Ninth Circuit Finds Arbitration Agreement In Employment Application Was Unconscionable

In this case, Ritarose Capili, a sales associate, brought an action against her former employer The Finish Line, Inc. ("Finish Line"), an athletic retailer in California federal court. Finish Line made a motion to compel arbitration based on an arbitration agreement in its employment application, which was denied. Finish Line appealed to the Ninth Circuit.

First, the Ninth Circuit agreed with the California federal court's finding that the arbitration agreement was adhesive, and thus at least "minimally procedurally unconscionable" because it was essentially offered on a "take it or leave it" basis. Next, the Court also concurred with the district court's finding that a cost-sharing provision in the arbitration agreement — which required the plaintiff to pay up to $10,000 at the outset of arbitration, not including the fees and costs for legal representation — was substantively unconscionable because it imposes substantial non-recoverable costs on low-level employees