Thach v. Matrix Anesthesia P.S., 78669-5-I

CourtCourt of Appeals of Washington
PartiesTIEN THACH, M.D., Respondent, v. MATRIX ANESTHESIA P.S., a Washington corporation, M. SEAN KINKAID, M.D., in individual person, JOHN COSTELLO, M.D., an individual person, JOHN DOES I-XX, individual persons. Appellants.
Docket NumberNo. 78669-5-I,78669-5-I
Decision Date19 August 2019

TIEN THACH, M.D., Respondent,
v.
MATRIX ANESTHESIA P.S., a Washington corporation, M. SEAN KINKAID, M.D.,
in individual person, JOHN COSTELLO, M.D., an individual person, JOHN DOES I-XX,
individual persons.
Appellants.

No. 78669-5-I

COURT OF APPEALS OF THE STATE OF WASHINGTON DIVISION ONE

August 19, 2019


UNPUBLISHED OPINION

HAZELRIGG-HERNANDEZ, J. — Parties may agree to submit disputes regarding the scope of an arbitration provision to arbitration. Dr. Tien Thach entered into an employment agreement with Matrix Anesthesia that contained such a provision. After Matrix terminated Dr. Thach, she sued, alleging that her termination related to her actions as a corporate shareholder rather than an employee. The trial court denied Matrix's motion to compel arbitration. Because the employment agreement assigns disputes regarding the scope of the arbitration agreement to the arbitrator, we reverse and remand for an order to compel arbitration.

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FACTS

Dr. Thien Thach signed an employment agreement with Matrix Anesthesia, P.S., in 2010. After working with them for more than three years, she was approved for shareholder status. She signed a second employment agreement in 2014. Each employment agreement contained an arbitration provision with the following language:

Arbitration. Any issue, dispute, controversy or claim arising out of or relating to this Agreement or the breach thereof shall be resolved by arbitration and, except as may otherwise be provided herein, the arbitration shall be submitted to the Seattle office of the Judicial Arbitration and Mediation Service (JAMS). The parties hereto expressly waive any right to file a lawsuit in any court involving the same issue, dispute, controversy or claim until 30 days after the arbitration award has been issued. The arbitration shall be governed by the Washington Rules of Evidence and RCW 7.04. Any dispute as to whether any issue is to be resolved by arbitration shall be submitted as part of the arbitration proceeding.

After she became a shareholder, she became a divisional compliance officer and board treasurer.

Thach voiced concerns regarding corporate practices that she believed violated the federal anti-kickback statute. In response, Thach encountered hostility from the corporate board. Thach resigned as treasurer, board member, and division compliance officer. She was fired soon after.

Thach sued Matrix for violation of her shareholder rights, arguing that her shareholder status was not terminated in accord with the bylaws. The relevant clause in the bylaws reads:

Termination of Shareholder's Employment. The employment of a person who is a Shareholder may be terminated by the Corporation only if (i) he or she is terminated for "cause" as that term is defined

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in his or her Employment Agreement, (ii) the termination is recommended by 66 2/3% of the shareholders of the Division in which the person works, and the termination is approved by a majority of all Directors, or (iii) the termination is recommended by a majority of the Quality Assurance Committee, and approved by sixty percent (60%) of all Directors.

Matrix moved to compel arbitration under the employment agreements. The trial court denied the motion to compel arbitration, holding that Thach's claims were outside the scope of the arbitration provision and that the employment agreements were procedurally unconscionable. Matrix appeals that order.

DISCUSSION

I. The 2014 employment agreement contains a valid agreement to arbitrate disputes arising out of or related to that agreement.

Motions to compel arbitration are reviewed de novo. Adler v. Fred Lind Manor, 153 Wn.2d 331, 342, 103 P.3d 773 (2004). The Federal Arbitration Act (FAA),1 applies to all employment contracts except for employment contracts of certain transportation workers. Adler, 153 Wn.2d at 341. Washington courts enforce the policies in the FAA and RCW 7.04A.060 favoring arbitration. Romney v. Franciscan Med. Grp., 186 Wn. App. 728, 734-35, 349 P.3d 32 (2015). Courts must indulge every presumption in favor of arbitration, including in the contract language itself. Adler, 153 Wn.2d at 342.

Arbitration is a matter of contract, and parties may only be forced to submit disputes to arbitration when they have agreed to submit those disputes to arbitration. Hill v. Garda CL NW, Inc., 179 Wn.2d 47, 53, 308 P.3d 635 (2013) (quoting Satomi Owners Ass'n v. Satomi, LLC, 167 Wn.2d 781, 810, 225 P.3d 213

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(2009)). Gateway disputes regarding the validity of the contract or the arbitration provision "are preserved for judicial determination, as opposed to arbitrator determination, unless the parties' agreement clearly and unmistakably provides otherwise." Id. at 53, (see Satomi, 167 Wn.2d at 809. When the validity of an arbitration agreement is challenged, ordinary contract defenses such as unconscionability may invalidate the agreement. McKee v. AT&T Corp., 164 Wn.2d 372, 383, 191 P.3d 845 (2008).

A. The 2014 contract is the only existing agreement between Thach and Matrix.

In order to determine if the contract and arbitration provision are valid, we must first determine which contract applies. The parties did not meaningfully brief or argue the question of which contract represented the agreement between Thach and Matrix at the time of her termination. Instead, the parties argued whether each agreement was procedurally unconscionable. Some Court of Appeals cases suggest that a subsequent contract between the same parties regarding the same subject matter must be interpreted together, with the second contract controlling on inconsistencies.2 That approach would warrant considering the procedural unconscionability of each employment agreement separately. But cases from the Washington Supreme Court, both old and new, adopt the opposite conclusion. In Higgins v. Stafford, the Court reiterated the rule that the legal effect of a subsequent contract made by the...

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