitration under the 2011 agreement (2011 agreement valid because it allowed 30-day opt-out) |
| Whether specific 2013 substantive terms (e.g., fee-shifting) rendered agreement unenforceable | Mayne: fee-shifting conflicts with statutory attorney-fee rights and is substantively unconscionable | Monaco: speculative; arbitrator should apply applicable law and Monaco said it would not deny statutory fees | Court: substantive challenge was speculative and premature; not resolved against arbitration under 2011 agreement |
| Standard for evaluating employee arbitration agreements imposed during employment | Mayne: existing-employee imposition is coercive given life changes (move, house) | Monaco: employer can condition employment on arbitration; many employees will sign voluntarily | Court: employers imposing arbitration on existing employees must take steps to ameliorate coercion (notice, reasonable time, or consideration); mere threat of immediate termination is not a meaningful choice |
Key Cases Cited
- Zuver v. Airtouch Commc’ns, Inc., 153 Wn.2d 293 (state may refuse to enforce arbitration agreements that are unconscionable; outlines procedural unconscionability factors)
- Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (strong federal policy favoring arbitration)
- Doctor's Assocs., Inc. v. Casarotto, 517 U.S. 681 (states cannot apply rules that single out arbitration clauses for disfavor; general contract defenses remain available)
- Adler v. Fred Lind Manor, 153 Wn.2d 331 (threats of termination to force arbitration can support procedural unconscionability)
- Schroeder v. Fageol Motors, Inc., 86 Wn.2d 256 (distinguishes procedural and substantive unconscionability)
- Labriola v. Pollard Grp., Inc., 152 Wn.2d 828 (changes to employment agreements require independent consideration)