Unconscionable Contracts

News & Analysis as of

Government Attacks on Non-Compete Agreements Continue

Non-compete agreements have long been used by employers as an effective tool to protect their valuable trade secrets and confidential information. However, employers’ overuse of non-compete agreements and employers’ practice...more

English-Only Arbitration Agreement Deemed Unenforceable

Seyfarth Synopsis: An arbitration provision that was provided only in English to a population consisting of one-third Spanish speakers, and that required claimants to bear one-half of arbitration expenses, was unenforceable...more

Federal Appeals Court Hands Uber Major Victory In Arbitration Agreement Fight

The 9th Circuit Court of Appeals delivered a significant victory to Uber and other gig economy businesses by reversing a trial court’s denials of Uber’s motions to compel arbitration in companion class action lawsuits brought...more

The New York Attorney General’s Crackdown on Non-Compete Agreements: What It Means for Companies

Background - Recently, the NYAG has turned quite a few heads by entering into a new legal arena: challenging non-compete agreements between companies and their employees. The NYAG settled two investigations brought...more

Illinois Prohibits Non-Compete Agreements with Low-Wage Employees

Effective January 1, 2017, the Illinois Freedom to Work Act (the “Act”) will prohibit private sector employers from entering into non-competition agreements with employees earning a “low wage.” The Act defines low-wage...more

FRANCHISOR 101: Non-Competes for Franchisees’ Employees

A "non-compete" provision limits the franchisee's ability, after the franchise agreement ends, to continue to work in a similar type of business to the franchise within a certain time period and geographic area. The purpose...more

Smith v. D.R. Horton, Inc.: The End of Arbitration for Residential Developers and Builders in South Carolina?

Mark Twain famously wrote that the reports of his death were exaggerated. Following the South Carolina Supreme Court’s decision in Smith v. D.R. Horton, Inc. last month, you may have heard arbitration is dead for South...more

Limitations of Liability Clause Does Not Violate Ohio's Consumer Sales Practices Act

Contractors often attempt to limit their liability by including a limitations of liability clause in the contract. Plaintiffs attempt to avoid the limitations of liability by asserting that the clause is unconscionable under...more

The Dennis Decision: A Shot Across the Bow for Hospitals

A recent Virginia court decision questions the reasonable value of health care services and creates a challenge to debt collection efforts by hospitals. In March, the Circuit Court for Henry County, Patrick County, and the...more

The New York Attorney General’s Crackdown on Non-Compete Agreements: What It Means for Investment Managers

Key Points - - To the surprise of many, the New York Attorney General (NYAG) has become active in challenging non-compete agreements entered into between companies and their employees. - The NYAG’s...more

South Carolina Supreme Court Decision Impacts Enforceability of Arbitration Provisions in New Residential Construction Sales...

On July 6, 2016, the South Carolina Supreme Court filed its Opinion No. 27645, captioned Smith v. D.R. Horton, Inc., in which it affirmed the Court of Appeals' refusal to compel arbitration between new home purchasers and the...more

Reminder to New Jersey Employers: Shortening the Law Against Discrimination’s Statute of Limitations is Prohibited

Employers in New Jersey should be aware that a recent New Jersey Supreme Court decision invalidated a contractual provision that shortened the statute of limitations for bringing a claim for discrimination under the Law...more

Employers Can’t Contractually Shorten Time For Filing Claims Under N.J. Law Against Discrimination

Last week the New Jersey Supreme Court issued its long-awaited decision in Rodriguez v. Raymours Furniture Co., Inc., ruling that the two-year statute of limitations for filing a lawsuit alleging violations of the New Jersey...more

New Jersey Rejects Contractual Shortening of Limitations Period

The New Jersey Supreme Court’s decision forbids employers from contractually shortening the two-year limitations period under the state’s Law Against Discrimination. In a decision issued on June 15 that reversed two...more

Please, Take Your Time: NJ Supreme Court Voids Contracts That Limit Workers’ Time to Sue

On June 15, 2016, the New Jersey Supreme Court issued its long-awaited decision in Sergio Rodriguez v. Raymours Furniture Company, Inc., in which it addressed whether the two-year statute of limitations under the New Jersey...more

Employers Cannot Shorten Time Frame to Bring Claims Under N.J. LAD

In a decision issued yesterday in Rodriguez v. Raymours Furniture Company, the Supreme Court of New Jersey ruled that provisions in employment agreements shortening the limitations period for bringing claims under the New...more

Statute of Limitations for New Jersey Law Against Discrimination Claims Cannot Be Shortened By Contract

Seyfarth Synopsis: The Supreme Court of New Jersey rules that employers may not shorten the statute of limitations for claims of discrimination under the New Jersey Law Against Discrimination via private contract. The...more

Ninth Circuit Reverses Holding That Arbitration Clause In Employment Agreement Is Unconscionable

In early April, the Ninth Circuit Court of Appeals reviewed a lower court’s holding that an arbitration clause in an employment agreement with JP Morgan was procedurally and substantively unconscionable. Because the...more

Consumer Financial Protection Bureau Publishes Proposed Rule Precluding Class Action Waivers in Arbitration Clauses

As we reported last year, in October 2015 the Consumer Financial Protection Bureau published an outline of proposals that would limit the use of arbitration provisions in contracts for consumer financial products. On May 5,...more

California Supreme Court Enforces Arbitration Agreement, Finding It Is Not Unconscionable

In this case, a former employee of a retail store appealed to the California Supreme Court seeking reversal of an appellate court decision which found that an arbitration agreement in her employment application was not...more

Carbajal v. CWPSC Decision Provides Guidance for Drafting Employment Arbitration Agreements

On February 26, 2016, the California Court of Appeal, Fourth District, issued its decision in Carbajal v. CWPSC, Inc., invalidating an employment arbitration agreement due to a number of provisions the Court considered...more

California Supreme Court Upholds Arbitration Agreements That Mutually Exclude Applications for Temporary Restraining Orders and...

On Monday, March 28, 2016, the California Supreme Court affirmed the decision of the Second Appellate District holding that an arbitration agreement in an employment contract is not substantively unconscionable simply because...more

Court OKs Arbitration Agreement Permitting Injunctive Relief

Seyfarth Synopsis in a Second: A clause in an employment arbitration agreement that authorizes preliminary injunctive relief in court does not make the agreement unenforceable. As a general proposition, arbitration...more

California Supreme Court: Arbitration Agreement Restating Existing Law Is Not Unconscionable

On March 28, 2016, the California Supreme Court handed down a long-awaited opinion in Baltazar v. Forever 21. Baltazar’s most important holding is that an arbitration agreement is not unconscionable merely because it restates...more

Exhibit C For The Case That California Is No Longer Anti-Arbitration

The Supreme Court of California this week enforced the arbitration agreement between an employee and employer. Yes, you read that right. While reputed to be reliably anti-arbitration, California’s highest court continues to...more

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