Employment Agreement Mandating Arbitration With Exclusion To Seek Equitable Relief From Court For Non-Compete Violations Found Unconscionable

Summary:  Tatum, an employee of ProBuild, purportedly blew the whistle on her subordinate for allegedly stealing from ProBuild.  Shortly thereafter, she was fired, but alleged similarly situated male employees were not.  She filed a gender discrimination suit in a New Mexico state court. ProBuild removed the case to federal court and then moved to compel arbitration based on the mandatory arbitration clause in ProBuild’s employment agreement.  That clause provided, however, that equitable relief could be sought in a court for violation of the non-competition, non-solicitation, and confidentiality covenants in the agreement.  Since those were allegations ProBuild could be expected to assert, whereas the claims employees would tend to file (such as employment discrimination) had to be arbitrated, “common sense” led the federal court to hold that the agreement was one-sided and unfair.  Tatum v. ProBuild Co., No. Civ. 12001060 LH/LFG (D.N.M., July 17, 2013).

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