IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

TIEN THACH, M.D., 

### ) No. 78669-5-I

Respondent, 

### ) DIVISION ONE

v. 

### ) UNPUBLISHED OPINION MATRIXANESTHESIA P.S., a 

### ) Washington corporation, M. SEAN 

### ) KINKAID, M.D., in individual person, 

### ) JOHN COSTELLO, M.D., an individual 

### ) person, JOHN DOES I-XX, individual 

### ) persons. Appellants.

___________________________________ 

### ) FILED: August 19, 2019 HAZELRIGG-HERNANDEZ, J.

— Parties may agree to submit disputes regarding the scope of an arbitration provision to arbitration. Dr. Tien Thach entered into an employment agreementwith MatrixAnesthesiathatcontained such
a provision. After Matrix terminated Dr. Thach, she sued, alleging that her termination related to her actions as a corporate shareholder rather than an employee. The trial court denied Matrix’s motion to compel arbitration. Because the employment agreement assigns disputes regarding the scope ofthe arbitration agreement to the arbitrator, we reverse and remand for an order to compel arbitration.No. 78669-5-1/2
FACTS Dr. Thien Thach signed an employmentagreementwith MatrixAnesthesia, P.S., in 2010. After working with them for more than three years, she was approved forshareholderstatus. She signed a second employmentagreement in 2014. Each employment agreement contained an arbitration provision with the following language: Arbitration. Any issue, dispute, controversy or claim arising out ofor relating to thisAgreementorthe breach thereofshall be resolved by arbitration and, except as may otherwise be provided herein, the arbitration shall be submitted to the Seattle office of the Judicial Arbitration and Mediation Service (JAMS). The parties hereto expressly waive any right to file a lawsuit in any court involving the same issue, dispute, controversy or claim until 30 days after the arbitration award has been issued. The arbitration shall be governed by the Washington Rules of Evidence and RCW 7.04. Any dispute as to whether any issue is to be resolved by arbitration shall be submitted as part ofthe arbitration proceeding. Aftershe became a shareholder, she became a divisional compliance officerand board treasurer. Thach voiced concerns regarding corporate practices that she believed violatedthefederal anti-kickbackstatute. In response, Thach encountered hostility from the corporate board. Thach resigned as treasurer, board member, and division compliance officer. She was fired soon after. Thach sued Matrix forviolation of her shareholder rights, arguing that her shareholder status was not terminated in accord with the bylaws. The relevant clause in the bylaws reads: Termination of Shareholder’s Employment. The employment of a person who is a Shareholder may be terminated bythe Corporation only if (i) he or she is terminated for“cause” as that term is defined

2No. 78669-5-1/3 in his or her Employment Agreement, (ii) the termination is recommended by 66 2/3% of the shareholders of the Division in which the person works, and the termination is approved by a majority ofall Directors, or (iii) the termination is recommended bya majority ofthe QualityAssurance Committee, and approved bysixty percent (60%) ofall Directors. Matrix moved to compel arbitration underthe employment agreements. The trial court denied the motion to compel arbitration, holding that Thach’s claims were outsidethescope ofthe arbitration provision and thatthe employment agreements
were procedurally unconscionable. Matrix appeals that order. DISCUSSION The 2014 employment agreement contains a valid agreementto arbitrate disputes arising outofor related to that agreement. Motions to compel arbitration are reviewed de novo. Adler v. Fred Lind Manor, 153 Wn.2d 331, 342, 103 P.3d 773 (2004). The Federal Arbitration Act (FAA),1 applies to all employment contracts except for employment contracts of certain transportation workers. Adler, 153 Wn.2d at 341. Washington courts enforce the policies in the FAAand RCW7.04A.060favoring arbitration. Romney
v. Franciscan Med. Grp., 186 Wn. App. 728, 734-35, 349 P.3d 32 (2015). Courts must indulge every presumption in favor of arbitration, including in the contract language itself. Adler, 153Wn.2d at 342. Arbitration is a matterofcontract, and parties may only beforced to submit disputes to arbitration when they have agreed to submit those disputes to arbitration. Hill v. Garda CL NW, Inc., 179 Wn.2d 47, 53, 308 P.3d 635 (2013) (quoting Satomi OwnersAss’n v. Satomi, LLC, 167Wn.2d 781, 810, 225 P.3d 213

1 9

### usc, §~1-16
3No. 78669-5-1/4

(2009)). Gateway disputes regarding the validity ofthe contract orthe arbitration provision “are preserved for judicial determination, as opposed to arbitrator determination, unless the parties’ agreement clearly and unmistakably provides otherwise.” ki. at 53, (see Satomi, 167 Wn.2d at 809. When the validity of an arbitration agreement is challenged, ordinary contract defenses such as unconscionability mayinvalidatetheagreement. McKeev. AT&TCorp., 164Wn.2d 372, 383, 191 P.3d 845 (2008). A. The 2014 contract is the onlyexisting agreement between Thach and Matrix. In orderto determine ifthe contract and arbitration provision are valid, we mustfirstdeterminewhich contractapplies. The parties did not meaningfully brief
orarguethequestion ofwhich contract represented theagreementbetweenThach and Matrixatthetime ofhertermination. Instead, the parties arguedwhethereach agreement was procedurally unconscionable. Some Court of Appeals cases suggestthata subsequentcontract between the same parties regarding the same subject matter must be interpreted together, with the second contract controlling
on inconsistencies.2 That approach would warrant considering the procedural unconscionability ofeach employmentagreementseparately. But cases from the Washington Supreme Court, both old and new, adoptthe opposite conclusion. In Higgins v. Stafford, the Court reiterated the rule that the legal effect of a subsequent contract made by the same parties and covering the same subject

2S~g Durand v. HIMC Corp., 151 Wn. App. 818, 830, 214 P.3d 189 (2009), (citing Flowery. T.R.A. Indus., Inc., 127Wn. App. 13, 29, 111 P.3d 1192
4No. 78669-5-1/5

matter, but containing inconsistentterms isto rescind the earliercontract, and the subsequentcontractisthe onlyagreement between the partieson thesubject. 123 Wn.2d 160, 165-66, 866 P.2d 31(1994) (quoting Bader v. Moore Bldg. Co., 94 Wash. 221, 224, 162 P.8(1917)); Cf. Tingleyv. Fairhaven Land Co., 9 Wash. 34, 39-40, 36 P. 1098 (1894), overruled on othergrounds by Rosellini v. Banchero, 83 Wn.2d 268, 273, 517 P.2d 955 (1974). We are bound by the Supreme Court’s rule. Here, Dr. Thach signed employment agreements with Matrix in 2010 and 2014. The two contracts are substantiallysimilar, butthe contract signed in 2014 significantly expands section 11, regarding disability, substantively changes section 12, regarding termination and suspension, and references either the divisional board orcorporate board ratherthan the executive board. Because the contracts involve the same parties, the same subject matter, and contain inconsistent terms, we consider the 2014 contract to be the only agreement between Thach and Matrix. B. The 2014 agreement is not procedurally unconscionable. Washington courts recognize both substantive and procedural unconscionability. Adler, 153 Wn.2d at 344 (citing Nelson v. McGoldrick, 127 Wn.2d 124, 131, 896 P.2d 1258 (1995). Procedural unconscionability is the lack of meaningful choice, considering the circumstances surrounding the agreement, (1) “[t]he manner in which the contractwas entered,” (2) “whethereach party had
a reasonableopportunityto understandtheterms ofthe contract,”and (3) “whether the important terms [were] hidden in a maze of fine print.” j~çj.. at 345 (quoting

5No. 78669-5-1/6

Nelson 127 Wn.2d at 131). Those factors should “not be applied mechanically without regard to whether

. . . a meaningful choice existed.” j.ç[~ at 345 (quoting Nelson, 127Wn.2d at 131). Procedural unconscionability is sufficientto renderan agreement unenforceable. Steven Burnettv. Pagliacci Pizza, Inc., 442 P.3d 1267, 1272 (Wash. Ct. App. 2019). Atrial court’sfinal conclusion ofunconscionability is
a question law reviewed de novo. McKee, 164 Wn.2d at 383 (citing Nelson, 127 Wn.2d at 131). Thach argues thatthe agreement is procedurally unconscionable because the arbitration provision is buried in the fine print of the agreement and that a reasonable person would not be able to understand the provision. But the agreement itself does not support a finding of procedural unconscionability. The arbitration provision is not hidden. It has its own numbered section in the agreement, and istitled Arbitration in bold font. No “reasonable person” standard applies to the analysis. While Thach argues that the provision’s reference to a repealed statute makes itambiguous, the provision explicitlystatesthatthe parties agree to submit disputes to Judicial Arbitration and Mediation Service and waive their righttofile a lawsuit until 30 days afteran arbitration award. Because the agreement itself does not support a finding of unconscionability, the court must examine the circumstances surrounding the agreement. Thach alleges that the employment agreement is an adhesion contract. An adhesion contract is (1) a “standard form printed contract,” (2) “prepared by one party and submitted to the other on a ‘take it or leave it’ basis,” and (3) “where there was ‘no true equality of bargaining power’ between the

6No. 78669-5-1/7

parties.” Adler, 153 Wn.2d at 347 (quoting Yakima County (W. Valley) Fire Prot. Dist. No. 12v. CityofYakima, 122Wn.2d 371, 393, 858 P.2d 245 (1993). Whether
a contract is an adhesion contract can help show procedural unconscionability in
a contract, but does not necessarily render it unconscionable. k~. at 347-48. There is nodisputethattheemploymentagreementisan adhesion contract. However, an employee cannot rely solely on a lack of bargaining powerto show that an adhesion contract is unconscionable. Zuver v. Airtouch Commc’ns, Inc., 153 Wn.2d 293, 306, 103 P.3d 753 (2004). The employee must show some evidence thatthe employer (1) refused to respond to the employee’s questions or concerns, (2) placed undue pressure on the employee to sign the agreement without a reasonable opportunity to consider the terms, (3) and/or that a reasonable person could not understand the terms. j4. at 306-07. Based on the uncontestedfacts alleged byThach, the2014agreementwas not procedurally unconscionable. Thach’s only other argument regarding procedural unconscionabilityand the2014agreementis hersignificant investment in Matrix. She invested halfof herfirstyearsalary and twenty-five percent of her second year salary in Matrix in order to secure shareholder status. She would have suffered tremendous financial and professional loss if she did not sign the contract and was forced to start again with a newemployer. While these facts indicate Thach lacked relative bargaining power, these consequences applyto anyone who has expended the effortto become a partner in the organization thatemploys them. The facts do not showthat Matrix refused to respond to herconcerns, placed undue pressure onThach, orthata reasonable

7No. 78669-5-118

person could not understand the terms. Neither do the facts demonstrate that Thach lacked other opportunities for employment or was unable to exercise a meaningful choice. Thach’s investment in her employment and the benefits derived from maintaining it are not the sort of undue pressures that cause a new employment agreement to be unenforceable. Because Thach fails to allege factorsthatshowthe2014 agreementis procedurallyunconscionable, we hold that the employmentagreement and arbitration provision arevalid and enforceable. II. The arbitrator mustdecide whetherThach’s claims fall within the scope of the arbitration agreement. Afterinitial briefing in this case, the United States Supreme Court issued an opinion that definitively resolved the question of who should decide whether Thach’s claims are within the scope of the arbitration clause. When parties delegate the question of arbitrability to the arbitrator, the arbitrator must resolve any disputes regarding thatquestion. Who decides issues ofarbitrability is a question ofcontract. Henry Schein, inc. v. Archer and White Sales, Inc., 139 S. Ct. 524, 527, 202 L. Ed. 480 (2019). Parties may make an agreementthatan arbitrator, ratherthan a court, will resolve threshold arbitrability questions, as long as the contract clearly and unmistakably does so. ~ at. 530. When the parties delegatethethreshold arbitrabilityquestion to an arbitrator, the court has no powerto decide the issue, even ifthe argument that arbitration appliesto the dispute appears wholly groundless. ki. at 529. Here, the contract clearly and unmistakably assigns questions of arbitrability to the arbitrator. The employment agreement explicitly states that

8No. 78669-5-1/9

“[a]ny dispute as to whether any issue is to be resolved by arbitration shall be submitted as part ofthe arbitration proceeding.” The language used is expansive (“any”), mandatory (“shall’), and encompasses questions ofarbitrability. Because the contract clearly assigns the dispute to arbitration, the court must permit an arbitratorto decide. In responseto HenrySchein, Thach directs the courtto Nelson v. Westport Shipyard. Inc., a case where the arbitration clause did not assign questions of arbitrabilitytothe arbitrator. 140Wn. App. 102, 163 P.3d 807 (2007). WhileThach is correctthat Nelson involves shareholderand employmentagreements, onlyone of which contained an arbitration clause, the arbitration clause in Nelson was narrow and required arbitration of “only those disputes ‘arising out of this Agreement.” 140 Wn. App. at 113-14. In fact, the court in Nelson carefully distinguished the arbitration clause from one that required disputes regarding the validity, enforceability, or scope of an agreement or arbitration provision to be submitted to arbitration. 140 Wn. App. at 112-13, distinguishing Buckeye Check Cashing, Inc. v. Cardegna. 546 U.S. 440, 442-43, 126 S. Ct. 1204, 163 L. Ed. 2d 1038 (2006). Nelson istherefore inapplicable here, becauseThach’s employment agreement explicitly states that the question of arbitrability must be submitted as part ofthe arbitration proceeding. Because the agreement clearly and unmistakably assigned questions of arbitrabilitytothearbitrator, HenrySchein controls, and thearbitrator, notthe court, must decide whether Thach’s claims fall within the scope of the employment agreement. We do not reach the question ofwhetherThach’s claimsfallwithin the

9No. 78669-5-1110

scope of the arbitration agreement, and remand for the entry of an order compelling arbitration ofThach’s claims. Reverse and remand.

WE CONCUR:

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