On June 15, the 3rd U.S. Circuit Court of Appeals sent a strong message to employers utilizing arbitration agreements. Specifically, the court of appeals reversed the U.S. District Court for the District of the Virgin Islands’ decision in Nino v. The Jewelry Exchange Inc. on the grounds that the “pervasively one-sided nature” of an arbitration agreement foreclosed any possibility of severing the unfair provisions from the remainder of the agreement.
The court held that an arbitration agreement can be voided in its entirety even if only parts of it are determined procedurally and substantively unconscionable. Furthermore, the 3rd Circuit concluded that the right to arbitration can be waived where a party has taken prejudicial actions displaying avoidance of such proceedings, such as through litigation.
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