Opinion ID: 2632568
Heading Depth: 1
Heading Rank: 8

Heading: Confidentiality Provision

Text: Relying on the Ninth Circuit's decision in Ting v. AT&T, 319 F.3d 1126, 1151-52 (9th Cir.), cert. denied, 540 U.S. 811, 124 S.Ct. 53, 157 L.Ed.2d 24 (2003) and a federal district court decision applying Washington law, Luna, 236 F.Supp.2d at 1180-81, Zuver asserts that the confidentiality provision unduly favors Airtouch and thus, is substantively unconscionable. [9] In Ting, the Ninth Circuit held that an arbitration agreement's confidentiality provision was unconscionable because AT & T ha[d] placed itself in a far superior legal posture by ensuring that none of its potential opponents have access to precedent while, at the same time, AT & T accumulates a wealth of knowledge on how to negotiate the terms of its own unilaterally crafted contract. 319 F.3d at 1152. See also Torrance v. Aames Funding Corp., 242 F.Supp.2d 862, 875 (D.Or.2002) (holding that confidentiality provision in an arbitration agreement appended to a mortgage contract would give mortgagors a vastly superior legal posture). Similarly, in Luna, the court there held that a confidentiality provision in an arbitration agreement was substantively unconscionable since repeat arbitration participants enjoy advantages over one-time participants [and] ... the ... confidentiality provision magnifies the effect of those advantages. [10] 236 F.Supp.2d at 1181. In response, Airtouch urges us to adopt the analysis articulated by the California Court of Appeal in Woodside Homes of California, Inc. v. Superior Court, 107 Cal.App.4th 723, 731-32, 132 Cal.Rptr.2d 35 (2003). There the court considered whether a confidentiality provision in a contract between two sophisticated parties was substantively unconscionable. The party seeking to void the contract argued that the confidentiality provision would impair the public's interest in open proceedings. Id. at 732, 132 Cal.Rptr.2d 35. The court rejected its argument reasoning that [t]hese concerns have nothing to say about the fairness or desirability of a secrecy provision with respect to the parties themselves, and we see nothing unreasonable or prejudicial about it. Id. However, unlike the party in Woodside Homes, Zuver does not argue that the public interest in open arbitration proceedings alone renders this provision substantively unconscionable. Rather, she contends that the effect of this confidentiality provision is harsh and blatantly benefits only Airtouch because it serves no purpose other than to tilt the scales of justice in favor of the employer by denying access to any information about other claims against the employer to other potential victims of discrimination. Br. of Pet'r at 20. Consequently, we do not find the court's analysis in Woodside Homes compelling in these circumstances. Airtouch alternatively argues that since confidentiality provisions are routinely included in arbitration agreements, such provisions cannot be substantively unconscionable. See State Bd. of Labor Relations v. Freedom of Info. Comm'n, 244 Conn. 487, 500, 709 A.2d 1129 (1998) (holding that arbitration proceedings before a public mediation board could be confidential); Lloyd v. Hovensa LLC, 243 F.Supp.2d 346, 351-52 (D.Vi.2003) (noting that AAA rules provide that arbitrations can be confidential), overruled on other grounds by, 369 F.3d 263 (3d Cir.2004). Indeed, this court has acknowledged that arbitrations are often confidential. See Barnett v. Hicks, 119 Wash.2d 151, 159, 829 P.2d 1087 (1992) (noting that confidential proceedings in arbitrations are an exception to the state constitutional requirement that judicial proceedings be public). Parties in labor arbitrations also routinely include confidentiality provisions in their collective bargaining agreements. See Cole v. Burns Int'l Sec. Servs., 105 F.3d 1465, 1477 (D.C.Cir.1997). Nonetheless, although courts have accepted confidentiality provisions in many agreements, it does not necessarily follow that this confidentiality provision is conscionable. As the court aptly noted in Cole, [W]hile a lack of public disclosure of arbitration awards is acceptable in the collective bargaining context, because both employers and unions monitor such decisions and the awards rarely involve issues of concern to persons other than the parties, in the context of individual statutory claims, a lack of public disclosure may systematically favor companies over individuals. Id. at 1477. The effect of the provision here benefits only Airtouch. As written, the provision hampers an employee's ability to prove a pattern of discrimination or to take advantage of findings in past arbitrations. Moreover, keeping past findings secret undermines an employee's confidence in the fairness and honesty of the arbitration process and thus, potentially discourages that employee from pursuing a valid discrimination claim. Therefore, we hold that this confidentiality provision is substantively unconscionable. [11]