Arbitration Agreement Enforceable Against Employee Despite Illegality of Provision

In Kepas v. eBay, the Tenth Circuit Court of Appeals, with one judge dissenting, affirmed a district court’s decision to compel an employee to arbitrate a dispute.  Applying California law, the Court reasoned that, although the arbitration agreement impermissably allowed the arbitration costs to be shifted to Kepas and the agreement was procedurally unconscionable, the defects were not significant enough to render the arbitration agreement unenforceable.  The dissenting judge found the former employee’s argument more compelling and chided the majority for concluding that the agreement was bilateral when the agreement excepted intellectual property claims from the arbitration requirement—a carve out that would exempt most claims brought by eBay from being arbitrated.