Arbitration Agreements in Washington State

Many believed that this kind of new state law, like that of Washington and many other states, that the attempt to prohibit labor arbitration would be prevented by the Federal Arbitration Act (FAA). A Washington court has just upheld this conviction. In a July 12, 2019 ruling, King County Superior Court Judge John McHale noted that the state`s law prohibiting arbitration is anticipated by the FAA. Logan v. Lithia Motors, et al., No. 18-2-19068-1 SEA. An arbitrator`s decision is as binding on the parties to the arbitration as a court decision and can be enforced in court if necessary. A commercial contract, lease or other written contract may contain an arbitration clause. By using such a clause, the Contracting Parties undertake to settle future disputes.

As with any clause, all parties must agree to use it in the contract before signing the contract. The following wording of the arbitration clause may be tailored to the needs of the parties or used “as is” to use the services of the Washington Arbitration & Mediation Service or its national organization, United States Arbitration & Mediation, if arbitration is required. The parties involved in the arbitration effectively withdraw from the court system and submit their dispute for resolution by a neutral third-party arbitrator. Arbitration is generally faster, cheaper and more informal than going to court. It also has the advantage of being private and confidential. The court ruled in favor of Lithia Motors and ruled that the employee`s claims (with the exception of a claim of discrimination after termination of employment) should be heard in arbitration. In short, Justice McHale said the exclusions from the state`s new law for settling claims under the WLAD were “anticipated by federal law.” Citing the 2011 U.S. Supreme Court decision, AT&T Mobility LLC v. Conceconcere, Justice McHale stated, “Federal policy favours arbitration… The Supreme Court has made it clear in recent years that it is “undisputed that the FAA was designed to promote arbitration” and “enshrine a national policy in favor of arbitration.” In Burnett v. Pagliacci Pizza, Inc.

The Washington Supreme Court ruled that a pizza delivery company was not required to settle its wage and hourly claims. Burnett (the plaintiff named in an alleged class action lawsuit) had no knowledge of the arbitration provision when he signed his employment contract with Pagliacci Pizza, Inc., because the arbitration agreement was contained in a separate labor manual. In particular, Pagliacci`s binding arbitration agreement was included in his personnel manual entitled “Little Book of Answers”. Burnett received the Little Book as well as various other guidelines during his orientation, including an Employee Relations Agreement (ERA) that included the binding arbitration agreement in the Little Book. Burnett was ordered to sign the ERA so he could work for the employer that day, but was asked to read the Little Book at Home. While the ERA asked employees “to learn and follow the rules and guidelines outlined in our Little Book,” it made no explicit mention of arbitration. ARBITRATION STANDARD CLAUSE: In the event that a dispute arises between the parties [contract, lease, etc.], it is hereby agreed that the dispute shall be addressed to [one of the following ways: (1) designation of the Washington Arbitration & Mediation Service or an alternative service by agreement of the parties; 2° specify the method of selection of the arbitrator and the place of the hearing, . B, for example, “the county where the production site is located”; or for multi-jurisdictional disputes (3), insert “a USA&M office designated by USA&M`s national headquarters”] for arbitration in accordance with the arbitration rules of the Washington Arbitration & Mediation Service (or United States Arbitration and Mediation, Inc. at the national level).

The arbitrator`s decision is final and final, and the judgment may be entered therein. Although McHale J.`s conclusion applies only to Washington law, it could be extrapolated that the same analysis can be applied to other states with similar laws. With this in mind, employers may want to review their arbitration agreements to ensure that they explicitly invoke the FAA and to ensure that they do not require “confidential” or “privileged” arbitration. This position serves as an additional reminder that employers must present clear and careful arbitration agreements at the beginning of employment, otherwise they risk the court declaring them unenforceable. Each party shall be liable for its share of the costs of arbitration in accordance with the applicable arbitration rules. In the event that a party fails to initiate arbitration, unsuccessfully challenges the arbitrator`s award, or fails to comply with the arbitrator`s award, the other party shall be entitled to damages of action, including reasonable attorneys` fees for the need to enforce the arbitration or to defend or enforce the award. The facts in the Burnett case concern a former delivery driver, Steven Burnett, who attempted to make a class-based wage and hourly claim against Pagliacci Pizza for failing to give drivers the necessary rest and meal hours and for failing to pay exact wages. After Burnett sued Pagliacci, Pagliacci forced arbitration based on the policy of his personnel manual. In this case, the court noted that pagliacci`s binding arbitration agreement was a “contract of adhesion” because it was “a printed standard contract that [the employee] had to sign in order to accept employment, that is, on a “take it or leave it” basis. Specifically, the court noted that the employee did not have a “reasonable opportunity” to understand the terms contained in the Little Book before signing the ISR because he was asked to read the Little Book at home, but was asked to sign the ERA to start working. Id. at 1273.

In addition, the court found that the binding arbitration agreement was “buried in a pamphlet” because it appeared on page 18 of a 23-page document and because it appeared “in the same font size and formatting as the surrounding sections.” Accordingly, the court concluded that the binding arbitration agreement was procedurally unscrupulous and therefore unenforceable. Pagliacci`s binding arbitration agreement provided that an employee must first file their dispute “for resolution under F.A.I.R. policy” and, if not resolved, “submit the dispute to binding arbitration before a neutral arbitrator under the Washington Arbitration Act.” Id. at 1269. The F.A.I.R. policy referred to in the agreement requires an employee to first report “the matter and all details” to their supervisor before commencing arbitration, and if the employee is not satisfied with the solution, the employee may initiate a non-binding arbitration. Burnett ignored the binding arbitration agreement and brought his claims directly to the state court in Washington. Pagliacci then forced arbitration, which Burnett, who wanted to go to court, refused. As previously noted, on March 21, 2018, the State of Washington amended state law by prohibiting employers from requiring an employee to waive their right to publicly pursue a cause of action, including prohibiting the use of a confidential dispute resolution procedure in a contract or employment contract for all claims under the Washington Anti-Discrimination Act (WLAD). including discrimination, hostile work environment and demands for reprisals.

It is also recommended that contracts containing arbitration clauses, in particular those relating to labour relations, contain the following wording in bold above the signature lines: Burnett rejected the request for enforcement of the Pagliacci arbitration because the binding arbitration agreement was unscrupulous both procedurally and substantively. Federal, state, and district laws govern arbitration in conjunction with the published arbitration rules used by most professional arbitrators. To the extent permitted by law, the parties are free to negotiate some of the basic rules of their arbitration. B e.g. number of referees or high-low parameters. These agreed provisions must be set out in a written arbitration agreement. Binding arbitration clauses can also be included in most types of contracts, so any dispute arising out of the contract must be resolved by arbitration rather than by dispute. A letter of intent to arbitrate (also known as a “solicitation of arbitration”) is used to initiate arbitration under an arbitration clause. In Burnett v.

Pagliacci Pizza, Inc., 442 P.3d 1267 (Wash. Ct. App. 2019), the Washington Court of Appeals ruled that how an employer communicates its arbitration agreement is essential to determining whether it is valid and binding. Employers should carefully review their arbitration agreements to ensure that they are consistent with the tribunal`s new decision. In the Logan case, a former Lithia Motors employee signed an arbitration agreement that provided that all employment-related claims, including claims of legal discrimination, harassment and reprisal, were to be arbitrated. The FAA applied in accordance with the wording of the agreement. After the termination of the employee`s employment relationship, he filed discrimination actions and other claims against Lithia Motors. .