MHN Government Services v. Zaborowski

Posted: February 9, 2016 by beguide in case summaries, employment discrimination, Fantasy Supreme Court League, Federalism, Uncategorized
Tags: ,

WHAT HAPPENED:  MHN hired the plaintiffs in this action to perform services pursuant to an employment contract.  At the bottom of the contract contained an arbitration clause, which required that any dispute by the plaintiffs be brought in a separate venue that presumably favors MHN.  Plaintiffs had claims pertaining to the Fair Labor Standards Act and believed that the requirement of arbitration was unfair due to the location of the arbitration clause and their inability to negotiate for that right.  The California appellate courts agreed with plaintiffs and held that the employment contract was unconscionable.

WHY IS THIS BEFORE THE SUPREME COURT:  California has a special statute which codifies the common law and negates statutes that are unconscionable, which was the grounds of this decision.  MHN argues that (1) an arbitration clause on its own is not unconscionable, and (2)  the California law is preempted by the Federal Arbitration Act which holds that arbitration clauses are enforceable.

WHAT IS THE RULING:  This case is not yet decided.

WHAT ARE THE RAMIFICATIONS OF THIS DECISION:  If arbitration clauses of this kind are held to be unconscionable, it could green-light other decisions that would affect employment contracts, customer service contracts, and other areas where arbitration clauses are included within big contracts to favor the party drafting the contract.  Each state would have to make that decision, but it could give individual states more power to control these disputes.

ROOT FOR MHN IF: You are the kind of person who reads the iTunes service agreement every time that it updates.

ROOT FOR ZABOROWSKI IF:  You’ve stopped reading already because there were too many words.


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