Mohammed Al-Safin v. Circuit City Stores, Inc., a Virginia Corporation

that, today exactly with- does majority I would hold that from me. help out 1101(a)(43)(A), Congress §in

where, as provided, the tradi- “clearly” so

has and fel- misdemeanors line between

tional

onies remains.

CONCLUSION clearly expressed congressional

Absent contrary, practice, historical

intent to sense, and a recent

common construing all warrant

Court decision 1101(a)(43)(A) require that an offense

§ felony it can constitute an before

first be a court, This and oth- felony.”

“aggravated year” specifica- “at

ers, least one read 1101(a)(43)(F) as over- purposely §

tion in meaning usual

riding, by day, one defined, Now, being “felony.”

the term congres- specific indication of

with 729 from the usual depart

sional intent defined, being

meaning of term Congress the use

majority attributes to “felony” crime

the term to refer a

may carry imprison- term minimal Language just not mallea-

ment. I therefore respectfully

ble. dissent. AL-SAFIN,

Mohammed

Plaintiff-Appellee, .

v STORES, INC.,

CIRCUIT CITY Virginia corporation,

Defendant-Appellant.

No. 03-35297. of Appeals, States

United Court

Ninth Circuit.

Argued May Submitted

Filed Jan. Berry, Livingston

Red & Darrell Matte- sich, Sacramento, CA, for the defendant- appellant. Subit, to As- days 30 calendar written notice Frank Freed Subit & C.

Michael WA, Seattle, plain- sociates, Thomas, LLP, for the provided arising all claims tiff-appellee. alteration or termination shall be before

subject corresponding [DRA] time in at the the claim [DRRP] effect added.) (Emphasis arose.”1 by employed Al-Safin was still While amended, City, the DRRP was ef- Circuit (the fective December “1998 TASHIMA, PAEZ, BEA, and Before: DRRP”). essentially was The 1998 DRRP Judges. Circuit DRRP, as except the sáme that “all Rule 19 was amended to state that TASHIMA, Judge. Circuit arising alteration or termi- claims before (“Circuit Stores, City”), Inc. City Circuit subject nation and [DRA] shall be court’s denial its the district appeals corresponding [DRRP] effect compel arbitration and motion dismiss Request time the Arbitration Form and employment dis- Al-Safin’s Mohammed filing is received accompanying fee The district court held crimination claims. added.) (Emphasis The re- Company.” agreement between the arbitration sult of this would be modification City Al-Safin is unconscionable Circuit and governed in 2003 would arbitration filed law, thus un- Washington state opposed as the DRRP effect.in jurisdiction pursu- have enforceable. Wé n when the claim in. effect 16(a)(1)(B), Ferguson § see ant to 9 U.S.C. arose. Indus., Countrywide Credit v. (9th Cir.2002), and'we af- F.3d continued work Al-Safin for Circuit

firm. City after the 1998 modification until his employment was- terminated November BACKGROUND joba applied Al-Safin June 2, 1999, On December Al-Safin filed a City state of a Circuit store against City Circuit in the Unit- complaint City Washington. Before Circuit would ed States District Court for the Western his Al-Safin was re- application, consider Washington alleging District of violations quired sign of both federal and state anti-discrimina- City Dispute Resolution entitled “Circuit Circuit City tion laws. filed motion to (“DRA”). Agreement” By signing the arbitration, denied, compel was which DRA, all agreed to resolve dis- City appealed. Circuit putes arising out of his rela- City tionship through unpublished disposition, -with arbitra- In an we re tion, in accordance with “Circuit versed district court’s decision and Rules and Dispute (1) Resolution Procedures” improperly held that: the district court (“DRRP”). Stephens v. Robertson & relied Duffield (9th Co., Cir.1998), “to hold

Rule 19 of the DRRP effect F.3d contract (the DRRP”) compulsory stated that both the “1997 (2) unenforceable;” “to the extent that DRA and the DRRP could be amended giv- on the any year upon ‘knowing “on the district court relied December 31st ” Stores, Inc., Ingle job applicants 1. "Circuit refers to all ates.' v. Cir.2003). (9th F.3d current and former ‘Associ- n. requirement waiver’ of Prudential Ins. Co. After its motion for reconsideration was (9th Lai, Cir.1994), denied, F.3d 1299 our City appealed. examination of the relevant contract re- STANDARD OF REVIEW requirement

veals that the was met as a law;” “although matter of we ex- The district court’s denial of a mo press opinion enforceability as to the tion compel arbitration is reviewed de particular provisions, we are unable to Ingle, novo. 328 F.3d at 1169. agree suggestion illegal pro- with the visions so infected the contract as to ren- DISCUSSION der it invalid as a matter law.” federal (“FAA”) The Federal Arbitration Act Stores, Inc., City v. Circuit 46 Al-Safin was enacted “to reverse the longstanding (9th Cir.2002) Fed.Appx. 446 (emphasis judicial hostility agreements to arbitration added) I”). (“Al-Safin explicitly We re- ... place and to arbitration agreements manded the case for the district court to upon footing the same as other contracts.” validity consider “the of these contracts Gilmer v. Inter Corp., Lane state/Johnson under state law.” Id. at 447. 20, 24, 1647, 500 U.S. 111 S.Ct. 114 31, 2002, Effective long December after (1991). L.Ed.2d 26 The FAA applies to Al-Safin was terminated Circuit agreements, here, arbitration like the one years and over three litigation, into this employment-related cover claims. (the again the DRRP was amended “2003 Stores, Adams, City See Circuit Inc. v. 532 DRRP”). The DRRP many modified U.S. S.Ct. 149 L.Ed.2d 234 that have been deemed (2001). provides The FAA that arbitration unconscionable or unenforceable other valid, agreements generally “shall be irre Stores, proceedings. City See Circuit Inc. vocable, enforceable,” may but courts (9th Mantor, Cir.2003); v. 335 F.3d 1101 decline to enforce them grounds when “ex 1165; Stores, Ingle, 328 F.3d City equity ist at law or in for the revocation of (9th Adams, Cir.), Inc. v. 279 F.3d 889 “Thus, § contract.” 9 gener U.S.C. denied, cert. U.S. S.Ct. ally applicable defenses, contract such as (2002); 153 L.Ed.2d 160 Gannon v. Circuit fraud, duress, unconscionability, may (8th Stores, Inc., City 262 F.3d 677 Cir. applied to invalidate agree 2001); see also Morrison v. Circuit contravening” ments without federal law. (6th Stores, Cir. Assocs., Casarotto, Doctor’s Inc. v. 2003) (expressing “serious doubts about 681, 687, U.S. 116 S.Ct. 134 L.Ed.2d the fairness and reasonableness” of the (1996). remedies, DRRP’s “concerning terms fees, payment of discovery, Accordingly, we review Al-Safin’s arbi period requesting the limitations arbi agreement tration with Circuit tration”). light of the “liberal federal favoring agreements,” Moses H. Cone week adopting

One after the 2003 Hosp. Mercury Mem’l Corp., Constr. DRRP, its motion renewed 1, 24, 460 U.S. 103 S.Ct. 74 L.Ed.2d compel argued arbitration and that under (1983), enforceability and consider its agreement new the arbitration according to the laws of of the state con is enforceable. The district court held formation, tract DRRP, Options see First Chi that the 1997 and not the 1998 or DRRP, 938, 944, 115 cago, Inc. v. applies, Kaplan, and that the U.S. arbitra- (1995); agreement tion Ingle, is unenforceable because it S.Ct. 131 L.Ed.2d 985 is unconscionable under law. 328 F.3d at 1170. (1) pre- agree suggestion were. with whether: we “unable dispute parties

The agree- that the arbitration the con- illegal provisions so infected decided viously (2) enforceable; the agreement is as a matter ment is tract to render it invalid law; added). under unconscionable (emphasis law.” federal (3) provi- any unenforceable contract what paragraph The second discusses severable.2 sions are began decide. we did not We enforceable, that to be general proposition the Case 1. Law of “must an arbitration contract meet prior City contends our de generally applicable state requirements to deter cision instructed the district court then remanded law.” Id. We [contract] terms are any particular mine if contract court the case for the district to determine law, unenforceable under “validity agreement] under [the enforcing the core contractual obli while Id. at 446-47. [Washington] state law.” I, gation to arbitrate. See our plain meaning decision disagree. Fed.Appx. We (1) that: the arbitration is valid “The law of the case doctrine law; the district federal but requires ap a district court follow court to determine in the first instance was of of pellate court’s an issue resolution it is valid under state contract subsequent in the same proceedings all not law. We did address whether Lujan case.” ex rel. v. United States under agreement is enforceable Co., 1181, Hughes 243 F.3d 1186 Aircraft and the court followed state law district (9th Cir.2001). applies The doctrine by determining our mandate unconsciona- appellate “explicit both the court’s deci bility under law. as sions as well those issues decided necessary implication.” United States v. II. of Law Unconsciona- Cote, (9th Cir.1995) 178, (quot 51 F.3d 181 bility v. Corp., Eichman Fotomat “Unconscionability is a doctrine (9th Cir.1989)). 149, However, “[t]he may deny courts which enforcement apply doctrine does not issues ad all or part of or of an unfair oppressive Lujan, court.” appellate dressed during pro contract based abuses at 1186. F.3d or forming cess a contract within prior disposition Our consists of two actual David terms contract itself.” paragraphs. first addresses valid DeWolf, al., K. et Practice Ser Wash. ity agreement of the arbitration under fed (2003). ies, § Law Practice Contract & 9.5 By Duffield, eral citing F.3d recognizes two classifications Lai, 1182, and Prudential Ins. v. Co. unconscionability, pro substantive and 1299, F.3d we determined cedural. Zuver v. Airtouch Commu compel could fed Al-Safin’s nications, Inc., 753, 759, 103 P.3d 2004 WL claims, eral discrimination (Wash.2004) (citing at *3 Nelson knowingly agreed that Al-Safin ar McGoldrick, P.2d v. Wash.2d I, bitrate his federal claims. (1995), Fageol and Schroeder v. Although expressed at 446. Fed.Appx. we Motors, Inc., 86 Wash.2d 544 P.2d enforceability par “no as to opinion (1975)). provisions,” ticular we concluded we 23 Luce, Forward, prohibits decision ments enforcement of Our in EEOC that Duffield (9th agreement. Scripps, & F.3d 742 See id. at 745 Hamilton Cir. banc) 2003) (en argu- Duffield). (overruling forecloses Ai-Safin’s Unconscionability unconscionablity involves III. “Substantive Substantive those cases where a clause or term Whether a contract is to be alleged the contract is one-sided question unconscionable is a of law deter ” “ overly ‘Shocking harsh.... mined as of the time the contract was conscience’, harsh’, ‘monstrously made, opposed to the time when the ‘exceedingly calloused’ terms some- Schroeder, contract is enforced. 544 P.2d times used to define substantive uncon- at 24. scionability.” Procedural unconsciona- bility choice, “lack a meaningful is the A. Which Controls considering all the circumstances sur- rounding including transaction issue, As a threshold con- “ manner in which the contract ‘[t]he tends that Rule 19 of the permit- DRRPs ” entered,’ party whether the had “a ted it to amend the arbitration agreement opportunity reasonable to understand year, DRRP, each and that under the 1998 contract,” the terms of the and whether dispute governed by Al-Safin’s the rules “ important ‘the in a terms[were] hidden in effect when he files for arbitration. Be- ” ” print.’ maze of fíne yet cause Al-Safin has not filed for arbi- Zuver, tration, 103 P.3d at 2004 WL contends that his dis- Schroeder, (quoting governed by *3 544 P.2d at pute most recent rules Nelson, 1262) (emenda- procedures 896 P.2d at and that analyze we should original). tions See also Adler v. the 2003 DRRP to determine whether the Manor, 773, 781, Fred Lind is enforceable. 3016302, (Wash.2004). at *4

WL persuaded. are not We Even if we Washington, general a contract City validly assume that Circuit amended ly may be invalid on either based substan the 1997 DRRP and is to seeking enforce or procedural unconscionability. tive DRRP, Rule 19 of the 1998 we could not M.A. Mortenson v.Co. Timberline Soft applies conclude that the 2003 DRRP to 568, Corp., 305, ware 140 Wash.2d 998 P.2d Al-Safin.3 (2000) (en banc); Tjart 314-16 v. Smith Inc., 885, Barney, Wash.App. First, 28 P.3d we have held that the modification 823, (2001) (recognizing that a contract provision of Rule 19 of the 1998 DRRP is may be unenforceable on procedural based unenforceable under California law. See Zuver, Mantor, unconscionability only); 1107; Ingle, see also 335 F.3d at 4, at 759 n. P.3d 2004 WL at at 1179. The modification allows context, employment City *3 n. 4. In the proce- the Circuit to alter the rules and Court, governing while at dures arbitration almost will. “hold[ing] here, that example, City substantive unconscionabili For at- Circuit has ty alone can a support finding tempted implement pro- of uncon- to rules new scionability,” recently years has to cedures over three the “decline[d] after onset of [procedural consider whether litigation, years unconsciona- this and over four after bility] support alone will a claim of terminating employment. uncon- Al-Safin’s We Adler, scionability.” 103 P.3d at permits conclude Rule which this conduct, WL *5. unconscionable dispute City 3. Al-Safin properly City does not that Circuit was amended and that Circuit effectively implemented the 1998 DRRP. can enforce the 1998 DRRP. Therefore, we assume that the 1997 DRRP DRRP, the properly did not amend Washington law and the modifi- City’s offer unenforceable. as to Circuit to provision is therefore least Al-Safin. cation post- the DRRP consisted of amend Second, accept if we were even City a written notice at Circuit loca- requires to look at the 1998 DRRP us by the modifi- including copy tions when Al-Safin files DRRP in effect in its Even if Applicant cation Packet. arbitration, conclude that we would notice” to cur- provided this “reasonable as to DRRP is not effective Al-Safin. it was prospective employees, rent and law, contract modifi Under employees to former “reasonable notice” subject “requi general cations is, it is like Al-Safin. That not reasonable formation, offer, accep sites of contract ’ City expect employees former of Circuit v. Thompson tance and consideration.” to check the a Circuit postings Co., Regis Paper 102 Wash.2d St. December, every nor is it reasonable store (1984). Employers P.2d employee expect terminated pérmitted have been to “uni Packet, to Applicant would review an de- laterally policies pro amend revoke ' if termine decided amend employee hand cedures established in an procedures. rules its Rests., Denny’s Gaglidari book.” like Al- former Wash.2d Safin, there no valid offer to amend was (en banc). Moreover, DRRP. the 1998 did language handbook constitutes [T]he employment not continue his offer; offer is communicated sign accept acceptance, or dissemination of the handbook to in any modification of the 1998 employee; retention of employee’s way.4 other acceptance; and constitutes Therefore, al- continuing stay job, no contract because leave, though employee sup- free to formed between and Al-Safin plies necessary DRRP, consideration. regarding the 2003 the 2003 DRRP never went into effect as to Al-Safin and Bank (citing Pine River v. Met State parties’ the 1998 DRRP controls the dis- tille, (Minn.1983)). 333 622 “How N.W.2d pute.5 ever, employer’s change an unilateral until will not be effective Unconscionability B. Substantive change” of the

receive reasonable notice the 1998 change. and accept Mantor, Adams, set In and we Applying principles Ingle, forth held City agreement Gaglidari, City’s we conclude Circuit that Circuit arbitration "[n]othing unilaterally Gagli- permitted a 4. The dissent asserts that to amend con prin- dari litigation varied the well-settled common-law midway through concerning tract ciples employment: at-will Rather, terms of addressing that contract. courts and of termination set its agreement can be arbitration Dissent, employer.” Op. at 1266. That challenged during been amended after it has however, assertion, not address what does litigation permit have to declined amend Here, happened City in this case. e.g., ment. See Found. Health Armendariz attempted change employ- to terms "the Inc., 83, Servs., Psychcare 24 99 Cal.4th Cal. ment of its and termination” Al-Safin’s after (2000) (“No Rptr.2d 697 employment had been terminated. existing party permits rule contract law a case, legally a contract to resuscitate defective 5. Circuit has not cited and our none, it.”). change (cid:127)merely by offering party has revealed where a research substantively unconscionable under Cali ent in the 1998 DRRP at issue here. rejected provi Thus, Mantor, fornia law and contract we Ingle, conclude that and (1) forcing employees to arbitrate sions: persuasive Adams are authority that the against requir claims but not agreement un- against to arbitrate claims ing Circuit And, conscionable under 1173; employees, Ingle, 328 F.3d at fact, Washington Supreme Court (2) Adams, 893-94; limiting 279 F.3d at recently cited Ingle, 328 F.3d at remedies, 1178-79; Ingle, 328 F.3d at Adams, 894-95, 279 F.3d at approval, with (3) Adams, 894; at splitting 279 F.3d costs in holding 180-day that a provi- limitations Mantor, fees, 1107; at Ingle, 335 F.3d sion in an employment agree- Adams, 1177-78; at at 328 F.3d F.3d ment was substantively unconscionable. (4) 894; imposing one-year a statute of Adler, 103 P.3d at 2004 WL limitations, Mantor, 1107; 335 F.3d at In 3016302, at 11 (stating that agree “[w]e 1175; Adams, gle, 328 F.3d at 279 F.3d at Circuit”).6 Ninth with the (5) 894; actions, Mantor, prohibiting class Moreover, the United States Su 1107; Ingle, 328 F.3d at 1175- preme Court explained “[b]y has (6) 76; regarding filing fee and waiver agreeing claim, statutory arbitrate a Mantor, fee, 1107-08; 335 F.3d at party forgo does not rights substantive 1177; Ingle, 328 F.3d at giving statute; only afforded it submits to right the unilateral termi arbitral, their resolution rather than Mantor, modify agreement, nate or Gilmer, judicial, forum.” U.S. 1107; Ingle, 335 F.3d at 328 F.3d at 1179. (quoting S.Ct. 1647 Mitsubishi Motors applies virtually California the same def Corp. Chrysler-Plymouth, v. Soler unconseionability inition of substantive 614, 628, U.S. S.Ct. Washington. Compare Ingle, 328 F.3d at (1985).). L.Ed.2d 444 requires Gilmer ar (stating law, that under California agreements embody bitration “basic unconseionability substantive refers procedural protections and remedial so agreement whether terms of the “are so effectively pursue that claimants can their conscience”) one-sided as to shock Adams, statutory rights.” F.3d (quoting Kinney v. United Healthcare Adams, explained we that Circuit Servs., Inc., Cal.App.4th 83 Cal. City’s does not meet (1999)) Nelson, Rptr.2d requirements these minimum it because (stating Washing P.2d at 1262 that under limits the remedies would otherwise law, unconseionability ton substantive re forum, judicial in a be available fails fers to contract terms that are “one-sided that employees pay ensure do have to overly or “shocking harsh” and to the con fees, costs, Schroeder, expenses unreasonable or “as a (quoting science” 544 P.2d at 23)). provisions Each of the un condition access to the arbitration fo we held Here, pres- conscionable under California law is rum.” again Id. we conclude that 53, (2003), 6. The dissent is critical of our reliance on 124 S.Ct. 157 L.Ed.2d 24 hold purport interpret confidentiality provision substantively "Ninth Circuit cases that Dissent, unconscionable, Zuver, 763-66, Op. California law.” at 1268. In 103 P.3d at *8-*10, 3016484, Washington Supreme addition the Court's 2004 WL and a Califor at Adams, case, Armendariz, 745, agreement Ingle Cal.Rptr.2d with and as shown nia text, above, Zuver, Washington holding the the Su P.3d at a remedies limitation unconscionable, preme approval Ting provision substantively Court cited with AT & Zu T, ver, (9th Cir.) (constru 765-68, F.3d 1151-52 P.3d at 2004 WL at denied, law), ing California cert. 540 U.S. *10-*11. provisions those would render the agreement re- sever arbitration City’s procedure unworkable. forgo essential sub- quires rights and that the procedural stantive Zuver Adler The recent cases of claims, coverage of rem- regarding clauses contrary. Although the in those not to fees, edies, cost-splitting, the arbitration the Court sev cases actions, limitations, class statute provisions and en ered the unconscionable modifications, the arbitration render the of the arbitration forced remainder un- excessively one-sided and agreement only two agreements, that was because conscionable. agree provisions respective discrete were to be unconscionable. ments held Severability IV. Zuver, 768, 2004 WL 103 P.3d at. law, Washington (“We law Like *11 easily California at can excise the to sever uncon courts discretion grants confidentiality remedies but provisions provisions remainder.”); Adler, contract refuse scionable enforce (“In In Compare entire contract. enforce the at 2004 WL *12 this un (explaining however,[the] at 1180 gle, case, agreement may court “refuse just der California substantively contains two unconscion entirety”) in its enforce the'Contract provisions.”). Su able Schroeder, (stating however, 544 P.2d at Court, preme “acknowledge[d] may court re law “the en employer in instances where (quoting fuse to the contract” seeking enforce gages pattern’ in an ‘insidious 62A.2-302)). § Wash. Rev.Code the scales in its favor in tip uncon inserting numerous disputes Mantor, In of the California each cases— in an scionable un- Ingle, and Adams —we held agreement, may to sever the courts decline terms conscionable rendered arbitra- (citing In provisions.” unconscionable agreement Ingle, tion unenforceable. 1180).7 gle, F.3d Because this specifically determined that we agreement “permeated is with unconscion “permeated agreement was provisions,” Ingle, able 328 F.3d at provisions” with unconscionable and was agree hold that entire arbitration we entirety unenforceable in its because isment unenforceable. “[a]ny attempt to ameliorate the earnest aspects City’s of Circuit ar- unconscionable CONCLUSION agreement require bitration this would reasons, foregoing court of contract author For the conclude to assume role we interpreter.” Ingle, agreement rather F.3d that the arbitration between than Adams, 1180; also at 895- Circuit and Al-Safin see F.3d Although (reaching regarding the same result unconscionable. we have serious agree- earlier doubts about version the arbitration ment). well, law, procedurally we Applying Washington we also unconscionable as do provi- agree- conclude that unconscionable not decide this issue because unconscionability DRRP alone pervade sions of the 1998 the entire ment’s substantive any Washington it agreement attempt renders invalid warranted, certifying question 7. The Court’s de recent Zuver and Adler have cisions in erased longer Supreme Court is war Ingle "doubt the relevance of and Man about ranted. that, tor," dissent, Op. at so ever if it Adler, WL I. Therefore, judgement at *5. forth, majority opinion As the sets Al- of the district court is job applied City Safin at Circuit in appli- June Before he submitted his

AFFIRMED. cation, signed he agreement that bound disputes Al-Safin resolve all BEA, Judge, dissenting. Circuit arising out of employment relationship his City with Circuit in accordance with the , (“Circuit Stores, City City”) Inc. Circuit DRRP. Rule 19 of the DRRP in effect at appeals the district court’s denial of its applied job the time Al-Safin for his stat- compel motion to dismiss and ed: employment of Mohammed Al-Safin’s dis- City may Circuit alter or terminate the majority opinion crimination claims. The Agreement and Dispute these Resolu- affirms, holding provisions that certain tion Rules and Procedures on December City’s Dispute Circuit Resolution Rules any year 31st of upon giving 30 calendar effect, (“DRRP”) and Procedures in in 1998 Associates, days written notice to pro- unconscionable under that all arising vided claims before alter- Washington law and that these unconscion- ation or subject termination shall be provisions pervade able the entire arbitra- Agreement and corresponding Dis- any attempt tion such that pute Resolution Rules and Procedures sever those would render the at the time the claim arose. An effect resulting procedure Op. unworkable. associate shall be deemed to have ac- 1260-62. cepted modification or termination of the Dispute Agreement Resolution or majority I that the opinion believe errs the Rules and accepting Procedures is, premise in its initial that it is the —that continuing employment with Circuit DRRP in effect 1998 that are at issue. City receiving after notice of such modi- Rather, pro- I that the modification believe fication or termination. vision in Rule 19 of DRRP in effect added). (Emphasis 1998 is enforceable under year City At end amended (or, least, very at the that there is suffi- working Rule 19.1 Al-Safin continued certify question cient doubt as to until his was ter- Court) and, thus, Washington Supreme minated November 1998. There is no that it DRRP in is the effect at the time issue raised Al-Safin that he did not ultimately his files Arbitration receive reasonable notice of the December Request Form accompanying filing fee 31,1997 Indeed, change to Rule 19. Further, govern the arbitration here. majority opinion correctly notes, “Al-Safin the DRRP effect in 2003 are not sub- dispute does not that Circuit effec- stantively Washing- unconscionable under tively implemented the Op. 1998 DRRP.” (or, Accordingly, ton law. I would reverse n. at 1259 3. least, very at the certify ques- the relevant Court) Washington Supreme

tions to the The December 1997 amendment to and, thus, and, thus, respectfully dissent. DRRP Rule Rule 19 of the 19— Although any year. the DRRP in effect in 1998 are the DRRP in effect January dated as of the DRRP in effect have resulted must from amendments on De- permitted in 1997 to alter or 31, 1997. cember only terminate on December 31 of “ majority ing opinion, employ- ‘an provided in in relevant

in effect 1998— change policy er’s unilateral in will not be part: em- effective until City may [under law] alter or terminate the these Resolu- notice of the Dispute ployees and receive reasonable Agreement accept change” and on December change’ and the and that tion Rules Procedures “ year calendar any upon giving 30 City provide 31st did ‘reasonable Associates, pro- notice to written days like notice’ to former Al-Safin” alter- arising all claims before vided his employment nor did Al-Safin “continue subject shall or termination ation sign acceptance, with Circuit and Dis- Agreement corresponding the accept the[substantive the modification of Rules pute and Procedures Resolution any rules of 1998 DRRP in the] at time the Arbitration in the Second, effect way.” Op. other at 1260. accord- accompanying filing Form and Request majority opinion, modifi- “[t]he the received'by Company. the is fee provision alter cation allows Circuit added). majority opin- As the (Emphasis procedures governing the rules and arbi- concludes, correctly result this “[t]he ion and, thus, tration almost at will” “Rule that any modification would be conduct, permits this which substantive- governed by filed in 2003 would be the ly unconscionable under 2003, as opposed DRRP in effect in the ... the modification is there- the claim arose.” DRRP in effect when atOp. fore unenforceable.” Op. majority I that the opinion believe errs The, ques- and determinative threshold thus, and, regards in both that the believe tion, then, in the DERP effect DRRP in effect at time ulti- the Al-Safin employment in was when Al-Safin’s mately files with Circuit the Arbitra- discrimi- terminated his fee, tion Form Request accompanying arose, arbitration, govern nation claim the rather than the DRRP in effect in the at the rather than DRRP effect time govern the arbitration. ultimately files Request Form and accom- Arbitration A. panying plain meaning fee. The “ ‘an uni- concluding employer’s provision in 19 of modification Rule change lateral will not be effec- DRRP in effect the time em- Al-Safin’s employ- tive ployment [under law] was terminated 1998 admits of until sought If doubt: he arbitration and ees receive notice of reasonable upon paid immediately the arbitration fee change’ accept change,” Op. Decem- termination or at time before majority opinion solely relies gov- his ber arbitration would be Restaurants, Gaglidari Denny’s in 1998. If (en erned effect P.2d 1362 Wash.2d tarried, he he ran the risk newer banc). There, Denny’s Gaglidari hired adopted'which arbitration' rules would be and, day on her work as a bartender first to him. On would be less beneficial work, provided copy her with hand, delay bring other could rules that employee handbook. Id. at 1364. which, him, comparatively benefit would employee The 1979 handbook contained a event, happened. is what provision stating fighting while on dismissal, Nevertheless, duty grounds for immediate con- majority opinion provided “counseling but for review and that the DRRP in 1998 are cludes effect First, manager” rule applicable reasons. accord- review a certain for two level by beverage not covered the immediate alcoholic handbook did achieve a infractions 1986, Denny’s Id. In provision. dismissal modification the contract: beverage an “alcoholic gave Gaglidari receipt Plaintiffs of the handbook satis- handbook,” provision' contained a which' requisites fied the of contract formation. company stating fighting while by provid- Defendant extended an offer duty, or not while on premises, whether ing the handbook training plaintiff for immediate Id. grounds dismissal. on alcoholic beverage service accor- duty, Gaglidari In off was in- while requirements dance with the contained fight Denny’s in a at a and was volved accepted the handbook. Plaintiff the shortly Id. at 1364-65. fired thereafter. by signing offer for the handbook and Denny’s Gaglidari sued for breach participating in the training. The con- forth in employment contract as set the plaintiffs sideration was continuation of handbook, employee jury and the re- employment. her Gaglidari. a verdict for Id. at 1365. turned The handbook also achieved unilateral Washington Supreme On appeal, policies. modification of defendant’s judgment entered upon Court reversed had notice the provisions Plaintiff trial, and remanded for a such verdict new the handbook signed because she a form holding employee the 1979 handbook saying she read it and understood it. gave a contract that its terms rise to but (internal omitted; Id. 1367-68 citation by beverage modified the alcoholic were added). emphasis Gaglidari handbook that received background, With that it is clear that Although acknowledging Id. at 1365-66. employer may unilaterally Gaglidari inapposite is and that the rea- “[a]n policies procedures amend or revoke requirement sonable-notice it announced is handbook,” in an employee established nearly majority opinion not so broad as the Bankey court cited to v. Storer Broadcast suggests. Co., 432 Mich. 443 N.W.2d First, contrary majority to what (1989), proposition for the that “an asserts, 1259-60, opinion Op. at the rea employer’s change policy unilateral will requirement sonable-notice is satisfied employees effective until receive be alone, regardless notice whether the em change.” Gagli reasonable notice of the accepts change Again ployee policy. dari, Quoting Bankey, 815 P.2d contrary majority opinion to what the as “ may, court ‘An employer continued: sumes, 1259-60, Op. the sole articulated express right without an reservation purpose require of the reasonable-notice so, unilaterally change to do its written employee ment is not to afford the at-will discharge from one of cause accept, reject negoti an opportunity to will, one provided of termination at Rather, an from employer. ate offer employer gives employees affected ” in Gaglidari as the court stated: “The policy change.’ reasonable notice of the Bankey per reasonable notice rule of is added). The court rea (emphasis place suasive it is unfair to because soned: “The reasonable notice rule of of, policy changes on discovering burden Bankey persuasive it unfair because (empha at 1367 employee. ” place discovering policy the burden of added). words, it sis other would changes employee. on the the em While employee unfair to allow em

ployee is bound unilateral acts of the —even viola ployee at will—to be fired for rule employer, upon it is the em incumbent tion, the rule made known if had not been ployer to inform of its actions.” Gaglidari Id. The court then concluded that the 1986 to her. the court in held granted the motion alternatively the”[p]laintiffs receipt that trial court bank’s for Id. On summary judgment. to beverage] appeal alcoholic handbook the [1986 of the Appeals, Court of con- requisites of contract forma- Govier satisfied the that, “[p]laintiff although pre- had that the had because the tended bank tion” and handbook,” terms, of the sented her with the new she did not of notice the a notice” she also achieved unilateral have “reasonable because had handbook “[t]he Id. policies.” changes not of the a reason- of defendant’s been notified modification Gaglidari Nothing of length in varied able time before their effective at 1367-68. Id. at 816. of that principles common-law date. She reasoned “the the well-settled requiremént necessary of employ- the terms reasonable notice employment: at-will by are the ‘to an give employee opportunity its termination set the ment and of a employer. make reasoned decision about ” Id. The stay rejected leave.’ or court scope pur- of the interpretation This that argument, holding purpose this the of by Gaglidari’s reasonable-no- pose served requirement the reasonable notice mere- Govier requirement was confirmed tice ly changes of employees policy to inform Bank, v. North Sound Wash.App. “ place ‘it because is unfair to the burden (1998), 811, 813-14 wherein discovering changes policy on the em- an presented employ- Govier with bank ” Id. ployee.’ (emphasis origi- at 817 changed the ment terms nal).2 sign Govier refused to employment. her fired, agreement, was and then sued . the fact did not “Al~Safin prior his with employment for breach of contract continue Id. acceptance, accept employment. sign terms of an or the modifica- interpretation support necessary predicates 2. This also finds are consideration Co., Thompson Regis establishing Paper policies employment 102 Wash.2d v. St. an (1984) (en banc), part original employees' of the 685 P.2d 1081 wherein manual part employment employ- or Court first contract enunciat- by parties.” ment contract as modified principle employment ed the that an at-will by Id. relationship émploy- could be modified an There, Continuing, “Independent held: the court Thompson ee was handbook. asked " however, analysis, ... this contractual em- resign somebody's 'stepped he because " may ployers obligated to act in accordance toes.' Id. 1083. No other reason policies with announced as in handbooks is- given. Thompson sued for breach of con- Id. employees.” (emphasis sued to their Id. add- tract, summary company moved for ed). Relying promissory estoppel aon theo- judgment, arguing that the rela- ry, the court reasoned: tionship Thomp- was terminable at will. Id. [T|he exclusive, though principal, not rea- "Policy responded company's son employers son issue manuals is such Guide," argued pro- and Procedural which he atmosphere create an of fair treatment only vided could be cause. that he fired job security employees. for their granted Id. at The trial court the com- pany's motion. Id. may atmosphere This create where Washington Supreme appeal, On Court justifiably rely employees on the ex- remanded, holding reversed and first and, thus, policies pressed justifiably ex- employer’s right "the to terminate an at will pect employers that the do the same. will and, employee contractually can be modified employer specific Once announces thus, qualified by statements contained in em- policy especially light practice, ployee expects manuals or handbooks issued fact that he same, employers employees.” máy to their Id. at 1087. employer abide analysis,” requi- promises illusory. Under this "contractual "the its treat n . formation, offer, acceptance (emphasis original). sites of contract at 1087-88 (“Cessante legis, ipsa arbitration rules of ratione-' cessat et tion of the [substantive (The way,” Op. DRRP in other ceasing, the] lex[.] reason the law have irrelevant under would been ceases).”); Legislative law itself also ATU employed Gaglidari had been Washington Washington, Council of City at the time the modifica- with Circuit (2002) (en 661 Wash.2d and, contrary made to the ma- tions were banc) (same); King State ex rel. County v. otherwise, jority Op. assertion at opinion’s Superior County, Court Pierce 104 4,n. can no under less irrelevant (“The 176 P. Wash. explained As the circumstances here. being founded in reason boasts as its above, re- Gaglidari’s reasonable-notice that, principle first cardinal when the rea- neither nor is quirement requires prem- ceases, son for the law the law itself ceas- having opportu- upon employee ised es.”). Indeed, appear there to be no nity reject or accept, negotiate changes including Gaglidari— cases— in employment policies regardless when — in which the reasonable-notice require- Further, it changes those occur. bears ment invoked when change repeating, by continuing virtue of his em- employee policies occurred after the em- City after ployment with Circuit the De- ployment relationship had terminated. to Rule 19 cember 1997 amendment effect, Here,

went into Al-Safin assented to the no claim that there is Al-Safin’s provision modification itself. employment was terminated because of violation of the modification Second, may the fact that Al-Safin not Rule 19 of the DRRP in effect in 1998. reasonable notice of the have received Likewise, the modifications made to the pro modifications made to the substantive provisions substantive in the DRRP from in the DRRP from visions 2003 is 1998 to 2003—all of occurred after which Gaglidari. likewise irrelevant under As employment Al-Safin’s was terminated— above, the explained purpose the rea bearing why had no employ- Al-Safin’s requirement to inform sonable-notice terminated; rather, they ment was con- employees policy changes because “it is only cern the manner in which the arbitra- place discovering unfair to the burden of tion is to occur. In brief: As the reason policy changes employee.” Gagli on the dari, 1367; Govier, requirement for the reasonable-notice does 815 P.2d at accord exist, prevents P.2d at 817. This situations neither does the rule. employees

which are fired or suffer other Third, employer unlike employment adverse action on the basis of Gaglidari right did not reserve its permissible conduct that had been but la changes employee make handbook. impermissible by unpubli ter was made Michigan Gaglidari case on which re- policy. Thompson, cized See 685 P.2d at forth setting lies in the reasonable-notice requirement suggests require- Thus, the requirement reasonable-notice ment is limited to situations which the purpose serves no once the employer does not make such a reserva- relationship Why give has ended. notice tion: of new rules to former who can employer may, express “An without an longer be fired for their violations? To so, 'right reservation to do unilat- necessity on the insist of “reasonable no- erally change its written from one tice” such circumstances is to venerate discharging to one of termi- an abstraction. States v. cause United Cir.2000) (9th will, Griefen, provided employ- 200 F.3d nation at that the Stores, employees reasonable Circuit affected gives er (9th policy change.” Cir.2003), and Circuit notice Stores, Mantor, F.3d Inc. (quoting P.2d Ban Gaglidari, Cir.2003) 113) added). (9th cite no state (emphasis 443 N.W.2d key, —themselves whether, are well- reservations or disclaimers let hold cases that discuss 'alone Such recognized that, the modification issue or (“[T]he em at 1088 Thompson, P.2d provisions are even similar modification right may specifically reserve ployer unconscionable. their modify [employment] policies, write point law on this analyses of California discretion manner that them retains in.a thorough reflexively not so that we should employer.”). the Washington law. import holdings their to is without substance This distinction n Moreover, good reason not to do there is explaining that the discussion given above here, Washington though even the Su- so requirement re- the reasonable-notice approval preme Court cited with Ninth permit acceptance an or has quired not offer rejection employer’s the in interpreting cases California law it provides but employee, rather because adjudicating unconscionability the of terms justifiable for the reliance on the basis modification quite provi- different from the theory might promissory estoppel a which here, at 1261 n. Op. sion at issue and has employer Where made be based. the general a if it is that as even correct is, has reserved the a disclaimer—that Washington matter California law and law make cannot right changes employees — similar. unconscionability Specifi- on are justifiably rely on outlined previously cally, although appear there policies. Washington addressing cases Gaglidari nor its reasonable- Neither at one similar it is provision issue or requirement applicable here. notice are unconscionable, substantively the Wash- long has in no ington Court held B. employer terms may uncertain that an re- majority correctly opinion concludes right unilaterally to change serve the provisions of the DRRP that whether an employment relationship: terms of question of Wash- are unconscionable is employer may specifically reserve a “[T]he Op. But in ington conclud- modify policies right [employment] ing that modification Rule 19 them in write a manner retains dis- of the DRRP effect in 1998 “is substan- Thompson, to the employer.” cretion Washington tively unconscionable under Gaglidari P.2d at 1088. this affirmed modification provision and that the law principle, its reasonable-notice re- unenforceable,” majority therefore way in no undercut the quirement employ- Washington cites no law at all. opinion ability changes: to make unilateral er’s Instead, majority opinion at 1260. Op. unilaterally employer may “An amend or that pur- on two Ninth cases relies law, interpret Op. policies procedures revoke established port California presumably However, on its later conclu- employee in an handbook. virtually applies sion “California change employer’s unilateral will definition of unconsciona- same substantive until not be effective receive n bility Washington.” Op. change.” of the reasonable notice added; at- 1367 (emphasis P.2d internal begin, the two cases To Ninth Circuit on omitted). majority Ingle citations opinion which the relies — Further, majority nearly overlooks I am not so opinion confident as that under Rule 19 of the my colleagues the salient fact the modification at the time Al-Safin’s em DRRP in effect 19 of DRRP in provision Rule effect terminated, ployment in 1998 is unconscionable un “unilaterally” in not have acted least, could very der law.3 At the until changing the DRRP the end directly the absence of Gg Thus, Al-Safin, year. whose point, coupled Thompson had was terminated November ability line of cases and Al-Safin’s lidari full month in he could have over a which to have invoked the substantive himself of under the insured of the DRRP in effect in create by taking action: re then-current sufficient doubt about the relevance of In- tendering arbitration and the fil questing gle and Mantor to warrant our certifying ing fee before December 1998. Under question to the Washington Supreme law, voluntarily refusing to in Court.4 rights timely may in a manner voke contexts constitute waiver of those some II. See,

rights. e.g., International Associa I that Because believe the modification Firefighters, v. Pub tion Local No. 469 of provision in Rule 19 of the DRRP in effect Employment lic Relations Commission of Washington in 1998 enforceable under is Washington, 686 P.2d Wash.App. law, I that the in would find DRRP effect (holding although 1125-27 that at the time Al-Safin files Arbitration his statutorily protected a union’s waiver of Request accompanying filing Form and fee concomitant bargaining rights and its as govern Although the arbitration. Al-Safin employer unilateral action in lieu of sent to did not file his Arbitration Form Request bargaining collective must be “intentional accompanying filing prior fee to voluntary,” timely request a to failure the record does not indicate whether he negotiations following knowledge actual has since form and appropriate filed employer’s intentions where there is or promulgat- fee whether Circuit has “meaningfully” sufficient time to do so con in beyond ed DRRP those 2003. it waiver). inac stitutes Whether Al-Safin’s is not the DRRP in effect evident whether consent, tivity amounted to a or waiver applica- or some later DRRP are that waiver or consent could ble. change any subsequent the character of however, that the DRRP in Assuming, modifications to the DRRP from “unilater con- applicable, al” to “consented to” or “mutual” is a effect 2003 are Al-Safin substantially cedes that rules were question Washington law. It was not a these many of raised in either of our cases in revised such that the substantive- question ly provisions in the earlier volving enforceability City’s of Circuit unconscionable fact, argues In agreements rules were removed. he arbitration under California only provisions beyond two the modi- pursu- Why provides for certification the DRRP in effect in made ant Code of Revised applicable plain to the arbitration here Appellate § Rule of 2.60.020 and provision in Rule 19 text of the modification 16.16(a) question where there is a Procedure of the DRRP in effect in are themselves "clearly state law has not been deter- not unconscionable is discussed in Part II necessary is mined” and its resolution below. proceeding disposition of the in federal court. Homes, v. Palm Harbor are sub- Mendez discussed above provision fication (cid:127) 594, 597, Wash.App. stantively unconscionable. (2002), court denied trial First, argue's that DRRP in compel pursuant motion to arbitration provision that re- include in 2003 effect agreement, holding that the arbitration decisions be confiden- arbitration quires agreement was because unconscionable and, thus, substantively unconsciona- tial entry “prohibitive costs places because it ble both “ entry compared' to the of trial” “ef costs ensuring superior legal posture by ‘a far fectively preclude[d] pursu from [Mendez] opponents that none of its have access “ ” Im against claims Palm Harbor.” his ‘the and because unavailabil- precedent’ prohibitive deter portantly, costs so as to may prevent poten- arbital ity of decisions implicit is the concern that led obtaining plaintiffs tial from the informa- on the basis Ninth Circuit conclude needed a case intentional tion to build ” of California law Cir discrimination.’ misconduct or unlawful City’s agreements cuit However, 12 of the in effect Rule preclude or consolidated arbitration class agreed 2003 states: “Associates who have substantively See In unconscionable. may request copies of arbi- to arbitration (“Circuit Thus, gle, given tration in a case.” decisions ' arbitration, its bar on confidentiality provision through is not so class-wide “ ” overly proceed ‘one-sided harsh’ so as to be to insulate itself from class seeks “ “” conscience,’ ings conferring ‘mon- ‘[sjhoeking corresponding while “ ” harsh,’ return.”); strously 'or cal- ‘exceedingly benefit to see its ” thus, and, Mantor, uncon- loused’ also F.3d n. 14 at 1107 & McGoldrick, 1175-76). v. scionable. Nelson Ingle, 328 F.3d at The (citing (1995) 1258, 124, Wash.2d P.2d affirmed, Washington Court of Appeals (en banc). “approving] a new rule al for this State lowing equitable legal prohibitive and Second, argues that DRRP contractually agreed cost defense arbi prohibit effect class or consoli Mendez, tration,” 597, limit P.3d at but that this dated arbitrations and is substan ing party oppos the defense “when the tively Again, ap unconscionable. there reasonably shows in law pears Washington addressing to be law no likely equity prohibitive that costs are substantively are provisions whether such the arbitral render inaccessible.” Geonerco, unconscionable. See Stein forum added); (emphasis at 605 accord Hea Inc., 41, Wash.App. 17 P.3d & phy Farm Automobile v. State Mutual (2001) n. 2 (noting “Washington that Co., 117 Wash.App. Insurance 72 P.3d specifically courts have not class addressed (rejecting prohibitive 224-25 arbitration,” holding that court arbitration”, cost in the evi defense absence “cannot compel class in the costs). prohibitive Washing dence statutory absence of “relevant provisions recently ton has Supreme approved Court arbitration,” not authorize but class approach. this Zuver v. Airtouch Com reaching process “due 762-63, munications, grounds” may “permit[] class otherwise (Wash.2004) (en arbitration”). 3016484,at However, *6-7 line WL analogous banc); Manor, v. Fred cases Adler Lind suggests Washington 773, 786, 74701-6, provision courts find the P.3d No. 2004 WL would not sub (Wash.2004) (en banc). stantively Al- unconscionable on the facts at *9 showing here.' Safin has made claim nor DRRP in effect in 1998 is unenforceable render the which would costs prohibitive has he provisions Neither other in the forum inaccessible. and that various arbital a class or initiating any interest substantively evinced same are unconscion- Absent such arbitration. consolidated able, to Al- majority opinion accedes would Washington law showing, predicate and, doing, in so contravenes Wash- Safin provision of not hold the relevant law. ington DRRP unconscionable. provision I that the modification believe Further, that there provision if the even DRRP in in Rule 19 of the effect 1998 is no class or consolidated or, enforceable unconscionable, it could be severed were least, very there is sufficient to the severance pursuant certify question, doubt as to in effect in 2008. of the DRRP Rule 18 question further whether Al-Safin’s inac- Zuver, 103 P.3d at 2004 WL tion in late 1998 rendered the modification parties have (noting *11 that “when provision “mutual” rather than “unilater- in an severability clause arbi- agreed to al,” I Washington Supreme to the Court. often strike the agreement, tration courts provisions believe further that the pre- unconscionable offending DRRP in in 2003 to which Al-Safin effect term of arbi- the contract’s essential serve objects unconsciona- tration,” “faced with doing so when I Accordingly, ble under provisions”); only two unconscionable denial of would reverse the district court’s 788-89, Adler, 103 P.3d at WL com- City’s motion to dismiss and (holding *12 that where the least, (or, certify very at the pel just two agreement contains “arbitration questions the relevant provisions” substantively unconscionable Court) and, thus, respectfully primary [the] thrust “[t]he and where arbitrate,” dissent. agreement is the “without can sever those terms the court par- intent of the

disturbing primary disputes”). their

ties arbitrate

III. truth in this case is that

The kernel of litigate federal

Al-Safín is so desirous arbitrate, than to district court rather America, UNITED STATES conces- accept he refuses to the substantial Plaintiff-Appellee, pro- it that Circuit made when sions its new DRRP in 2003 relative mulgated and which were the DRRP that obtained MAYO, Defendant-Appellant. Alan Eric employ- reach when his within Al-Safin’s Instead, he terminated ment was No. 04-10076. DRRP in effect in himself to the lashes Appeals, United States Court (except provision for the modification Ninth Circuit. 19) in apparently

in Rule well-founded find the sub- hope that this court would Nov. Argued and Submitted DRRP so un- those stantive 14, 2005. Filed Jan. agreement as the arbitration conscionable By holding founder. a whole must in Rule 19 of the

the modification

Case Details

Case Name: Mohammed Al-Safin v. Circuit City Stores, Inc., a Virginia Corporation

Court Name: Court of Appeals for the Ninth Circuit

Date Published: Jan 14, 2005

Citation: 394 F.3d 1254

Docket Number: 03-35297

Court Abbreviation: 9th Cir.