Class action against Perkins Coie blocked by arbitration clause

Posted on: August 15th, 2012 by Steve Larson

I previously posted an article about a class action filed by a former Perkins Coie attorney seeking to assert claims on behalf of a class of employees seeking to recover business expenses.  A federal judge has now ruled that  the claim belongs in arbitration, and he dismissed the case.

Harold DeGraff  sued Perkins Coie in federal court in San Francisco for himself and a purported class, claiming he was an employee who was wrongfully made to pay some expenses.

Perkins Coie — which has offices throughout the United States, two in China and one in Taiwan — moved to dismiss the lawsuit, or to stay it pending arbitration, claiming that Mr. DeGraff joined its firm as a partner and is, therefore, subject to an arbitration clause in the partnership agreement.

Mr. DeGraff opposed the firm’s motion on the grounds that the arbitration agreement is unconscionable, and, therefore, unenforceable.  He argued the arbitration clause is unfair because it requires the arbitration to be conducted in Seattle, to apply Washington law, to be finished in 90 days and to remain confidential.  But in a ruling he issues on July 30, U.S. District Judge Jeffery White found that only the confidentiality provision unfairly benefits Perkins Coie.

“Perkins Coie has institutional knowledge of prior arbitrations.  In contrast, individual litigants, such as plaintiff, are deprived from obtaining information regarding any prior arbitrations,” Judge White wrote.  “Thus, Perkins Coie is the only party who would obtain any benefit from this provision without receiving any negative impact in return.”

As for Mr. DeGraff’s argument that the Washington law clause deprives him of his wage claims under California law, Judge White ruled that the arbitrator must decide which state applies.

Mr. DeGraff also claimed that the agreement does not provide for a neutral arbitrator because if the parties can’t agree on one, it requires the arbitrator to be a partner in a law firm having a Seattle office of at least 100 lawyers.  He argued that this arbitrator would be a peer of Perkins Coie, risking their neutrality.

Judge White found this would not give rise to any bias against Mr. DeGraff, however, as the arbitrator would also be his peer.

Given these facts, Judge White severed the arbitration agreement’s confidentiality provision but enforced the rest of it, and granted Perkins Coie’s motion to dismiss.