Court of Appeals hears arguments over arbitration and shortened statute of limitations in Phillips v. Odom

Division 2 of the Washington Court of Appeals heard oral argument on Jan. 21 in Clinton Phillips v. the Odom Corporation over whether a trial-court order compelling arbitration should be reviewed. Commissioner Aurora Burse presided. Petitioner counsel Wyndham Hubbard asked the court to grant discretionary review, arguing that enforcing the order would “completely terminate Mr. Phillips’ statutory rights” because a shortened statute-of-limitations clause in the arbitration agreement would bar his claims.

Hubbard framed the hearing as a question of probable error and contended the court need only find a substantial likelihood of error because of the significant harm to Phillips’ ability to pursue wage claims. He advanced two independent grounds for relief: that Phillips is exempt from the Federal Arbitration Act (FAA) as a transportation worker based on his delivery and warehouse duties, and that the arbitration provision’s shortening of the statute of limitations is substantively unconscionable under the Washington Minimum Wage Act (MWA). "If that's all he did, it would probably be very analogous to Waitake," Hubbard said of the delivery role, and he urged the court to treat merchandising materials attached to the stream of interstate commerce as equivalent to product.

Respondent counsel argued the trial court followed binding Washington Supreme Court and U.S. Supreme Court precedent and urged a narrow reading of the FAA exemption. Counsel told the court that petitioner was relying "on the outlier cases" and that the exemption should not be extended to sales or marketing roles that occasionally touch goods. The respondent stressed that the record does not show Phillips crossed state lines and that the trial court’s findings were supported by evidence: "We would say he had no responsibility to actually touch the product," counsel argued, noting the factual disputes over frequency and specificity.

Commissioner Burse pressed both sides on fact-bound issues central to the exemption analysis, including how often Phillips moved goods within a warehouse versus routine in-store stocking and whether merchandising materials are themselves goods for purposes of interstate commerce. The judge also asked whether, even if the FAA exemption did not apply, the case could nonetheless be sent to arbitration under Washington law; counsel agreed the questions are separable and that Washington's standards for arbitration agreements differ from the FAA's.

On the statute-of-limitations issue, petitioner urged the court to treat a materially shortened limitations period as void because it would reduce employees’ ability to recover under the MWA. Respondent relied on Washington case law distinguishing extreme shortenings (for example, from three years to 14 days) from more modest negotiated periods and argued that mutual, bargained-for terms have routinely been enforced.

In rebuttal, Hubbard reiterated that Hill’s analysis looks first to extreme shortness and that the trial court did not consider Phillips’ declaration and job descriptions because they were attached to a reply. He urged the court to resolve the statutory limitation question rather than sending the parties to arbitration, saying that referral would likely return the matter to the court after arbitration and be an inefficient use of judicial resources.

Commissioner Burse told counsel she would take the motion under advisement and issue a written ruling. The court did not announce a decision at the hearing and adjourned. The motion for discretionary review remains pending.