## Facts

- Garda CL Northwest, Inc. operated armored trucks in Washington and employed drivers and messengers to transport and deliver currency.
- Employees were required, as a condition of employment, to sign standard-form labor agreements negotiated between Garda and employee “associations” that were not traditional unions.
- Employees filed a wage-and-hour class action alleging violations of the Washington Industrial Welfare Act and the Washington Minimum Wage Act, including failure to provide compliant meal and rest breaks and failure to pay for all hours worked.
- The labor agreements contained an arbitration provision requiring disputes to be arbitrated.
- After class certification, Garda moved to compel arbitration under the arbitration provision.

## Issues

1. Whether the arbitration provision in the labor agreements was unconscionable under Washington contract law and therefore unenforceable.
2. Whether the agreements’ formation and employment context established procedural unconscionability (including adhesion-like features and lack of meaningful choice).
3. Whether the provision’s cost, forum, and claim-processing terms were substantively unconscionable because they impaired employees’ ability to vindicate statutory wage rights.
4. Whether refusing to enforce the arbitration clause on unconscionability grounds was consistent with the Federal Arbitration Act.

## Decision

- The Washington Supreme Court reversed the Court of Appeals.
- The court held the arbitration clause unconscionable and unenforceable.
- Because the clause was unenforceable, Garda’s motion to compel arbitration was denied and the wage-and-hour claims proceeded in court.

## Legal Principles

- Washington unconscionability has two components: procedural unconscionability (defects in contract formation and meaningful choice) and substantive unconscionability (overly harsh, one-sided terms); the required showing operates on a sliding scale.
- An arbitration agreement imposed as a condition of employment in a standard-form arrangement can support procedural unconscionability when workers lack a realistic ability to opt out while retaining their jobs.
- Arbitration provisions are substantively unconscionable when their terms, considered together, impose costs, risks, or structural barriers that effectively prevent employees from enforcing nonwaivable statutory wage-and-hour rights.
- The Federal Arbitration Act permits state courts to apply generally applicable contract defenses, including unconscionability, so long as the doctrine is applied evenhandedly and not as a rule targeting arbitration.

## Conclusion

The Washington Supreme Court invalidated Garda’s employment arbitration clause as unconscionable because its formation circumstances and one-sided terms functioned to impede enforcement of statutory wage protections, and the court held this application of neutral contract law was not preempted by federal arbitration policy.


Hill v. Garda CL Nw., Inc., 179 Wash. 2d 47, 308 P.3d 635 (2013)