Judge Strikes Arbitration Agreement in Suit Against Ma Labs

Posted May 16th, 2013.

SAN FRANCISCO — It’s gotten awfully hard for lawyers to wriggle out of arbitration agreements in the wake of AT&T Mobility v. Concepcion.

Alsup struck down an arbitration agreement the company instructed the lead plaintiff to sign on the day she was fired, finding it unconscionable under state law. Alsup blasted Ma Laboratories for slipping arbitration language into the contract without mention and giving plaintiff Michelle Lou the impression that she would only receive her final paycheck upon signing.

To be deemed invalid under the doctrine of unconscionability, an arbitration agreement must include both substantive and procedural inequity, for example by relying on unequal bargaining power and also resulting in one-sided benefits. The doctrine, called into question but not killed in Concepcion, the U.S. Supreme Court’s landmark 2011 decision, remains good law in the U.S. Court of Appeals for the Ninth Circuit, Alsup asserted.

“Lou’s employment certainly was not conditioned upon execution since the agreement was presented on her termination,” the lawyers wrote in a court filing.

Alsup will separately evaluate an arbitration agreement signed in 2010 by opt-in plaintiff Xueou Feng. That ruling could have broader consequences for the class action because it was presented to all salespeople in the ordinary course of business.

This article originally appeared in The Recorder.

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