Skirchak v. Dynamics Research Corp.

United States Court of Appeals
For the First Circuit

Nos. 06-2136, 06-2180

JOSEPH SKIRCHAK on behalf of himself and all others similarly
situated; BARRY L. ALDRICH, on behalf of himself and all others
similarly situated,

Plaintiffs, Appellees/Cross-Appellants,

v.

DYNAMICS RESEARCH CORPORATION,

Defendant, Appellant/Cross-Appellee.

APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Morris E. Lasker, U.S. District Judge]

Before

Torruella, Lynch, and Howard, Circuit Judges.

David S. Rosenthal, with whom Carrie J. Campion, Jeffrey
B. Gilbreth, and Nixon Peabody LLP were on brief, for Dynamics
Research Corporation.
Martin J. Newhouse, Ben Robbins, and New England Legal
Foundation on brief for New England Legal Foundation and Associated
Industries of Massachusetts, amici curiae.
Shannon Liss-Riordan, with whom Hillary Schwab, Pyle,
Rome, Lichten, Ehrenberg & Liss-Riordan, P.C., and Elayne N. Alanis
were on brief, for Joseph Skirchak and Barry L. Aldrich.
John Roddy, Elizabeth Ryan, and Roddy, Klein & Ryan on
brief for Public Justice, amicus curiae.

November 19, 2007
 LYNCH, Circuit Judge. At issue is the enforceability

under Massachusetts law unconscionability doctrine of class action

waivers (of Fair Labor Standards Act claims) contained in a

company-imposed arbitration/dispute resolution program.

Two managers brought a class action suit against their

former employer, Dynamics Research Corporation ("DRC"), for

violations of the Fair Labor Standards Act ("FLSA"), 29 U.S.C.

§ 201 et seq., and the Massachusetts Minimum Fair Wage Law, Mass.

Gen. Laws ch. 151, § 1 et seq.

The company moved to compel arbitration under its newly

adopted Dispute Resolution Program ("Program") which contains

language waiving class actions. The district court ordered

arbitration and struck the class waiver provisions, finding them

unconscionable and invalid as contrary to the policies animating

the FLSA. Skirchak v. Dynamics Research Corp., 432 F. Supp. 2d 175

(D. Mass. 2006). The company has appealed the decision striking

the class action waiver. The plaintiffs have agreed to arbitration

but oppose waiver of their ability to pursue a class action in

arbitration.

Based on the particular facts of this case, we uphold the

striking of the class action waiver on grounds of unconscionability

under state law and thus under the Federal Arbitration Act ("FAA"),

9 U.S.C. §§ 1-16. Our ruling is narrow. We do not reach the

argument that waivers of class actions themselves violate either

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the FLSA or public policy. The question of whether plaintiffs

otherwise meet the requirements for a class action are for the

arbitrator to decide.

I.

A. Procedural History

Plaintiffs Joseph Skirchak and Barry Aldrich were

employed by DRC, a government contractor of technology services.

Skirchak worked in the Human Resources Department as the Director

of Compensation and Retirement Programs until his resignation in

October 2004; Aldrich was the Vice President of Contracts until his

resignation in November 2004.

Following a complaint by Skirchak, the U.S. Department of

Labor conducted an investigation into alleged violations of the

FLSA in the fall of 2004. As a result, DRC agreed to pay back

approximately $75,000 to its employees and change its policies.

The plaintiffs then filed a class action complaint in the District

of Massachusetts in June 2005 alleging violations of the FLSA and

the Massachusetts Minimum Fair Wage Law and seeking treble damages.

The complaint alleged that DRC willfully failed to pay plaintiffs,

and all other similarly situated employees categorized as "exempt,"

at time-and-a-half of their regular pay rate for time worked in

excess of forty hours per week in violation of federal and state

law. Specifically, plaintiffs alleged that up until October 1,

2004, DRC's payroll department made partial-day deductions from

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each employee's balance of paid leave and this violated the FLSA's

salary basis test, resulting in underpayments that violated the

FLSA and the Massachusetts Minimum Fair Wage Law. The plaintiffs'

suit claimed damages beyond any relief obtained as a result of the

Department of Labor investigation.

DRC never filed an answer, but instead moved to dismiss

the complaint and compel arbitration in accordance with its 2003

Dispute Resolution Program, which, DRC contended, constituted an

agreement between the parties to arbitrate all disputes. The

Program, in certain clauses, required the plaintiffs to proceed in

arbitration individually, as opposed to in a class action. The

plaintiffs opposed the defendant's motion.

The district court, on April 6, 2006, issued an order

compelling arbitration, but striking the part of the Program which

barred class actions. Skirchak, 432 F. Supp. 2d at 181. The court

found the class action waiver unconscionable under Massachusetts

state law, finding procedural defects in the way it was adopted,

that it was so one-sided as to be oppressive, and that the waiver

was contrary to the purpose of the FLSA. Id. at 180-181. Both

parties appealed: the defendant appealed the striking of the class

action waiver, and the plaintiffs initially appealed the order

compelling arbitration. The plaintiffs now agree to arbitration

and argue only that the class action waiver is unenforceable.

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B. The Dispute Resolution Program

We describe the essential facts surrounding the Program

and its adoption. Roughly a year before the plaintiffs left the

company, on Tuesday, November 25, 2003, at 11:42am, two days before

the Thanksgiving holiday, DRC sent a five-line e-mail to all of its

employees asking them to read three attached documents describing

the company's new "Dispute Resolution Program". [The third

attachment is not in the record and apparently is not in dispute.]

Nothing in the e-mail mentioned that the attachments constituted

modifications to the employees' terms of employment or employment

contract, nor that the documents restricted the employees' rights

to a judicial forum, nor that they waived class actions. Further,

no response to the e-mail was required, nor were employees asked to

acknowledge reading the documents.

The initial attachment, which appeared first after the

body of the e-mail, contained a two-page memorandum introducing the

Program. That memorandum explained that the Program took effect on

the following Monday, December 1, 2003, and applied to all work-

related disputes between the company and its employees. The

memorandum stated that the Program "expands upon" and "enhance[s]"

DRC's previous problem resolution process by requiring mediation

and arbitration, described as "two additional and more formal

processes for resolving disputes between an employee and the

company." The "enhanced" Program would "create improved, reasoned,

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predictable, and reliable processes" that would "provide the same

resolution as can be obtained through the court system but with

less cost and complications for all parties." Lastly, the

memorandum reiterated that "[t]he program does not limit or change

any substantive legal rights of our employees, but it does require

that you seek resolution of such rights and complaints by following

the procedures of the program." (Emphasis added.) This language

is in some tension with later waiver language contained in the

other attached documents. An employee who stopped after reading

the descriptive memorandum would not know of the class action

waiver.

A second attachment contained the actual text of the

Program in four parts: a broadly-phrased, fifteen-page description

of the Program, two appendices describing the Program's rules, and

a third appendix containing relevant forms. The scope of the

Program, by its terms, is broad and encompasses claims under

federal and state employment statutes and matters of interpretation

of the Program's rules. The Program applies to all "Disputes,"

defined as "any dispute for controversy including all legal and

equitable claims, demands, and controversies, of whatever nature or

kind, whether in contract, tort, under statute or regulation, or at

law or in equity, between persons and entities bound by the Program

. . . including, but not limited to, any matters with respect to

. . . this Program . . . ." The Program also covers claims

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premised on "allegations of[] discrimination based on race, sex,

religion, national origin, or disability; sexual harassment;

workers' compensation retaliation; [and] defamation . . . ." The

Program also instructs the arbitrator to construe the scope of the

Program liberally: "The arbitrator shall interpret and apply these

Rules to the greatest extent possible insofar as they relate to the

arbitrator's powers and duties." There is also a severability

clause. Should a section or a provision of the Program be

invalidated, the Program provides: "The invalidity or

unenforceability of any provision herein shall not affect the

application of any other provision or any jurisdiction in which

such a provision may be lawful."

The fifteen-page Program description, plus its three

Appendices, constitutes a thirty-three-page document. An employee

who read only the e-mail, the descriptive memorandum and the

fifteen-page Program description would not know of the class action

waiver.

The two class action waiver clauses are contained in the

Appendices to the Program. The first is in Appendix A, entitled

"Dynamics Research Corporation's Dispute Resolution Program Rules."

Rule 12 is entitled "Authority" and states: "The Arbitrator shall

have no authority to consider class claims or join different

claimants or grant relief other than on an individual basis to the

individual employee involved. The right of any party to pursue a

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class action for any Dispute subject to the Program shall be waived

to the fullest extent permitted by law." (Emphasis added.) The

language is some twenty pages into the thirty-three pages of the

Program and the Appendices.

Later, in Appendix B, entitled "Dynamics Research

Corporation's Dispute Resolution Program Arbitration Rules," there

is a second waiver clause in Rule 30 ("Scope of the Arbitrator's

Authority") on page 28 which provides that the arbitrator "shall

have no jurisdiction to grant class relief . . . ." (Emphasis

added.) This clause does not contain the limiting language "to the

fullest extent permitted by law" contained in Appendix A. In order

to find either of the provisions, the employee would have needed to

read the initial five-line e-mail, the memorandum and the Program

attachment, and to proceed to the pages in question.

A reader who read all of the attachments would likely

still be confused because of tension between the wording of several

clauses and documents. For example, one set of provisions provide

for the preservation of all of the employees' rights and remedies.

The last page of the Program description notes that an "arbitrator

has the same authority as a judge or jury in making awards or

granting relief to an individual employee."1 A judge, in an

1
At oral argument, defendant's counsel stated that this
clause meant that an arbitrator could only grant relief to the
individual employees whose individual claims were being arbitrated.
An arbitrator would be powerless to grant broader relief, such as
categorical job-description changes, unless all employees subject

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appropriate case, may issue class-wide relief, while the second

class waiver clause said an arbitrator had no such authority. To

give another example, the first paragraph of Appendix A, in a

section entitled "Purpose and Construction," states in part: "[The

Program] is not intended either to abridge or enlarge substantive

rights available under applicable law." In the same rule

reiterating the class waiver on page 28, the Program also provides:

"The arbitrator shall not have the authority to either abridge or

enlarge substantive rights available under existing law." The

Program's rules elsewhere state that "[o]ther than as expressly

provided herein, the substantive legal rights, remedies, and

defenses of all Parties are preserved."

Further, the reader would have to search to find that he

or she had consented to the terms of the new Program by returning

to work on the following Monday. While nothing is mentioned in the

e-mail, the descriptive memorandum, or the document describing the

Program, the final page of Appendix A provides that "[e]mployment

on or continued employment after [December 1, 2003] constitutes

consent by both the Employee and the Company to be bound by this

Program . . . ."

By contrast, before the mass e-mail to all company

employees on November 25, 2003, DRC had sent a similar e-mail to

its general managers, including the two plaintiffs. That e-mail

to the job description were individually before the arbitrator.

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contained an attached memorandum which informed the managers that

the Program would be "mandatory" and "non-discretionary." This

language was omitted from both the November 25 e-mail and the

attached memorandum sent to all employees.

The company's later announcements to its employees also

failed to disclose the class action waiver. The company's monthly

newsletters in January, February, and November of the next year

discussed the Program. Only the February 2004 article was explicit

that lawsuits under the Program would be subject to a motion to

remove the dispute from court. None of the newsletters described

the class action waiver provision.

There is evidence that the method by which the Program

was announced and adopted varied from the company's usual

practices. Unlike the Dispute Resolution Program at issue in this

case, which was only featured in the newsletter after it became

effective, a "New Compensation Program" was announced in the

January 2004 newsletter before its effective date of February 1,

2004. That newsletter also discussed plans to schedule "employee

Compensation Program Orientation Sessions" to explain the New

Compensation Program.

While DRC routinely communicated with employees about new

policies using e-mails and, at times, after-the-fact articles in

the newsletter, the company also sent personalized letters to the

homes of employees, ran training programs, and made announcements

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at employee meetings when it implemented new retirement programs.

As to its Code of Conduct, the company also required employees to

sign an annual acknowledgment that they had received and read the

distributed materials.

There was no evidence from DRC that it had ever adopted

and implemented any significant personnel policy, much less a

significant one involving waiver of rights, by an e-mail to

employees shortly before a holiday, and to which the employees were

deemed to have agreed by returning to work after the holiday.

II.

A. Appellate Jurisdiction

Plaintiffs' brief argues that this court lacks appellate

jurisdiction over DRC's appeal. Plaintiffs have most likely waived

the argument by later asking this court to decide the class action

waiver question. In any event, this court has jurisdiction to

review the district court's order under the FAA, which grants

appellate jurisdiction for "a final decision with respect to an

arbitration that is subject" to the FAA. 9 U.S.C. § 16(a)(3).

Plaintiffs had argued that the District Court's ruling compelling

arbitration was not "final" because the American Arbitration

Association Rules provide parties with the opportunity to seek

court intervention at points before the conclusion of the

arbitration. However, "the District Court has ordered the parties

to proceed to arbitration, and dismissed all the claims before it,

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[so] that decision is 'final' within the meaning of § 16(a)(3), and

therefore appealable." Green Tree Fin. Corp.-Ala. v. Randolph, 531

U.S. 79, 89 (2000); see also Municipality of San Juan v.

Corporación para el Fomento Económico de la Ciudad Capital, 415

F.3d 145, 148 (1st Cir. 2005). The potential for future court

intervention does not change the construction of "final" as set

forth in Green Tree Fin. Corp.-Ala., 531 U.S. at 89.

B. Who Should Decide the Question

Both parties agree that this case should proceed in

arbitration. Their disagreement is whether plaintiffs are barred

from pursuing a class action in arbitration. The parties have

requested this court to decide the issue and not refer it to the

arbitrator.

Under the language of the Program, the question here

ordinarily would be one for the arbitrator in the first instance

for two different reasons. First, the arbitrator must construe all

of the language to determine whether there was a waiver, in light

of the tensions in the language as described. Second, an

arbitrator could carry out the unconscionability analysis.

First, the Supreme Court's decision in Green Tree

Financial Corp. v. Bazzle, 539 U.S. 444 (2003), made clear that

when claims are submitted to arbitration, the question of whether

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class arbitration is forbidden is not a question of arbitrability,2

but initially a question of contract interpretation and should be

decided in the first instance by an arbitrator. Id. at 447

(plurality opinion); see also id. at 455 (Stevens, J., concurring

in the judgment and dissenting in part) (noting that the question

"[a]rguably . . . should have been made in the first instance by

the arbitrator"). "[T]he question is not whether the parties

wanted a judge or an arbitrator to decide whether they agreed to

arbitrate a matter. Rather the relevant question here is what kind

of arbitration proceeding the parties agreed to." Id. at 452

(plurality opinion) (internal citations omitted); see also

PacifiCare Health Sys., Inc. v. Book, 538 U.S. 401, 406-07 (2003)

(holding that an arbitrator must decide whether statutory treble

damages count as "punitive" within the meaning of an arbitration

agreement).

This court adhered to that view in Anderson v. Comcast

Corp., 500 F.3d 66 (1st Cir. 2007), which held that an arbitrator

must decide whether a class action waiver extended to cover the

suit in question under the language in the agreement. The relevant

2
In Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79
(2002), the Supreme Court explained that "whether the parties have
submitted a particular dispute to arbitration, i.e., the 'question
of arbitrability'" is a question for the court, but "'procedural'
questions which grow out of the dispute and bear on its final
disposition are presumptively not for the judge, but for an
arbitrator, to decide." Id. at 83-84 (internal quotation marks
omitted) (quoting John Wiley & Sons, Inc. v. Livingston, 376 U.S.
543, 557 (1964)).

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arbitration agreement there provided for waiver of class actions

"unless your state's laws provide otherwise." Id. at 72. It was

up to an arbitrator to determine whether a class action right

provided by Massachusetts law fell into the exception provided by

that arbitration agreement. Id.

Second, there is a separate but related question of

whether, assuming the contractual language is interpreted to

provide for a class action waiver, that waiver is unconscionable.

Under Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 445-46

(2006), it is likely that this question of the unconscionability of

the class action waiver provision, viewed as severable from the

arbitration provision, is an issue for the arbitrator. We need not

resolve the issue.

Nonetheless, here the parties have affirmatively stated

their intention that the court decide the unconscionability and

statutory invalidity questions. We understand them to agree that

the clauses should be assumed to be read to waive class claims, and

the question of whether the Program, so read, may be enforced under

the FAA is for the court.

The parties agree there is no jurisdictional objection to

our deciding the question. An agreement to arbitrate does not

divest a court of its jurisdiction. See DiMercurio v. Sphere Drake

Ins., PLC, 202 F.3d 71, 77 (1st Cir. 2000) (noting the "modern view

that arbitration agreements do not divest courts of jurisdiction,

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though they prevent courts from resolving the merits of arbitrable

disputes").

We have jurisdiction and, in the interests of efficiency,

we reach the merits question, as requested.

We review the district court's decision de novo, as it

presents solely questions of law. Anderson, 500 F.3d at 71; see

also Marks 3 Zet-Ernst Marks GmBh & Co. KG v. Presstek, Inc., 455

F.3d 7, 13 (1st Cir. 2006). The facts on which we rely are

undisputed; there are some disputes as to facts which are not

material. We may affirm the district court order on any

independent ground made manifest by the record. InterGen N.V. v.

Grina, 344 F.3d 134, 141 (1st Cir. 2003).

C. The Merits: Enforceability of the Waiver Clause

This case, then, does not involve an attempt to avoid

arbitration at all, but only avoidance of a class waiver. The case

does not call for invocation of much of the Supreme Court case law

originally designed to counter judicial hostility to arbitration.

See, e.g., Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth,

Inc., 473 U.S. 614, 625 n.14 (1985) ("[T]he [Federal Arbitration]

Act was designed to overcome an anachronistic judicial hostility to

agreements to arbitrate . . . ."); Moses H. Cone Mem'l Hosp. v.

Mercury Constr. Corp., 460 U.S. 1, 24 (1983) (the Federal

Arbitration Act reflects "a liberal federal policy favoring

arbitration agreements . . ."). Nor does the issue here invoke

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more recent case law designed to prevent judicial incursions into

the power of arbitrators to decide matters which the parties

intended the arbitrators to decide. See Green Tree, 539 U.S. at

447.

Both the law of arbitration and the law of contracts set

forth conditions under which a clause in such a contract may not be

enforced, such as unconscionability. See 9 U.S.C. § 2 (written

arbitration agreements "shall be valid, irrevocable, and

enforceable, save upon such grounds as exist at law or in equity

for the revocation of any contract"); see also Doctor's Assocs.,

Inc. v. Casarotto, 517 U.S. 681, 687 (1996) (noting that

"[g]enerally applicable contract defenses, such as fraud, duress,

or unconscionability, may be applied to invalidate arbitration

agreements without contravening § 2"); Kristian v. Comcast Corp.,

446 F.3d 25, 63 (1st Cir. 2006).

The issues in the case not only draw on the law of

contracts, but also are akin to issues under the law of waiver of

rights granted under federal employment statutes. That law focuses

largely on whether the waiver was knowing and voluntary. See,

e.g., Cabán Hernández v. Philip Morris USA, Inc., 486 F.3d 1, 8-9

(1st Cir. 2007) (finding that an employee's severance agreement

constituted a knowing and voluntary waiver of Title VII rights);

Rivera-Flores v. Bristol-Myers Squibb Caribbean, 112 F.3d 9, 12-14

(1st Cir. 1997) (finding that an employee's severance agreement

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constituted a knowing and voluntary waiver of ADA rights); Smart v.

Gillette Co. Long-Term Disability Plan, 70 F.3d 173, 181-83 (1st

Cir. 1995) (finding that an employee's severance agreement

constituted a knowing and voluntary waiver of her ERISA rights).

Congress has, through the Older Workers Benefit Protection Act,

legislatively required that waivers of ADEA rights be knowing and

voluntary. 29 U.S.C. § 626(f)(1). No such express statutory

protection applies to waivers under the FLSA. So we consider the

issues of knowledge and voluntariness insofar as they are pertinent

under the state law doctrine of unconscionability.

Unconscionability and related doctrines do not turn on

whether, in a strict sense, a party has a constitutional,

statutory, or common law "right." The FLSA does provide that

actions for FLSA violations may be brought as class actions. 29

U.S.C. § 216(b). This congressional allowance for class actions

recognizes that class actions may be the more effective mechanism

for redressing small claims, see Deposit Guar. Nat'l Bank v. Roper,

445 U.S. 326, 338 (1980) (noting that "the class-action . . . may

motivate [plaintiffs] to bring cases that for economic reasons

might not be brought otherwise"), and permit citizens to function

as private attorneys general.3 The Supreme Court has noted that

3
No issue is raised about the effect of the agreement on
the Department of Labor as a public enforcement agency. See EEOC
v. Waffle House, Inc., 534 U.S. 279 (2002) (holding that an
employer cannot preclude a public enforcement agency from bringing
an enforcement action for employee-specific relief by relying on an

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the FLSA itself is meant to offset the superior bargaining power of

employers both for particular employees at issue and broader

classifications, and to offset the resulting general downward

pressure on wages in competing businesses. See Tony & Susan Alamo

Found. v. Sec'y of Labor, 471 U.S. 290, 302 (1985).

For our purposes, it is not important to answer whether

the FLSA gives plaintiffs a "right" to a class action in the same

way one has a right to file suit under the FLSA. It is sufficient

that the class action provisions give the plaintiffs an interest of

some value to them in their employment.4

State law, under the provisions of the FAA, provides our

reference point. See 2 Barbara T. Lindemann & Paul Grossman,

Employment Discrimination Law 2988-89 (4th ed. 2007) ("The

enforceability of employer-imposed arbitration agreements depends

on the governing state's contract law and the facts of the

individual cases, including the prominence and clarity of the

employer-employee arbitration agreement).
4
DRC argues that the company's assumption of the costs of
mediation and arbitration, reimbursement of legal costs up to
$2,500 to each employee who wishes to arbitrate, the mutuality of
the obligation to arbitrate, and the ease and speed of arbitration
suffice to provide adequate consideration. These are very good
arguments for consideration for arbitration; they do not foreclose
analysis of whether the waiver of class actions in arbitration, a
further step, is its own protectable interest subject to
unconscionability analysis. The Program itself provides for
severability. See also Waters v. Min Ltd., 587 N.E.2d 231, 233
(Mass. 1992) (noting that "[g]ross disparity in the values
exchanged is an important factor to be considered in determining
whether a contract is unconscionable").

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arbitration agreement, whether the employee acknowledged the

arbitration requirement, whether the employee had a 'meaningful

choice,' and whether the employee was well-educated." (footnotes

omitted)).

Plaintiffs argue the application of normal state law

unconscionability analysis should be heightened somewhat because

the FLSA is a federal statute protecting employee rights. Under

Title VII and the ADA, we have applied an independent federal

scrutiny of the adequacy of the notice of waiver of judicial rights

because in the language of these statutes Congress referred to

"appropriate" waivers.5 Rosenberg v. Merrill Lynch, Pierce, Fenner

& Smith, Inc., 170 F.3d 1, 20 (1st Cir. 1999) (Title VII); Campbell

v. Gen. Dynamics Gov't Sys. Corp., 407 F.3d 546, 554-55 (1st Cir.

2005) (ADA). No "appropriateness" requirement exists in the FLSA,

and we reject the argument.

Rather, under the FAA, we approach this issue under

normal state law unconscionability standards; here, we apply those

of Massachusetts. In Miller v. Cotter, 863 N.E.2d 537 (Mass.

2007), the Massachusetts Supreme Judicial Court ("SJC") laid out

its present standard for unconscionability as a defense to

5
Both Title VII and the ADA expressly cabin their
endorsements of arbitration in cases covered by those statutes by
providing that "[w]here appropriate and to the extent authorized by
law, the use of alternative means of dispute resolution, including
. . . arbitration, is encouraged." Civil Rights Act of 1991, Pub.
L. No. 102-166, § 118, 105 Stat. 1071, 1081 (Title VII); 42 U.S.C.
§ 12212 (ADA).

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enforcing all or part of an arbitration agreement. Miller involved

an agreement to arbitrate (but not a class action waiver) signed

along with a contract for admission of a patient to a nursing home.

The court found that the agreement was not unconscionable, and set

forth a standard of case-by-case determination, looking at the

"setting, purpose, and effect" of the agreement.

"The determination that a contract or term is
or is not unconscionable is made in the light
of its setting, purpose and effect."
Restatement (Second) of Contracts § 208,
comment a (1981). "Because there is no clear,
all-purpose definition of 'unconscionable,'
nor could there be, unconscionability must be
determined on a case by case basis (see
Commonwealth v. Gustafsson, 370 Mass. 181, 187
[346 N.E.2d 706 (1976)]), giving particular
attention to whether, at the time of the
execution of the agreement, the contract
provision could result in unfair surprise and
was oppressive to the allegedly disadvantaged
party" (emphasis added). Zapatha v. Dairy
Mart, Inc., 381 Mass. 284, 292-293, 408 N.E.2d
1370 (1980).

Id. at 545. In giving further content to the agreement's

"setting," the SJC examined several factors, including: (1) the

plaintiff's education and business sophistication, (2) the

circumstances under which the plaintiff entered into the agreement,

and (3) any pressure that was exerted by the defendant on the

plaintiff. Id. The court noted that the "arbitration agreement

. . . was separate from and independent of the admissions

agreement, and explicitly not a condition of admission." Id. at

546. The defendant "did not exert any undue pressure on him to

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sign it," id. at 545, and the agreement "was adequately explained

in an extended admissions meeting" with the plaintiff. Id. at 546.

The SJC also found nothing objectionable about the agreement's

"purpose and effect."6 Id. at 545.

For a variety of reasons, we conclude that the waiver

clause, under these circumstances, is unenforceable under state

law. We do not need to reach the question of whether the waiver's

purpose and effect is independently objectionable. Under state

law, whether an enforceable contract exists, as in the case of

whether an employment handbook is a contract, "depends upon a host

of considerations, including its content and the circumstances of

its distribution." Campbell, 407 F.3d at 559 (citing O'Brien v.

New Eng. Tel. & Tel. Co., 664 N.E.2d 843, 847-49 (Mass. 1996)).

Further, under state law, when waiver of statutory rights is at

issue, Massachusetts generally requires that the waiver be both

knowing and voluntary. See, e.g., Barton v. Brassring, Inc., 2006

WL 3492161, at *3 (Mass. Super. Ct. Oct. 26, 2006); Rowe v. Town of

North Reading, 2001 WL 170655, at *7 (Mass. Super. Ct. Jan. 5,

6
The SJC noted the federal and state policies favoring
arbitration and that the agreement was bilateral, in that either
party was compelled to bring claims in arbitration. Miller, 863
N.E.2d at 545. The court further noted that "[a]ll rights and
remedies available in courts were preserved for the arbitrator, and
[that] Miller had a unilateral right of recision for thirty days
after execution of the agreement." Id. The agreement in this
case, by contrast with the one before the SJC in Miller, does not
preserve all judicial procedures and remedies, nor did employees
have a unilateral right of rescission.

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2001). In our view, this stautorily created interest in class

actions, even assuming it is waivable, was sufficiently strong that

Massachusetts law would, on these facts, find the waiver would

result in oppression and unfair surprise to the disadvantaged

party. The waiver was not due to mere allocation of risk because

of DRC's superior bargaining power.7 Waters, 587 N.E.2d at 233.

It is the combination of a series of events which leads

us to a conclusion of unconscionability; no single event alone

bears the weight of this conclusion and no broader implications

should be taken from this opinion.

The timing, the language, and the format of the

presentation of the Program obscured, whether intentionally or not,

the waiver of class rights. The waiver lacked both prominence and

clarity. Massachusetts courts, under another fairness doctrine,

have declined to enforce clauses due to short timing (here, the

short notice over a holiday weekend). See, e.g., Cherick

Distribs., Inc. v. Polar Corp., 669 N.E.2d 218, 220 (Mass. App. Ct.

1996) (upholding finding that termination of a contract with only

four days' notice was a breach of the implied covenant of good

faith and fair dealing); Williams v. B & K Med. Sys., Inc., 732

7
DRC, appropriately, has not argued it can impose any term
of employment it wants in any manner it chooses. In fact,
Massachusetts law imposes a covenant of good faith and fair dealing
in employment contracts. See Harrison v. NetCentric Corp., 744
N.E.2d 622, 629 (Mass. 2001) (citing Fortune v. Nat'l Cash Register
Co., 364 N.E.2d 1251, 1256-58 (Mass. 1977)).

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N.E.2d 300, 305 (Mass. App. Ct. 2000) (upholding a finding that

refusal to allow an employee time to consider a severance offer as

a violation of the implied covenant of good faith and fair

dealing).

There was nothing objectionable about the use of e-mail

itself. But the content, the obscurity, and the timing of the e-

mail and the failure to require a response raise unconscionability

concerns. The e-mail employees received the Tuesday before

Thanksgiving did not state it represented a modification to their

employment contract at all. To the contrary, the attached

memorandum clearly noted that the Program "d[id] not limit or

change any substantive legal rights of [DRC's] employees." It also

described the Program as an "enhanced program" with the intent "to

create improved, reasoned, predictable, and reliable

processes . . . ," without mention of any potential disadvantages.

The memorandum also failed to give notice.

We do not decide whether it was the intent of the company

to hide the waiver. The effect was to hide the waiver.

Massachusetts law considers the risk of misrepresentation in

assessing unconscionability. See Waters, 587 N.E.2d at 234

("[M]isrepresentation [is] recognized as [a] factor[] rendering a

contract unconscionable."); cf. Campbell, 407 F.3d at 557-58

(noting that an e-mail describing arbitration as "a kinder, gentler

alternative to litigation" without suggesting that it

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"extinguish[ed] an employee's access to a judicial forum" did not

"provid[e] fair warning that showing up for work the next day would

result in a waiver of important rights").

Massachusetts law considers, as part of unconscionability

analysis, whether the provision is "obscurely worded" or "buried in

fine print" of a contract. Zapatha, 408 N.E.2d at 1377. The lack

of fair notice here continued into the format of the presentation,

as the class action waiver was hidden in two paragraphs in a multi-

page appendix to a fifteen-page document. Cf. Campbell, 407 F.3d

at 557 (recognizing it as a "fundamental flaw" when an e-mail

announcement contained nothing to imply, nor did it "state directly

that the Policy contained an arbitration agreement that was meant

to effect a waiver of an employee's right to access a judicial

forum").

Massachusetts law also considers whether there was an

opportunity to consult or to signify acceptance of a contractual

term where waiver of statutorily defined rights are involved. See

Miller, 863 N.E.2d at 539, 545 (noting that the arbitration

agreement required a separate signature, but was not a requirement

for admission to the nursing home); Zapatha, 408 N.E.2d at 1377

(noting that the plaintiff had been given the opportunity to

consult an attorney before accepting). Here, DRC did not require

any sort of affirmative response or acknowledgment by the employee.

Cf. Campbell, 407 F.3d at 557 (noting that the "'no response

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required' format . . . disguised the import of the communication,"

while "[r]equiring an affirmative response . . . would have

signaled that the Policy was contractual in nature").8 This is

just another factor in the mix.

DRC attempts to avoid the consequences of the choices it

made which effectively hid the waiver provision with the argument

that, by now, enough notice has been provided for the class waiver

that the waiver is enforceable. DRC phrases the argument in terms

of the fact that plaintiffs continued to work after the effective

date of the announcement and certainly learned of the waiver. We

reject the argument. Nothing would be left of much of state law

unconscionability analysis if that argument were accepted. The

Campbell analysis is directly to the contrary; it analyzed the

procedures by which the arbitration agreement was communicated

before it became effective, even when an employee worked at the

company for twenty months after the agreement was adopted. 407

F.3d at 548-49, 559.

8
Plaintiff Aldrich provided written comments on the
Program to John Wilkinson, a DRC employee, on November 19, 2003.
Defendant argues, with some reason, that this undercuts Aldrich's
individual claim for lack of notice. That argument, though, is not
available as to plaintiff Skirchak. And it is undisputed that
Aldrich and Skirchak were on vacation over the period from November
25th to December 1st and would not have read the November 25th
e-mail until they returned. Further, an objective and company-wide
approach to notice is consistent with how this court handled the
issue in Campbell. See Campbell, 407 F.3d at 555 (noting that "the
sufficiency of the notice turns on whether, under the totality of
the circumstances, the employer's communication would have provided
a reasonably prudent employee notice of the waiver").

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 One additional factor in the mix is the comparison of how

this program was handled with how the company handled other

personnel issues. Plaintiffs point to two other programs which

involved face-to-face training sessions, mailings to employees'

homes, and announcements at company-wide meetings. DRC counters

that these two other programs were the deviations from the standard

procedure, and that the communication of this Program was the norm.

For our purposes, it suffices that it was at least common practice,

if not uniform practice, for DRC to employ methods of communicating

policy changes that extended further than e-mail notifications

before and newsletter articles after the fact. See Campbell, 407

F.3d at 557 ("[While] e-mail was a familiar format for many forms

of intra-office communication, . . . [the record] does not suggest

that e-mail was a traditional means either for conveying

contractually binding terms or for effectuating waivers of

employees' legal rights.").

We do not need to decide if class actions under the FLSA

may ever be waived by agreement.9 DRC strongly argues this point.

9
The parties argue about the impact of language in Gilmer
v. Interstate/Johnson Lane Corp., 500 U.S. 20, 32 (1991): "[E]ven
if the arbitration could not go forward as a class action or class
relief could not be granted by the arbitrator, the fact that the
[ADEA] provides for the possibility of bringing a collective action
does not mean that individual attempts at conciliation were
intended to be barred." (quoting Nicholson v. CPC Int'l Inc., 877
F.2d 221, 241 (3rd Cir. 1989) (Becker, J., dissenting) (internal
quotation marks omitted).
This argument about unenforceability vel non of class
waiver clauses under the FLSA stems from the recognition that

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The cases on which DRC relies find class waivers to be insufficient

grounds to invalidate an arbitration agreement in total. They are

not so instructive on the issues we do reach, which turn on the

facts of this case and not an attempt to invalidate the arbitration

agreement. See Caley v. Gulfstream Aerospace Corp., 428 F.3d 1359,

1378 (11th Cir. 2005); Carter v. Countrywide Credit Indus., Inc.,

362 F.3d 294, 298 (5th Cir. 2004); Adkins v. Labor Ready, 303 F.3d

496, 503 (4th Cir. 2002); Horenstein v. Mortgage Mkt., Inc., 9 Fed.

Appx. 618, 619 (9th Cir. 2001) (unpublished per curiam order). We

note there is also case law reaching the opposite result. See

Shroyer v. New Cingular Wireless Servs., Inc., 498 F.3d 976, 984

(9th Cir. 2007) (using a finding that class action waiver was

unconscionable under California law to invalidate an arbitration

agreement); Powertel, Inc. v. Bexley, 743 So.2d 570, 576-77 (Fla.

Dist. Ct. App. 1999) (using a finding that class action waiver was

unconscionable under Florida law to invalidate an arbitration

agreement).

parties to a pre-dispute arbitration agreement do not "forgo the
substantive rights afforded by the statute; [they] only submit[] to
their resolution in an arbitral, rather than a judicial, forum.”
Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 123 (2001)
(quoting Gilmer, 500 U.S. at 26) (internal quotation mark omitted).
While the FAA is silent on questioning the effectiveness of the
arbitral forum, Gilmer read into the FAA a test of whether a
litigant "effectively may vindicate [his or her] statutory cause of
action in the arbitral forum . . . ." Gilmer, 500 U.S. at 28
(quoting Mitsubishi, 473 U.S. at 637) (internal quotation mark
omitted); see also Rosenberg, 170 F.3d at 11. These arguments go
to the issue of whether waivers of class actions under the FLSA are
inherently unfair or unenforceable, an issue we do not reach.

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 By like token, plaintiffs rely heavily on Kristian, 446

F.3d 25, which invalidated a prohibition against antitrust class

action claims in an arbitration agreement. The Kristian holding

rests on reasoning that the class action waiver constituted a

weakening of antitrust law enforcement mechanisms in a manner

inconsistent with congressional intent. Again, Kristian is

pertinent to the questions we do not reach.

We also do not reach the question of whether such waivers

of FLSA class actions are per se against public policy under either

the FLSA or the Massachusetts Fair Wage Law.10 See, e.g., Beacon

Hill Civic Ass'n v. Ristorante Toscano, Inc., 662 N.E.2d 1015,

1018-19 (Mass. 1996) (contract in which neighborhood association

promised not to oppose beer and wine license in exchange for

promise of restaurant not to seek general alcohol license violates

public policy); Smith-Pfeffer v. Superintendent of the Walter E.

Fernald State Sch., 533 N.E.2d 1368, 1371 (Mass. 1989) ("Redress is

available for employees who are terminated for asserting a legally

guaranteed right (e.g., filing workers' compensation claim), for

doing what the law requires (e.g., serving on a jury), or for

refusing to do that which the law forbids (e.g., committing

perjury).").

10
We acknowledge the able amicus briefs filed on both
sides, which largely go to the issue we do not reach: the validity
per se of class action waivers under the FLSA.

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 We recognize that there is a policy debate about whether

class action waivers essentially act as exculpatory clauses,

allowing for violations of laws where individual cases involve low

dollar amounts and so will not adequately address or prevent

illegality.11 See Myriam Gilles, Opting Out of Liability: the

Forthcoming, Near-Total Demise of the Modern Class Action, 104

Mich. L. Rev. 373, 378 (2005) (arguing that "sound public policy

requires collective litigation be available for small-claim

plaintiffs who would not have the incentive or resources to remedy

harms or deter wrongdoing in one-on-one proceedings"); David S.

Schwartz, Enforcing Small Print To Protect Big Business: Employee

and Consumer Rights Claims in an Age of Compelled Arbitration, 1997

Wis. L. Rev. 33, 37 (contending that "displacing adjudication

through pre-dispute arbitration clauses systematically reduces the

legal liability of corporate defendants").

The SJC has not addressed the issue and we have no need

to predict what it would do.

11
Plaintiffs point to the decision in Gentry v. Superior
Court, 165 P.3d 556, 569 (Cal. 2007), which held, under California
law, that a class action waiver is contrary to public policy when
it would "weaken or undermine the private enforcement of overtime
pay legislation by placing formidable practical obstacles in the
way of employees' prosecution of those claims." Defendants respond
that unlike Massachusetts, California applies a rebuttable
presumption that pre-dispute arbitration agreements in the
employment context are unconscionable. See Ingle v. Circuit City
Stores, Inc., 328 F.3d 1165, 1174 (9th Cir. 2003).

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 III.

At oral argument we asked the parties whether each would

prefer to be in arbitration even if the class action waiver clause

was stricken. The company said it would prefer to be in

arbitration; the plaintiffs agreed. We have no reason to choose a

different remedy. We affirm the district court's striking of the

class action waiver and remand for further proceedings in accord

with this opinion.

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