Opinion ID: 1039181
Heading Depth: 3
Heading Rank: 2

Heading: Punitive Damages Provision

Text: The arbitration agreement provides, in part, The arbitrator shall have no authority to make material errors of law or to award punitive damages or to add to, modify or refuse to enforce any agreements between the parties. CP at 49. Brown and Hiett claim that the provision limiting punitive damages deprives them of their right to statutory double damages under RCW 49.52.070. 3 Under that provision, employees can be awarded statutory double damages from an employer who willingly and intentionally paid them less than is required by law. Following the United States 3 While the construction of the PSTOA is controlled by California law, Brown and Hiett have asserted state law claims under Washington law. 13 Brown v. MHN Government Services, et al., No. 87953-2 Supreme Court's lead in Paci.fiCare Health Systems, Inc. v. Book, 538 U.S. 401, 123 S. Ct. 1531, 155 L. Ed. 2d 578 (2003), we find that the punitive damages provision is not substantively unconscionable. In Paci.fiCare, the Court was asked to decide whether a party could be compelled to arbitrate claims arising under the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1961, even though the arbitration agreement's limitation on punitive damages could be construed to limit the arbitrator's authority to award statutory treble damages. 538 U.S. at 402. The Court ultimately concluded that addressing the question of whether the arbitration agreement would preclude RICO treble damages would be premature. Id. at 404. The Court noted that [ o]ur cases have placed different statutory treble-damages provisions on different points along the spectrum between purely compensatory and strictly punitive awards. Id. at 405. The Court further recognized that [i]n light of our case law's treatment of statutory treble damages, and given the uncertainty surrounding the parties' intent with respect to the contractual term punitive, the application of the disputed language to respondents' RICO claims is, to say the least, in doubt. And Vimar instructs that we should not, on the basis of mere speculation that an arbitrator might interpret these ambiguous agreements in a manner that casts their enforceability into doubt, take upon ourselves the authority to decide the antecedent question of how the 14 Brown v. MHN Government Services, et al., No. 87953~2 ambiguity is to be resolved. I d. at 406-07 (citing Vi mar Seguros y Reaseguros, S.A. v. M/V Sky Reefer, 515 U.S. 528, 115 S. Ct. 2322, 132 L. Ed. 2d 462 (1995)). Washington law is similarly unclear with respect to where RCW 49.52.070 lies on the spectrum between purely remedial and purely punitive. See RCW 49.52.070 (referring to the damages as exemplary); Schilling v. Radio Holdings, Inc., 136 Wn.2d 152, 158, 961 P.2d 371 (1998) (also noting the exemplary nature of the double damages provision); Morgan v. Kingen, 141 Wn. App. 143, 161-62, 169 P.3d 487 (2007) (the [RCW 49.52.070] damages are exemplary damages, not merely compensatory. As exemplary damages, they are intended to punish and deter blameworthy conduct. (emphasis added) (footnote omitted)). We follow the lead of the United States Supreme Court in PacifiCare and note that it would be premature to determine at this stage whether the punitive damages provision would limit Brown and Hiett's ability to collect statutory double damages under RCW 49.52.070. Accordingly, we find that the punitive damages provision is not substantively unconscionable.